Cardlytics - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue of $63.2M declined 9% YoY; adjusted EBITDA improved to $2.7M from $(2.3)M, while adjusted contribution margin expanded to 57.1% from 52.2% YoY. Versus S&P Global consensus, revenue was slightly below and EPS (Primary) beat; details below. Results were within/above prior Q2 guidance on all metrics, with adjusted EBITDA above the high end.
• Management guided Q3 to double‑digit YoY declines (Revenue: $52.2–$58.2M; Billings: $87–$95M; Adj. Contribution: $30.3–$34.3M; Adj. EBITDA: $(2.3)–$2.7M), signaling near‑term top‑line pressure (catalyst) despite improving unit economics.
• Strategic narrative emphasized network diversification (new non‑FI Cardlytics Rewards Platform, SDK/API plug‑and‑play), geo‑targeted/local offers, and momentum at Bridg/Rippl (Hy‑Vee RedMedia joined Rippl), supporting medium‑term mix and monetization.
• Cost discipline and liquidity remain focus areas after workforce reduction (15% annualized savings) and extended revolver; Opex run‑rate expected sub‑$35M per quarter ex‑SBC, aiding path to improved EBITDA through 2025.

What Went Well and What Went Wrong

• What Went Well

  • Margin expansion and mix: Adjusted contribution margin rose to 57.1% of revenue (vs. 52.2% LY) and adjusted EBITDA turned positive to $2.7M from $(2.3)M LY, indicating better partner/rewards management and operating discipline.
  • Platform/product progress: Management highlighted ramp of geo‑targeted/local offers and turnkey integrations (SDK/APIs), reducing time‑to‑launch (e.g., CRP partner in ~4 weeks) and improving relevancy and conversion models.
  • Retail media traction: Rippl expanded with Hy‑Vee’s RedMedia joining, enlarging addressable audiences for CPG/retail activation and closed‑loop measurement. Quote: “We’re… seeing benefits in everyday spend… and we plan to continue to bring these local offers” – CEO, Q2 call.

• What Went Wrong

  • Top‑line pressure: Revenue fell 9% YoY, with billings down 6% and MQUs outpacing ACPU (scale ahead of monetization), reflecting cautious advertiser budgets and mix.
  • Cash generation: Free cash flow was $(3.4)M in Q2 (worse than $(0.4)M LY) and net cash used in operating activities was $1.2M, underscoring continued investment needs and working‑capital dynamics.
  • Near‑term outlook softened: Q3 guide implies double‑digit YoY declines across billings/revenue/adj. contribution, tempering expectations for a rapid rebound despite operational improvements.

Transcript

Speaker 3

Good afternoon, ladies and gentlemen, and welcome to the second quarter 2025 Cardlytics, Inc. earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press *0 for the operator. This call is being recorded on Wednesday, August 6, 2025. I would now like to turn the conference over to Nick Lynton. Please go ahead.

Speaker 2

Good evening and welcome to the Cardlytics second quarter 2025 financial results call. Before we begin, let me remind everyone that today's discussion will contain forward-looking statements based on our current assumptions, expectations, and beliefs, including expectations regarding our future financial performance and results, including for the third quarter of 2025, our capital structure, increasing our supply, the growth of new partners, advertiser churn, and operational and product initiatives. For a discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion, please refer to the risk factors section of our 10-Q for the quarter ended June 30, 2025, which has been filed with the SEC. Also, during this call, we will discuss non-GAAP measures of our performance.

GAAP financial reconciliations and supplemental financial information are provided in the press release issued today, which you can find on the investor relations section of the Cardlytics website. Today's call is available via webcast, and a replay will also be available on our website. On the call today, we have CEO Amit Gupta and CFO Alexis DeSieno. Following their prepared remarks, we'll open it up for your questions. With that, I'll hand the call over to Amit.

Speaker 3

Good evening, and thank you for joining our second quarter 2025 earnings call. Q2 marked another quarter of steady progress against our strategy. As I look back over the past year since stepping into the CEO role, we significantly improved the product and tech challenges facing us over the past several quarters, diversified our ecosystem, and set a foundation for growth. With the work we've accomplished, we are now deepening our efforts in key areas that will be most critical for the next stage of our business. I'd like to share details on the progress we've made last quarter to advance our four business pillars. First, increasing and diversifying our supply to meet consumers where they are. Our publisher base is what makes our network unique, and growing and diversifying this foundation continues to be a top priority for us.

We're focused on growing our partnerships with both financial institutions and merchants from other verticals. We are pleased with the early progress with our newest bank partners, and we have a robust pipeline of prospective FI and non-FI partners in both the U.S. and UK. We are not only focused on adding more publishers with large user bases, but also working with our bank partners to maximize user engagement with our offers. When our partners are fully committed to our shared goal of maximizing value for consumers, we see a substantial difference in results. For example, we've been working with a top five bank partner who has been investing in their program and increasing their marketing and merchandising activities around cashback offers. Through these efforts, this partner is seeing a significant lift across key metrics, including a 92% increase in activations and a 48% increase in redemptions year over year.

We plan to continue these efforts with several bank partners who are interested in working with us to increase engagement and bring more demand. Now turning to the retail side of our CLO network. On our last call, we announced the launch of the Cardlytics Rewards Platform, which strategically diversifies our publisher base beyond FIs. We are now collecting data from our pilot, making refinements to the platform, and optimizing for the best consumer experience. In parallel, we are progressing many active conversations with leading merchants in the U.S. and UK. We look forward to sharing more partner updates in due time. While we continue our efforts to expand our supply, we are also working through a notable change with our largest FI partner.

This partner, who built their program with our offers over the last several years, has recently decided to restrict a large amount of content from running on their channels starting July 1. While we expected some level of this, we did not anticipate brand restrictions at this scale. The implications are that this partner's users will likely receive significantly less content and less value. We have also heard from numerous advertisers that they are equally concerned about the negative impacts to the efficacy of their programs if restricted from running on the trusted and proven Cardlytics platform. This change is posing significant limitations for our business. Despite our attempts to find a better path forward for us and their customers, we are now focused on mitigating the impacts of this bank's decision.

First, we will continue to invest in efforts to meet consumers where they are, and we expect to increase and diversify our supply. Second, we are improving our relevancy and targeting tools, which we expect will allow us to shift our content to other publishers that are focused on leveraging the Cardlytics platform to deliver value to consumers. Third, our shift to engagement-based pricing is helping advertisers see our platform as a real performance media ad format. Fourth, we are working with our advertisers to blend TVC reporting, incrementality results, and ratings for a more comprehensive view of performance, which we believe will continue to position Cardlytics as a trusted and immeasurable growth channel. For clarity, the restrictions imposed by this bank are unique to this partner, as no other FI partner of ours has imposed restrictions of any similar magnitude, nor do we expect them to.

In fact, our other bank partners are leaning into our platform to deliver more value to their users and are growing their share on our network. We are committed to ensuring that our business is sustainable and on a path to profitability. Alexis will discuss more about the financial impact these changes will have. We believe that our network capabilities are a real market differentiator that cannot be easily replicated. Competitors have generally not been successful in capturing budgets from advertisers with multi-unit chains or more sophisticated CLO needs. We hear this time and time again from our advertisers that only Cardlytics has the scale and ability to run the type of novel ad formats that they want. Since these restrictions were imposed, we've seen negligible churn with our restricted brands. The vast majority of them have stayed on our platform so far.

Now moving on to our second pillar: strengthening and growing advertiser demand. In light of supply limitations, doubling down on demand is of utmost importance. Our UK business continued to show strong growth with the highest billings quarter in history, driven by strength in categories like everyday spend, subscription services, and retail. We signed over 20 new logos, about half of which are top 150 brands in the UK, and we are focused on growing these accounts and securing longer-term commitments. With more pressures on performance, we are helping our advertisers demonstrate results and working closely with them to develop longer-term CLO strategies. In the U.S., we also saw increased performance expectations from our advertisers. Advertiser churn was mostly concentrated in mid to small-sized brands, which have been more susceptible to budget reductions. We saw strength in everyday spend and specialty retail, consistent with trends from the previous quarter.

Travel and restaurant categories experienced softness in the first half of the year, as we've seen across the industry. We are encouraged by signing new top-tier brands in the U.S. as well, including a leading rideshare player, top retailers, and national restaurant chains. These enterprise accounts are where we see the highest potential for growth and scaling in the second half of this year. In the light of the changes with our largest FI partner, we are focused on reinforcing our relationship with our top advertisers and ensuring their content is effectively delivered across our spectrum of publishers. We have reorganized our sales organization under our new Chief Business Officer and are accelerating our go-to-market efforts with intensity. We have been seeing success with our vertical-focused go-to-market initiatives, and we will enhance and expand on this strategy.

We are also leading with proven performance, which remains a true differentiator in the market against our competitors. While we diversify our supply, we are also adding new demand to our network. We expect to attract new brands and verticals to fuel our growth strategy with Cardlytics Rewards Platform. Furthermore, by aligning U.S. and U.K. under one leader, we are able to work with leading brands and support their marketing spend across these markets contiguously. Our third pillar: maximizing the performance of our network. We are seeing the benefits of our focused efforts to stabilize and optimize our platform over the past few quarters. Our network is performing effectively and efficiently, bringing more confidence to our partners and advertisers. As recently announced, we launched new dashboards within the Cardlytics Insights portal to bring the full power of our network data to our advertisers.

The new dashboards are focused on customer insights, which have historically been generated by our analytics team rather than self-serve and in real time. With the Insights portal, our advertisers can access market data and customer intelligence on demand whenever they need them. One client noted we are sharing these insights internally to highlight Cardlytics not just as a media partner, but a partner that provides real value to our business through data. Lastly, we continue to make progress with the migration to engagement-based pricing models, which are now implemented for 79% of our advertisers. In Q2, 96% of our new business ran on engagement-based pricing, reinforcing the fact that this pricing model is aligned with what our advertisers are looking for, as it provides lower funnel signals that are valuable to them.

Engagement-based pricing has also helped us compress deal cycles, align with internal brand measurement models, and we believe it will make us more resistant to churn over time. Our final pillar: accelerating our growth in Bridge. Last quarter, we saw strong and steady client interest for our identity resolution capability, including a long-term renewal with a high-end beauty brand. We also signed a new partnership with a popular restaurant chain that is using our advanced analytics and business intelligence for deeper customer insights. For Ripple, we're encouraged by the positive trends that helped us more than double our revenue quarter over quarter. We recently welcomed Hy-Vee Red Media to Ripple as our newest partner, which will further expand our current scale of over 140 million unique shopper profiles. Building on our efforts to scale supply over the past year, we are now continuing to focus on the demand side.

In Q2, there has been strong traction with the adoption of our Ripple audiences across different platforms. In fact, we're seeing 10% growth week over week on Trade Desk alone. We are continuing to work with new and existing platform partners to accelerate this momentum and drive broader adoption and more revenue diversification. On our last call, I shared that we launched a pilot for CPG offers with one of our large retail clients and bank partners. I am pleased to report that initial results from this pilot are encouraging. Not only did we validate the feasibility of connecting our Bridge and Cardlytics data, the pilot demonstrated a positive impact on both shopper behavior and basket size.

Among redeemers, we saw a 30% increase in the rate of baskets containing the specific product, as well as a 2% increase in basket size for transactions containing the product, and a 13% increase for all other transactions. Overall, we continue to move forward, taking a deliberate and thoughtful approach to growing our business. There are undoubtedly challenges that we did not anticipate a year ago, but we believe that over the medium term, the strategic shifts we initiated earlier this year will position us for profitable growth. We are operating efficiently and effectively, and we believe these shifts will ensure that we continue to deliver on our promise to our partners, advertisers, consumers, and investors. I'll now turn it over to Alexis to discuss the financials.

Speaker 1

Thank you, Amit. In the second quarter, we delivered results above the midpoint of our guidance for most metrics, and we surpassed the high end of our guidance for adjusted EBITDA. My comments will be year-over-year comparisons to the second quarter of 2024, unless stated otherwise. In Q2, our total billings were $104 million, a 5.7% decrease. We achieved our billings guidance by continuing to expand billings with many of our top accounts in the grocery and gas category, which grew 41%. We also had success in the retail category, growing our largest retail advertiser by $2.8 million in billings year over year. We continue to see weakness in the travel category, which declined across a few key accounts. On new business, we are encouraged by the high quality of brands and momentum, with 45 total new logos signed in Q2 and a strong potential to scale.

Consumer incentives of $40.8 million were flat to prior year, and revenue decreased 9.2% to $63.2 million, driven by a decrease in billings. Our revenue-to-billings margin was 2.3 points lower than prior year due to pressures on advertiser performance. Looking at our segment revenue results, our U.S. revenue, excluding Bridge, decreased 13% due to lower billings and pricing pressure, as previously discussed. In the UK, we saw 29% revenue growth, driven by higher billings and increased supply. We grew billings with all of our top five clients in the quarter and launched a new advertiser whose billings were in the top five. Bridge revenue decreased 8% due to the loss of a major account in previous quarters. Adjusted contribution was $36.1 million, down 0.6% from the prior year.

However, we expanded our margin as a percentage of revenue to 57.1%, an increase of five points due to a more favorable partner mix. This margin is the highest we have experienced to date, driven primarily by growth of our newest bank partners. Adjusted EBITDA was positive $2.7 million, an increase of $5 million. Total adjusted operating expenses, excluding stock-based compensation, came in at $33.4 million, a reduction of $5.2 million, primarily due to our previously discussed reduction in staff and a reduction to incentive compensation. In Q2, operating cash flow was positive $1.2 million. Free cash flow was negative $3.4 million, which was $3 million less than the prior year, due to interest on our 2029 convertible notes and severance payments that was partially offset by improved working capital. Free cash flow improved from the prior quarter by $7.4 million.

On the balance sheet, we ended Q2 with $46.7 million in cash and cash equivalents. This week, we drew $50 million on our line of credit, leaving us with $10 million of unused available borrowings. We have $106.7 million of liquidity, including the undrawn amount, or $81.7 million after accounting for our minimum cash covenant of $25 million. As previously shared, we plan to use the funds to pay for our upcoming 2025 convertible maturity, as well as to give us extra flexibility as we navigate the upcoming quarters while keeping our cash on hand at a comfortable level. Lastly, in Q2, we paid the final $2 million of our settlement with SRS, fully closing this matter. As a reminder, last quarter we introduced monthly qualified users, or MQUs, to drive consistent reporting across our FI and non-FI publisher partners.

In the second quarter, we had 224.5 million MQUs, an increase of 19%, driven by a full ramp of our newest FI partners. Excluding these partners, MQUs would have been up 1%. ACPU reflects how efficiently we convert advertiser budgets to value that the company can retain. In the second quarter, ACPU was $0.14, down 15% year over year, as the MQU base of our newest large FI partner has not yet been fully monetized. ACPU expanded 10% in the second quarter versus the prior quarter. Now turning to our outlook for Q3. Our expectations reflect the change with our largest FI partner, which Amit explained earlier. For Q3, we expect billings between $87 million and $95 million, revenue between $52.2 million and $58.2 million, adjusted contribution between $30.3 million and $34.3 million, and adjusted EBITDA between negative $2.3 million and positive $2.7 million.

Our billings guidance represents a negative 15% to negative 22% decrease year over year. Despite this top-line weakness, we still expect adjusted EBITDA to be breakeven, and we further expect to have the highest contribution as a percentage of billings and revenue to date. The primary driver of our expected billings decrease is a result of the content restrictions and reduced supply available to specific brands. As Amit mentioned, our largest FI partner is restricting certain content from running on its channels starting on July 1. While this option has always existed per the terms of our agreement, this is the largest restriction we have experienced. We are discussing this change with our advertising partners and working to shift as much of this volume as possible to other channels. We are still learning how to optimize projections and targeting based on these changes.

While we are undertaking a range of actions to help mitigate this, as Amit discussed, we expect to see some impact to our results, which you will see reflected in our guide. We are still in the early days of this optimization and are modeling conservatively. This change underscores the importance of our diversification strategy across banks and non-banks, as well as continuing to diversify our demand. While we navigate the impacts of the expected reduction in billings, we are prudently slowing the pace of some of our investments and focus on overall expense management. We continue to make progress with our newest large financial institution partner. We had twice as many unique advertisers live with this partner in Q2 than in Q1.

We expect this momentum to continue and are pleased to see engagement rates similar to our most established partners, and in some cases, higher AOVs and redemption values for certain premium types of advertisers that do well with this unique demographic. We continue to believe there is significant upside as engagement deepens. We are encouraged by our recent run rate in billings, which is now similar to one of our top five U.S. banks, and we believe there continues to be upside as this partner scales. Our newest digital banking partner also helps to expand our reach with a different demographic and supports long-term diversification. Consistent with our last call, we are not assuming any material financial impact in 2025 from either Cardlytics Rewards Platform or CPG offers.

Lastly, the UK continues to be a bright spot as we expect continued strong positive growth in Q3, driven by a healthy pipeline of quality advertisers and continued supply growth. Revenue as a percentage of billings is expected to be in the low 60% range for Q3, as well as for the full year. We have made strategic decisions to drive incremental performance and billings. We expect adjusted contribution as a percentage of revenue to be in the mid to high 50% range. This continues to be among the highest we have seen and reflects our improved economics with our new and ramping bank partners. Despite top-line weakness, we are keeping more of every dollar we make, and we remain focused on driving profitability. We continue to expect this metric to improve sequentially as we diversify our supply.

Our adjusted EBITDA guidance is a reflection of our reset operational cost base following the reduction in staff that we completed in May. We continue to hire in our lower-cost technology hub so we can continue to invest in key product areas. Operating expenses are expected to be sustained at or below $33 million per quarter for the remainder of the year, excluding stock-based compensation. Given the changes to our top line, we remain committed to driving operational efficiency, and we will make further changes as needed. As we stated last quarter, we believe we have sufficient liquidity to satisfy all of our financial obligations, including the repayment of our outstanding convertible note. Given our expected top-line results, we are further narrowing our focus and slowing investments until we can show sustained improvement. I'll now turn it back to Amit for closing remarks.

Speaker 2

Thank you, Alexis. We remain confident in our ability to navigate the headwinds and focus on our strategy to grow and diversify our platform. We have made meaningful progress on our turnaround over the past year, and we are committed to delivering continued success despite the challenging near-term dynamics. Before moving on to Q&A, I want to thank our teams for their effort and commitment, our partners and advertisers for the opportunity to serve them, and our investors for their patience. I'll now turn it over to the operator to begin Q&A.

Speaker 3

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star two. If you're using a speaker phone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Jacob Stephan of Lake Street. Your line is already open.

Speaker 0

I appreciate you taking my questions. Maybe just first starting on the kind of Q3 outlook, the billings decrease. Help me understand a little bit better on the content restrictions. Is this mostly brands that your FI partner is already doing business with and Cardlytics' platform may be competing with them, or maybe just kind of help us think through this and their decision?

Speaker 2

Thank you, Jacob. Thank you for the question. This goes broader than the restriction is broader than the brands that the FI partner is currently engaged with or the content you see. We were obviously not expecting this level of content restriction. It's gotten, it is beyond what our expectation was, and that's why it's reflected in the guide. We are actively working with our bank partners and advertisers to make sure we minimize the impact of this.

Speaker 0

Okay. Could you just kind of talk a little bit more on the credit line? It sounds like you guys drew $50 million of that in Q3 here. Has the debt paydown already occurred, or is that going to be prior to Q3 end, or will that be in Q4?

Speaker 1

Thanks. No, we drew the line of credit yesterday for $50 million. The intent is to pay that at maturity for the notes that are due in September, certainly not waiting until Q4. That's consistent with the notes that we passed, right? We've always intended to draw the line to repay our notes and also have maintained an operating cash balance between $40 million and $50 million. All of this is consistent with what I've said in terms of using it to pay the debt and maintaining a comfortable cash balance, then giving us sufficient flexibility to navigate the near-term headwinds that we're experiencing.

Speaker 0

Got it. Sorry, just maybe back to the outlook. If I could ask in a different way, you know, the concern from advertisers versus what your kind of FI partner is restricting content, you know, how much of the billings decrease sequentially is from each bucket there? I think in the past you had said billings should grow sequentially throughout the remainder of the year, but the shortfall there, what's in each bucket?

Speaker 1

Yeah, I'll take that. We did not anticipate this when I made the comment about sequential billings growth. I would say a large portion of this decrease is due to the supply change that we're seeing. This partner represents a large portion of our network in terms of billings. That's actually disproportionate to the number of MQUs that it has. We do believe we can shift some of this volume to other partners. We're only a few weeks into the change, and still learning how much we actually can shift. I do think there is room to do better than what I've guided, but being conservative and still learning on how we expect this volume to shift. I would say majority is related to this partner. We're still learning this over the next couple of weeks. Amit, do you want to add anything?

Speaker 2

Yeah, no, I think that's exactly right. This is an unexpected change, but at the same time, I think what Alexis said, I'll underscore, our bank partner's initial response and our advertising partner's initial response has been very much a leaned-in response. That's what we're engaging with them on.

Speaker 0

Okay. Thanks. I appreciate all the color.

Speaker 3

Your next question comes from Luke Orton of Northland Capital Markets. Your line is already open.

Speaker 4

Hi, thank you. This is Ben for Luke. Last quarter, you announced the Cardlytics Rewards Platform to diversify with non-bank partners. Just wondering how that initial digital sports partnership has been going and how the build-out of the platform is going, or if there's any other updates on new partners.

Speaker 2

Thank you, Luke. We completed the pilot that we mentioned in the previous quarter and are now collecting data and the initial market feedback so we can optimize customer experience. Even though it was a pilot, we saw very positive and promising rates of customers linking their cards and redeeming offers. Based on the initial results, we believe that there is a large potential for us to grow this part of the platform. Obviously, now we're focused on iterating and scaling this area. We're also very encouraged by the interest we're seeing with a long pipeline of prospective partners both across the U.S. and UK that we're engaged with. We have active conversations with the pipelines of several leading brands across verticals, including telecom, rideshare, and fintech. As soon as we have updates that we can share, we'll bring it back to you.

We're pretty positive; it's very promising that the initial pilot has gone well.

Speaker 4

Thank you. That's great color. How is Cardlytics leveraging AI throughout the platform, and what areas of the business do you think can benefit the most from that adoption, either internally or externally with partners and customers?

Speaker 2

Yeah, it's a great question. I mean, something that we've been thinking and starting to bring on board recently. The three areas that we've been debating and starting down this path, first of all, is within our dev team, our engineering team, to use the typical tools which can help in code dev, code generation snippets, and so on, and QA. Those elements are in progress already. The other area, which obviously, as you can imagine, is a big area of opportunity, is in our analytics space. We have a treasure trove of data with close to $6 trillion of spend that we have insight into. We absolutely expect to think about models that can actually connect the dots, identify patterns that can bring new capabilities to our advertisers. Given these changes from this bank partner, we are now thinking about how to prioritize these initiatives.

These are things that we've been talking about, but they might slow down given our reprioritization that we might need to undertake.

Speaker 4

Thank you so much. I will return to the queue.

Speaker 3

Your next question comes from Jason Crayer of Craig-Hallum. Your line is already open.

Speaker 4

Thank you. This is Cal on for Jason. We've been noticing an increase of local offers on some of your partner platforms. I was wondering if you can speak to any added traction that you've seen with scaling local offers.

Speaker 2

Thank you, Cal. I think we mentioned this in our last earnings call. As we have continued to invest in creating a high-performance network, one of the areas that we've invested and honed our capability is very much focused on geo-targeted offers, so we can now differentiate where an individual lives and where they shop. This has allowed us to actually bring in more geo-targeted content, more local offers. We continue to plan to increase those. You can imagine leading across multi-unit chains in QSRs. They're excited about it. Multi-unit or multi-line retail stores are excited about it. We are definitely seeing benefits in everyday spend in QSRs, in the general restaurant category, and we plan to continue to bring these local offers where it makes sense across our network.

Speaker 4

Great, thank you. Second, good to hear all the traction that you're seeing with Ripple. Just on the Hy-Vee partnership, can you speak to the drivers for the win? As you continue to build more referenceable wins like Hy-Vee, are you starting to see that accelerate interest and adoption of Ripple?

Speaker 2

Yeah, that's a great question. I think you heard in our prepared remarks that the traction in Ripple has definitely increased substantially, especially over the recent weeks. The quick answer to that is yes. As we bring on high-quality partners that we had before, like the Wegmans and the Giant Eagles, and the new ones that we had, like Hy-Vee and others, advertisers are getting more excited about the kind of scale that they see and also the quality of data that they see. We're seeing the typical DSPs like Trade Desk, there's a large volume increase. A lot of advertisers are actually coming and approaching us for custom work as well. We're excited about the prospect that Ripple has and the continued progress as more and more retailers are choosing to come and join the Ripple network.

Speaker 4

Great, thank you. Appreciate the color.

Speaker 3

Ladies and gentlemen, as a reminder, if you have a question, please press star one. Your next question comes from Robert Coolbrith of Evercore. Your line is already open.

Speaker 0

Great, thank you very much. Anything you can tell us about the MQU impact? I know you said that it sounds like the billings impact is bigger than the MQU impact, but just anything more you can tell us about that. Is there any way of more precisely characterizing the extent of the restriction that's in place and whether that could ramp up? Further related to that, what is the nature or basis of the restriction? Are there opportunities to substitute in something else that may not violate the restriction, whatever type? The comment about the concern, the local concern from brands, I just wanted to clarify that. Is the concern about running on that FI partner without the benefit of the Cardlytics platform and technology? It's not about a broader concern about the Cardlytics platform. I just wanted to make sure that I understood that correctly.

Thank you very much.

Speaker 2

Thank you for the multi-set question, Robert. I want to make sure we address all the parts of it. The first one was around MQUs. Just to give you a sense, our broader set of bank partners represent more than 50% of our MQUs, right? They represent a lower percentage in billings, but the broader set of our bank partners in the U.S. represent more than 50% of our MQUs. Hopefully this gives you a sense of it is a large scale, but the overall network continues to be scaled and resilient. I think, as we mentioned, your second question was around ability to replace and the concern about the brands. Frankly, the concern that brands have is mostly driven by the frustration that now, because of these restrictions, it limits their ability to come to one platform for all their CLO needs.

Some of them have actually expressed their dissatisfaction to us and the bank partner. That said, our view is that our value proposition continues to resonate. We continue to make sure that brands have access to the largest financial media network, regardless of this bank's decision. The areas that are resonating a lot with the brands as we've interacted with them, engaged with them, first of all, they appreciate our progress on all the measurement efforts. We're blending in TVC reporting, incrementality results, and ratings so they can really get a clear view of ROAS. Even from Q1 to now, advertisers have seen more than 25% growth in ROAS on the Cardlytics platform. Their trust and belief in Cardlytics' platform remain consistent and increases from what we see. The move to engagement-based pricing has been welcomed by our advertisers.

They are now able to look at CLO spend on Cardlytics as a true performance media buy. We've recently also reorganized our sales team under our new Chief Business Officer. Vertical focus efforts increase the velocity. We've brought U.S. and UK under this leader so that we can actually have marketing strategies across the two geographies run contiguously. Lastly, just to say the obvious, we very much plan to compete aggressively in the market and make sure we bring the best of our capabilities to our advertisers and to the network.

Speaker 4

Got it. Thank you.