Cardlytics Inc.
03/04/2026 | Press release | Distributed by Public on 03/04/2026 15:28
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review Item 1A. "Risk Factors" and "Special Note Regarding Forward-Looking Statements" in this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We operate a commerce media platform that is designed to make commerce smarter and rewarding for everyone. At the core of our commerce media platform is the financial media network that we run within our partners' digital channels, which includes online and mobile applications (the "Cardlytics platform"). Additionally we operate an identity resolution platform that utilizes point-of-sale ("POS") data, including product-level purchase data, to enable advertisers to perform analytics and targeted loyalty marketing and also measure the impact of their marketing (the "Bridg platform"). The partners for the Cardlytics platform are predominantly financial institutions ("FI partners") that provide us with access to their anonymized purchase data and digital banking customers. The partners for the Bridg platform are predominantly merchants ("merchant data partners") that provide us with access to their POS data, including product-level purchase data. By applying advanced analytics to the purchase data we receive, we make it actionable, helping marketers reach potential buyers at scale and measure the true sales impact of their marketing spend. We have strong relationships with leading marketers across a variety of industries, including everyday spend, specialty retail, restaurant, travel and entertainment.
Working with an advertiser, we design a campaign that targets consumers based on their purchase history. The consumer is offered an incentive to make a purchase from the brand within a specified period. We use a portion of the fees that we collect from advertisers to provide these Consumer Incentives to customers after they make qualifying purchases ("Consumer Incentives"). We report our Revenue on our consolidated statements of operations net of Consumer Incentives since we do not provide the goods or services that are purchased by customers from the advertisers to which the Consumer Incentives relate.
We pay certain partners a negotiated and fixed percentage of our Billings to advertisers less any Consumer Incentives that we pay to consumers and certain third-party data costs ("Partner Share"). We report our Revenue gross of Partner Share. Partner Share costs are included in Partner Share and other third-party costs in our consolidated statements of operations, rather than as a reduction of Revenue, because we and not our partners act as the principal in our arrangements with advertisers.
We run campaigns offering compelling Consumer Incentives to drive an expected rate of return on advertising spend for marketers. At times, we may collaborate with a partner to enhance the level of Consumer Incentives to their respective customers, funded by their Partner Share. We believe that these investments by our partners positively impact our platform by making their customers more highly engaged with our platforms. However, these investments negatively impact our GAAP Revenue, which is reported net of Consumer Incentives.
Sale of Bridg Business
On January 23, 2026 (the "Signing Date"), we, PAR Technology Corporation ("PAR") and DB Sub, LLC, an indirectly wholly owned subsidiary of PAR ("Buyer"), entered into an asset purchase agreement (the "Purchase Agreement"), pursuant to which Buyer agreed to acquire all of our assets, properties and rights primarily related to, or primarily used in, the Bridg platform (the "Purchased Assets" and the sale thereof, the "Bridg Sale"), subject to certain exceptions. In connection with the Bridg Sale, Buyer also agreed to assume certain liabilities and obligations of Cardlytics arising out of the use, ownership, possession, operation or sale of the Purchased Assets. Other than the Purchased Assets, neither Buyer nor PAR will acquire any other assets of Cardlytics pursuant to the Bridg Sale.
Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, as promptly as practicable after the closing of the Bridg Sale (the "Closing" and the date thereof, the "Closing Date"), but in any event on the Closing Date, PAR will deliver to us a number of shares of common stock of PAR ("PAR Common Stock") equal to the quotient obtained by dividing (i) (A) $27,500,000 plus (B) an adjustment amount for certain new customer contracts entered into by us prior to Closing less (C) an estimated closing net adjustment amount for revenue received by us for goods or services to be delivered or performed after the Closing pursuant to contacts assigned to Buyer in connection with the Bridg Sale (provided, that, the number pursuant to this (i) shall not exceed $30,000,000) by (ii) the volume weighted average price of a share of PAR Common Stock on the New York Stock Exchange for the 15 consecutive trading days ending on the trading day immediately prior to (and excluding) the Closing Date as reported by Bloomberg, L.P. ("Purchase Consideration"). PAR has also agreed to use reasonable best efforts to promptly file a registration statement with the SEC covering the resale of the shares of PAR Common Stock comprising the Purchase Consideration within three business days following the Closing Date, or, if later, PAR's receipt of a completed investor questionnaire. PAR has also agreed to use commercially reasonable efforts to keep such registration statement effective until the earlier of the date that all such shares of PAR Common Stock have been sold or otherwise disposed of or can be sold without restriction pursuant to Rule 144 (or any successor thereof) promulgated under the Securities Act.
The Closing is subject to the satisfaction or waiver of a number of customary closing conditions in the Purchase Agreement, including the absence of certain governmental restraints and the absence of a material adverse effect with respect to the Bridg platform or our ability to consummate the Bridg Sale.
CARES Act
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was signed into law. The CARES Act provides an employee retention credit ("ERC"), which is a refundable tax credit against certain payroll taxes. During the year ended December 31, 2025, we evaluated the conditions of the ERC and determined that we were eligible during the first and second quarter of 2021. As a result, we filed amended tax forms with the IRS claiming a tax credit of $5.3 million. The amended tax form for the first quarter and second quarter of 2021 were approved and paid by the IRS, which resulted in a benefit of $5.3 million in operating expense and $0.8 million in interest income within the consolidated statement of operations during the year ended December 31, 2025. The benefit of $5.3 million in operating expense is comprised of $0.9 million in delivery costs, $2.1 million in sales and marketing expense, $1.7 million in research and development expense, and $0.6 million in general and administrative expense.
Non-GAAP Measures and Other Performance Metrics
We regularly monitor a number of financial and operating metrics in order to measure our current performance and estimate our future performance. Our metrics may be calculated in a manner different than similar metrics used by other companies.
Key Performance Metrics
| Year Ended December 31, | |||||||||||||||||
| in thousands except ACPU amounts | 2025 | 2024 | 2023 | ||||||||||||||
| Cardlytics MQUs | 224,159 | 190,482 | 187,234 | ||||||||||||||
| Cardlytics ACPU | $ | 0.50 | $ | 0.67 | $ | 0.72 | |||||||||||
Cardlytics Monthly Qualified Users ("MQUs")
We define MQUs as targetable customers that have made a transaction using their account with an FI Partner or other partners in a given month, excluding pilot supply during the ramp up period, and whose transaction data was shared with Cardlytics. We then calculate a monthly average of these MQUs for the periods presented. We believe that the number of MQUs is an indicator of the Cardlytics platform's ability to drive engagement and is reflective of the consumer base and insights that we offer to marketers. As of January 1, 2025, we no longer report Cardlytics Monthly Active Users given we do not receive equivalent user data from our newer bank partners. We have applied this change to our reporting for current and prior periods in this Annual Report on Form 10-K.
| Year Ended December 31, | Change | Year Ended December 31, | Change | |||||||||||||||||||||||||||||||||||||||||
| in thousands | 2025 | 2024 | # | % | 2024 | 2023 | # | % | ||||||||||||||||||||||||||||||||||||
| Cardlytics MQUs | 224,159 | 190,482 | 33,677 | 18 | 190,482 | 187,234 | 3,248 | 2 | ||||||||||||||||||||||||||||||||||||
Cardlytics MQUs increased by 33.7 million during 2025 compared to 2024, primarily driven by organic growth of the existing FI partners in the U.K. and U.S. and a new FI Partner in the U.K.
Cardlytics MQUs increased by 3.2 million during 2024 compared to 2023, primarily driven by organic growth of the existing FI partners in the U.K. and U.S. and a new FI Partner in the U.K.
Cardlytics Adjusted Contribution per User ("ACPU")
We define ACPU as the Cardlytics platform Adjusted Contribution generated in the applicable period, divided by Cardlytics average MQUs in the applicable period. We believe that Adjusted Contribution is the most relevant metric as it reflects the value Cardlytics keeps after subtracting out rewards, Partner Share and other third-party costs. We believe that ACPU measures the Cardlytics platform's efficiency in converting marketer budgets into the value generated by customer engagement. Beginning on January 1, 2025, we no longer report Cardlytics Average Revenue per User. We have applied this change to our reporting for current and prior periods in this Annual Report on Form 10-K.
| Year Ended December 31, | Change | Year Ended December 31, | Change | |||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2024 | 2023 | $ | % | |||||||||||||||||||||||||||||||||||||
| Cardlytics ACPU | $ | 0.50 | $ | 0.67 | (0.17) | (25) | $ | 0.67 | $ | 0.72 | (0.05) | (7) | ||||||||||||||||||||||||||||||||
Cardlytics ACPU decreased by $0.17 during 2025 compared to 2024 primarily as a result of lower billings and the ramp up of our newest FI Partner.
Cardlytics ACPU decreased by $0.05 during 2024 compared to 2023 primarily as a result of lower billings and the ramp up of our newest FI Partner.
Non-GAAP Metrics
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Revenue | $ | 233,273 | $ | 278,298 | $ | 309,204 | |||||||||||
| Billings | $ | 384,958 | $ | 443,840 | $ | 453,426 | |||||||||||
| Gross Profit | $ | 104,613 | $ | 120,894 | $ | 130,378 | |||||||||||
| Adjusted Contribution | $ | 130,324 | $ | 150,537 | $ | 158,626 | |||||||||||
| Net Loss | $ | (103,488) | $ | (189,304) | $ | (134,702) | |||||||||||
| Adjusted EBITDA | $ | 10,057 | $ | 2,523 | $ | 3,771 | |||||||||||
| Adjusted Net Loss | $ | (17,288) | $ | (18,909) | $ | (31,921) | |||||||||||
| Net cash provided by/(used in) operating activities | $ | 9,290 | $ | (8,824) | $ | (185) | |||||||||||
| Free Cash Flow | $ | (6,492) | $ | (28,122) | $ | (12,577) | |||||||||||
Definitions of Non-GAAP Measures
Billings
Billings represents the gross amount billed to customers and marketers for services in order to generate revenue. Cardlytics platform Billings is recognized gross of both Consumer Incentives and Partner Share. Cardlytics platform GAAP Revenue is recognized net of Consumer Incentives and gross of Partner Share. Bridg platform Billings is the same as Bridg platform GAAP Revenue.
We review Billings for internal management purposes. We believe Billings is an important indicator for the current health of the business because it directly represents our ability to bill customers for our services before any Consumer Incentives are paid. Nevertheless, our use of Billings has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Other companies, including companies in our industry that have similar business arrangements, may address the impact of Consumer Incentives differently. You should consider Billings alongside our other GAAP financial results.
Adjusted Contribution
Adjusted Contribution measures the degree by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our partners. Adjusted Contribution demonstrates how incremental Revenue on our platforms generates incremental amounts to support our sales and marketing, research and development, general and administrative and other investments. Adjusted Contribution is calculated by taking our total Revenue less our Partner Share and other third-party costs. Adjusted Contribution does not take into account all costs associated with generating Revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns. Management views Adjusted Contribution as the most relevant metric to measure the financial performance as it reflects the dollars we keep after all of our partners are paid.
We use Adjusted Contribution extensively to measure the efficiency of our advertising platform, make decisions to manage advertising campaigns and evaluate our operational performance. We view Adjusted Contribution as an important operating measure of our financial results. We believe that Adjusted Contribution provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and Board of Directors. Adjusted Contribution should not be considered in isolation from, or as an alternative to, measures prepared in accordance with GAAP. Adjusted Contribution should be considered together with other operating and financial performance measures presented in accordance with GAAP. Also, Adjusted Contribution may not necessarily be comparable to similarly titled measures presented by other companies. Refer to Note 15-Segments to our consolidated financial statements for further details on our Adjusted Contribution by segment.
Adjusted EBITDA
Adjusted EBITDA represents our Net Loss before interest expense, net; depreciation and amortization; stock-based compensation expense; foreign currency (gain)/loss; gain on debt extinguishment; acquisition, integration and divestiture costs (benefits); change in contingent consideration; impairment of goodwill and intangible assets, (gain)/loss on divestiture; restructuring and reduction of force; income tax benefit and, in applicable periods, certain other income and expense items, such as deferred implementation costs. We do not consider these excluded items to be indicative of our core operating performance. Of these items depreciation and amortization expense, stock-based compensation expense, gain on debt extinguishment, impairment of goodwill and intangible assets and foreign currency (gain)/loss are non-cash impacting. Notably, any impacts related to minimum Partner Share commitments in connection with agreements with certain partners are not added back to net loss in order to calculate Adjusted EBITDA.
Adjusted EBITDA is a key measure used by management to understand and evaluate our core operating performance and trends and to generate future operating plans, make strategic decisions regarding the allocation of capital and invest in initiatives that are focused on cultivating new markets for our solution. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates comparisons of our operating performance on a period-to-period basis. Adjusted EBITDA is not a measure calculated in accordance with GAAP.
We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors. Nevertheless, use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are: (1) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (2) Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation and equity instruments issued to our partners; (3) Adjusted EBITDA does not reflect tax payments or receipts that may represent a reduction or increase in cash available to us; and (4) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our net loss and other GAAP financial results.
Adjusted Net Loss
We define Adjusted Net Loss as our Net Loss before stock-based compensation expense; foreign currency (gain)/loss; acquisition, integration and divestiture costs (benefits); amortization of acquired intangibles; change in contingent consideration; impairment of goodwill and intangible assets; gain on debt extinguishment; (gain)/loss on divestiture; restructuring and reduction of force; and income tax benefit, and in applicable periods, certain other income and expense items. We define Adjusted Net Loss per share as Adjusted Net Loss divided by our weighted-average common shares outstanding, diluted.
Free Cash Flow
We define Free Cash Flow as net cash provided by/(used in) operating activities, plus acquisition of property and equipment and capitalized software development costs. We believe Free Cash Flow is useful to measure the funds generated in a given period that are available for distribution or to sustain the business. We believe this supplemental information enhances stockholders' ability to evaluate our performance.
Results of Non-GAAP Measures
Billings
| Year Ended December 31, | Change | Year Ended December 31, | Change | |||||||||||||||||||||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | 2024 | 2023 | $ | % | ||||||||||||||||||||||||||||||||||||
| Billings | $ | 384,958 | $ | 443,840 | (58,882) | (13) | $ | 443,840 | $ | 453,426 | (9,586) | (2) | ||||||||||||||||||||||||||||||||
Billings decreased by $58.9 million during 2025 compared to 2024, primarily driven by a $98.8 million net decrease in sales to existing marketers, partially offset by an increase of $39.9 million in sales to new marketers.
Billings decreased by $9.6 million during 2024 compared to 2023, primarily driven by a $55.3 million decrease in sales to existing marketers, partially offset by an increase of $45.7 million in sales to new marketers.
The following table presents a reconciliation of Billings to Revenue, the most directly comparable GAAP measure, for each of the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Consolidated | |||||||||||||||||
| Revenue | $ | 233,273 | $ | 278,298 | $ | 309,204 | |||||||||||
| Plus: | |||||||||||||||||
| Consumer Incentives | 151,685 | 165,542 | 144,222 | ||||||||||||||
| Billings | $ | 384,958 | $ | 443,840 | $ | 453,426 | |||||||||||
| Cardlytics platform | |||||||||||||||||
| Revenue | $ | 212,326 | $ | 255,615 | $ | 285,425 | |||||||||||
| Plus: | |||||||||||||||||
| Consumer Incentives | 151,685 | 165,542 | 144,222 | ||||||||||||||
| Billings | $ | 364,011 | $ | 421,157 | $ | 429,647 | |||||||||||
| Bridg platform | |||||||||||||||||
| Revenue | $ | 20,947 | $ | 22,683 | $ | 23,779 | |||||||||||
| Plus: | |||||||||||||||||
| Consumer Incentives | - | - | - | ||||||||||||||
| Billings | $ | 20,947 | $ | 22,683 | $ | 23,779 | |||||||||||
Adjusted Contribution
The following table presents a reconciliation of Adjusted Contribution to Gross Profit, the most directly comparable GAAP measure, for each of the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Revenue | $ | 233,273 | $ | 278,298 | $ | 309,204 | |||||||||||
| Minus: | |||||||||||||||||
| Partner Share and other third-party costs | 102,949 | 127,761 | 150,578 | ||||||||||||||
|
Delivery costs(1)
|
25,711 | 29,643 | 28,248 | ||||||||||||||
| Gross Profit | 104,613 | 120,894 | 130,378 | ||||||||||||||
| Plus: | |||||||||||||||||
|
Delivery costs(1)
|
25,711 | 29,643 | 28,248 | ||||||||||||||
| Adjusted Contribution | $ | 130,324 | $ | 150,537 | $ | 158,626 | |||||||||||
(1)Stock-based compensation expense recognized in delivery costs totaled $1.7 million, $2.7 million and $2.4 million during 2025, 2024 and 2023, respectively.
Adjusted EBITDA
The following table presents a reconciliation of Adjusted EBITDA to Net Loss, the most directly comparable GAAP measure, for each of the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Net Loss | $ | (103,488) | $ | (189,304) | $ | (134,702) | |||||||||||
| Plus: | |||||||||||||||||
| Interest expense, net | 7,919 | 5,553 | 2,336 | ||||||||||||||
| Depreciation and amortization | 25,244 | 25,689 | 26,460 | ||||||||||||||
| Stock-based compensation expense | 28,129 | 40,367 | 40,980 | ||||||||||||||
| Acquisition, integration and divestiture costs (benefits) | 561 | 161 | (6,313) | ||||||||||||||
| Change in contingent consideration | 102 | 210 | 1,246 | ||||||||||||||
|
Foreign currency (gain)/loss
|
(6,247) | 1,269 | (3,304) | ||||||||||||||
| Impairment of goodwill and intangible assets | 58,843 | 131,595 | 70,518 | ||||||||||||||
| Gain on debt extinguishment | - | (13,017) | - | ||||||||||||||
| (Gain)/loss on divestiture | (4,831) | - | 6,550 | ||||||||||||||
| Restructuring and reduction of force | 3,825 | - | - | ||||||||||||||
| Adjusted EBITDA | $ | 10,057 | $ | 2,523 | $ | 3,771 | |||||||||||
Adjusted Net Loss
The following table presents a reconciliation of Adjusted Net Loss to Net Loss, the most directly comparable GAAP measure, for each of the periods indicated:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Net Loss | $ | (103,488) | $ | (189,304) | $ | (134,702) | |||||||||||
| Plus: | |||||||||||||||||
| Stock-based compensation expense | 28,129 | 40,367 | 40,980 | ||||||||||||||
|
Foreign currency (gain)/loss
|
(6,247) | 1,269 | (3,304) | ||||||||||||||
| Acquisition, integration and divestiture costs (benefits) | 561 | 161 | (6,313) | ||||||||||||||
| Amortization of acquired intangibles | 5,818 | 9,810 | (13,589) | ||||||||||||||
| Change in contingent consideration | 102 | 210 | 1,246 | ||||||||||||||
| Impairment of goodwill and intangible assets | 58,843 | 131,595 | 70,518 | ||||||||||||||
| Gain on debt extinguishment | - | (13,017) | - | ||||||||||||||
| (Gain)/loss on divestiture | (4,831) | - | 6,550 | ||||||||||||||
| Restructuring and reduction of force | 3,825 | - | 8,139 | ||||||||||||||
| Income tax benefit | - | - | (1,446) | ||||||||||||||
| Adjusted Net Loss | $ | (17,288) | $ | (18,909) | $ | (31,921) | |||||||||||
| Weighted-average number of shares of common stock used in computing Adjusted net loss per share: | |||||||||||||||||
| Weighted-average common shares outstanding, diluted | 53,114 | 48,361 | 36,488 | ||||||||||||||
| Adjusted Net Loss per share, diluted | $ | (0.33) | $ | (0.39) | $ | (0.87) | |||||||||||
Free Cash Flow
The following is a reconciliation of Free Cash Flow to the most comparable GAAP measure, Net cash provided by/(used in) operating activities:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Net cash provided by/(used in) operating activities | $ | 9,290 | $ | (8,824) | $ | (185) | |||||||||||
| Plus: | |||||||||||||||||
| Acquisition of property and equipment | (480) | (1,562) | (667) | ||||||||||||||
| Capitalized software development costs | (15,302) | (17,736) | (11,725) | ||||||||||||||
| Free Cash Flow | $ | (6,492) | $ | (28,122) | $ | (12,577) | |||||||||||
Components of Results of Operations
Revenue
We sell our Cardlytics platform solution by entering into agreements directly with marketers or their marketing agencies, generally through the execution of insertion orders. The insertion orders state the terms of the arrangement, the negotiated fee, payment terms and the fixed period of time of the campaign. We generally invoice marketers monthly based on the qualifying purchases of our partners' customers as reported by our partners during the month or based on the engagement of our partners' customers with our offers during the month. We report our Revenue net of Consumer Incentives and gross of Partner Share and other third-party costs. The Bridg platform generates Revenue through the sale of subscriptions to our cloud-based customer-data platform and the delivery of professional services, such as implementation, onboarding and technical support in connection with each subscription. We recognize subscription Revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer.
Cost and Expense
We classify our expenses into the following categories: Partner Share and other third-party costs; delivery costs; sales and marketing expense; research and development expense; general and administrative expense; and depreciation and amortization expense.
Partner Share and Other Third-Party Costs
Partner Share and other third-party costs consist primarily of the Partner Share that we pay our partners, media and data costs and deferred implementation costs incurred pursuant to our agreements with certain partners. To the extent that we use a specific partners' customer's anonymized purchase data in the delivery of our solutions, we generally pay the applicable partner a Partner Share calculated based on the relative contribution of the data provided by the partner to the overall delivery of the services. We expect that our Partner Share and other third-party costs will fluctuate over time in connection with changes in our revenue.
Delivery Costs
Delivery costs consist primarily of personnel costs of our campaign, data operations and production support teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. Delivery costs also include hosting costs, purchased or licensed software costs, outsourcing costs and professional services costs. As we continue to migrate our technology to the cloud, we expect our delivery costs will increase in absolute dollars and if such anticipated Revenue growth does not occur, our delivery costs as a percentage of Revenue will be adversely affected. Over time, we expect delivery costs will decline as a percentage of Revenue.
Sales and Marketing Expense
Sales and marketing expense consists primarily of personnel costs of our sales, account management, marketing and analytics teams, including salaries, benefits, bonuses, commissions, stock-based compensation and payroll taxes. Sales and marketing expense also includes professional fees, marketing programs such as trade shows, marketing materials, public relations, sponsorships and other brand building expenses, as well as outsourcing costs, travel and entertainment expenses and company-funded consumer testing expenses for certain marketers that are not current customers. We expect that our sales and marketing expense will increase in absolute dollars over time as a result of hiring new sales representatives and as we invest to enhance our brand. Over time, we expect sales and marketing expenses will decline as a percentage of Revenue.
Research and Development Expense
Research and development expense consists primarily of personnel costs of our IT engineering, IT architecture and product development teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. Research and development expense also includes outsourcing costs, software licensing costs, professional fees and travel expenses. We focus our research and development efforts on improving our solutions and developing new ones. We expect research and development expense to increase in absolute dollars as we continue to create new solutions and improve the functionality of our existing solutions.
General and Administrative Expense
General and administrative expense consists of personnel costs of our executive, finance, legal, compliance, IT support and human resources teams, including salaries, benefits, bonuses, stock-based compensation and payroll taxes. General and administrative expense also includes professional fees for external legal, accounting and consulting services, financing transaction costs, facilities costs such as rent and utilities, royalties, bad debt expense, travel expense, property taxes and franchise taxes. We expect that general and administrative expenses will decrease over time as a percentage of Revenue as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.
Acquisition, Integration and Divestiture Costs (Benefit)
Acquisition costs primarily represent diligence efforts, legal and advisory costs, broker fees and insurance premiums. Integration costs primarily represent integration-related employee compensation, advisory costs and travel costs. Divestiture costs primarily represent legal and other professional fees.
Change in Contingent Consideration
Our acquisition of Bridg included a component of contingent consideration to be paid to the sellers if certain performance levels were achieved by Bridg over a specific period of time. Contingent consideration is initially recorded at fair value on the acquisition date based, in part, on a range of estimated probabilities for achievement of these performance levels. The fair value is periodically adjusted as actual performance levels become known and updates are made to the estimated probabilities for future performance. A gain or loss is recognized in the income statement for fair value adjustments. If we make additional acquisitions, it is possible that we will incur gains or losses in the future due to the change in contingent consideration.
Impairment of Goodwill and Intangible Assets
Intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated useful lives. We evaluate the recoverability of our finite-lived intangible assets and other long-lived assets whenever events or substantive changes in circumstances indicate that the carrying amount may not be recoverable. The impairment analysis involves determining whether the estimated fair value of each intangible asset exceeds its carrying amount. Our estimation of the fair value of definite lived intangible assets includes the use of discounted cash flow analyses, which reflected estimates of future revenue, customer attrition rates, royalty rates, cash flows and discount rates.
Goodwill represents the purchase consideration of an acquired business that exceeds the fair value of the net tangible and identifiable intangible assets. Goodwill is evaluated for impairment by reporting unit annually in the fourth quarter, specifically October 1, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate or a significant decrease in expected cash flows.
(Gain) Loss on Divestiture
(Gain) Loss on divestiture of businesses consists of a gain on the dissolution of a business during the year ended December 31, 2025.
Depreciation and Amortization Expense
Depreciation and amortization expense includes depreciation of property and equipment over the estimated useful life of the applicable asset as well as amortization of acquired intangible assets, deferred patent costs and capitalized internal-use software development costs.
Interest Expense, Net
Interest expense, net consists of interest incurred on our debt facilities, as well as related discount amortization and financing costs, partially offset by interest income on our cash balances.
Foreign Currency Gain (Loss)
Foreign currency gain/(loss) consists primarily of gains and losses on foreign currency transactions.
Gain on Debt Extinguishment
Gain on debt extinguishment is associated with debt extinguishment including the write off of the unamortized debt issuance costs. These are primarily non-cash and are associated with debt payment transactions which are non-recurring.
Components Subject to Future Change - Sale of Bridg Business
Certain components of our results of operations, including revenue and operating expenses, may be impacted by the pending sale of our Bridg business. Until the closing of the transaction, Bridg results are included in our consolidated financial statements. Following the closing, we expect revenue, cost of revenue, and operating expenses associated with the Bridg platform to be excluded from our ongoing results of operations, and certain components may change as a result.
Results of Operations
The following table sets forth our consolidated statements of operations:
| Year Ended December 31, | |||||||||||||||||
| in thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Revenue | $ | 233,273 | $ | 278,298 | $ | 309,204 | |||||||||||
| Costs and expenses: | |||||||||||||||||
| Partner Share and other third-party costs | 102,949 | 127,761 | 150,578 | ||||||||||||||
| Delivery costs | 25,711 | 29,643 | 28,248 | ||||||||||||||
| Sales and marketing expense | 39,478 | 52,649 | 57,425 | ||||||||||||||
| Research and development expense | 39,765 | 49,607 | 51,352 | ||||||||||||||
| General and administrative expense | 47,267 | 56,482 | 58,810 | ||||||||||||||
| Acquisition, integration and divestiture costs (benefits) | 561 | 161 | (6,313) | ||||||||||||||
| Change in contingent consideration | 102 | 210 | 1,246 | ||||||||||||||
| Impairment of goodwill and intangible assets | 58,843 | 131,595 | 70,518 | ||||||||||||||
| (Gain)/Loss on divestiture | (4,831) | - | 6,550 | ||||||||||||||
| Depreciation and amortization expense | 25,244 | 25,689 | 26,460 | ||||||||||||||
| Total costs and expenses | 335,089 | 473,797 | 444,874 | ||||||||||||||
| Operating loss | (101,816) | (195,499) | (135,670) | ||||||||||||||
| Other (expense) income: | |||||||||||||||||
| Interest expense, net | (7,919) | (5,553) | (2,336) | ||||||||||||||
| Foreign currency gain/(loss) | 6,247 | (1,269) | 3,304 | ||||||||||||||
| Gain on debt extinguishment | - | 13,017 | - | ||||||||||||||
| Total other (expense) income | (1,672) | 6,195 | 968 | ||||||||||||||
| Loss before income taxes | (103,488) | (189,304) | (134,702) | ||||||||||||||
| Income tax benefit | - | - | - | ||||||||||||||
| Net Loss | (103,488) | (189,304) | (134,702) | ||||||||||||||
| Net loss per share, basic and diluted | $ | (1.95) | $ | (3.91) | $ | (3.69) | |||||||||||
| Weighted-average common shares outstanding, basic and diluted | 53,114 | 48,361 | 36,488 | ||||||||||||||
Comparison of Years Ended December 31, 2025 and 2024
In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Revenue
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Billings | $ | 384,958 | $ | 443,840 | $ | (58,882) | (13) | % | |||||||||||||||
| Consumer Incentives | 151,685 | 165,542 | (13,857) | (8) | |||||||||||||||||||
| Revenue | $ | 233,273 | $ | 278,298 | $ | (45,025) | (16) | % | |||||||||||||||
| % of Billings | 61 | % | 63 | % | |||||||||||||||||||
The $45.0 million decrease in Revenue during 2025 compared to 2024 was comprised of a $58.9 million decrease in Billings, partially offset by a $13.9 million decrease in Consumer Incentives. In 2025, Consumer Incentives decreased at a lower rate than Billings, primarily due to strategic decisions to drive incremental performance for our advertisers as well as optimization of our network.
Costs and Expenses
Partner Share and Other Third-Party Costs
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Total Partner Share and other third-party costs | $ | 102,949 | $ | 127,761 | $ | (24,812) | (19) | % | |||||||||||||||
| % of Revenue | 44 | % | 46 | % | |||||||||||||||||||
Partner Share and other third-party costs decreased by $24.8 millionduring 2025compared to 2024, primarily driven by lower top line billings and changes in Partner mix.
Delivery Costs
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Delivery costs excluding stock-based compensation expense and reduction in force | $ | 23,322 | $ | 26,963 | $ | (3,641) | (14) | % | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Stock-based compensation expense | 1,673 | 2,680 | (1,007) | (38) | |||||||||||||||||||
| Reduction in force | 716 | - | 716 | n/a | |||||||||||||||||||
| Total delivery costs | $ | 25,711 | $ | 29,643 | $ | (3,932) | (13) | % | |||||||||||||||
| % of Revenue | 11 | % | 11 | % | |||||||||||||||||||
Total delivery costs decreased by $3.9 millionduring 2025compared to 2024. Delivery costs excluding stock-based compensation and reduction in force decreased by $3.6 millionduring 2025compared to 2024, driven by a decrease of $3.2 million in staff expense, $0.2 millionin data storage and data center expense, $0.2 millionin desktop software licenses. The decrease in staff expense includes a $0.9 million benefit associated with the first and second quarter 2021 employee retention tax credit. The decrease in data storage includes a $0.8 million expense resulting from a shortfall associated with a guaranteed minimum spend on our cloud hosting agreement. Refer to Note 13-Commitments and Contingencies to our consolidated financial statements for further details.
Sales and Marketing Expense
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Sales and marketing expense excluding stock-based compensation expense and reduction in force | $ | 33,922 | $ | 42,632 | $ | (8,710) | (20) | % | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Stock-based compensation expense | 4,611 | 10,017 | (5,406) | (54) | |||||||||||||||||||
| Reduction in force | 945 | - | 945 | n/a | |||||||||||||||||||
| Total sales and marketing expense | $ | 39,478 | $ | 52,649 | $ | (13,171) | (25) | % | |||||||||||||||
| % of Revenue | 19 | % | 19 | % | |||||||||||||||||||
Total sales and marketing expenses decreased by $13.2 million during 2025 compared to 2024. Sales and marketing expenses excluding stock-based compensation and reduction in force decreased by $8.7 million during 2025 compared to 2024 primarily due to a decrease of $7.2 million in staff expenses, $0.9 million in marketing events, $0.5 million in travel and entertainment and $0.1 million in dues and subscriptions. The decrease in staff expense includes a $2.1 million benefit associated with the first and second quarter 2021 employee retention tax credit.
Research and Development Expense
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Research and development expense excluding stock-based compensation expense and reduction in force | $ | 27,662 | $ | 34,650 | $ | (6,988) | (20) | % | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Stock-based compensation expense | 10,431 | 14,957 | (4,526) | (30) | |||||||||||||||||||
| Reduction in force | 1,672 | - | 1,672 | n/a | |||||||||||||||||||
| Total research and development expense | $ | 39,765 | $ | 49,607 | $ | (9,842) | (20) | % | |||||||||||||||
| % of Revenue | 17 | % | 18 | % | |||||||||||||||||||
Total research and development expenses decreased by $9.8 million in 2025 compared to 2024. Research and development expenses excluding stock-based compensation and reduction in force decreased by $7.0 million during 2025 compared to 2024, primarily due to a decrease of $4.8 million in staff expenses, $1.3 million in data storage and data center expense, $0.8 million in desktop software licenses and $0.1 million in professional fees. The decrease in staff expense includes a $1.7 million benefit associated with the first and second quarter 2021 employee retention tax credit.
General and Administrative Expense
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| General and administrative expense excluding stock-based compensation expense and reduction in force | $ | 35,362 | $ | 43,769 | $ | (8,407) | (19) | % | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Stock-based compensation expense | 11,414 | 12,713 | (1,299) | (10) | |||||||||||||||||||
| Reduction in force | 491 | - | 491 | n/a | |||||||||||||||||||
| Total general and administrative expense | $ | 47,267 | $ | 56,482 | $ | (9,215) | (16) | % | |||||||||||||||
| % of Revenue | 20 | % | 20 | % | |||||||||||||||||||
Total general and administrative expenses decreased by $9.2 millionduring 2025compared to 2024. General and administrative expense excluding stock-based compensation and reduction in force decreased by $8.4 millionduring 2025compared to 2024, primarily due to a decrease of $4.0 million in bad debt, $1.4 million in professional fees, $1.0 million in software licenses and data storage, $0.8 million in staff expenses, $0.7 million in travel and entertainment expense, $0.3 million in lease expenses and
$0.2 million in administrative expenses. The decrease in staff expense includes a $0.6 million benefit associated with the first and second quarter 2021 employee retention tax credit.
Stock-based Compensation Expense
The following table summarizes the allocation of stock-based compensation in the consolidated statements of operations:
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Delivery costs | $ | 1,673 | $ | 2,680 | $ | (1,007) | (38) | % | |||||||||||||||
| Sales and marketing expense | 4,611 | 10,017 | (5,406) | (54) | |||||||||||||||||||
| Research and development expense | 10,431 | 14,957 | (4,526) | (30) | |||||||||||||||||||
| General and administrative expense | 11,414 | 12,713 | (1,299) | (10) | |||||||||||||||||||
| Total stock-based compensation expense | $ | 28,129 | $ | 40,367 | $ | (12,238) | (30) | % | |||||||||||||||
| % of Revenue | 12 | % | 15 | % | |||||||||||||||||||
Stock-based compensation expense decreased by $12.2 million during 2025 compared to 2024 primarily driven by higher forfeitures due to a reduction in headcount as a result of the reduction in force that occurred during 2025. Refer to Note 10-Stock-based Compensation to our consolidated financial statements for additional information regarding the change in stock compensation expense.
Acquisition, integration and divestiture
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Acquisition, integration and divestiture | $ | 561 | 161 | $ | 400 | 248 | % | ||||||||||||||||
| % of Revenue | - | % | - | % | |||||||||||||||||||
During 2025, we incurred $0.6 million of costs, which related to divestiture expense consisting of professional fees associated with the Bridg Sale. During 2024, we recognized a $0.1 million expense associated with the net working capital adjustment related to the divestiture of Entertainment. Refer to Note 4-Business Combinations and Divestitures to our consolidated financial statements for additional information.
Change in contingent consideration
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Change in contingent consideration | $ | 102 | $ | 210 | $ | (108) | (51) | % | |||||||||||||||
| % of Revenue | - | % | - | % | |||||||||||||||||||
During 2025, we realized an expense of $0.1 million primarily related to interest accretion associated with the contingent consideration. During 2024, we realized an expense of $0.2 million primarily due to the change in value of contingent consideration to the former Bridg shareholders. Refer to Note 12-Fair Value Measurements to our consolidated financial statements for additional information regarding the contingent consideration.
Impairment of goodwill and intangible assets
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Impairment of goodwill and intangible assets | $ | 58,843 | $ | 131,595 | $ | (72,752) | (55) | % | |||||||||||||||
| % of Revenue | 25 | % | 47 | % | |||||||||||||||||||
During 2025, we recognized an impairment of $49.1 million on goodwill related to the Cardlytics platform in the U.S. and an impairment of $9.7 million on capitalized software development costs associated with the Cardlytics asset group. During 2024, we recognized an impairment of $117.8 million on goodwill related to the Bridg platform and an impairment of $13.7 million on the developed technology intangible asset associated with the Bridg asset group. The impairment of goodwill and intangible assets resulted from a continued slowdown in the economy, decreased consumer spend, and a sustained decline in our stock price. Refer to Note 5-Goodwill and Acquired Intangibles to our consolidated financial statements for additional information.
Gain on divestiture
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Gain on divestiture | $ | (4,831) | $ | - | $ | (4,831) | n/a | ||||||||||||||||
| % of Revenue | - | % | 3 | % | |||||||||||||||||||
During 2025, we realized a non-cash gain of $4.8 million primarily related to the derecognition of the wallet liability associated with the decommissioning of the Dosh app, a consumer facing cashback mobile application, operated by Dosh Holding LLC. Refer to Note 4-Business Combinations and Divestitures to our consolidated financial statements for additional information regarding the Gain on divestiture.
Depreciation and Amortization Expense
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Depreciation and amortization expense | $ | 25,244 | $ | 25,689 | $ | (445) | (2) | % | |||||||||||||||
| % of Revenue | 11 | % | 9 | % | |||||||||||||||||||
Depreciation and amortization expense decreased by $0.4 million during 2025 compared to 2024, primarily due to a decrease in fixed assets and acquired intangible assets partially offset by an increase in capitalized software development.
Interest Expense, Net
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Interest expense | $ | (10,630) | $ | (8,901) | $ | (1,729) | 19 | % | |||||||||||||||
| Interest income | 2,711 | 3,350 | (639) | (19) | |||||||||||||||||||
| Interest expense, net | $ | (7,919) | $ | (5,553) | $ | (2,366) | 43 | % | |||||||||||||||
| % of Revenue | (3) | % | (2) | % | |||||||||||||||||||
Interest expense, net increased by $2.4 million during 2025 compared to 2024 due to an increase in our interest expense of $1.7 million and a decrease in our interest income of $0.6 million. Interest expense increased as a result of the issuance of the 2024 Convertible Senior Notes during 2024 and the greater utilization of our 2018 Line of Credit during 2025, partially offset by a decrease in interest expense related to our 2020 Convertible Senior Notes, which were partially paid down during 2024 and fully settled in 2025. Interest income decreased as a result of the decrease in our average cash balance, partially offset by $0.8 million in interest income associated with the first and second quarter 2021 employee retention tax credit. Refer to Note 9-Debt and Financing Arrangements to our consolidated financial statements for additional information regarding the 2024 Convertible Senior Notes, 2020 Convertible Senior Notes and our 2018 Line of Credit.
Foreign Currency Gain (Loss)
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Foreign currency gain (loss) | $ | 6,247 | $ | (1,269) | $ | 7,516 | (592) | % | |||||||||||||||
| % of Revenue | 3 | % | 1 | % | |||||||||||||||||||
Foreign currency gain was $6.2 million during 2025 compared to a loss of $1.3 million during 2024, primarily due to the change in the value of the British pound relative to the U.S. dollar.
Gain on Debt Extinguishment
| Year Ended December 31, | Change | ||||||||||||||||||||||
| in thousands | 2025 | 2024 | $ | % | |||||||||||||||||||
| Gain on debt extinguishment | $ | - | $ | 13,017 | $ | (13,017) | n/a | ||||||||||||||||
| % of Revenue | - | % | 5 | % | |||||||||||||||||||
During 2024, we realized a Gain on debt extinguishment of $13.0 million due to the partial payment of the 2020 Convertible Senior Notes in April 2024. Refer to Note 9-Debt and Financing Arrangements to our consolidated financial statements for additional information regarding the 2020 Convertible Senior Notes.
Liquidity and Capital Resources
The following table summarizes our cash and cash equivalents, working capital, accounts receivable and contract assets, net and unused available borrowings:
| December 31, | |||||||||||
| in thousands | 2025 | 2024 | |||||||||
| Cash and cash equivalents | $ | 48,719 | $ | 65,594 | |||||||
|
Working capital(1)
|
58,889 | 29,028 | |||||||||
| Accounts receivable and contract assets, net | 82,669 | 103,252 | |||||||||
|
Unused available borrowings(2)
|
8,458 | 16,688 | |||||||||
(1)We define working capital as current assets less current liabilities. See our consolidated financial statements for further details regarding our current assets and current liabilities.
(2)As part of our amended and restated Loan and Security Agreement, we are required to maintain a minimum unrestricted cash of $25.0 million in demand deposit accounts.
Our cash and cash equivalents are available for working capital purposes. We do not enter into investments for trading purposes, and our investment policy is to invest any excess cash in short-term, highly liquid investments that limit the risk of principal loss. Currently, a significant portion of our cash and cash equivalents are held in fully FDIC-insured money market accounts, demand deposit accounts and U.S. Treasury Bills. As of December 31, 2025, our money market account and our U.S. Treasury Bills had earned approximately 4.1% and 4.3% annual rate of interest, respectively. As of December 31, 2025, we had $5.0 million in cash and cash equivalents in the U.K. Our U.K. cash balances are denominated in British pounds and as a result, may fluctuate based on changes in the exchange rate. Refer to Item 7A. Qualitative and Quantitative Disclosures About Market Risk for additional information about our foreign currency exchange risk. While our investment in our operations in the U.K. is not considered indefinitely invested, we do not have any current plans to repatriate these funds.
Through December 31, 2025, we have incurred accumulated net losses of $1,404.1 million since inception, including net losses of $103.5 million, $189.3 million and $134.7 million during 2025, 2024 and 2023, respectively. We expect to incur additional operating losses as we continue our efforts to grow our business. We have historically financed our operations and capital expenditures through convertible note financings, private placements of our redeemable convertible preferred stock, public offerings of our common stock as well as lines of credit and term loans.
Sources of Material Cash Requirements
Other Commitments
In January 2024, we renewed our cloud hostingarrangement guaranteeing an aggregated spend of $17.0 million each year over a 36-month period. During the second year of the agreement, we had $16.2 million of aggregated spend. As a result of the shortfall, we have accrued $0.8 million within accrued expenses liability on our consolidated balance sheets.
Sources of Funds
Equity Distribution Agreement
On January 29, 2024, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on February 9, 2024. This shelf registration statement, which includes a base prospectus, allows us to offer and sell up to a maximum aggregate offering amount of $100.0 millionof our registered common stock, preferred stock, debt securities, warrants, or any combination of securities described in the prospectus in one or more offerings.
On March 18, 2024, we entered into an equity distribution agreement (the "Equity Distribution Agreement") with Evercore Group L.L.C., BofA Securities, Inc. and Cantor Fitzgerald & Co., as sales agents, pursuant to which wemay issue and sell, from time to time, shares of ourcommon stock up to a maximum aggregate offering amount of $50.0 millionin "at-the-market" offerings (the "ATM Offering Program"). On March 18, 2024, wesold 3,907,600shares of our common stock at a weighted average price per share of $12.80, for aggregate net proceeds of $48.3 millionafter deducting commissions and estimated offering expenses payable by us, pursuant to the Equity Distribution Agreement and completed the ATM Offering Program.
2024 Convertible Senior Notes
On April 1, 2024, we issued $172.5 million in principal amount of our 4.25% Convertible Senior Notes due in 2029 (the "2024 Convertible Senior Notes") in a private offering, including the exercise in full of the initial purchasers' option to purchase up to an additional $22.5 million principal amount of 2024 Convertible Senior Notes. The net proceeds from the offering were $166.8 million, after deducting the initial purchasers' discounts, commissions and the offering expenses payable by us. The 2024 Convertible Senior Notes were issued pursuant to, and are governed by, an indenture, dated as of April 1, 2024, between us and U.S. Bank Trust Company, National Association, as trustee. We used $169.3 million, consisting of the net proceeds from the offering, together with cash on hand, to repurchase for cash $183.9 million in aggregate principal amount of the 2020 Convertible Senior Notes, together with accrued and unpaid interest, in privately negotiated transactions below par and entered into concurrently with the pricing of the offering through one of the initial purchasers or one of its affiliates, as our agents.
2018 Loan Facility
In April 2022, we amended our loan facility with Pacific Western Bank (the "2018 Loan Facility") to increase the capacity of our asset-backed revolving line of credit (the "2018 Line of Credit") from $50.0 million to $60.0 million with an option to increase to $75.0 million upon syndication. Additionally with this amendment, the former cash covenant, as described below, was removed and was replaced with a requirement to maintain a minimum level of Adjusted Contribution and a minimum adjusted cash of $25.0 million, which is reduced by eligible accounts receivable in excess of the loan capacity. In November 2022, we amended our 2018 Loan Facility to modify the eligible account receivable to exclude U.K. accounts, reduce the ability to borrow up to 85% of the amount of our eligible accounts receivable to 50% and adjusted the required minimum level of Adjusted Contribution. In February 2023, we amended our 2018 Loan Facility to remove and replace the former Adjusted Contribution covenant with a requirement to maintain a minimum level of Adjusted EBITDA. In May 2023, we amended our 2018 Loan Facility to modify the covenants related to the maximum amount of cash we are allowed to pay for the First Anniversary Payment Amount and Second Anniversary Payment Amount under the Merger Agreement. In February 2024, we amended our 2018 Loan Facility to increase the ability to borrow up to 75% of the amount of our eligible accounts receivable, adjusted the required minimum level of Adjusted EBITDA and increased the interest rate to the prime rate plus 0.25%.
The 2018 Loan Facility includes customary representations, warranties and covenants (affirmative and negative), including restrictive covenants that prohibit mergers, acquisitions, dispositions of assets, incurrence of indebtedness, encumbrances on our assets and the payment or declaration of dividends, in each case subject to specified exceptions.
The 2018 Loan Facility also includes standard events of default, including in the event of a material adverse change. Upon the occurrence of an event of default, the lender may declare all outstanding obligations immediately due and payable and take such other actions as are set forth in the 2018 Loan Facility and increase the interest rate otherwise applicable to advances under the 2018 Line of Credit by an additional 3.00%. All of our obligations under the 2018 Loan Facility are secured by a first priority lien on substantially all of our assets. The 2018 Loan Facility does not include any prepayment penalties.
In April 2024, we repaid in full $30.0 million of the principal balance of the 2018 Line of Credit. Interest on advances under the 2018 Line of Credit bore an interest rate equal to the prime rate plus 0.25%. In addition, we were required to pay an unused line fee of 0.15% per annum on the average daily unused amount of the revolving commitment.
In July 2024, we amended our 2018 Loan Facility, which increased the ability to borrow up to 85% of the amount of our U.S. eligible accounts receivable and 30% of the amount of our U.K. eligible accounts receivable, decreased our required minimum level of Adjusted EBITDA, and decreased the interest rate to prime rate plus 0.125%. The amendment also established a reserve and included an extension of the maturity date of the loan to July 31, 2026.
In September 2024, we entered into an amended and restated Loan and Security Agreement, which amended and restated the original Loan and Security Agreement to consolidate the original agreement and all subsequent amendments thereto into a single document. In January 2025, we amended our 2018 Loan Facility to decrease our required minimum level of Adjusted EBITDA. In April 2025, we amended our 2018 Loan Facility to extend the maturity date of the loan to April 15, 2028.
As of December 31, 2025, we had net borrowings of $40.1 million under the 2018 Line of Credit, which includes total draw downs of $56.0 million and repayments totaling $15.9 million during the year ended December 31, 2025. Subsequent to December 31, 2025, we repaid $10.0 million on February 25, 2025 under the 2018 Line of Credit.
During the years ended December 31, 2025 and 2024, we incurred $1.5 million and $0.7 million of interest expense, respectively, associated with the 2018 Loan Facility. As of December 31, 2025, we had $8.5 million of unused available borrowings under our 2018 Line of Credit. We believe we are in compliance with all financial covenants as of December 31, 2025.
Uses of Funds
Our collection cycles can vary from period to period based on the payment practices of our marketers and their agencies. We are generally obligated to pay Consumer Incentives between one and four months following redemption, regardless of whether we have collected payment from a marketer or its agency. We are generally obligated to pay our FI partners' Partner Share by the end of the month following our collection of payment from the applicable marketer or its agency. As a result, timing of cash receipts from our marketers can significantly impact our operating cash flows for any period. Further, the timing of payment of commitments and implementation fees to our FI partners may also result in variability of our operating cash flows for any period.
Our operating cash flows also vary from quarter to quarter due to the seasonal nature of our marketers' advertising spending. Many marketers tend to devote a significant portion of their marketing budgets to the fourth quarter of the calendar year to coincide with consumer holiday spending and reduce marketing spend in the first quarter of the calendar year. Any lag between the timing of our payments to FI partners and our receipt of payment from marketers and their agencies can exacerbate our need for working capital during the first quarter of the calendar year.
Historical Cash Flows
In this section, we discuss the activity of our cash flows for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended December 31, 2024.
The following table shows a summary of our cash flows for the periods presented:
| Year Ended December 31, | |||||||||||
| in thousands | 2025 | 2024 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | $ | 65,594 | $ | 91,830 | |||||||
| Net cash provided by (used in) operating activities | 9,290 | (8,824) | |||||||||
| Net cash used in investing activities | (15,302) | (18,746) | |||||||||
| Net cash (used in) provided by financing activities | (11,122) | 1,444 | |||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 259 | (110) | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 48,719 | $ | 65,594 | |||||||
Operating Activities
Historically, we have experienced negative operating cash flows, which reflects our investments to grow our business. Over time,
we expect our business to generate positive operating cash flows. Given the seasonal nature of our marketer's advertising spending and our continued investment in our business, we may experience periods of negative operating cash flows from operations.
Operating activities provided $9.3 million of cash in 2025, which reflected our net loss of $103.5 million, $107.1 million of which were non-cash charges, and a $5.7 million change in our net operating assets and liabilities. The non-cash charges primarily related to credit loss expense, depreciation and amortization expense (including the amortization of acquired intangible assets), stock-based compensation expense, impairment of goodwill and intangible assets, amortization of right-of-use assets, changes in contingent consideration, gain/(loss) on divestiture and gain on debt extinguishment. The change in our net operating assets and liabilities was primarily due to a $20.6 million decrease in accounts receivable and contract assets and $1.8 million decrease in prepaid expense, partially offset by an $8.2 million decrease in Partner Share, $8.0 million decrease in our Consumer Incentive liability and $0.7 million decrease in other accrued expenses.
Operating activities used $8.8 million of cash in 2024, which reflected our net loss of $189.3 million, $196.3 million of which were non-cash charges, and a $15.8 million change in our net operating assets and liabilities. The non-cash charges primarily related to stock-based compensation expense, depreciation and amortization expense (including the amortization of acquired intangible assets), impairment of goodwill and intangible assets, amortization of right-of-use assets, changes in contingent consideration, and credit loss expense. The change in our net operating assets and liabilities was primarily due to a $12.5 million increase in accounts receivable and contract assets, a $6.6 million decrease in other accrued expenses, and a $7.1 million decrease in our Consumer Incentive liability, partially offset by a $1.4 million decrease in prepaid expense and other assets and a $16.4 million increase in Partner Share liability.
Investing Activities
Our cash flows used in investing activities are primarily driven by our investments in, and purchases of, property and equipment and costs to develop internal-use software. We expect that we will continue to use cash for investing activities as we continue to invest in and grow our business.
Investing activities used cash totaling $15.3 million and $18.7 million in 2025 and 2024, respectively. Our investing cash outflows during these periods primarily consisted of funds used for the purchases of technology hardware and costs to develop internal-use software. Additionally, in 2025 and 2024, we had cash inflows of $0.5 million and $0.6 million, respectively, related to proceeds from divestitures, net of cash divested. Refer to Note 4-Business Combinations and Divestitures to our consolidated financial statements for additional disclosures related to our acquisitions and divestitures.
Financing Activities
Our cash flows (used in)/provided by financing activities have primarily been composed of contingent consideration payments to Bridg, repurchasing shares of our common stock, offset by borrowings and repayments under our debt facilities, proceeds from the issuance of common stock and payments for costs related to debt issuances and equity offerings.
Financing activities used $11.1 million in cash in 2025, which consisted of $62.0 million principal payment of debt ($46.1 million aggregate principal payment amount related to the 2020 Convertible Senior Notes and $10.9 million pay down of our 2018 Loan facility) and $5.0 million paid in cash related to the settlement agreement with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, inclusive of brokerage fees and transaction bonuses and accounting for all true-ups and credit, partially offset by proceeds from issuance of debt of $56.0 million related to our draw down on our 2018 Loan Facility
Financing activities provided $1.4 million in cash in 2024, which consisted of aggregated net proceeds of $166.8 million from issuance of our 2024 Convertible Senior Notes offering ($172.5 million gross proceeds from the issuance of the 2024 Convertible Senior Notes offset by $5.6 million in debt issuance costs) and $48.6 million proceeds from the issuance of common stock, partially offset by $199.3 million principal payment of debt ($169.3 million related to the repurchase of 2020 Convertible Senior Notes and $30.0 million related to pay down of the 2018 Line of Credit) and $14.2 million paid in cash related to the settlement agreement with the Stockholder Representative to resolve all outstanding disputes related to the Merger Agreement, inclusive of brokerage fees and transaction bonuses and accounting for all true-ups and credit.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. Our most critical accounting policies are summarized below. Refer to the notes to our consolidated financial statements for additional information.
Valuation and Impairment of Goodwill and Intangible Assets
Intangible assets are recorded at fair value on the date of acquisition and amortized over their estimated useful lives. The intangible assets are evaluated whenever events or changes in circumstances indicate that we should estimate the fair value of our individual long-lived assets to determine if any impairment charges were present. Our estimation of the fair value of definite lived intangible assets includes the use of discounted cash flow analyses which reflected estimates of future revenue, customer attrition rates, royalty rates, cash flows, and discount rates. Given the significant level of uncertainty that currently exists, management applied several alternative scenarios for market and Company performance over the next several years to determine an estimated fair value. Other key assumptions were updated as appropriate, including the discount rate, which increased as a result of an increase in the equity risk premium, which was partially offset by a decrease in the risk free rate.
Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination. We evaluate our goodwill for impairment annually during the fourth quarter and whenever events or changes in circumstances indicate that the fair value of a reporting unit is more likely than not less than the carrying amount. Our reporting units are one level below the operating segments at which level our segment management conducts regular reviews of the operating results.
Our impairment evaluation consists of a qualitative assessment. If this assessment indicates that the fair value of the reporting unit is not more likely than not less than the carrying amount, goodwill is not considered impaired. Otherwise, a quantitative impairment test is performed by comparing the estimated fair value of a reporting unit to its carrying value, including goodwill. We can bypass the qualitative assessment for any period and proceed directly to the quantitative impairment test. If the carrying value of the net assets associated with the reporting unit exceeds the fair value of the reporting unit, goodwill is considered impaired and the impairment will be determined as the amount by which the reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.
We assessed the triggering events criteria along with related conditions and developments as of September 30, 2025 and September 30, 2024, and we concluded that we had a triggering event as a result of a sustained decline in our stock price during the three months ended September 30, 2025 and 2024. We, therefore, performed a quantitative impairment test as of September 30, 2025 and 2024. As a result of our quantitative impairment test, we determined that the carrying value of the Cardlytics platform in the U.S. exceeded its fair value for the three months ended September 30, 2025 and that the carrying value of the Bridg platform exceeded its fair value for the three months ended September 30, 2024. As such, we recognized a goodwill impairment of $49.1 million for the Cardlytics platform in the U.S. during the three months ended September 30, 2025 and $117.8 million for the Bridg platform during the three months ended September 30, 2024. We performed our annual goodwill impairment test in the fourth quarter of 2025 and concluded that there was no additional impairment associated with the Cardlytics platform in the U.S. We performed our annual impairment test as of October 1, 2023 and determined that the carrying value of the Bridg platform, which is comprised entirely of an acquired business exceeded its fair value, and we recognized a goodwill impairment of $70.5 million.
The decline in the fair value of the Cardlytics platform in the U.S. below its carrying value at September 30, 2025 and the decline in the fair values of the Bridg platform reporting unit below its carrying values at September 30, 2024 and October 1, 2023 resulted from a continued slowdown in the economy and decreased consumer spend that led to a sustained decline in our stock price. The method of determining fair values of the reporting units at September 30, 2025, September 30, 2024 and October 1, 2023 was the discounted cash flow method under the income approach, and to a lesser extent the market approach. The most significant assumptions utilized in the determination of the estimated fair values of the Cardlytics platform in the U.S. and the Bridg platform are the discount rate and forecasts of future revenues and cash flows.
We prepared cash flow projections based on management's estimates of revenue growth rates and earnings growth rates for each reporting unit, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions. The discount rate, which is consistent with a weighted average cost of capital that is likely to be expected by a market
participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. Our discount rate may be impacted by adverse changes in the macroeconomic environment and volatility in the equity and debt markets. See Note 5-Goodwill and Acquired Intangibles in our consolidated financial statements for additional information.
We continue to closely monitor developments related to global events and macroeconomic conditions. Changes in market conditions, laws and regulations, and key assumptions made in future quantitative assessments, including forecasted revenues and expected cash flows, competitive factors and discount rates, could negatively impact the results of future impairment testing and could result in the recognition of an additional impairment charge.
Internal-Use Software Development Costs
Capitalized software development costs consist of costs incurred in the development of internal-use software, primarily associated with the development and enhancement of our Cardlytics platform and Bridg platform. We capitalize the costs of software developed or obtained for internal use in accordance with ASC Topic 350-40, Internal Use Software. We begin to capitalize our costs upon completion of the preliminary project stage. We consider the preliminary project stage to be complete and the application development stage to have begun when preliminary development efforts are successfully completed, management has authorized and committed project funding and it is probable that the project will be completed, and the software will be used as intended. These costs are amortized on a straight-line basis over the estimated useful life of the related asset, generally estimated to be three years. Costs incurred in the preliminary project stage and post-implementation operation stages are expensed as incurred and recorded in research and development expense on our consolidated statements of operations. Significant judgment includes deciding if a project is eligible for capitalization, determining whether the incurred costs are directly associated with the project, evaluating the current stage of the project's development and assessing whether capitalized costs are impaired and, if so, the amount of any impairment.
We have assessed the triggering events criteria along with related conditions and developments as of September 30, 2025. As a result of the triggering event discussed, we performed an impairment test on Capitalized software development costs as of September 30, 2025, and determined that the carrying value of the internal-use software development costs intangible asset associated with the Cardlytics asset group exceeded its fair value. The Cardlytics asset group is included in the Cardlytics platform reportable segment and primarily consists of the internal-use software development costs, which represents the predominant asset from which the group's cash flows are generated. As a result of the impairment test, we recognized an impairment of $9.7 million to the impairment of goodwill and intangible assets within the consolidated statement of operations during the year ended December 31, 2025.
During 2025, 2024 and 2023, we capitalized development costs for improvements to our platforms, including our Ads Manager and Ad Server, totaling $18.9 million, $22.9 million and $14.6 million, respectively.
Recent Accounting Pronouncements
Refer to Note 3-Accounting Standards to our consolidated financial statements for additional information.
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates and foreign exchange rates.
Interest Rate Risk
The interest rates under the 2018 Line of Credit are variable. Interest on advances under the 2018 Line of Credit bears an interest rate of the prime rate of 6.75% plus 0.125%. As of December 31, 2025, the prime rate was 6.75% and a 10% increase in the current prime rate would, for example, result in a $0.4 million annual increase in interest expense if the maximum amount under the 2018 Line of Credit was outstanding for an entire year. On April 1, 2024, we issued the 2024 Convertible Senior Notes bearing an interest rate of 4.25%. Refer to Note 9-Debt and Financing Arrangements to our consolidated financial statements for additional disclosures related to our debt.
Foreign Currency Exchange Risk
Both revenue and operating expense of Cardlytics UK Limited are denominated in British pounds. We bear foreign currency risks related to the extent that any unfavorable fluctuation in the exchange rate between U.S. dollars and the British pound could result in an adverse impact to either revenue or expense. For example, if the average value of the British pound had been 10% lower relative to the U.S. dollar during 2025, our revenue would have decreased by $3.0 million. The overall impact to net loss would be partially mitigated by decreases in operating expense of $2.7 million in 2025.
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