| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3286 Registered: 05-2011 Posted From: 65.35.45.47 Rating: N/A |
CDLX Cardlytics charges higher despite mixed results; 2021 outlook and Dosh deal both look promising (140.55 +8.12) Cardlytics (CDLX +6%) may be surprising investors today by being up so sharply despite reporting what looks to be a mixed Q4 report with no specific guidance. CDLX reported a loss in Q4, but it was $0.02 larger than expected. The good news is that revenue was above analyst expectations, although it still declined on a yr/yr basis. Cardlytics operates an advertising platform wherein it partners with banks to run their rewards programs, and it in turn receives data on how consumers spend their money, which it then analyzes and sells to marketers. Not surprisingly, CDLX's business has been hurt hard by a reduction in consumer spending and credit card usage due to retailers and restaurants (CDLX's primary verticals) operating on a limited basis in response to the COVID-19 pandemic. So, why is the stock higher? We think encouraging comments from CDLX during its earnings call are providing a boost: Q4 billings from restaurant clients more than doubled sequentially from Q3. Importantly, 12 of the top 15 US restaurant chains were live on CDLX's platform in Q4. Furthermore, it's also notable that US billings returned to pre-COVID levels in Q4 and were essentially flat with 4Q19. In the retail category, CDLX was able to secure additional budgets from key advertisers in Q4. This not only drove additional Q4 billings but positioned CDLX for larger annual budgets in 2021. Cardlytics also worked with one of the largest businesses in the US to help it launch a new membership subscription service. CDLX sounded pretty bullish on 2021, saying that it believes recent momentum will continue throughout 2021, reflecting the continued gradual recovery in consumer spending. In addition to responding to the company's earnings, investors may also be excited by Cardlytics' announcement that it will acquire Dosh, which operates a consumer app that provides cash back for millions of consumers from thousands of merchants. CDLX is paying $275 mln in cash and stock. In the past year, Dosh expanded into banks and fintech companies (Venmo, Betterment, Ellevest). CDLX benefits because Dosh brings new banking partnerships, and CDLX should be able to leverage its current banking relationships to drive Dosh's growth. Dosh's platform will also give CDLX access to smaller and medium-sized advertisers and expand its exposure to advertisers in the travel industry. Overall, our sense is that investors are happy that Q4 results were decent — it could have been much worse. CDLX is highly tied to consumer spending and advertising budgets. After taking a hit in 2020, CDLX looks positioned to be an attractive economic re-opening play in 2021 as restaurants and retailers open back up. Also, this Dosh acquisition seems like a good fit that should provide notable expansion opportunities both for CDLX and for Dosh. |