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Intro To Cardlytics

Jan. 06, 2021 11:52 AM ETCardlytics, Inc. (CDLX)GOOGL
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  • CDLX.
  • Part 1 of a series.
  • Fundamentals of the business.
  • Key metrics.

I plan on writing a series on Cardlytics with each article focusing on different parts of the business. I aim to keep all posts in the 300-500 words range.

Business Basics

Here's a quick primer on Cardlytics. It partners with banks. The partnership involves Cardlytics sharing roughly 55% of its revenue in exchange for access to the banks user data and a dedicated placement within banks digital application where Cardlytics can sell slots to advertisers. 

Currently, Cardlytics works directly with advertisers to create custom campaigns with a targeted return on ad spend (ROAS). In the future, Cardlytics is rolling out a self service platform that will enable small and medium size businesses to join the platform.

Lastly, the consumer incentive. Cardlytics platform revolves around incentives in the form of discounts offered to the banks digital application users. On average, the incentive is around 30%. In the custom campaign mentioned above, if Cardlytics fails to get the pre agreed ROAS, Cardlytics must use its portion of the payment to incentivize more users.

Metrics worth analyzing

Good management will know what metrics matter to the business. As investors, we never have the same knowledge as management.


The average ROAS across the segments for advertisers using Cardlytics is 6:1. This is the incremental spend that Cardlytics generates for advertisers for each dollar spent on the Cardlytics platform. The advertising industry generates roughly 1.5:1 ROAS. Google has an estimated ROAS of 2:1. ROAS really tells you how in demand that advertising channel is because the more bidders for a placement, the higher the price paid for the ad placement, resulting in a lower ROAS if the incremental sales from the advertisement placement remains the same. We could foreseeably track this number by monitoring the ratio of Cardlytics take to the consumer incentive, with a higher ratio meaning Cardlytics is providing a lower ROAS to marketers.

Engagement Numbers vs MAUs

Cardlytics claims to have 180 million monthly active users. This is factually correct but in my opinion hides what is really going on under the hood. The MAU count is important because it highlights how many of the users it can target, but we should focus more on the engaged user numbers. Why? we need to know how many users engage with the offers. The MAU number provides how many people log onto the mobile application, but how many people are simply logging on to check their balance or set a payment for a card. The offers are at the bottom of the home screen, out of the way for first time users. The engagement numbers can tell us the habits Cardlytics users are forming. Based off of data in the public filings, engaged users stands between 6-7%. The 2017 1.72 ARPU would be in the $24-28 ARPU range. It then becomes about engaging more users.

What other metrics should be tracked? Do you disagree with these metrics?

Analyst's Disclosure: I am/we are long CDLX.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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