Cardlytics Adds New Risk Factors

Atlanta-based digital advertising platform, Cardlytics (CDLX), which serves banks and other financial services providers, recently acquired transaction-based advertising platform Dosh and customer data platform Bridg.

CDLX helps clients run loyalty programs that drive customer loyalty and deepen relationships. It has offices in several U.S. cities as well as in the U.K. and India.

Notably, the company also added Microsoft (MSFT) executive Chris Suh to its board of directors. (See Insiders’ Hot Stocks on TipRanks)

Let’s take a look at the newly added risk factors for Cardlytics.

Q3 Financial Results

Cardlytics reported revenue of $65 million for Q3 2021, against $46.1 million in the same quarter last year, surpassing the consensus estimate of $62.08 million. The company’s monthly active users increased 6% year-over-year to $170.6 million, and average revenue per user (ARPU) jumped 24% to $0.36.

CDLX posted an adjusted loss per share of $0.33, which widened from the loss of $0.16 per share in the same period last year, but beat the consensus estimated loss per share of $0.54.

Cardlytics ended Q3 with $237.3 million in cash.

For Q4, the company anticipates revenue in the band of $70 million to $80 million. For 2021, it expects to deliver revenue in the range of $247.1 million to $257.1 million.

Risk Factors

Cardlytics carries 63 risk factors, according to the new TipRanks Risk Factors tool. It recently updated its risk profile with three new risk factors under the Finance and Corporate, and Legal and Regulatory categories.

Cardlytics has informed investors that its earnings results could be adversely affected due to impairment charges to the goodwill associated with Dosh and Bridg acquisitions.

The company has told investors that Dosh’s reward app could attract additional regulatory requirements. It cautions that failing to comply with the additional regulations could expose it to fines and mandates to change its business practices.

Furthermore, Cardlytics has informed investors that it is subject to stringent and evolving data privacy and security laws.

Most of the company’s risk factors fall under the Finance and Corporate category, with 43% of the total risks, below the sector average of 48%.

Wall Street’s Take

Following Cardlytics’ Q3 earnings report, Craig-Hallum analyst Jason Kreyer reiterated a Buy rating on Cardlytics stock but lowered his price target to $100 from $120. Yet, Kreyer’s reduced price target implies upside potential of 11.2%.

Kreyer commented that the company’s Q3 results were strong but the Q4 guidance was a little underwhelming.

Overall, consensus among analysts is a Strong Buy based on three unanimous Buys. The average Cardlytics price target of $110 implies 22.2% upside potential to current levels.