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Summer is in full swing, and the mercury is rising with both the U.S. economy and inflation on an upward trajectory. Consumer trends show that many are undaunted by the rising cost of goods and services and formerly housebound shoppers are keen to spend their dollars outside and in person.

Since our last State of Spend report, total spend has remained consistent, floating between +5% and +10% year-over-year (YoY) over our estimated non-pandemic baseline*.  

Based on consumer trends, it appears consumers are spending more on travel, retail, and restaurant purchases but are spending less on the ‘essentials’ like grocery. This isn’t to say that there’s been a drop in grocery spend, in fact grocery is still doing well YoY, but we are seeing a declining rate of growth as consumers reallocate their wallet share to discretionary categories. 

As consumers venture out, they’re spreading the wealth.

Tip: Focus on Retention 

Our data shows that consumers have expanded the number of brands they buy from, so hiding in your top line sales growth is a customer who may not be committed to your brand for the long term but could be persuaded. 

Flattening the Curve: The Cardlytics’ Recovery Leading Indicator (RLI) is back to flat 

Cardlytics’ RLI tracks spend in select discretionary categories to help brands measure consumer confidence during the recovery. The latest spend trends show more consumers are dining out in-person, shopping in-store and visiting salons—a great indicator of ‘true’ recovery and driver of economic growth.  

What's the implication of the RLI? 

It could be that consumer spending will continue to slow back to the historic averages. If that happens, their brand preferences may follow suit, so a savvy marketing leader should be prepared to invest in re-engaging their most loyal customers and growing their share of wallet by converting more casual new shoppers into long-term loyalists. 

A table for two and a weekend away 

The pandemic hit the dining and travel industries pretty hard and now, more than a year later, we’re seeing improvements in each category since shoppers can now enjoy spending on activities outside of the home. Over the last six months, spend in airline, car rental, and hotel categories has seen significant improvement with car rentals seeing a 24.2 percentage point increase, hotels a 36.9 percentage point increase, and airlines a whopping a 46.8 percentage point increase in year-over-year spend change. Similar trends are present among ticket providers and amusement parks—spend in both areas ramped up really quickly over the last three months as vaccination rates continue to increase.  

Dining continues to see improvement but ordering in remains top dog.  

Dining spend is up 5.3% YoY in early June compared to estimated ‘non-pandemic’ spend in 2020. All restaurant categories continue to improve, with full service seeing the biggest changes between January and June of this year. The quick serve restaurant category remains consistently positive but perhaps the biggest surprise is that restaurant delivery is still going strong. While many expected a decline as in-person dining returned, we're seeing consistent growth compared to last year with restaurant delivery up 129.4% YoY.  

The Bottom Line: 

Consumer confidence continues to grow. However, the COVID-19 Delta variant could be a speed bump to economic recovery and potentially curb spending. But, if consumer trends continue as they have, the second half of the year could show consumer spend patterns that exceed pre-pandemic levels. Marketers should take note of current spend behaviors (they’re not what they used to be) and focus efforts on a customer retention strategies. We’ve seen that consumers are willing to spend, so re-assess customer loyalty and look at share of wallet per category rather than purchase frequency.

*Estimated non-pandemic baseline is calculated by applying YoY growth rates from 2019 to 2020 before the pandemic affected consumer spending. 

Download the Cardlytics case study and learn how to drive engagement and spend for neobanks.

Neobank-Case-StudyDownload

Whether it’s saving the environment, women-focused investing, or supporting local businesses, neobanks offer something for everyone.

With hyper-focused audiences, neobanks (aka “challenger banks”) fill the dovetailing trends of lifestyle marketing and accelerated consumer adoption of online banking. One nationwide survey found that 80% of consumers nationwide now prefer online services over a visit to a physical bank location, and this preference is driving consumers towards these fintech firms.

Growth, Challenges, and Solutions

According to a PwC report, the global neobank market is expected to hit $394.6 billion by 2026, up from $18.6 billion in 2019. Despite the growth, they also face challenges similar to traditional banks like churn and digital engagement and unique hurdles such as fewer products and lack of in-person services. 

By offering a card-linked cash back program, neobanks gain a partner that can address these challenges while providing innovative solutions to attract and retain customers with frictionless purchases from beloved brands.

How Do Cash Back Rewards Drive Engagement?

Cash back rewards programs engage with neobanks’ most enthusiastic customers: millennials and Gen Zers. A Cardlytics survey showed that these cohorts gravitate towards a more modern shopping experience with hassle-free rewards. Add to that the lifestyle or mission-focused component of many neobanks, and it becomes a winning combination. Niche customers such as millennials, micro, small and medium enterprises (MSMEs), and those having sporadic incomes and earnings embrace innovative technologies, especially cash back rewards that put money back into their wallets to use as they choose.

Neobanks are digital only, which adds to their appeal but also removes in-person opportunities to create stronger relationships with customers. To help minimize customer churn, they can offer products that promote customer loyalty while encouraging in-person purchases. Card-linked cash back rewards programs allow neobanks to create collections of retail brands that their customers love. About 75% of consumers say they favor companies that offer rewards. Despite being online, providing customers with an in-store experience through retailers is essential to long-term success. 

Cardlytics Can Help Neobanks Better Serve Their Customers

Cardlytics’ SDK platform is highly customizable and uses behavioral analytics to drive personalized offers and to increase purchases. Financial institution partners see a 5.6x increase of average transactions per month from previously lapsed cardholders and a 200% increase in spend and transaction frequency from cardholders who previously transacted less than once a week. When multiplied by the number of neobank customers, a cash back rewards program can also become an additional driver of revenue.

The uptick in adoption of online banking has added urgency for neobanks to differentiate in the marketplace. Cash back programs are a streamlined, rewarding way for them to connect to customers while generating revenue. And with a leading digital marketing partner like Cardlytics, neobanks can quickly put money back into their customers’ pockets while strengthening their customer relationships.

Covid precautions and the uncertainty it brings has led to a staycation boom in the UK. From Cardlytics’ UK office, The Summer of Spend report investigates consumer trends in response travel restrictions and offers advice on how brands across the travel, leisure and hospitality sectors can maximize spend opportunities and appeal to new customers.

Download the full report and to read more about the UK's biggest, and most competitive, ‘staycation summer’ in recent years.

UK-State-of-Spend_Summer-2021Download

Cardlytics adds Zolve to growing neobank roster.

We like to say Cardlytics is “built by bankers for banks” and it’s true. Our founders were both bankers who saw the value in having a view of a customer’s total wallet. Since Cardlytics was founded 13 years ago, we’ve been driving results for major U.S. banks. And while banks will always be central to what we do, we are excited about scaling our offering. Enter: the neobanks.

Zolve: A solution for an underserved population 

Catering towards tech-savvy audiences, neobanks make managing finances easy from anywhere in the world. Zolve, in particular, aims to improve accessibility to high-quality banking products for immigrants in the U.S. Zolve’s founder, Rahgunadan G, noticed that many immigrants were forced to wait for months, and in many cases, years to access financial services upon arriving in the U.S. While neobanks may focus on a specific type of customer, the customers' needs remain universal: quality products, secure services and a rewarding experience.

“At Zolve, we are working to provide equitable access to global financial products on one single platform. A tangible rewards program helps create an engaging experience for our customers, and with this partnership, we now have offers across categories that our users find relevant and rewarding” says Raghunandan G, Zolve’s founder. 

A rewarding experience for all 

When it comes to capturing and maintaining consumer loyalty and personalized experiences, neobanks are well-positioned to grab top of wallet advantage through a rewards program.  Neobanks and fintechs have changed the financial landscape over the past decade, offering digital-only solutions to the traditional financial process, while also addressing the needs of their niche audiences. This rise in popularity coincides with a consumer base that prefers shopping and banking online. 

To learn more about how Cardlytics works with neobanks and fintechs, check out our case study.

Atlanta, GA – July 20, 2021 – Cardlytics, Inc., (NASDAQ: CDLX), one of the largest digital advertising platforms, today announced that its second quarter ended June 30, 2021 financial results will be released on Tuesday, August 3, 2021, after market close. The company will host a conference call and webcast at 5:00 PM (ET) / 2:00 PM (PT) to discuss the company’s financial results.

A live audio webcast of the event will be available on the Cardlytics Investor Relations website at http://ir.cardlytics.com/.

A live dial-in will be available at (866) 385-4179 (domestic) or (210) 874-7775 (international).  The conference ID number is 3993796. Shortly after the conclusion of the call, a replay of this conference call will be available through 8:00 PM ET on August 10, 2021 at (855) 859-2056 (domestic) or (404) 537-3406 (international).  The replay passcode is 3993796. 

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, and Visakhapatnam. In March 2021, Cardlytics acquired Dosh, a transaction-based advertising platform. In May 2021, Cardlytics acquired Bridg, a customer data platform. Learn more at www.cardlytics.com.

Atlanta, GA – August 3, 2021 – Cardlytics, Inc. (NASDAQ: CDLX), a digital advertising platform, today announced financial results for the second quarter ended June 30, 2021. Supplemental information is available on the Investor Relations section of the Cardlytics' website at http://ir.cardlytics.com/.

“While we grew Cardlytics platform billings 111% and adjusted contribution 123% year-over-year, we fell below our guidance.  This was driven by us forecasting a faster recovery than was realized due to labor shortage and supply chain challenges in retail, restaurant and travel,” said Lynne Laube, CEO & Co-Founder of Cardlytics. “Our core business remains on a very solid foundation and we continue to make significant progress on all of our strategic initiatives, including the integration of Dosh and Bridg.”

“We believe we will still be dealing with an uneven recovery in Q3 as each industry we operate in is still working through unique macroeconomic challenges,” said Andy Christiansen, CFO of Cardlytics. “We remain very excited about the long-term potential of Cardlytics and continue to make immense progress on our product and technology initiatives.”

Second Quarter 2021 Financial Results

• Revenue was $58.9 million, an increase of 109% year-over-year, compared to $28.2 million in the second quarter of 2020.
• Billings, a non-GAAP metric, was $85.3 million, an increase of 116% year-over-year, compared to $39.5 million in the second quarter of 2020.
• Gross profit was $23.2 million, an increase of 193% year-over-year, compared to $7.9 million in the second quarter of 2020.
• Adjusted contribution, a non-GAAP metric, was $29.6 million, an increase of 139% year-over-year, compared to $12.4 million in the second quarter of 2020.
• Net loss attributable to common stockholders was $(47.3) million, or $(1.43) per diluted share, based on 33.0 million weighted-average common shares outstanding, compared to a net loss attributable to common stockholders of $(19.8) million, or $(0.73) per diluted share, based on 27.1 million weighted-average common shares outstanding in the second quarter of 2020.
• Non-GAAP net loss was $(12.8) million, or $(0.39) per diluted share, based on 33.0 million weighted-average common shares outstanding, compared to a non-GAAP net loss of $(10.2) million, or $(0.38) per diluted share, based on 27.1 million weighted-average common shares outstanding in the second quarter of 2020.
• Adjusted EBITDA, a non-GAAP metric, was a loss of $(5.7) million compared to a loss of $(7.7) million in the second quarter of 2020.

Key Metrics

• Cardlytics MAUs were 167.6 million, an increase of 7%, compared to 157.2 million in the second quarter of 2020.
• Cardlytics ARPU was $0.34, an increase of 89%, compared to $0.18 in the second quarter of 2020.
• Bridg ARR was $12.5 million in the second quarter of 2021.

Definitions of MAUs, ARPU and ARR are included below under the caption “Non-GAAP Measures and Other Performance Metrics.”

Third Quarter 2021 Financial Expectations

Cardlytics anticipates billings, revenue, and adjusted contribution to be in the following ranges (in millions):

 Q3 2021 GuidanceBillings⁽¹⁾ $85.0 - $95.0Revenue $57.0 - $66.0Adjusted contribution⁽²⁾$27.0 - $32.0

• A reconciliation of billings to GAAP revenue on a forward-looking basis is presented below under the heading "Reconciliation of Forecasted GAAP Revenue to Billings."
• A reconciliation of adjusted contribution to GAAP gross profit on a forward-looking basis is not available without unreasonable efforts due to the high variability, complexity and low visibility with respect to the items excluded from this non-GAAP measure.

Earnings Teleconference Information

Cardlytics will discuss its second quarter 2021 financial results during a teleconference today, August 3, 2021, at 5:00 PM ET / 2:00 PM PT. The conference call can be accessed at (866) 385-4179 (domestic) or (210) 874-7775 (international), conference ID# 3993796. A replay of the conference call will be available through 8:00 PM ET / 5:00 PM PT on August 10, 2021 at (855) 859-2056 (domestic) or (404) 537-3406 (international). The replay passcode is 3993796. The call will also be broadcast simultaneously at http://ir.cardlytics.com/. Following the completion of the call, a recorded replay of the webcast will be available on Cardlytics’ website.

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their banking rewards programs that promote customer loyalty and deepen banking relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, we have offices in London, New York, San Francisco, Austin and Visakhapatnam. In March 2021, we acquired Dosh, a transaction-based advertising platform, and in May 2021 we acquired Bridg, a customer data platform. Learn more at www.cardlytics.com.

In his latest piece for Forbes.com, Dosh Founder and CEO Ryan Wuerch discusses how COVID-19 has boosted interest in cash back, and the psychology behind it. Click HERE to read the full article.

The Center for Generational Kinetics reveals in this groundbreaking research the robust links between younger generations (Millennials, and Gen Z), cash back incentives, digital marketing strategies, and frictionless transactions that are becoming Trend Drivers.

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