Cardlytics Prepares for a Potential Tripling of Its Active User Base by 2019’s End

Cardlytics Inc. is building its infrastructure to support as many as 200 million monthly active users of its merchant-funded rewards program by the end of 2019, more than three times the 60 million it currently has, company executives said Thursday.

The big expansion comes as Cardlytics’ grows its business with financial institutions, including a new pact announced this week with JPMorgan Chase & Co., one of the nation’s top credit and debit card issuers. Cardlytics also has a pilot program going with another leading bank, Wells Fargo & Co., though no national rollout with Wells has been announced.

“We are preparing for significant growth in MAU [monthly active users] in 2019 and beyond,” Cardlytics co-founder and chief operating officer Lynne Laube tells Digital Transactions News. “I think Chase and Wells are going to keep us plenty busy.”

Atlanta-based Cardlytics raised nearly $70 million in a Feb. 9 initial public offering of stock, and on Thursday held its first earnings conference call as a public company shortly after it reported first-quarter financial results. Total revenues for the quarter ended March 31 rose 22% to $32.7 million from $26.9 million a year earlier. Revenues from Cardlytics Direct, the company’s main product, increased 31% to $32.1 million. Chief executive and co-founder Scott Grimes tells Digital Transactions News the results were in line with the company’s expectations, including a quarterly loss of $20.1 million versus a $12.5 million loss a year earlier.

Cardlytics Direct provides targeted advertisements for merchants through the online and mobile-banking channels of more than 2,000 banks and credit unions. The service takes in transactional data from the institutions’ credit and debit card purchases, automated clearing house payments, and bill payments, and scrubs it of personally identifying information. Using that data, merchants—what Cardlytics calls marketers—can present offers to customers of financial institutions with cash-back or other card-usage and related payment-generating programs.

Cardlytics earns a percentage of the purchases by consumers responding to the offers. The average revenue per user was 55 cents, a 17% increase from 47 cents in 2017’s first quarter.

The company claims marketers get an average of $30 back for every dollar they spend on Cardlytics Direct. The sell to financial institutions is more customer spend and reduced attrition.

Bank of America Corp. is Cardlytics’ biggest existing customer, accounting for 51% of monthly active users as of last September. But with more than 80 million credit card accounts, according to press reports, as well as millions of debit accounts, Chase could generate millions of new users for Cardlytics.

Grimes declined to give details about the extent of his company’s potential business with Chase, but says “we do expect to roll out broadly across Chase’s credit and debit card portfolio.”

The Wells Fargo pilot was scheduled to begin in the first quarter in Miami, Charlotte, N.C., and San Francisco.