Cardlytics: Underrecognized Margin Recovery; Strong Buy Reiterated

2025-05-26 01:46:30 ET

Summary

• We maintain our Strong Buy on Cardlytics and issue a PT of $6, despite the near-term revenue reset and slower monetization from new partners.
• The Amex channel is a game-changer, offering high-margin, immediate profitability with minimal incremental OpEx, supporting a clear path to EBITDA recovery.
• EBP and platform diversification are driving structural margin expansion, de-risking revenue and opening new high-engagement verticals for scalable growth.
• Risks include ongoing monetization friction and potential Bank of America contract headwinds, but we see a deeply asymmetric risk/reward profile at current depressed multiples.

Key Thesis

Following our previous coverage capturing Cardlytics, Inc. (CDLX) inflection themes (Amex ramp, platform diversification), we issue a PT of $6 (216% upside) and maintain Strong Buy, while recalibrating the monetization curve and deeper near-term revenue reset. Prior optimism on accelerating topline stabilization proved premature: FY25E revenue now -4.4% y/y ($266mn, -1.6 pts consensus) as ARPU lags despite strong MQU from new FI launches/Amex, and incremental partner revenue only provides modest $15mn uplift this year; and for FY26E, we model $275mn (+3.4% y/y)....

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