<SEC-DOCUMENT>0000950123-17-008281.txt : 20180309
<SEC-HEADER>0000950123-17-008281.hdr.sgml : 20180309
<ACCEPTANCE-DATETIME>20170828203257
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-17-008281
CONFORMED SUBMISSION TYPE:	DRSLTR
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20170828

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Cardlytics, Inc.
		CENTRAL INDEX KEY:			0001666071
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
		IRS NUMBER:				263039436
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DRSLTR

	BUSINESS ADDRESS:	
		STREET 1:		675 PONCE DE LEON AVENUE, NE
		STREET 2:		SUITE 6000
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30308
		BUSINESS PHONE:		888-795-5802

	MAIL ADDRESS:	
		STREET 1:		675 PONCE DE LEON AVENUE, NE
		STREET 2:		SUITE 6000
		CITY:			ATLANTA
		STATE:			GA
		ZIP:			30308
</SEC-HEADER>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:8pt; font-family:Times New Roman">Nicole Brookshire</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:8pt; font-family:Times New Roman">T: +1 617 937 2357</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; margin-left:1.00em; text-indent:-1.00em; font-size:8pt; font-family:Times New Roman">nbrookshire@cooley.com</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top" ALIGN="right">VIA EDGAR</TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">August&nbsp;28, 2017 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance</P></TD></TR>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">100 F Street, N.E.</P></TD></TR>
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<TD VALIGN="top" COLSPAN="3"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman">Washington, D.C.
20549</P></TD></TR></TABLE>
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<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Attn:</P></TD>
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<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Ms. Barbara C. Jacobs</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Ms. Katherine Wray</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Mr. Bernard
Nolan</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Ms. Kathleen Collins</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Ms. Melissa Kindelan</P></TD></TR>
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<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Re:</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Cardlytics, Inc.</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Confidential
Draft Registration Statement on Form S-1</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Submitted June 16, 2017</B></P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman"><B>CIK No. 0001666071</B></P></TD></TR>
</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ladies and Gentlemen: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">On behalf of our client, Cardlytics, Inc. (the &#147;<B><I>Company</I></B>&#148;), we are responding to the comments (the
&#147;<B><I>Comments</I></B>&#148;) of the staff (the &#147;<B><I>Staff</I></B>&#148;) of the Securities and Exchange Commission (the &#147;<B><I>Commission</I></B>&#148;) contained in its letter dated June&nbsp;30, 2017 (the &#147;<B><I>Comment
Letter</I></B>&#148;), relating to the above referenced Confidential Draft Registration Statement on Form S-1 (the &#147;<B><I>Draft Registration Statement</I></B>&#148;). In response to the Comments set forth in the Comment Letter, the Company has
revised the Draft Registration Statement and is confidentially submitting via EDGAR a revised draft (the &#147;<B><I>Amended DRS</I></B>&#148;) with this response letter. For the Staff&#146;s reference, we are also delivering both a clean copy of
the Amended DRS and a copy marked to show all changes from the Draft Registration Statement confidentially submitted on June&nbsp;16, 2017. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Set forth below are the Company&#146;s responses to the Comments. The numbering of the paragraphs below corresponds to the numbering of the
Comments, which for your convenience we have incorporated into this response letter. Page references in the text of this response letter correspond to the page numbers of the Amended DRS. Capitalized terms used but not defined herein are used herein
as defined in the Amended DRS. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Prospectus Summary </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Overview, page 2 </U></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Please address the following as it relates to your response to prior comment 2: </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Explain further your process for pairing the Redemption cohort with the Non-Redemption cohort to ensure
comparability between the groups when analyzing for attrition and monthly spend. In this regard, we note from your response to comment 3 in the May&nbsp;12, 2017 letter that &#147;the frequency at which both Cohorts spent money from the applicable
account prior to presentation of a Cardlytics Direct marketing incentive were the same, and that the composition of both Cohorts in terms of other relevant metrics such as geography, income and demographics were likewise consistent&#148;;
</P></TD></TR></TABLE>

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<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Disclose what percentage of the total customer database the 10,000 customers used in your analysis represents;
and </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">You disclose that monthly customer attrition decreased by 17% on average over the six-month period following a
customer&#146;s first redemption. However, it appears that the 17% represents the difference between the average monthly attrition rates for the Redemption cohort and the Non-Redemption cohort, not the decrease in overall attrition. Please revise to
clarify. </P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><U><B>Response to Comment 1:</B></U> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>In response to the Staff&#146;s comment, the Company has revised the disclosure on pages 2, 3 and 94 of the Amended DRS.
Set forth below is additional information regarding the Company&#146;s process for generating the Redemption Cohort and Non-Redemption Cohort. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>The Company respectfully advises the Staff that, in order to generate the Redemption Cohort, the Company selected random
customers from three of its 10 largest FIs who each redeemed his or her first Cardlytics Direct offer in any month in 2016 (each, a &#147;</B><B><I>Redeemer</I></B><B>&#148;). The Redeemers, taken as a whole, constitute the Redemption Cohort. With
respect to each Redeemer, the Company selected at random from customers from three of its 10 largest FIs a customer who did not redeem a Cardlytics Direct offer (each, a &#147;</B><B><I>Non-Redeemer</I></B><B>&#148;) in the same month as the
corresponding Redeemer redeemed his or her first Cardlytics Direct offer. The Non-Redeemers, taken as a whole, constitute the Non-Redemption Cohort. Each Redeemer may not have had similar historical monthly spend as the Non-Redeemer with whom such
Redeemer was paired, nor may each paired Redeemer and Non-Redeemer have been the same in terms of other relevant metrics. However, the Company respectfully submits that it conducted all of its analysis at the cohort level (as opposed to focusing on
individual pairings), and that the cohorts taken as a whole were the same in terms of the relevant metrics highlighted in the Staff&#146;s comment. Accordingly, given the size of the cohorts, the Company respectfully submits that it believes that it
was able to conduct a robust statistical analysis with the only uncontrolled variable being whether a customer redeemed his or her first Cardlytics Direct offer in any month in 2016. </B></P>

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 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">August&nbsp;28, 2017 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Page 3
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Summary Consolidated Financial and Other Data, page 13 </U></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">We note the new calculation of adjusted contribution in the table on page 16. Please revise this presentation
so it is clear which amounts are being subtracted and which are being added to revenue to arrive at the measure. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><U><B>Response to Comment 2:</B></U> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>In response to the Staff&#146;s comment, the Company has revised the disclosure on page 16 of the Amended DRS. </B></P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">You refer to the adjustment of FI Share commitment payments in excess of the amount of FI Share earned by the
applicable FI as having a non-recurring impact; however, it occurs in both years presented. Adjusting a non-GAAP performance measure to eliminate items identified as non-recurring when the nature of the adjustment is such that it is reasonably
likely to recur within two years or there was a similar adjustment within the prior two years is not consistent with Item&nbsp;10(e)(1)(ii)(B) of Regulation <FONT STYLE="white-space:nowrap">S-K.</FONT> Please revise your presentation accordingly.
See also Question 102.03 of the Non-GAAP Compliance and Disclosure Interpretations. </P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><U><B>Response to
Comment 3:</B></U> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>In response to the Staff&#146;s comment, the Company has revised the disclosure on pages 16 and 66
of the Amended DRS. </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations, page 13 </U></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Results of Operations </U></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Years Ended December&nbsp;31,
2015 and 2016 </U></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Revenue, page 76 </U></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Your response to prior comment 6 advises that you are unable to specifically quantify the impact of price
increases on revenue growth attributable to increased sales of Cardlytics Direct to existing marketers, and we note that your revised disclosure removes any attribution to price increases. Notwithstanding your inability to specifically quantify
their impact, please provide a qualitative discussion of the extent to which increases in price contributed to an increase in revenue, if such price increases were a material factor. In this regard, we note the related disclosure on page 84 that
your cash used in operating activities in 2016 &#147;reflected growth in revenue from new customers and changes to [y]our pricing model.&#148; In addition, please revise your disclosure on page 72 regarding the causes of the increase in revenue in
the three months ended March&nbsp;31, 2017, to the extent price increases materially contributed to that change. Refer to Item&nbsp;303(a)(3)(iii) of Regulation S-K. </P></TD></TR></TABLE>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><U><B>Response to Comment 4:</B></U> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>In response to the Staff&#146;s comment, the Company respectfully advises the Staff that the Company effectively increased
the price of Cardlytics Direct across its marketer base by optimizing the level of Consumer Incentives needed to drive incremental sales for marketers. The Company has revised the disclosure on pages 71 and 75 of the Amended DRS to include a
discussion of the impact of changes in Consumer Incentives levels over the periods presented. </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Part II. Information Not Required in Prospectus
</U></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Item&nbsp;15. Recent Sales of Unregistered Securities, page II-2 </U></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">You disclose on page 83 that you issued warrants to purchase 388,500 shares of common stock at a price per
share of $5.00, an unsecured promissory note in an aggregate principal amount of $6.0 million, and warrants to purchase 70,000 shares of common stock at a price per share of $6.92 in connection with your original and amended Term Loan agreement. It
appears, however, that you do not provide the full disclosure called for by Item&nbsp;701 of Regulation S-K with respect to these unregistered issuances in Part II of the registration statement. Please revise. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><U><B>Response to Comment 5:</B></U> </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman" ALIGN="justify"><B>In response to the Staff&#146;s comment, the Company has revised the disclosure on page II-3 of the Amended DRS. </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">*&nbsp;&nbsp; *&nbsp;&nbsp; *&nbsp;&nbsp; * </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Please direct any questions or comments concerning the Amended DRS or this response letter to either the undersigned at (617)&nbsp;937-2357 or
Richard Segal at (617)&nbsp;937-2332. </P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Very truly yours,</P></TD></TR>
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<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">/s/ Nicole Brookshire</P></TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">Nicole Brookshire</P></TD></TR>
</TABLE></DIV> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" ALIGN="center">


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<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P ALIGN="justify" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">cc:</P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Kirk Somers, Cardlytics, Inc.</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Richard Segal, Cooley LLP</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Glen R.
Van Ligten, Gunderson Dettmer Stough Villeneuve Franklin&nbsp;&amp; Hachigian, LLP</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman" ALIGN="justify">Heidi E. Mayon, Gunderson Dettmer Stough Villeneuve
Franklin&nbsp;&amp; Hachigian, LLP</P></TD></TR>
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