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SEGMENTS | 9 Months Ended
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Sep. 30, 2019
Segment Reporting [Abstract] |
SEGMENTS | SEGMENTS As of September 30, 2019, we have two operating segments: Cardlytics Direct in the U.S. and U.K., as determined by the information that both our Chief Executive Officer and our President and Chief Operating Officer, who we consider our chief operating decision makers, use to make strategic goals and operating decisions. Our Cardlytics Direct operating segments in the U.S. and U.K. represent our proprietary native bank advertising channels and are aggregated into one reportable segment given their similar economic characteristics, nature of service, types of customers and method of distribution. Prior to 2019, we offered Other Platform Solutions, which was deemed to be a separate operating segment. Our Other Platform Solutions enabled marketers and marketing service providers to leverage the power of purchase intelligence outside the bank channel. We have shifted our efforts and resources to support the growth of Cardlytics Direct. As a result, we have not and do not expect to generate substantial, if any, revenue from Other Platform Solutions for the foreseeable future. Revenue and FI Share and other third-party costs can be directly attributable to each segment. Our chief operating decision makers allocate resources to, and evaluate the performance of, our operating segments based on revenue and adjusted contribution. The accounting policies of each of our reportable segments are the same as those described in the summary of significant accounting policies. The following table provides information regarding our reportable segments (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2019 |  | 2018 |  | 2019
Cardlytics Direct: |  |  |  |  |  |  |
Adjusted contribution | $ | 16,906 |  |  | $ | 24,738 |  |  | $ | 47,368 |  |  | $ | 64,216 |
Plus: Adjusted FI Share and other third-party costs(1) | 17,514 |  |  | 31,681 |  |  | 54,271 |  |  | 76,921 |
Revenue | $ | 34,420 |  |  | $ | 56,419 |  |  | $ | 101,639 |  |  | $ | 141,137 |
Other Platform Solutions: |  |  |  |  |  |  |
Adjusted contribution | $ | 72 |  |  | $ | — |  |  | $ | 3 |  |  | $ | — |
Plus: Adjusted FI Share and other third-party costs(1) | 90 |  |  | — |  |  | 1,223 |  |  | — |
Revenue | $ | 162 |  |  | $ | — |  |  | $ | 1,226 |  |  | $ | — |
Total: |  |  |  |  |  |  |
Adjusted contribution | $ | 16,978 |  |  | $ | 24,738 |  |  | $ | 47,371 |  |  | $ | 64,216 |
Plus: Adjusted FI Share and other third-party costs(1) | 17,604 |  |  | 31,681 |  |  | 55,494 |  |  | 76,921 |
Revenue | $ | 34,582 |  |  | $ | 56,419 |  |  | $ | 102,865 |  |  | $ | 141,137 |
(1) | Adjusted FI Share and other third-party costs presented above represents GAAP FI Share and other third-party data costs less a non-cash equity expense included in FI Share and amortization of deferred FI implementation costs, which are detailed below in our reconciliation of GAAP loss before income taxes to adjusted contribution.
Adjusted Contribution Adjusted contribution measures the degree by which revenue generated from our marketers exceeds the cost to obtain the purchase data and the digital advertising space from our FI partners. Adjusted contribution demonstrates how incremental marketing spend on our platform generates incremental amounts to support our sales and marketing, research and development, general and administration and other investments. Adjusted contribution is calculated by taking our total revenue less our FI Share and other third party costs exclusive of a non-cash equity expense and amortization of deferred FI implementation costs, which are non-cash costs. Adjusted contribution does not take into account all costs associated with generating revenue from advertising campaigns, including sales and marketing expenses, research and development expenses, general and administrative expenses and other expenses, which we do not take into consideration when making decisions on how to manage our advertising campaigns. The following table presents a reconciliation of loss before income taxes presented in accordance with GAAP to adjusted contribution (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2019 |  | 2018 |  | 2019
Adjusted contribution | $ | 16,978 |  |  | $ | 24,738 |  |  | $ | 47,371 |  |  | $ | 64,216 |
Minus: |  |  |  |  |  |  |
Non-cash equity expense included in FI Share(1) | — |  |  | — |  |  | 2,519 |  |  | — |
Amortization of deferred FI implementation costs(1) | 378 |  |  | 789 |  |  | 1,136 |  |  | 2,173 |
Delivery costs | 3,007 |  |  | 3,070 |  |  | 7,509 |  |  | 9,686 |
Sales and marketing expense | 9,452 |  |  | 11,074 |  |  | 27,915 |  |  | 31,458 |
Research and development expense | 4,097 |  |  | 3,018 |  |  | 12,444 |  |  | 8,741 |
General and administration expense | 7,925 |  |  | 12,218 |  |  | 23,486 |  |  | 27,558 |
Depreciation and amortization expense | 777 |  |  | 1,167 |  |  | 2,471 |  |  | 3,181 |
Total other expense (income) | (290 | ) |  | 1,149 |  |  | 11,367 |  |  | 1,990 |
Loss before income taxes | $ | (8,368 | ) |  | $ | (7,747 | ) |  | $ | (41,476 | ) |  | $ | (20,571 | )
(1) | Non-cash equity expense included in FI Share and amortization of deferred FI implementation costs are excluded from adjusted FI Share and other third party costs, which is shown above in our reconciliation of GAAP revenue to adjusted contribution.
The following table provides geographical information (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2018 |  | 2019 |  | 2018 |  | 2019
Revenue: |  |  |  |  |  |  |
United States | $ | 30,884 |  |  | $ | 50,997 |  |  | $ | 90,606 |  |  | $ | 125,468 |
United Kingdom | 3,698 |  |  | 5,422 |  |  | 12,259 |  |  | 15,669 |
Total | $ | 34,582 |  |  | $ | 56,419 |  |  | $ | 102,865 |  |  | $ | 141,137 |
| December 31, 2018 |  | September 30, 2019
Property and equipment: |  |  |
United States | $ | 9,794 |  |  | $ | 11,583 |
United Kingdom | 436 |  |  | 384 |
India | $ | — |  |  | $ | 158 |
Total | $ | 10,230 |  |  | $ | 12,125 |
Capital expenditures within the United Kingdom were less than $0.1 million and $0.3 million during the nine months ended September 30, 2018 and 2019, respectively. Concentrations of Risk Customers Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Our cash and cash equivalents are held with three financial institutions, which we believe are of high credit quality. We believe that our accounts receivable credit risk exposure is limited as a result of being diversified among a large number of marketers segregated by both geography and industry. Historically, we have not experienced significant write-downs of our accounts receivable. One marketer represented 10% of our accounts receivable as of September 30, 2019. During the nine months ended September 30, 2018, a marketer accounted for 10% of our revenue. During the nine months ended September 30, 2019, a marketer accounted for 11% of our revenue. No other marketer accounted for over 10% of revenue or accounts receivable during the periods presented. FI Partners Our business is substantially dependent on a limited number of FI partners. We require participation from our FI partners in Cardlytics Direct and access to their purchase data in order to offer our solutions to marketers and their agencies. We must have FI partners with a sufficient number of customers and levels of customer engagement to ensure that we have robust purchase data and marketing space to support a broad array of incentive programs for marketers. Our agreements with a substantial majority of our FI partners have terms of three to seven years but are generally terminable by the FI partner on 90 days or less prior notice. If an FI partner terminates its agreement with us, we would lose that FI as a source of purchase data and online banking customers. During nine months ended September 30, 2018 and 2019, Bank of America, National Association accounted for 68% and 38% of the total FI Share we paid to all FIs, respectively. JPMorgan Chase Bank, National Association accounted for 0% and 40% of the total FI Share we paid to all FIs during the nine months ended September 30, 2018 and 2019, respectively. No other FI partners accounted for over 10% of FI Share during the nine months ended September 30, 2018 and 2019.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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