CDLX stock in focus as Cardlytics’ revenue share to JPMorgan decreases

In 2018, Cardlytics (NASDAQ: CDLX), a tech company that operates as an advertising platform in banks’ digital channels, and JPMorgan Chase Bank (NYSE: JPM) struck a PayTech deal. 

Notably, the Wall Street giant began using Cardlytics’ Purchase Intelligence platform that banks can integrate with their debit or credit cards to create a loyalty program. This solution provides customers with customized offers and cash-back savings based on their transactions. 

On June 1, the two parties made a noteworthy amendment to the agreement. One of the changes stated in the recently published 8-K filing stated that Cardlytics’ revenue share (rev share) to JPMorgan decreased as of June 1.

“Pursuant to the terms of the Amendment, among other things, the Supplier Billings Share, which is the portion of advertiser billings that is retained by the Company, increased beginning on June 1, 2023.”

the 8-K filing states.

The latest change represents a part of a “Third Amendment to Schedule#1” of the agreement between Cardlytics and JPMorgan Chase. Thus, with the Amendment, starting from June 1, 2023, Cardlytics gets to keep more of the advertisers’ money.

The Amendment also states that this increased portion of the Supplier Billings Share, will stay the same or be even higher until the end of what they call the “Initial Term,” which is in November 2025.

Other prominent clients that use this product include PNC, Regions, SunTrust, and Bank of America, among others.

The amendment to have ‘a very large impact on $CDLX’s bottom line’

Interestingly, investment researcher Austin Swanson emphasized that the latest agreement change could make a significant impact on CDLX’s bottom line “since this is purely incremental with no additional expenses.”

‘Rev share’ refers to a compensation model commonly used in advertising. It is the practice of sharing a percentage of the revenue generated from an advertising campaign between the advertiser and the advertising platform or publisher. 

The amendments come weeks after Cardlytics posted its latest earnings report for Q1 2023, which showed a year-over-year revenue decrease of 5% to $64.3 million. Gross profit stood at $24.5 million, down 7% from a year ago, while billings declined 3% to $95.6 million.