Liquidity

Cardlytics IPOs Amid Record Market Turbulence

On Friday, shares in Atlanta-based financial data and marketing analytics company Cardlytics began trading on the Nasdaq exchange under the symbol CDLX.

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According to data from Nasdaq, the company floated 5.4 million shares at a target price of $13.00, to raise a total of approximately $70.2 million in the offering. With close to 19.52 million shares outstanding, an IPO price of $13 would have valued the company at around $253.75 million.

However, the stock opened at $12.10 and dipped as low as $11.10 in early trading.

A Top-Heavy Business

According to the S-1 filed with the SEC on January 12, Cardlytics is not profitable at this time, but it did generate $113 million in revenue throughout 2016 and $91 million during the first three quarters of 2017. During that same 9-month period, the company lost almost $16 million.

At this time, the company is “substantially reliant” on just one of its customers. Although the S-1 states that Cardlytics is partnered with 2,041 financial institutions as of September 2017, Bank Of America “contributed […] 51%” of the company’s total monthly active users (MAUs) in 2017. Its largest partner in the UK, Lloyds, accounted for nine percent of the MAUs during the first three quarters of 2017. Its next largest US customer, Digital Insight Corporation, accounted for 11 percent of MAUs during that same period.

In other words, just over seventy percent of the company’s MAUs come from just three of its partner firms.

Jumping Into Choppy Waters

Cardlytics makes its public market debut amid a climate of uncertainty on US markets. Between Monday and the time of writing on Friday morning, the S&P 500 index dropped 5.8 percent and the more tech-heavy Nasdaq Composite index pulled back 6.8 percent since the start of the week. If markets don’t recover throughout the day, the Dow Jones Industrial Average is due to have its worst week in nine years, according to CNBC. Such conditions prove challenging even to larger, more financially robust public companies.

Another Exit For Atlanta

Cardlytics’s IPO delivers liquidity to its venture capital backers. According to Crunchbase data, prior to going public, Cardlytics raised nearly $203 million in funding, which includes a $25 million debt round closed in 2016. The company’s investors include Atlanta Ventures, Canaan Partners, Kinetic Ventures, and Discovery Capital.

Cardlytics marks one of the largest tech IPOs for the Atlanta metro area since Dell-owned SecureWorks raised $114 million in its public offering back in April 2016. Another Atlanta-based player in the payments and analytics sector, Cotiviti Corporation, went public in June 2016.

Cardlytics now joins a small but mighty group of Atlanta-based companies in the financial data analysis sector that have gone public. If current market turbulence continues, that club may stay small for some time.