UPDATE: Cardlytics IPO: What it's like to go public during market madness
By Max A. Cherney
Cardlytics executives never considered ditching IPO that raised $70 million
A calm market suddenly went crazy in the final two weeks leading up to Cardlytics Inc.'s initial public offering, but top executives didn't even discuss the possibility of turning back.
"There was never a conversation about us not doing this," Chief Operating Officer Lynne Laube told MarketWatch in a telephone interview Friday, when Cardlytics stock began trading a day after the Dow Jones Industrial Averageand S&P 500 indexclosed in correction territory (http://www.marketwatch.com/story/dow-poised-to-edge-up-as-traders-lick-their-wounds-after-a-punishing-stretch-2018-02-08).
Two Mondays ago, when the company began its final push toward the IPO, its executives--much like many investors--didn't see the S&P 500 correction coming. Laube said his company even allowed itself a bit of "cautious optimism" that it would be able to price its offering higher than its $13-to-$15 forecast range.
"The first week [of the pre-IPO road show] was fantastic," Laube said. "There was strong investor engagement."
See also: What technical analysts say about the stock-market collapse (http://www.marketwatch.com/story/what-technical-analysts-say-about-the-stock-market-collapse-after-the-dow-sp-500-fall-into-correction-2018-02-09)
As it became clear that market conditions had turned unfavorable, Cardlytics focused on wooing high-quality investors--those who believed in the company's story and were less worried about short-term price movement.
"Even on the choppiest of days in the market, when the Dow was down 1,000 points, 5% of the discussion was about the market and 95% of the discussion was about the business," Chief Executive Scott Grimes, who founded the company with Laube, said.
Cardlytics still managed to price within its range, though at the lower end (http://www.marketwatch.com/story/cardlytics-ipo-aims-to-raise-70-million-at-13-a-share-2018-02-08), and raised $70.2 million. Shares dipped when they first hit the Nasdaq under the ticker symbol "CDLX" on Friday morning, but closed 2.9% above the IPO price of $13.
Grimes said that investors were excited about the marketing-data platform's partnerships with banks and the results it's able to deliver. The company has established partnerships with heavyweights including Bank of America Corp. (BAC)and U.K.-based Lloyds Banking Group PLC (LLOY.LN) , and Grimes said the company's software is more effective than Alphabet Inc.'s(GOOGL)(GOOGL)Google Adwords product.
"We think it's better than intent-based advertising," he said.
Investors gave Cardlytics a roughly $250 million valuation at the time of the IPO, after the company revealed average revenue per user (https://www.sec.gov/Archives/edgar/data/1666071/000119312518022400/d338035ds1a.htm) of $1.56, compared with Snap Inc.(SNAP)which banked $1.54 per user last quarter and is valued at $23 billion. Facebook Inc.(FB)makes more than triple those numbers, clocking in at over $6 per user.
See also: This stock-market shakeout looks a lot like 1996-97 (http://www.marketwatch.com/story/this-stock-market-shakeout-looks-a-lot-like-1996-97-in-one-chart-2018-02-09)
Executives decided to begin the process of listing sometime in early to mid-2017, but it was really in the fourth quarter of 2017 that they decided to list early in 2018. Grimes said that in general the reason he wanted to take Cardlytics public is that "the company is at a huge inflection point right now, and we thought we were best positioned as a public company."
Also, said Laube, with a coming partnership with Wells Fargo & Co.(WFC)and others, "We want to have a strong balance sheet to manage expectations."
"The company is a money machine," Grimes said. Referring to a store manager the company was working with to use the platform's insights to help drive sales, he said: "For every dollar she put in, she got six dollars out."
-Max A. Cherney; 415-439-6400; AskNewswires@dowjones.com
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02-12-18 0709ETCopyright (c) 2018 Dow Jones & Company, Inc.