Earnings Call: Q3 2020

Nov 2, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Cardlytics Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to Curt Summers, Chief Legal and Privacy Officer. Thank you, and please go ahead, sir. Good evening, and welcome to CARbolytics' Q3 2020 financial results call. Before we begin, let me remind everyone that today's discussion will contain forward looking statements based on our current assumptions, expectations and beliefs, including expectations about future financial performance or results, our financial guidance for the Q4 of 2020, our ability to achieve our key long term priorities, the launch of U. S. Bank, growth in FI MAUs or monthly active users, the increase in our connectivity to our MAUs, the use of proceeds from the convertible notes, the evolution of our platform to a fully operational platform, the impact of COVID-nineteen on our business and the economy as a whole, including the stabilization of the economy and potential improvements in the economy in Q4 the impact of our rise, retain and return strategy and the sufficiency of our capital structure. For a discussion of the specific risk factors that could cause our actual results to differ materially from today's discussion, please refer to the Risk Factors section of the company's 10 Q for the quarter ended September 30, 2020, that we filed earlier today and in subsequent periodic reports that we filed with the Securities and Exchange Commission. Also during this call, we will discuss non GAAP measures of our performance. GAAP financial reconciliations and supplemental financial information are provided in the press release issued today and the 8 ks that has been filed with the SEC. Today's call is available via webcast and a replay will be available for 1 week. You can find all the information I've just described on the Investor Relations section of Cardlytics' website. Please note that a supplemental presentation to our 3rd quarter results has also been posted to our Investor Relations website. Joining us on the call today is Cardlytics' leadership team, including CEO and Co Founder, Lynn Loebi and CFO, Andy Christiansen. Following their prepared remarks, we'll open the call for your questions. With that, let me turn the call over to Lynn. Lynn? Thanks, Kirk, and thank you to everyone for joining us on our Q3 2020 earnings conference call. Q3 showed increases in spend throughout the quarter, so we are optimistic that the economy is in the middle of a slow recovery. We've also seen signs of this recovery in our business and continue to succeed with our rise, retain and return strategy. For example, prior to Q3, every major hotel partner we had exited our channel. By the end of Q3, they had all signed an IO with Carlytics for recovery campaign. And despite airline travel seeing a persistent decline in demand post COVID, we're currently in a national full scale recovery campaign with one of our airline partners. However, we are still cautious in regards to some aspects of our business as consumer spending in the UK and some of our key We are also continuously monitoring spend data to make sure we're prepared as a company for a potential new wave of infections this winter. With all that in mind, here are our results. Total billings for the Q3 were $62,100,000 down 25% year over year. Total revenue, which is equal to billings net of consumer incentives, was $46,100,000 a decline of 18% year over year. Adjusted contribution was $19,700,000 down 20% year over year. As we've said on calls and in meetings throughout the year, we remain optimistic about the future. Our key long term priorities of increasing the number of marketers working with us, bringing our solutions to new industries, evolving the Cardlytics platform and demonstrating operating leverage in our business remains fully achievable. Now on to several updates in specific areas of the business. With advertisers, we are seeing increased momentum in both long standing partners and new ones. 1 of our top retail and dining partners renewed for 2021 with an 11% year over year contract growth and a 2% rate increase. In the Q3, 10 new direct to consumer brands ran on our platform for the first time, all 10 have re signed to subsequently run-in Q4 and several have signed or are finalizing annual contracts for 2021. On a product note, we are pleased to report continued progress with our self-service platform. Agencies continue to test and we're working with them to create the best user experience possible. Our partner agencies are providing feedback on how we can improve and have simultaneously expanded testing to 3 new brands, including a CPG client. In addition, the platform is currently connected to over 75% of MAUs and we expect to be connected to the vast majority by the first half of twenty twenty one. We're excited about the incremental strides we've made towards a fully operational platform this quarter. Moving to the bank side of our business, Wells Fargo continues to scale and our MAU base has grown to $161,600,000 or a 26% increase year over year. We expect MAU growth to stabilize in the low to mid single digits in the future quarters. Further, our launch preparations with U. S. Bank are going as planned and we still expect to launch them with our version 1 of our new user experience in the first half of twenty twenty one. With that, I will turn it over to Andy. Thanks, Lynn. Despite the challenging environment, we have continued to see month over month improvement in our results since April. Many parts of the business continue to track in the right direction, which makes us optimistic about continued improvement throughout the rest of the year. We remain focused on our longer term initiatives, such as our self-service platform and the launch of U. S. Bank, and we're looking forward to sharing future updates on our progress. Just like last quarter, I'll give a quick update on liquidity and our recent capital raise before covering Q3 results and guidance. As many of you are aware, we completed a $230,000,000 convertible note offering in the quarter. We firmly believe our prior liquidity was sufficient to operate the business. We decided to take advantage of a very favorable financing environment. The net proceeds will be used for working capital or other general corporate purposes, which may include potential acquisitions and strategic transactions to support long term growth in our business. In addition, this financing provides us even greater financial flexibility to weather unforeseen economic uncertainties and be opportunistic as we evaluate avenues of inorganic growth. We ended the quarter with $288,000,000 in cash and cash equivalents compared to $98,000,000 at the end of Q2. We also continue to have access to our undrawn $40,000,000 loan facility. The economy continues to improve, but there's still a lot of near term uncertainty, especially in key verticals and the U. K. Market. So we're remaining extremely prudent in regards to our cash strategy. During the Q3, billings decreased 25% year over year to $62,100,000 and revenue decreased 18% year over year to $46,100,000 While U. S. Revenue declined 15% year over year, U. K. Revenue was down 52% as businesses there have been impacted by much deeper and more prolonged economic contraction in the U. S. On a sequential basis, billings and revenue were up 57% 63%, respectively, in the Q3 compared to Q2 of 2020. Adjusted contribution was $19,700,000 in the quarter, down from 20% from Q3 2019. Adjusted EBITDA was a loss of $600,000 in the quarter compared to a gain of $3,000,000 in Q3 of 2019, reflecting the $5,000,000 decline in adjusted contribution offset by $2,600,000 of incentive compensation that was shifted from cash to equity as part of an effort to preserve cash during the pandemic. The strategic investments we continue to make across the business to support our long term growth alongside the effects of the pandemic and the programs we put in place to preserve cash may cause fluctuations in our EBITDA over the coming quarters. MAUs grew 26% year over year from $128,300,000 in the Q3 of 2019 to $161,600,000 in Q3 of 2020, reflecting the Wells Fargo launch and an increase in MAUs from existing FI partners. ARPU during the Q3 was $0.29 down 34% year over year. As expected, ARPU continues to experience pressure year over year due to our significant MAU growth and decline in revenues. We had 27,500,000 shares outstanding at the end of Q3. Weighted average shares outstanding during the quarter was 27,300,000 compared to 23,600,000 during Q3 of 2019. Now turning to guidance. The economy is clearly in a more stable position than it was in the first half of the year, but there's still a lot of uncertainty related to infection trends in the U. S. And U. K. That could disrupt the economic recovery. We recognize the importance of guidance to the investing community, so we decided to provide some direction on billings and revenue. While our guidance is a bit wider range than usual, it reflects the wider range of potential outcomes. Please note that depending on the circumstances, we may decide to withhold guidance in the future. As mentioned, we foresee sequential improvement in our results continuing in Q4 and expect billings between $79,000,000 $89,000,000 and GAAP revenue between $55,000,000 $62,000,000 Overall, we've been pleased to see the business adapt and recover in a rapidly evolving landscape, and we're eager to see continued progress towards a more normal operating environment, which will help us achieve our long term financial goals. And if things get worse before they get better, we're confident that our liquidity provides us the flexibility to maintain a long term mindset and act opportunistically. With that, I'll hand it back to Lynn for closing remarks before we open for questions. Lynn? Thanks, Andy. Q3 was a solid quarter. As we've said in the past, we remain excited about our opportunities for growth and feel like our momentum is increasing. We are cautiously optimistic that sequential improvements will continue into Q4, but we have plans in place to address any scenario. Like always, I remain proud of our team's response in the workplace and the community, and we continue to remain focused on their health and well-being. With that, I'll open the call up for your questions. Our first question comes from the line of Youssef Squali with Truist Securities. Your line is open. Excellent. Thank you very much. Hi, guys. Two quick questions for me. First, can you just speak to the October trend, if you can maybe just quantify that for us? I think you did out of Q2 when you spoke to July. So if you can speak to that? And just generally, what kind of macro environment is baked into your guidance in terms of the UK versus kind of what you're seeing in the U. S? And second, the delta between bookings growth and revenue growth seems to have increased again this quarter, basically implying fewer incentives to customers. Maybe can you speak to the reason for that? And is there basically a structural difference between maybe offline versus online offers going on? Or is it that just a product mix based on what you guys are what's most popular at this point from an offers standpoint? Thank you. Yes. Hey, Youssef, thanks. It's Lynn. I'm going to let Andy answer most of this, but I will just sort of refer to the month over month billings guidance that we were giving in previous quarters. Because we're giving guidance in Q4, we're not going to do that in this quarter, but I can tell you we have continued to see sequential month over month improvements and expect to see that in Q4. But I think we're going to kind of be landing harder on our guidance and less on how we ended the month in October. Yes, that's exactly right. And then to your second question on the UK, we actually have haircut our expectations there pretty substantially. So we certainly are concerned with what's going on over there. But we've seen a lot of strength in the U. S, which is really driving the numbers and not so much of any type of material rebound in the UK. So we feel like we're covered there pretty well. And to your last point on rewards, certainly we've talked about this in the past. We had certain areas of the business that had perhaps a bit lower margins. And as those areas have really come down to UK and also some travel, we've certainly seen that change in mix occur. We actually aren't seeing a lot of changes from account to account historically, but it's much more around mix. We are actually reevaluating the margins there. I think that it's fair to say that this has been one of the higher margin quarters that we've had in a while. So you will actually, I think, see this come back down into a normal trend as the business continues to adapt and pivot over the next probably couple of quarters. Yes. I definitely wouldn't put the margins this quarter in your long term model. Got it. That's helpful. Thank you both. Thanks, Youssef. Our next question comes from the line of Chris Shutler with William Blair. Your line is open. Hey, everybody. Good afternoon. Would you mind giving us, I guess, an earlier look into the sales funnel? I know one of the challenges with Cardlytics is that advertisers tend to test and learn and it takes time to ramp up the budgets. But I know when you did give the 10 new DTC brands, which is great to see, but anything else that you can say or quantify around number of new advertisers using the platform relative to what you normally would see? I mean, I can give you anecdotal information. I'm not going to be able to give you other specific stats other than what we discussed already. But what I would say and I've said this for a couple of quarters is we are now at the scale where most advertisers will at least take our call. Doesn't mean we can't get to the right person immediately, doesn't mean they still have to go through a test and learn cycle, but we are engaged with more advertisers than ever before simply because of the scale that we now bring to the table and the fact that we can move the needle even to the largest. Some move very fast, the D2C brands, for example, that we referenced have moved very fast and a much faster sales cycle than we see with a traditional large big box retailer, for example. But we feel good about the engagement that we have with new advertisers. We'll see how long it takes for them to go through that testing cycle. So at this point, I wouldn't give you I would not say you should assume acceleration even though we have seen some nice points where we are seeing acceleration. And then as we continue to watch it, if we feel good about signaling acceleration, we'll let you know. Okay. And then on the self-service tool, just I know it's early days still, but any kind of early feedback, learnings from the agencies that you're working with? And do you expect to expand the number of agencies you're working with here in the near term? Yes, good question. So we have told you guys not to expect us to expand the agencies we're working with this year. That is a 2021 initiative to start going to more agencies. What we are doing is expanding the number of clients with the 2 test agencies. So we've already done that and that continues to expand in terms of the number of clients within those agencies that are testing on the platform. The biggest feedback that we're getting from the agencies is specific reporting that they would like that is more consistent or similar with reporting that they get on other platforms. So for example, we don't overly emphasize clicks because we are a true return for investment dollar ad spend platform. It's a paper performance platform, so clicks don't matter. But the agencies would like some of those standard metrics that they get in other platforms. So we're working on that as well as more customizable reporting for them to import and create their own reports using some of their own data. Those are probably the 2 biggest points of feedback that we're getting from them. But nothing major, nothing that is not easily addressable and that we continue to work on. So we are still very confident with our beginning of rollout in early 2021 to many other agencies. And of course, as we discussed, it will take many quarters for them to get to scale, but we're confident that we're going to get started. Okay. Thank you very much. Thanks, Chris. Our next question comes from the line of Tim Willi with Wells Fargo. Your line is open. Hi, thanks. Good afternoon, everybody. A couple of quick questions, a couple of housekeeping and then one other. Just on the housekeeping side, Andrew, how should we think about interest expense in the upcoming quarters with the convert raise? Is what we saw in 3Q a decent run rate? Or should we think about adjusting that number a little bit as we build out the quarterlies from this point? Yes, that's right. So we would not have had much time here. We closed that kind of in the middle towards the end, month of 18th September. So we would not have reflected a full quarter of interest expense. And so certainly, the $230,000,000 convert, 1%, you're going to have an annualized $2,300,000 out there. You're also going to have some non cash interest as well, just via the accounting. And so that will accrete up, that discount will accrete up. So you will certainly see that here in the next quarter, but that's fair to build that in. So sort of started, just take the 2.3 and divide that by 4, that will be a good starting point. The accretion won't be that material? That's right. So you're going to get that and that will be the cash interest. That's right. Yes, yes, perfect. The second question was just around the stock comp number and I know that can move around with the share price. So that is a moving target at times the way that formula works. But I guess we've sort of got 2 quarters here sequentially where you could average it out to $10,000,000 And I know you brought on a bunch of people and things like that, that probably helped push that number up. But assuming no real volatility around the share price, is this again sort of a good nominal number to work with in that $10,000,000 quarter? Or is there something we need to again sort of think about from the perspective of add backs and adjustments with stock comp? Yes, there's actually you're right, there's quite a few moving parts on there, as well as the underlying kind of accounting, which creates a little bit of noise sometimes. So we did have a little bit of unusual charges that we don't take every quarter that are running through there of a couple of $1,000,000 Also, over the last couple of quarters, right, we've been talking a little bit about this that we had diverted some of our cash compensation into equity. And so it is a bit inflated, both in Q2 and Q3. In the prepared remarks, I think we actually quoted the $2,600,000 number. So these numbers here for Q3 and Q4 are not truly represented. They're a bit higher than they would be otherwise. But we do continue to think that over the coming quarters, borrowing excluding the effects of the incentive comp, which will come back into cash at some point, that we're probably going to have some additional quarters here in 2021 where it will continue to be noisy unfortunately. But that's kind of directionally what I have. Okay, perfect. And then the question, this is the last one and I'll hop back in the queue. I think you said you say a CPG was part of 1 of the test groups with the agencies around self-service. Is that correct? I'm sorry? Yes, that is correct. We've had our first CPG brand testing the Activate platform via the agencies or the self-service platform. We have an interim name for it called Activate. Just out of curiosity, I mean, obviously, the model has generally been sort of driven around a purchase amount at a retailer or a marketer, time of day, dollar amount, frequency, what have you. I know you've referenced before in the grocery channels, it's a little bit harder because the groceries sort of have their own type of approach and they let the CPGs do a lot of promotional activity as opposed to the store. And I guess thinking about SKU level awards, etcetera, I think you've talked about, just any thoughts there? And I don't know if the CPG test is around a particular item and getting into sort of the SKU type level redemption activity, but I guess if any thoughts around that test and or just a broader concept of truly very specific items, especially if you had talked about like the grocery channel where I know you guys still sort of try to crack the code versus some of the other verticals where it was a bit easier? Yes. No, it's a great question, Tim. So this particular test, I want to be clear, it's a CPG brand. We are testing the brand influence and brand kind of drive that we can have as a result of this platform. It is not redeemed at the brand level, however. They are still able to redeem within a variety of stores and buy a variety of number of products underneath the CPG brands. So it's not a full SKU level offering and redemption. That is absolutely something that as we've all discussed over and over again, if you could combine SKU level data with transaction level data, that is a game changer in our opinion. We are constantly looking at companies that we can either partner with or acquire that have SKU level information. But this is, call it, a very, very baby step. It is not the full SKU level targeting and redemption product that we'd ultimately like to build. But it is a very important baby step to have a major brand and this is a brand everyone on the phone would know well, to have a major brand come in and say, let us try to test out this channel in a more of a non traditional way is exciting. And then just very quickly, I do want to talk about the stock based comp. As a reminder, a lot of the variability is because we have an awful lot of our stock based comp is performance based, not time based. And so we've got a number of performance based grants out there that we may trigger in 2021, which is a big part of what makes it variable. But their performance numbers that I think everyone on this phone call would be thrilled if we hit. So just keep that in mind. That's great. That's helpful to have that as well. So thanks. I'll just get back in the queue. Thanks. Our next question comes from the line of Doug Anmuth with JPMorgan. Your line is open. Great. Thanks for taking the questions. Len, I was just hoping you could share some of your latest thoughts kind of going into the holidays this year, just on any patterns you're seeing around consumer spending and anything that you think will influence marketer spend on the platform? And then secondly, just on the new user experience, can you give an update there? Are you still expecting U. S. Bank to be the 1st bank to see kind of the early version? And is that still on track for the first half of the year? Thanks. Thanks, Doug. Let me take your last question first. The answer is yes, U. S. Bank is on track for the first half of next year, new user experience. It will be version 1 of the new user experience, but it will be noticeably different. In terms of trends that we're seeing, obviously, we see the spend. We watch it very closely. We continue to see recovery in all spend categories, even including travel, although it's still down quite a bit. What I think the difference is, I think twofold as we go into Q4. One is, while it's looking like we're going to have another wave of some form of potential partial shutdown even in the U. S, I think most of our advertisers are more prepared to think about that and to handle that shutdown in a way that is very different than what they did in Q2, which was panic first and shut everything off and then try to figure things out. So I feel good about that. I also feel good about the pivot, if you will, that we've had with the rise, return, retain strategy. I think we are more COVID insulated with some of our brands than we were in the past. The D2C brands, as an example, are much more COVID resistant than, for example, a large dining out establishment. So we feel good about Q4 even if there is another disruption, I mean, if it's massive and completely unprecedented, all things off the table, but we are generally expecting disruption in both the U. S. And the U. K. And still feel good about the numbers we gave you. Okay. And just following up on the U. S. Bank part, any just insight on what kind of the early version of the new user experience will include, what that will look like? Yes. It's laying the foundation for having different types of offer constructs. So that's the way you need to think about it. As you know today, all of our offer constructs are the same. If you see a logo, you can shop at that retailer whenever and however you choose online, offline and you get the cash back. This new user experience is completely trying to lay the foundation for there are different kinds of offers that require different kinds of consumer experiences for you to get the cash back. And so you're going to see much more of a tabular kind of feature where you can find certain kinds of offers, where the offers actually look a little bit different, where you can sort and categorize. So it's laying that foundation. Now you won't necessarily see lots of different kinds of offer constructs, but you'll see the foundation laid so that over time we can bring those in. Got it. Okay. Very helpful. Thank you. Our next question comes from the line of Jason Kreyer with Craig Hallum. Your line is open. Hi, good afternoon. Thank you. Just piggybacking here, but you talked about potentially another wave of cases or shutdowns that could be on the horizon. Just curious if you're seeing anything in your data on consumer behavior in any geographies or any uniqueness that may be showing up in the numbers that you guys see? Nothing like we were before. Before in Q2 and into early Q3, the differences you could see between states and cities and zip codes and categories was dramatic. It's a lot more leveled out now. So California isn't that much different than New York right now. The categories are still down, some categories are still up, but you don't see massive geography differences right now. I anticipate that's going to start to change again, quite frankly. But right now, what you see is everything is recovering. Some are almost fully recovered, if not fully recovered. Several are still not, but everything is recovering and it's covering pretty consistently across all areas of the U. S. Right now. Got it. Thank you. And then, we've some changes start to trickle out just in terms of like imagery or formatting of the offers from some of these bank partners. Just curious what goes into that on your end? Like how many how much of these changes are things that Cardlytics has driven working with the with your financial partners and what comes directly from the bank in terms of just making platforms updates to like their mobile experiences? Yes. No, I mean all of the changes that you see to our offer constructs are driven by us. Now the banks are friendly, engaged partners in it, but they are driven by us. The changes you've seen so far are small test and learn types of changes, nothing too material, but you got to start somewhere. But the banks do have a decent view of where we'd like to get to ultimately. And so they're all trying to put their foot in the water to test little things here and there where they can to get ready for more and more. So you should see that as a very positive sign of bank engagement willing to work with us to get some of these ideas out there as soon as possible. Okay. Last one quick for me. Just going through the slide deck, interesting you talk about like greater touch points with consumers and it's kind of implied in there this is based on email communication. Curious how those conversations go with the FIs? I mean, it seems like 1 or 2 of the FIs have been more aggressive with email campaigns than the rest of them have. So just wondering how that dialogue progresses? Yes. I mean, I think the vast majority of our at least larger institutions are pretty aggressive. Aggressive might not be the right word, but email is a routine part of how they market this program to their customers. And so I think most of our e mails are fairly they're just part they're just an expectation that the bank has that we're going to email our customers quite routinely on this program. Some banks are more willing to do sort of test and learn within the email construct, but I believe all of our banks consider email a huge part of the marketing of this program and will continue to do so. And the conversations are I mean, we've talked about this. We have some of the highest open rates, if not the highest open rates of emails sent by these banks over any other product that they have. So they're excited to continue to use these emails to engage with customers. And I do think you'll even see some of them trying to sell other products and services within the emails, but still using the Cardlytics content to be the thing that encourages the initial engagement. Great. Thank you. Our next question comes from the line of Aaron Kessler with Raymond James. Your line is open. Great. Thanks a lot. A couple of questions. Maybe just first on the very traditional retail category and the restaurants verticals. Kind of where are we in terms of the recoveries? Are you seeing kind of similar recoveries across the merchants in these categories? Or is it really depends from 1 retailer restaurant to another? And just maybe also in any updates maybe trends in advertiser ROI and your sense of how that compares to other channels as well? I think you used to quote kind of an incremental return on ad spend number. Thank you. Yes. This is Andy. Yes, we're actually seeing a very broad based recovery, to be honest. When we look at all of the spend that we see, macro level, we see very healthy gains across retail and restaurant, even travel has started to pick up a little bit. It's still down significantly. But we're benefiting from all of those tailwinds as well. When you look at our results on a vertical basis and we don't share details there, but it aligns very closely with the overall economy and restaurant in particular for us has been very, very strong. So I think that's one of the very, very encouraging thing for us, which gives us a lot of comfort when you go in to reintroducing guidance for Q4 and you see it on a broad basis like that. It really is helpful. Do you want to take the ROI question? Yes. I mean, the ROI is this is going to sound sillier than I mean it to, but it is easy to obtain. It is a very simple math formula. If we're running a little hot on ROI, we simply bring offer values and offer impressions down. If we're running a little low on ROI, we bring impressions up and sometimes offer amount up as well. It is very easy for us to hit whatever ROI we need. It's just a simple math formula and the big machine. So we continue to try and be at the top of the stack for most of our advertisers. They don't always tell us exactly where we rank in the stack, but our general sales approach is we want to be the best option you have out there, at least the best we continue to deliver incredibly strong ROIs for our advertisers. So, we continue to deliver incredibly strong ROIs for our advertisers across every vertical. Got it. Thanks a lot. And our next question comes from the line of Josh Beck with KeyBanc. Your line is open. Yes. Thanks for taking the question team. Lynn, I wanted to follow-up on one of your comments, which I found interesting. It sounds like the advertiser attitude has changed a little bit. Obviously, everyone's learned a lot in the last 3 to 6 months. Certainly, it seems like maybe how they will reprioritize things if there were another big slowdown has changed. So I'm wondering if that's favoring these very clear ROI channels like yourselves? I'm just kind of curious to hear a little bit more about that change. No, great question. And the change I was referring to is more at the macro level. I don't know that it's necessarily unique to us. But at the macro level, I think what you have is advertisers who know that there's likely another version of some wave coming. They're thinking about what their strategies are for handling that. They're thinking about how they can push online more or in store delivery more, things like that. And they're not in an instant reaction of, okay, I have to shut everything down and figure out what I'm going to do. So that comment was much more macro. I think all channels are going to see all advertising platforms are going to see something similar. I do think where we are somewhat uniquely advantaged, but it is different by vertical is because we see the spend sooner than others. We can certainly, particularly on the recovery campaign, we can tell them when it's time to start launching a recovery in a way that other platforms maybe can't. So we continue to believe that we're advantaged on that sort of return strategy. But the comments were much more meant at the macro level. You're just not going to see the same panicked reaction that you saw in Q2, in Q4, unless complete disaster strikes. I mean, certainly if there's riots in the street and the cities are burning after Election Day that who knows. But I think every major advertiser we talk to know that there's going to be some bumps in Q4 and they're sort of trying to figure out how they still do business despite bumps and regional shutdowns and things like that. We've adapted and pivoted our business and our clients are doing the exact same thing as well. Their businesses are just well much more prepared to deal with it. Okay. That's very helpful context. And I certainly appreciate these engagement metrics. I think it's probably a little tough to look at them sequentially, but it does seem like there's a little bit of an improvement in the offer activation rates for restaurant and retail. So I'm just wondering, is there anything to read into that? Are those verticals starting to recover in your view? Just anything that really stood out to you as you looked at some of these engagement metrics? Yes. I don't think that there's anything really noteworthy in the activation rates. One thing that was kind of one thing So one thing that's interesting there is that we're starting to capture a little bit of budget there, but it's off a real small base. But the activation rates themselves, I don't think there's anything to really read into it at this quarter. Okay. That's helpful. And then, when I know this question came up earlier about the delta between billings and revenue growth. It certainly looks like in Q4, it's a much smaller delta that's coming out in your preliminary guidance. So anything that we should be mindful of there in terms of maybe what's behind that? Yes. I think we foresee that over the next couple of quarters that our billing margins will begin to revert back to historical levels. That kind of upper 60, kind of low 70 level is kind of where we've been historically, where we feel comfortable. I think it does remain to be seen how quickly that, that does pivot, but we are taking some strategic action to get that down a little bit. So it does remain to be seen how far that may come down. But you're right, we did certainly guide for that to come down slightly. But it remains to be seen exactly where that is going to land. Okay. And then if I can just sneak one other quick one in on MAUs. It certainly seems like you're around the call it $4,400,000 level of net adds in Q3. Is that maybe what was behind that? Is that a bit of a steady state for a while? Just anything you can share with us on MAU trend? Yes. I think we for the most part, these Chase and Wells launches are behind us at this point. So what you're going to be seeing in future quarters is just natural growth rate of MAUs as it relates to customers engaging in online banking and mobile banking. So just macro trends that we benefit from versus one last push from any of our banks on a slug of MAUs that we don't already have. Obviously, U. S. Bank, you'll see some uptick with them. But again, on the base that we have of $161,000,000 plus, even U. S. Bank, we're still going to be in that sort of lowtomidsingledigit growth rate for many quarters to come on MAUs, even with the add of the U. S. Bank, which will probably go across 2 quarters, maybe even 3, which is why we're confident you should take that back down to low to single digit growth. Really helpful. Thank you. Thank you. And our last question is a follow-up from Chris Shutler with William Blair. Your line is open. Hey, thanks for taking the follow-up. Once U. S. Bank is live with the new user experience, it's going to be the only bank where marketers can do more than put a logo on the bank's mobile app or online banking platform. So would you allow marketers I think the answer is yes, but would you allow them to essentially specify that they want to work with U. S. Bank because they're going to be the only ones that allow the showing of imagery? And then any update on other large financial institutions expressing interest in the new UX? Yes, great question. So the answer to your first question is no. Initially, what we're going to do is allow marketers to test and learn with us on having some capabilities available in some banks and not in most banks. We probably won't raise prices. So they'll probably get the benefit of some free testing and learning with new capabilities like basic industry, etcetera. To use that as a carrot to get the banks to go faster on rolling out the new user experience. So, I think that answers that question. In terms of where the banks are, they are all very engaged in wanting this new user experience. They're all in various stages of figuring out how to do the business case and or how to get it into their IT pipeline for prioritization. So it is going to be many, many quarters. I would tell you to conservatively not expect any bank, any large bank to roll out the new user experience fully in 2021. I believe we have a good chance at getting a couple of them to start, but this is an initiative that goes clearly into 2022 and maybe even into early 2023. Okay. Thanks, Lynn. Thank you. And I'm not showing any further questions. So I'll now turn the call back over to Lynn Lope for closing remarks. Okay. Well, thank you everyone for joining the call. We appreciate it. And get out and vote if you haven't already. Bye everyone. Ladies and gentlemen, this does conclude the program. Thank you for participating and everyone have a wonderful day.