Earnings Call: Q4 2019

Mar 3, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Cardlytics 4th Quarter and Full Year 2019 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host for today, Mr. Kirk Sommers. Please go ahead. Good evening, and welcome to Cardlytics' 4th quarter and full year 2019 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 Q1 2020 financial guidance, full year 2020 financial outlook, executive changes, future growth of financial measures, the rollout of Wells Fargo, growth in financial institution monthly active users, or FI MAUs, in 2020, expansion into new verticals, the number of purchase transactions in the United States, the addition of marketers and marketer spend in 2020, the impact of investments on driving revenue and margin growth, achievement of future goals, the evolution of our platform to a highly automated platform and our expectations regarding 2021 ARPU levels. 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 ks for the year ended December 31, 2019 that we filed earlier today and in subsequent periodic reports that we file 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 we filed with the SEC today. Today's call is available via webcast and a replay will be available for 2 weeks. You can find all of the information I've just described on the Investor Relations section of Cardlytics' website. Please note that a supplemental presentation to our Q4 and full year 2019 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, Scott Grimes COO and Co Founder, Lynn Loeby CFO, David Evans and SVP and Controller, Andy Christiansen. Following the prepared remarks, we'll open the call to your questions. With that, let me turn the call over to Scott Grimes, Cardlytics' CEO and Co Founder. Scott? Thanks, Kurt, and thank you to everyone for joining us on our Q4 and full year 2019 earnings conference call. 2019 was a strong year for Cardlytics. I'm proud of what our colleagues have accomplished and I'm more confident than ever in our ability to achieve our goals going forward. I'm pleased to announce that we delivered 4th quarter results, which exceeded all key metrics from the guidance in our Q3 earnings call and are consistent with the preliminary results we delivered in January. Here are some of the highlights. Total billings for the Q4 were $100,900,000 an increase of 44% year over year. Total revenue, which is equal to billings net of consumer incentives, was $69,300,000 up 45 percent and adjusted contribution was $31,000,000 growing 40% year over year. And we generated adjusted EBITDA of positive $6,900,000 In the 4th quarter, we continued to grow the reach of our platform. We increased our quarterly average FI MAUs to 133,400,000, up 60% from Q4 2018. We continue to expect to reach 150,000,000 FI MAUs in the first half of this year. And at that point, we will see and analyze roughly one out of every 2 purchase transactions in the U. S. We believe the scale places us on equal footing with other major U. S. Advertising platforms and provides a highly differentiated solution for marketers. As marketers continue to adopt and expand the use of our platform, we are increasingly confident in our ability to realize our 2018 ARPU levels by the end of 2021. In addition to announcing our financial results today, we are announcing several senior level executive changes that I have made to position the company for future success. We have built a substantial business and are moving towards our next phase of growth. I have asked several of our most talented senior leaders to take on new and larger roles to help us prepare and scale. Effective May 15, 2020, my cofounder, Lynn Loeby, will assume the role of CEO. I will become the Executive Chairman and our current Chairman, John Balan, will become the Lead Independent Director. 12 years ago, Lynn and I founded the company and have taken this amazing journey together. Over the past year, she has increasingly taken on additional responsibility. I truly believe that she is the right leader to drive our next wave of growth as we continue to realize the value of the unique platform we have built. I will continue to be involved with the company, focusing on strategy and innovation and will support Lynn any way I can. Additionally, I've asked several other senior leaders in the organization to take on new roles to build our leadership capacity. Going forward, David Evans will move into a newly created role as Chief Administrative Officer, overseeing key corporate functions and driving critical cross functional change. 4 years ago, David stepped into the CFO role, brought us public and did an exceptional job preparing us to be a high performing public company. I now want his energy and intellect focused on important processes and capabilities we will need as a much larger company. Andy Christiansen, our SVP and Controller, will become Chief Financial Officer. Andy has been our Controller for more than 5 years and was also hugely instrumental in bringing Cardlytics public and delivering results since then. Of course, David will work closely with Andy to ensure a smooth transition. These announcements today formalize a transition that has been underway for some time as part of the Board's long term succession planning. With these moves, along with a number of senior hires in sales and product over the past few quarters, Cardlytics has never had such great executive bench strength. I'm confident in our plans and I feel these moves best position Cardlytics to execute against significant opportunities that we see in the future. I'll now hand the call over to Lynn to provide greater detail on our recent accomplishments and our initiatives for 2020. Lynn? Thanks, Scott. Before I start, I'd like to express how excited I am about the future of Cardlytics and I look forward to assuming the role of CEO after the Q1 2020 earnings call. Congratulations to Scott, David and Andy on their new roles. These moves further cement the strong leadership team at Cardlytics and I'm thrilled to grow the company with them and our existing talented leaders. For today, I'd like to highlight a few success stories since the last earnings call and will provide an update on some of our 2020 initiatives. We launched Wells Fargo in Q4 2019 and have completed the rollout to 35% of their customers. We expect the Wells Fargo launch to continue into phases into the first half of twenty twenty. Now, I would like to discuss our 4 key long term priorities to drive future success. First is to increase the number of marketers we count as Cardlytics clients and to increase the amount those marketers spend on our platform. In 2019, we had a 21% increase in the number of marketers with more than 1,000,000 of billings when compared to 2018. These results reaffirm our belief that we will see increased spend for 2020 as marketers fully understand the impact we can have on their business. 2nd is to expand to new verticals, including ecom, travel and entertainment, grocery and luxury. In 2019, we added 30 net new advertisers in our growth verticals. We also made significant investments in our sales team, including hiring Ross McNabb and several other senior sales executives. 3rd is to continue evolving the Cardlytics platform. 3rd is to continue evolving the Cardlytics platform. We are making a multiyear investment to move to a highly automated platform that reduces buying friction, extends to 3rd parties and supports richer media. It's been another area of investment and much like our sales team, we've brought on numerous hires and leadership positions, including Michael Ackerman, our new Chief Product and Strategy Officer. We are also extending our platform's reach beyond banking. In the U. K, we recently launched a pilot with Sainsbury's Nektar loyalty program. Via open banking APIs, we are analyzing customer purchases to bring targeted cash back offers to Nektar's digital channel. While early, the results are promising and we will update you in future quarters on the implications between UK and other international markets. And finally, our 4th priority is continuing to demonstrate operating leverage in the business from investments we've already made to support over $200,000,000 in FIME. With the addition of new talent on our leadership team and the solid hires they are bringing to our company, we spent the last few months evaluating and honing our strategy to be sure we have the right team and go forward market plan in place. As a result, I feel confident we are positioned incredibly well to execute against our initiatives and we remain focused on strong top line and margin growth over the long term. With that, I'll turn it over to Dave. Thanks, Lynn. First, I want to say congratulations to Lynn, Scott and Andy on their new roles. I've worked directly with Andy for a number of years. He is the right CFO for this next phase of growth in Parcolytics. Personally, I'm excited to begin my new role and I look forward to helping Parcolytics realize its growth potential in this new capacity alongside our other leaders. Now on to the results. As Scott mentioned, we delivered excellent 4th quarter and annual results that exceeded our prior guidance. I want to highlight that in the 4th quarter, we saw true incremental budget increases outpacing the pull forward of budgets we saw in Q3. This acceleration in the back half of the year aligns with our comments on guidance at the beginning of 2019. In addition to our results, we are confident that we will reach our long term operational and financial goals. I'll begin by commenting on our Q4 and annual results and then discuss Q1 2020 guidance and our approach to the full year 2020 financial outlook. Total billings, which is the gross amount billed to marketers inclusive of the consumer incentive, for the Q4 increased 44% year over year to $100,900,000 Total billings for the year were $316,100,000 up 44% year over year. Total revenue for the 4th quarter was $69,300,000 representing 45 percent year over year growth over the Q4 of 2018. Our U. S. Revenue was up 50% year over year in Q4 and our UK revenue grew 15%. For the full year, total revenue was $210,400,000 an increase of 40% over 2018. Our Q4 2019 ARPU was $0.52 down 9% from $0.57 in the Q4 of 2018, primarily reflecting the impact of the Chase and Wells Fargo launches. We'd like to note that ARPU has increased sequentially for 3 straight quarters post the Chase launch, but will likely experience some pressure in 2020 due to the Wells Fargo launch and resulting MAU growth, which precedes associated top line growth. Full year 2019 ARPU was $1.72 compared to $2.30 in 2018. Total adjusted contribution was $31,000,000 in the Q4 of 2019, up from $22,100,000 in the Q4 of 20 18. For the full year 2019, adjusted contribution was $95,200,000 up from $69,500,000 in 20 18. Adjusted EBITDA was a positive $6,900,000 in the Q4 of 2019 compared to a positive $308,000 in the Q4 of 2018. Full year 2019, our positive adjusted EBITDA was $6,100,000 an improvement from a negative 6.6 $1,000,000 adjusted EBITDA in 2018. Our strong adjusted EBITDA improvement in the second half of twenty nineteen is reflective of the operating leverage in our business model. As noted in prior quarters, we expect to see the benefits of operating leverage on our profitability moving forward, but we will also continue to make strategic investments in the business to take advantage of future growth opportunities that present themselves. As a result, there may be fluctuation in our results from quarter to quarter in 2020. Average FI MAUs grew 60 percent from 83,200,000 in the Q4 of 2018 to 133,400,000 in the 4th quarter of 2019, primarily reflecting the launch of Chase and the phased launch of Wells Fargo. Consistent with our recent commentary, we expect FI MAUs to grow to $150,000,000 in the first half of twenty twenty, once we have fully launched Wells Fargo. We expect additional FI MAU growth through 2020 from the Phase 12 launch, the natural maturation on our platform, our ongoing efforts with FI partners and digital adoption. We ended the quarter with $104,500,000 in unrestricted cash and cash equivalents on the balance sheet compared to $95,200,000 in unrestricted cash and cash equivalents at the end of Q3 2019. Our total cash and cash equivalents plus available dollars in our facility as of December 31, 2019 is approximately $144,500,000 We ended the quarter with 26,500,000 shares outstanding and quarter to date weighted shares outstanding of 26,100,000 compared to weighted shares outstanding of 23,600,000 in the 3rd quarter. The change in weighted shares outstanding relative to the 3rd quarter reflects exercise options vesting and delivery of restricted stock in ESPT purchases. Before we turn to Q1 2020 guidance, I want to provide an update on full year 2020 guidance. Much like the Q1 of 2019 with Chase, we are still in the early stages of measuring our performance and analyzing what steady state looks like with Wells Fargo. The Wells launch as well as new sales talent and continued acceleration of platform investments creates a range of possible scenarios for our 2020 results. Like many companies, we are also trying to understand the current and future impact of the coronavirus. We have studied our consumer purchase history closely and can see clear indicators of changes in behavior. We think it's possible that the virus has impacted Q1 results and it's likely that the virus will continue to impact the overall economy into the first half of twenty twenty. As a result of where we are on the Wells Fargo launch and economic uncertainty related to the coronavirus, we are deferring our full year 2020 guidance until we can better gauge impact on our business. We will continue to provide quarterly guidance throughout 2020. Now, Q1 2020 guidance. I want to remind everyone that Q1 is always our seasonal low point, but we have high expectations for this year and are focused on continuing our growth. For the Q1, we expect billings to grow 9% to 18% year over year to between $64,000,000 $69,000,000 We expect GAAP revenue to be between $43,500,000 $46,500,000 and we expect adjusted contribution for the Q1 to be between 19 $20,500,000 representing 21% to 29% revenue growth and 8% to 16% adjusted contribution growth year over year. Finally, we expect adjusted EBITDA for the Q1 to be between negative $4,500,000 negative $3,000,000 Echoing Scott and Lynn, we are very pleased with our strong Q4 and full year 2019 results. We are encouraged by the progress in our business, driven by expansion of budgets with existing advertisers and the growth of new advertisers in our new verticals and continue to expect strong execution against our key growth strategies. While our expectations for Q1 may seem moderated, I feel confident the work that has taken place positions us well to execute against our long term strategic plans. We are all looking forward to a solid 2020 beyond. With that, I'll hand it back to Scott for his closing remarks before we open the call to your questions. Scott? Thanks, David. 2019 was without a doubt an exceptional year for Cardlytics. It has been just over 2 years since we went public and Lynn and I couldn't be more proud of what our team has accomplished and we are even more excited about what they will deliver going forward. It has been a true honor to serve as CEO of Cardlytics since founding the company within 12 years ago. I'm really excited about the breadth and depth of the leadership we have in place to scale the company going forward and to become one of the most frictionless and effective platforms available to marketers. We have never been more strongly positioned and are squarely focused on delivering strong results in 2020 beyond. With that, I'll open up the call for questions. Thank Our first question comes from Youssef Squali of SunTrust. Your line is open. Great. Thank you very much. Hi, guys and congrats for all the new rules. I guess two questions for me. David, maybe starting with you. Can you just peel the onion a little bit more on the Q1 guidance? Just looking at it from a seasonality standpoint relative to Q4, I think last year you saw about a 25% sequential decline. This year you're guiding to about 35%. Is the delta primarily explained by what you just said about the coronavirus? Or is there anything else in Q4 maybe that drove that business that may not be there in Q1? And then Lynn, interesting you talked about now looking to expand beyond the financial institutions with the Singularity deal. Maybe can you just help us understand your thinking around that opportunity? How aggressive are you going to be pushing it this year and maybe kind of what speaks into your thinking for at least this year on that? Thanks. Thanks, Youssef. I'll take the first one on the Q1 guide. The answer is no, nothing from Q4 that would have stolen from Q1 per se. I think a couple of things that I would point to. Number 1, you mentioned the coronavirus. Obviously, given where we sit, we see a tremendous amount of data that comes through our network and platform with regards to changes in spend behavior. As you know, we are we make money based on that Day 4 performance based on spend. And so there is a little bit of an approach of not knowing exactly kind of how this thing is going to unfold that is that put me in a position of providing the guide that I did. The other thing, too, that I think is really important for people to understand is that we have brought on a half a dozen new senior executive leaders that we are extremely excited about who just got through with their 100 day plans. And we are very positive about how we feel about the rest of the year as I reiterated in my prepared remarks. That being said, I think it's also fair to say that when we hit the ground running on January 2, we had a couple of examples of advertisers that were slow to get going in the Q1. But that being said, we're very much managing the business for 2020, 'twenty one and beyond, and we feel really good about that. Yes. And Youssef, this is Lynn. I'll just answer the question that you had about open banking. So just so everyone understands, open banking is a phenomenon taking place in most of the rest of the world. The premise is essentially consumers own their transaction data. And so in countries in the world where this has been rolled out, if the consumer opts to give permission, the banks via APIs need to allow access to their transaction data and it's pretty robust set of transaction data similar to what we get in the U. S. Only going back 7 years. So we have a pilot with Nektar, which is the largest loyalty program in the U. K, where consumers basically think about Nektar as just like another FI. The difference is we don't have to go through a bank to get access to access the customer. We go through their loyalty program and the economics are pretty favorable for us. So, we're very excited about this. It is early days. Our biggest question was would consumers actually allow somebody besides a bank to have access to their transaction data. And the early indications are quite frankly super exciting with what we're seeing in terms of adoption rates and take up rates. So to answer your question very specifically about this year, we are going to continue to push this hard in the UK both with Nektar and potentially some other partners. It's likely, if we continue to see results that we're seeing, that we will actually start investing in this, not just in the UK, but in other countries in the world, Australia and Japan being sort of the next big one. So I don't want to get too far out over our skis because the pilot has only been live for a couple of months now, but we're pretty excited about what we're seeing. Okay. Thank you very much. Thank you. Thank you. Our next question comes from Doug Anmuth of JPMorgan. Your line is open. Hey, this is David on for Doug. Thanks for taking our question. So just first one, you're like going back to the 1Q guide. So your just 1Q adjusted EBITDA guide suggests margins compression compressing from a year ago period. Just curious what's driving that and how we should think about the adjusted EBITDA trajectory in 2020 in light of the positive dollar EBITDA you achieved in 2019? And then just secondly, just wanted to get your latest thoughts on starting your testing for automated tools for marketers this year. And what stage do you expect to exit 2020 from that perspective? Sure. Thanks, Dave. So on your point around margin compressions, we obviously have 2 that we pay attention to. 1 is our billings margins, which is ultimately how effectively we're able to drive spend based on the amount of consumer incentives go out. The other margin I look at is what I refer to as my contribution margin, which is kind of isolates the FI share. For sure, as I've said many times, we will see some fluctuation on the contribution margin, meaning if you isolate that FI share as a percentage of revenue. I think I've also always maintained that it's a couple of 100 basis points one way or the other. I think going forward, we're going to see some improvement. We'll see some improvement in and around that area. As it relates to the billings margin, I think we found ourselves with Chase in a pretty decent steady state. I think going forward, with Wells, it's no different than it was a year ago. We're going to be monitoring this very closely here over the next 2 to 4 to 6 months as Wells comes on online in full with regards to how effectively we can continue to run that in an optimal state from a billings margins perspective. So nothing there by way of trend of significance, no different than we've been running in the past. And can you repeat the second question? I'm sorry. Just updated thoughts on your plan to start testing automated tools for marketers this year and then what stage you expect to exit the year? Yes, yes. So look, we already have an automated tool live in the of a couple of our very long term closed advertisers. We're there testing the tool and giving us feedback, both in the U. S. And the UK. Our intention is to get some more feedback on that tool to continue to sort of hone it down. And then as I have said, we expect to have a partner or 2 or maybe more, piloting this from an agency perspective in the back half of the year. The intention, of course, is always to reduce the friction, enable some self-service so that we can actually start to work with agencies. But we thought it would be best to use this tool first with existing friendly customers. So, it is in basically beta. Still needs some work, but we do expect that in the back half of this year we will have an agency partner or more using this tool in some capacity to do their own analytics and start to run some of their own campaigns. Got it. Thank you. Thank you. Our next question comes from Tim Willi of Wells Fargo. Your line is open. Hey, thanks and good afternoon. I had 3 questions, if I could. Let me first just start with, I guess, Scott, congrats on everything and been great to sort of see the story over the years that I've watched it. Thanks, Tim. I think a logical question from people is just going to be why now, right? Things are humming. You're still young. And I guess if you can just give a little bit more color about your move. I don't think you have any questions that the new roles for when David etcetera, but I think people are a bit taken back by seeing you leave so quickly after IPO and seeing the success you've had. So Tim, first of all, thank you for saying I'm so young. I appreciate that. But more seriously, the answer why now, there's really sort of 2 parts to that answer or 3. First of all, I think our Board, as we've done succession planning throughout the years, have always thought Lynn was the logical successor to me, and I think the company very much agrees with that. Why now, from my point of view, is the company has never been stronger. Let's go this is a great time to transition to Lim where we're at a ton of energy around driving this next big wave of growth over the next years. And importantly, Tim, we've been operating more and more in this mode over the past year. And in a lot of ways, what we're kind of doing is finally formalizing the way that we've been operating around the company. But what I really am emphasizing to everybody is, I will go into this Executive Chairman role. I expect to still be very, very involved with the company, very, very involved with the strategy and our innovation agenda and, of course, just a resource out there available to let in. So I'm certainly not going anywhere. Okay. Thanks for that. And then my next few questions are around the 1Q guide, And I know this is probably art, not science. But you mentioned coronavirus, you mentioned Wells Fargo reminded us about last year with JPMorgan and that variance. Is there any way to just sort of give us some color about as you think about the 1Q guide, how much of that you taste a little bit more about the Wells Fargo ramp up and uncertainty and the timing of that versus what you were seeing in the data around consumer spending that you might point to as being an impact of the virus? Yes. So let me tell you what we're seeing sort of in the data and anecdotally, and then David might want to add some color to it. Certainly, as you guys know, our data is pretty granular. So, we can see impacts at the zip code level and we have kind of evaluated travel spend across the country and we are definitely seeing the impact of travel start in the west and move east. The west is probably a couple of weeks ahead of the East in terms of actually seeing true impact and decreased spend. We are seeing it not just in airline space, but in lots of other travel related kind of advertisers. And I will tell you that a couple of them have called us and asked us proactively both help them understand what's happening, see if we can help them sort of stem the tide of cancellations. That's the good news. The bad news is they've also asked us if we could give them some relief on bookings that our channel have driven that have resulted in a cancellation. So we know for a fact that this is impacting some of our clients. What we haven't had a chance to do is study clients where anecdotes of what's happening in the, like the big box stores, the Costco's, the Sam Clubs of the world. So far, we have not seen that materialize in a noticeable way in our data, but we're going to keep watching it. Our guess is it will probably come sort of the stay at home part of the spend. But it is definitely something that we see in the data and we are seeing with our clients. So it is real. The question is to what magnitude and how long will it happen. That's anyone's guess. Yeah. I think, That's right. Yes. And was there a second question that I've forgotten now? No. That takes care of it. I'm good. Thanks very much. Thanks, Tim. Thank you. Our next question comes from Chris Shutler of William Blair. Your line is open. Hey, Good afternoon, everyone. Just to confirm the 2018 ARPU levels that you're saying that you expect to get there by the end of 2021, should we think of that as full year 2021 ARPU should be at least $2.30 or is there a different way to interpret that? Yes, it's a fair question. I think to be safe, I've always said, as we exit 2021, we should be back to those normalized levels from 2018. So not that not the annual average, but in exiting 2021. Okay. Got it. And then the only other one is just in your conversation with banks, in what areas, capabilities, functionalities are they telling you that they would like to see Cardlytics invest? Yes, it's a great question. So, for sure, if I had to answer it in 2 words, it's the user experience and making a user experience that is more robust than what we have today. I mean, if we're honest with ourselves today, we show logos. So creating a user experience that is both more contextual in terms of being able to sort of find the right offers based on what you're looking for. You can picture a tab for just travel offers, a tab for retail offers, a tab for dining out offers. But then also within each of those sort of contextual experiences, just an overall richer media experience and the fact that we can't show a picture of a hamburger is a little disturbing. So we need to work on that. And then also offers that are more relevant for those particular categories. So today, most of our offers are just save a certain percentage off. You'd love to be able to offer a free hamburger with a purchase of a Coke, for example, or to be able to sell a particular product at a big box retailer versus just the big box retailer themselves. So in one word, it's a richer user experience, I guess that's a couple of words, but richer user experience is what they're looking for. They all have different ideas and flavors of that. And we're trying to build a very modularized components to the technology so that they can sort of pick and choose the way they want to display the experience. But yet from an advertiser perspective, it's still one seamless network that they're buying. And so that does take time. But I would say that our FIs are pretty excited about creating this richer experience. And not while they all have different opinions, none of them have said no. Most of them, if not all of them, are actually pushing forward pretty aggressively. And you know what's great about it is the things that we're trying to do from the bank side around the richer user experience, richer media is exactly what our advertisers want us to do for them also. So it's a good example of where we're kind of aligning both the interested banks and the advertisers together in a way that's just good for the ecosystem. When do you think that some of those capabilities will be, I guess, ready for prime time where they're rolled out across a good part of the base? Yes. So that's a tougher question to answer because we first have to build it and then the banks have to accept what is going to be a pretty significant technology release and we have to get that into their queue. So we have what I would call an aggressive goal of having the first wave of us having it built by Q4 2020 and then trying to get at least our 1st bank or in bank live with that first user experience upgrade sometime in the first half of twenty twenty one. But that is highly reliant on banks and getting into their queues. So we all know there is that is the more unpredictable part of this business model. Got it. Thank you. Thank you. Our next question comes from Jason Kreyer of Craig Hallum. Your line is open. Hey, good afternoon. Just wanted to unpack the commentary that you gave on 2020. You talked about a range of outcomes there and obviously wells remains somewhat of a wildcard. Just curious if you can give like any qualitative commentary around like a same store sales or what kind of progression you would expect from the more mature clients like Chase and BofA? So, first of all, Chase and BofA are all three of these banks are in very different states of maturity. So BofA, as you know, is a very, very mature bank. They have pretty good user experience. I think they have a program that is running well on without a lot of marketing, without a lot of continued consumer education. I would say it's a program that is just sort of humming along reasonably nicely. Chase, on the other hand, still a newer bank. Customers are still finding it, still learning about it. Chase is still spending significant dollars marketing and enhancing the program and the offers. So, you still it's still very much maturing. And I think there's upside, quite frankly, quite a bit of upside. Not to say that there is an upside in some of our more mature banks, but they're just at a more steady state. Wells Fargo, of course, by definition, is then our least mature bank. So there is material and significant upside. And we've only rolled out to 35% of the population in terms of full user experience and full UI. So we're not even halfway done yet. And even that 35% have really only had the program for a couple of months. So real upside with Wells Fargo. And so we do monitor each bank both individually and then we monitor the overall network. But individually, each bank is in a very, very different state of rollout and maturity and thus consumer adoption. I mean, I was going to say on the advertiser side, a couple of good sound bites on the prepared remarks. We saw 30 new logos in the new verticals that we're going after. Almost about half of our billings now are our annual commitments, which is an improvement from a year ago. So from where I sit, I'm very encouraged about the remainder of 2020 and us being able to execute against what we've told everybody all along. Yes. And to build on what David just said and to remind everybody, our constraint to growth is really not tied to MAU growth at all. We use very small amount of our total inventory today. The constraint is the number of advertisers that we signed and the amount they're spending with us. Very few are spending even close to what they could spend in the channel. So that's really our focus is how do we get this new sales team in place and go after just more significant budgets across a broader range of major advertisers? What we know for a fact is every new material logo that we add creates a reasonably noticeable and measurable change to the good side in engagement. So and that's consistent across all the banks regardless of where they are in their maturity state. So that is absolutely the focus. On the engagement side, just wondering if you could comment at all on, I guess, maybe on a more mature bank perspective on what kind of acceptance or utilization rates and how those have progressed within consumers? And like any I guess, at a scale at the efforts with the financial institutions to ramp that up. So like if we talk about a Wells Fargo, which is only a third of the way into the rollout, at what point do you work with them to start improving consumer adoption and consumer awareness? Yes. I'll comment and then I'll let Scott Lynn add on. I mean, certainly from an engagement perspective, it's a question we get often. We are still very much in the same place we were 3 months ago, which is there's a lot of noise right now. For wells, we're fully rolled out to 35%. We expect that number to continue to ramp up. As that happens, we're going to continue to see a lot of movement as it relates to engagement, not only at Wells, but across the network. Certain banks are performing better than others at the end of the day. But we also hear people out and clear. I mean, this is something that we are going to coalesce around to provide additional transparency into the performance of the network with regards to engagement. It's important to keep in mind, however, that it's a high correlation to engagement as it relates to how we make money, which we make money on the post serve spend. So, hear you loud and clear. We're still in a position where we're seeing a lot of noise. And if I could just add, I mean, if we were if we felt comfortable giving you engagement levels per bank, this would not be a problem. And you guys would be able to understand full color of how different banks mature and also how different user experiences and even different marketing efforts of the banks impact the program. We obviously can't do that. So trying to create averages across this very complicated network with all of these massive organizations in different states of maturity is it's not as easy as it might sound. But we are committed to trying to create an engagement stat that we can talk about sometime in the course of 2020. Okay, great. Thank you. Thank you. Our next question comes from Nat Schindler of Bank of America Merrill Lynch. Your line is open. Yes. Hi, guys. This question may fall victim to what you just said, but I don't want to drill down more on that engagement issue. Specifically, whether or not there's any I know there's a difference in maturity and that might be something to do with how the user interface works with your product itself. But is there any real differences between the major your major customer banks in how they their mobile presence at all? Yes. There are dramatic differences directly correlated to how long the customers have had the offering available to them, but also the quality of the user experience. And the quality of the marketing that goes behind the overall program and the consumer education. There are dramatic differences, yes, Nate. And that one of the things that we do is we look at those differences and then we benchmark them and share them with the other banks to help them mobilize to go and drive engagement. But I want to keep going back to the basic fact. Very, very few of our advertisers spend even close to what they could given the levels of consumer engagement we have. So it is not a constraint to revenue or growth. So then going a little deeper into that question, what is holding back advertisers at this point? Yes, you could say that getting back to the pre chase, pre Wells, ARPU superfast might take a little time if BofA was ahead in how the app interfaces and how people engage with it. But getting back closer because you are getting these ads out to massively more people, what is stopping them from just turning on more budget? What's when you tell them I've got triple as many people now, how do they respond? Look, Nat, it's a great question. What are well, 2 couple of things. First of all, the significant increase in annual budgets contracts is, we think, a great sign. It does show that people are like, I need this now as a constant part of my marketing mix. But our experience has been that you can only kind of grow budget so much during a fiscal year because every time someone doubles our budget, they almost for sure have taken it out of another budget. And so we do think there is a kind of a just a certain rate or certain friction of trying to grow budgets too fast. The second thing that we continue to think is really important is we are an IO driven model. And every 45 days, we're going to get new IOs and turn them back into the channel versus being an always on model. That's one of the reasons we are investing so much to get to that always unautomated state because that we think that takes out a lot of the friction of how quickly we grow budgets with advertisers. Okay, thank you. Sure. Thank you. I'm showing no further questions at this time. I'd like to turn the conference back over to CEO, Scott Grimes, for any closing remarks. Yes, look, yes, we are super proud of how our team delivered in 2019. And but I got to tell you, what we're really even more excited is how well the company is positioned to grow in 2020 2021. We think these leadership changes we are making, if you think about what we're really doing, we're expanding the bench of leaders that we can have that can really drive growth in the company. We have super exciting new leaders in the company and are just really excited about what we're going to go bring to investors in 2020 2021. So we thank everybody for joining the call today and we look forward to our earnings call in May. Ladies and gentlemen, this does conclude today's conference. Thank you for participating. You may all disconnect.