Ladies and gentlemen, today's conference is scheduled to begin shortly. Please continue to stand by and thank you for your patience. Thank you for standing by and welcome to the Cardlytics Q3 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentations, there'll be a question and answer session. To ask a question at that time, please press star then one on your touchtone telephone. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mr. Kirk Somers, Chief Legal and Privacy Officer. Sir, you may begin.
Good evening, and welcome to Cardlytics' third quarter 2021 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 and cash position for the fourth quarter of 2021, our ability to achieve key initiatives to drive long-term growth, growth in MAUs or monthly active users, the migration of clients to our Ads Manager, launches of our new ad server by bank partners and the capabilities and timing thereof, the renewal of the Bank of America contract and contracts with other financial institutions and the timing thereof, the increase in ARPU or average revenue per user, the impact of COVID-19 on our business and the economy as a whole, including the uneven recovery and volatility of the economy, the impact of iOS privacy changes, the growth in agency sales, the impact of product level offers, and the anticipated benefits, expectations, and goals related to the integration of our acquisitions of Dosh and Bridg.
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 30th, 2021, and in subsequent periodic reports that we file with the Securities and Exchange Commission. Also during the 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-K that has been filed with the SEC. Today's call is available via webcast and a replay will be available for one week. You can find all the information I've just described on the investor relations section of the Cardlytics website. Please note that a supplemental presentation to our third 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, Lynne Laube, and CFO, Andy Christiansen. Following their prepared remarks, we'll open the call to your questions. With that, let me turn the call over to Lynne. Lynne?
Good evening, and thank you for joining our Q3 2021 earnings call. We had a solid quarter and delivered results above our guidance. During Q3, we saw increasing momentum from our investments in sales, and marketers are better managing the ongoing labor and supply disruptions that impacted our results in Q2. Here are the numbers. Cardlytics platform billings were $95.5 million, up 54% year-over-year. Cardlytics platform revenue, which is equal to billings net of consumer incentives, was $62.1 million, an increase of 35% from Q3 2020. Cardlytics platform adjusted contribution was $28.9 million, up 46% year-over-year. Our Q3 results reflect sequential billing growth in all of our industry verticals.
The core business continues to gain traction with our clients, and we achieved wins in all of our major verticals, including six new logos within travel and entertainment. We are encouraged by the pace of our billings growth compared to last quarter and expect the momentum in our sales organization will continue. I want to caution that the now well-documented labor and supply chain disruptions that we noted last quarter continue to impact our clients. It's difficult to estimate the impact this may have on their appetite to drive consumer demand until these conditions improve. On a positive note, I want to remind investors that Apple's iOS privacy changes do not affect our platform, and we believe it will be an additional tailwind moving forward as advertisers look for new ways to engage their customers.
Moving on from results, I want to provide an update on our key initiatives. As we've discussed over the past several quarters, we're transforming our entire platform to have features and functionality that are similar to other digital platforms, but still within the brand safe and responsive bank channels. This is a company-wide initiative that has involved nearly every single employee, and I'm proud of the progress the team continues to make to enable us to open our platform to agencies and SMBs and enable new capabilities such as product-level offers, imagery, dynamic pricing, and self-service. In Q3, we started migrating our campaigns to this new platform, which we refer to as our Ads Manager. We're excited to report that as of today, 99% of our current campaigns in the U.S. were built on the new platform.
We are pleased with the migration, and our current efforts are focused on standardizing processes and optimizing campaign performance. As we've discussed before, agencies will be the first group of clients to leverage self-service, and our agency sales team we built earlier this year continues to gain traction. For example, our largest agency partner has spent over $8 million on behalf of six clients in 2021 and is planning pilot campaigns with several other new clients. We also signed an MSA with a top five agency group, which will allow us to access performance marketing budgets across all of their operating entities. As promised, we are reporting agency as a percent of advertiser spend starting this quarter. I'm pleased to say that our agency accounts grew over 150% year-over-year and now represent nearly 10% of advertiser spending during Q3.
Concurrent with launching our new Ads Manager, we're deploying our new ad server. This is the technology we deploy for our banks that enables the transformation of the user experience. It will allow us to deliver richer and more diverse content. The new ad server will enable new offer constructs at scale, such as product-level offers that can only be redeemed at a specific time of day, offers that are local and/or store specific, and other constructs that give advertisers much more choice and features versus our current experience. To provide an example of the benefits, U.S. Bank, the first adopter of our ad server, now has rich imagery live on 20% of its campaigns. Soon we will be piloting product-level offers to U.S. Bank consumers.
We're working very closely with our major banks to launch the new ad server and have received significant positive interest thus far. While we expect the full adoption process to be a two-year journey, we aim to have greater than 50% of our MAUs connected to the new ad server by the end of 2022. However, this goal is subject to change given we're dependent on our FI partners, but we will keep you updated on our progress. Once we gain sufficient scale of MAUs live on the ad server, we will be in market selling new products and new offer types. We're excited to expand these offerings as more FIs adopt the new ad server. Finally, we're using the new ad server as a catalyst to update FI contracts and working protocols.
We are encouraging our banks to let us do more for them so we can all go faster together. This is an extremely positive development in all of our bank relationships. However, the introduction of the ad server and other new offerings has increased the complexity and time it takes to renew contracts. As a result, we believe the Bank of America contract may not be renewed until early next year, but both teams are still working very hard to get it done before the end of the year. Regardless, we fully expect to reach an agreement with B of A and believe this new contract will be highly beneficial to both parties. We're also focusing on other strategic initiatives, including our recent acquisitions. The Dosh integration continues to proceed as planned.
We are leveraging Dosh's technology to speed up our development efforts, extend our network to large fintech platforms, and allow our banks to test and learn new features before they adopt them. We are on track to achieve our planned cost synergies next year, and therefore, this will be the last time we discuss Dosh as a separate entity. We will continue to speak about Bridg as a separate entity. They too had a solid quarter, and our integration continues as planned. In Q2, we began combining back-office functions, and during Q3, we started to invest in Bridg's sales team. We expect Bridg to exceed the first-year ARR that we initially forecasted in our acquisition thesis. This is partially driven by recent wins at a large home improvement retailer and several well-known restaurant brands. Bridg has also entered a new industry vertical, signing their first cinema client.
Bridg's platform allows studios to analyze and market to previously unknown moviegoers, giving studios access to data similar to that of the largest streaming platforms. I also wanna highlight that we had a significant restaurant client renew their relationship with Bridg and Cardlytics due to the value of our shared insights and targeting. This deal represents a 400% increase in spending compared to when the advertiser was buying from each company separately, and it's a real testament to the value of the combined insights from both organizations. Our early success is proving our acquisition thesis. The value of Bridg is greater when combined with Cardlytics, given our complementary products and datasets. We expect Bridg to contribute more as we connect the two platforms to enable product-level offer constructs for our clients. Internationally, the open banking program with Nectar continues to make progress.
We now have several hundred thousand customers that have connected at least one account. In addition, new business conversations are progressing well, including potential open banking clients in the U.K. and gas, convenience, and retail. On another note, we're happy to announce that Chris Suh joined the board of Cardlytics in September 2021. Chris is currently the Corporate Vice President and Chief Financial Officer of Microsoft Cloud AI. He brings an impressive background in accounting and finance to the board. With that, I will turn it over to Andy.
Thank you, Lynne. We saw the core business strengthen throughout the quarter as we achieved sequential billings growth each month. As Lynne discussed, we also made exciting progress on our strategic product and in technology initiatives. Let me review our Q3 financial results. Total billings increased 59% year-over-year to $98.4 million. Cardlytics platform billings was $95.5 million, an increase of 54%. Total revenue increased 41% year-over-year to $65 million. Cardlytics platform revenue was $62.1 million, an increase of 35%. Adjusted contribution was $31.6 million, an increase of 60% year-over-year. Cardlytics platform adjusted contribution was $28.9 million, an increase of 46%.
Adjusted contribution as a percentage of billings was 30.2% for the Cardlytics platform, which is slightly below historical levels and is temporary as we migrate to Ads Manager. It is possible that we experience similar margins in Q4, which will be our first full quarter with Ads Manager, but that is not our expectation. Our Cardlytics U.S. revenue increased 32% year-over-year. Compared to Q3 of 2019, revenue is only up 12%, so it's clear that we've been impacted by the economic disruptions of the pandemic for well over a year. In the U.S., we saw year-over-year growth in each of our industry verticals with the exception of travel. Despite this continued improvement, I wanna caution investors that advertisers are still facing macroeconomic headwinds related to labor and supply shortages.
Our Cardlytics U.K. revenue increased 84% but is still down 11% compared to Q3 of 2019. Our U.K. business has been impacted by the effects of the pandemic even longer than the U.S. due to lockdowns and restrictions that have been in place for much of 2021. We're paying close attention to the new Delta Plus variant. We're hopeful that the U.K. business will continue to recover the next two quarters. Adjusted EBITDA was a loss of $5.2 million, compared to a loss of $0.6 million in Q3 of 2020. Our adjusted EBITDA loss includes an incremental $7.8 million of operating expenses related to our recent acquisitions. We expect Dosh operating expenses, which is most of the incremental operating expense, will come down over time as we continue our integration efforts.
There are a few other items outside of our EBITDA results worth mentioning. First, in Q3, we incurred integration costs of $1.7 million, down from the $14.1 million we incurred during Q2 that contained a significant amount of diligence and transaction costs. We expect to incur some additional costs next quarter, but we expect it to be even less than Q3. Second, our stock-based compensation increased sequentially from $13.3 million in Q2 to $16.8 million in Q3. We mentioned last quarter that we expected an increase related to both the Bridg and Dosh acquisitions, as well as a few new hires. We expect stock compensation will decline approximately $3 million-$4 million next quarter.
We ended Q3 with $237.5 million in cash and cash equivalents compared to $250.7 million at the end of Q2. A large portion of this decline relates to the payment of acquisition and integration costs that we recognized in Q2. In addition, we have another $50 million still available to us under our loan facility this time. Our balance sheet and liquidity remain strong. Although we're always evaluating our capital structure, we see no immediate need to raise additional funds. MAUs were 170.6 million, an increase of 5.6% year-over-year and up from $167.6 million in Q2. The U.S. Bank launch was completed this quarter and contributed a couple hundred basis points of year-over-year growth.
Our organic growth rates are in line with our expectations and is what we anticipate going forward. ARPU during the third quarter was $0.36 compared to $0.29 in the prior year. We expect ARPU to increase on a sequential and year-over-year basis in Q4 as we expect revenue to continue growing at a faster rate than MAUs. We had 33.2 million shares outstanding at the end of Q3 compared with $33 million at the end of Q2. Weighted average shares outstanding during the quarter was $33.1 million compared to $27.3 million during Q3 of 2020, which reflects the issuance of 3.9 million shares in March of 2021. Now turning to guidance.
In Q4, we expect total billings of between $105 million and $120 million, total revenue of between $70 million and $80 million, and adjusted contribution of between $33 million and $38 million. It's worth mentioning that our guidance range is wider than normal. On the one hand, we have a healthy sales pipeline and a scaled user platform that is capable of consuming budgets that are significantly larger than the budgets we have today. On the other hand, our clients are still wrestling with supply chain issues that have been exacerbated by labor shortages. We believe the supply chain issues are likely to get worse before they get better. For many companies, these issues could persist for some time. It is difficult to estimate the potential impact this may have on our clients' advertising budgets in Q4.
Our clients haven't made any meaningful changes to their planned advertising campaigns yet, but the labor and supply issues during the peak retail spending season could restrain the desire to drive consumer demand that may not be capable of being satisfied. While we've been making good progress in reducing our reliance on specific industries and clients, our ad budgets are still heavily concentrated, which heightens our sensitivity to these macroeconomic issues. A wider guidance range reflects these risks and uncertainties. As I said last quarter, we remain very excited about the long-term potential of Cardlytics, Dosh, and Bridg in concert with our strategic initiatives. We remain focused on things we can control, developing and maintaining strong relationships with all of our partners, and developing a technology platform that will unlock the massive potential of our channel.
Despite the near-term risks I noted, I'm feeling optimistic about the rest of the year and what's in store for 2022. With that, I'll turn it back over to Lynne.
Thanks, Andy. This quarter was a step in the right direction, and we believe our business will continue trending towards a position of strength despite the challenges in the global economy. I wanna thank Cardlytics employees for their hard work this quarter as we continue through a series of important strategic changes. Execution remains our primary focus, and we have the team and resources to achieve our financial goals, be a strategic partner for our banks, and continue our progress on product and technology initiatives. We're looking forward to executing on our plan and finishing out the year strong. With that, I'll open up the call for your questions.
Thank you. Ladies and gentlemen, as a reminder to ask a question, you will need to press star then one on your telephone. To withdraw your question, press the pound key. Again, that's star one to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Doug Anmuth with JPMorgan. Your line is open.
Hey, this is Dae Lee on for Doug. Thanks for taking the questions. I had two. I mean, you guys have talked about supply chain and labor shortage issues affecting your marketers, and you guys have mentioned this at two key earnings as well. Just curious, you know, since we fast-forwarded three months now, what state are your advertisers in respect to supply and labor shortage challenges relative to what you saw in 2Q? I'm curious if their outlook for holiday season has been dampened in any ways because of this and are there any specific verticals that might feel affected more by these challenges? And then as a follow-up to your comment about contract renewals coming up with your FI partners, I'm curious to hear your latest thoughts on competition and what you have heard from your partners on this front.
Hey, this is Lynne. Thanks for the questions. On the supply chain and labor disruption issues, Q3 was certainly quite a bit better than Q2. We actually did not have to the best of our knowledge, we had no advertisers that had impacts in those issues such that they pulled or reduced their campaign spend with us. So we did not see it in Q3 like we did in Q2. However, we know lots of other people are seeing it. We certainly know that, you know, in the holiday season coming up, I mean, just today I was reading articles about there's not gonna be turkey for Thanksgiving. We are very cautious about it. It certainly has dampened the Q4 guide that we gave you.
It's why the range is wider, and it's why it's certainly, you know, lower than we would've thought and hoped before these issues happened. They're real. We haven't seen them in Q3 like we did in Q2. We are cautious for Q4. On the competition question, there's really no one out there still in the U.S. and in the U.K., to the best of my knowledge, that is competing with us in terms of getting access to banks' data and banks' digital channels to publish targeted advertising content and content that gives you the ability to fully close the loop. There are certainly people out there who are trying to publish other types of content to some of our bank partners. Some of that content is complementary, some of it is kind of noise.
In terms of really creating true transaction-based targeted marketing and fully penetrating all of that spend and being able to use it for advertisers and for advertising purposes, there is no one out there.
Got it. Thanks for the clarity.
Thank you. Our next question comes from the line of Kyle Peterson with Needham. Your line is open.
Hey. Good evening, guys. Thanks for taking the questions. Just wanted to touch a little bit on, you know, the outlook and specifically if you guys have what you guys have seen in, you know, October, whether it's, you know, qualitatively or quantitatively. If you guys mentioned that kind of the expectation is that things might get a little better or things might get a little worse before they get better. Just wanted to see if there was any kind of update of what you guys are seeing either in the numbers or in just conversations with advertisers, kind of quarter to date so far.
Yeah. Hey, Kyle, this is Andy. Yeah, look, we tried to be fairly clear that, you know, we are being cautious about Q4. We haven't quite seen the level of disruption that we did a couple of quarters ago. I think, you know, it's fairly logical that, you know, as we get into kind of the peak demand season, shopping season, that some of the issues that are present are gonna be stressed even further. I think while we haven't seen that yet, even October has been basically what we've expected. I think that risk really does remain. I think that there's gonna be a pull forward of spend as I think everyone is thinking about how do I secure gifts and whatnot a little bit earlier this year.
I think we're gonna be in a good position to handle some of those things. As it relates to advertisers thinking about whether they need to be driving additional demand, that's a huge uncertainty for us. We are being cautious, but I think it's a very real risk, that we expect to see to some degree.
All right. That's super helpful. Just a quick follow-up on Bridg. Obviously, the commentary seems, you know, very positive, and it's great to hear about some of these new deal wins. How should we think about kind of a ramp schedule of some of these recent deal wins and when we'll start seeing them show up in ARR and revenue?
Yeah, that's a great question. When Bridg signs a client, the first thing the client has to do, of course, is give Bridg access to all of the data, and then Bridg has to sort of clean and organize that data. That can go as quickly as two weeks, but it's still on average for most clients, it's taking a couple of months, and that's just the client sort of getting their data organized and in order. You won't see Bridg's ability to deliver for those clients until probably two, maybe three months after the deals are signed. It is a SaaS-based model, so you'll see sort of the ARR three months later.
However, what most clients do is they start by giving Bridg a certain amount of data, maybe 1 million customers, to see what Bridg can do with that data, and then they give them more and more over time. That's pretty consistent. It's usually somewhere in the neighborhood of some clients give all the data right away, so call it three months. Some clients really do test and learn for a couple of months before they give all of the data. Anywhere from three months to as long as nine months, quite frankly, maybe even longer before you get to the full potential ARR, SaaS-based amount that that client's going to pay. And then it continues from there, obviously. Does that help?
Yeah, yeah. That's extremely helpful. I'll head back in the queue. Thanks, guys.
Thank you. Our next question comes from the line of Jason Kreyer with Craig-Hallum. Your line is open.
Hey, this is Bailey on for Jason. Thank you for taking my call. Just wondering what kind of traction you guys are seeing with self-serve and what kind of indications you might be getting from users that's building on your long-term confidence and solution.
Yeah. Thanks for asking the question. I wanna be clear with investors that we are working with agencies basically for the first time ever. We started building an agency sales team for the most part this year. While we've had the occasional agency client in the past, it was only when the advertiser that we went directly to referred us to that agency. We're now directly calling on agencies for the first time ever, and I think some of those stats that I gave sort of show and prove the momentum. That being said, not all of those agencies are using self-service. Many of them are still testing and learning on the platform and letting us do the work for them.
Self-service, of course, is available in its V1 version, which is still, you know, strong but rudimentary in terms of what we ultimately wanna have available. For us, the way we look about this is how much spend are we getting from agencies, and then how many agencies are over time doing more and more of the work themselves. Right now, I would say most of the agencies are letting us do the work for them. There's a few exceptions. But we're closely watching how over time, as the platform is proven to them, they then start putting their hands on keyboard. That will continue to happen over the course of the rest of this year into 2022 and probably even into 2023, quite frankly.
Great. Thanks so much for the color on that. That's all for us.
Thank you. Our next question comes from the line Aaron Kessler with Raymond James. Your line is open.
Great. Thank you. A couple of questions. Just you mentioned kind of the IDFA headwinds, not seeing that. And maybe, how are you thinking about maybe potentially gaining some budget share with, marketers now maybe looking to reallocate some of the budgets? Have you had any conversations with respect to that? And I did notice just the consumer incentive payments increased to, I believe, 35% in the Q3. Just any details around that and how we should think about that going forward? Thank you.
Hey, Aaron, I couldn't hear what you said. The very first part of your question, the tailwinds that we're seeing on what?
Oh, on the first part was the, I think, the IDFA headwinds that the industry was saying. You said that you're not seeing obviously any of that. Thoughts on maybe gaining some market share from some of those marketers that need to reallocate?
Yeah. I mean, yes. Yes, please. We're obviously out there being very, very clear with our advertisers that we are not impacted by those changes, that we can still reach the consumers that they wanna reach in our highly secure channel. It is definitely a tailwind for us. It's obviously a fairly recent tailwind. I think a lot of advertisers are still trying to figure out how it has impacted their advertising strategy, but we do think it will, you know, continue to work in our favor going forward. Just how much is hard to say, but it is absolutely a tailwind.
Got it.
You wanna take that one, Andy?
Yeah. The trend on consumer incentives that.
Yeah, I think that was 35% in Q3, but my calculation a little bit higher than normal. Just thoughts on that?
Yeah, that's right. You know, look, I think really what we saw this quarter, the actual percentage of incentives does fluctuate from period to period for a number of reasons. We did see that during the pandemic that the mix of advertisers really shifted, and we saw a lower incentive during that time. That has kind of shifted back to be closer to where it's been historically. On top of that, we've talked a little bit about certain banks who use some of their FI Share in certain periods to fund richer rewards and increases the consumer incentive, but then we're actually made whole on that. Those are dynamics certainly that we see today that does cause a little bit of noise on the billings margin.
Now, when you look down at our take, the adjusted contribution as a percentage of the billings, that is very, very stable. We did have a little bit lower margin there than we've had over the last couple years, not that significant. I will chalk that up a little bit to just the temporary shift into our Ads Manager. As we work to finalize some of the optimization tools, et cetera, we'll see that rebound here in the next quarter or two. That's really the dynamics this quarter.
Got it. That's helpful. Thank you.
Thank you. I'm showing no further questions in the queue. I would now like to turn the call back over to Lynne for closing remarks.
Well, thank you everyone for joining the call. As we've said, I think we continue to see positive momentum with both our advertising base and the progress that we're making on diversifying our advertising base and our advertising capabilities. Despite some of the short-term tailwinds, certainly some of the ones we saw in Q2 and some of the ones that we're cautiously watching for Q4, we feel great about this business and we're, you know, as optimistic as we've ever been. Thank you for joining, and we'll be available for questions after for those who wanna schedule calls. Good night, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.