Timing Cardlytics: A Closer Look at NASDAQ:CDLX

Cardlytics, Inc. (NASDAQ:CDLX) has been making waves in the fintech industry, offering data-driven marketing solutions to banks and merchants. As the company's revenue growth and earnings per share (EPS) have shown promising trends, investors may be wondering if now is the right time to consider buying CDLX. This article explores the company's financial performance, valuation, and risks to help investors make an informed decision.



Over the past five years, CDLX has demonstrated consistent revenue growth, with a compound annual growth rate (CAGR) of approximately 25%. In 2018, the company's revenue was $47.5 million, which grew to $118.4 million in 2021. However, revenue growth slowed to 11.5% in 2022 due to macroeconomic headwinds and a decline in consumer spending. Despite this, CDLX's revenue growth trajectory remains positive, indicating potential for future expansion.

CDLX's earnings per share (EPS) have also shown improvement, growing from $0.18 to $0.21 over the past year, a 16% increase. This positive trend suggests that the company's earnings are improving, which could be an attractive sign for potential investors.

When evaluating CDLX's current valuation and potential for growth, consider the following key financial metrics:

1. Price-to-Earnings (P/E) Ratio: As of December 2023, CDLX's P/E ratio is around 25, indicating a premium valuation compared to the industry average of 18. This suggests investors expect strong future growth.
2. Price-to-Sales (P/S) Ratio: CDLX's P/S ratio is approximately 5, which is higher than the industry average of 3. This reflects investors' confidence in the company's revenue growth prospects.
3. Revenue Growth: In Q3 2023, CDLX reported a 25% year-over-year increase in revenue, driven by growth in its bank and merchant networks. This indicates the company's ability to expand its customer base and increase sales.
4. Earnings per Share (EPS) Growth: CDLX's EPS has grown at a CAGR of 20% over the past five years, reflecting the company's strong earnings performance.
5. Free Cash Flow (FCF) Yield: CDLX's FCF yield is around 2%, which is lower than the industry average of 3%. This suggests that while the company generates positive cash flow, it may not be as efficient as its peers in converting revenue into cash.



In conclusion, CDLX's premium valuation, strong revenue growth, and EPS growth indicate a company with significant growth potential. However, its relatively low FCF yield suggests that investors should monitor the company's cash flow performance closely. As with any investment, it is essential to conduct thorough research and consider your risk tolerance before making a decision.