When Will Cardlytics, Inc. (NASDAQ:CDLX) Become Profitable?

Cardlytics, Inc.’s (NASDAQ:CDLX): Cardlytics, Inc. operates a purchase intelligence platform in the United States and the United Kingdom. With the latest financial year loss of -US$53.2m and a trailing-twelve month of -US$32.8m, the US$720m market-cap alleviates its loss by moving closer towards its target of breakeven. Many investors are wondering the rate at which CDLX will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for CDLX.

See our latest analysis for Cardlytics

CDLX is bordering on breakeven, according to the 7 Media analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$6.4m in 2021. Therefore, CDLX is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which CDLX must grow year-on-year. It turns out an average annual growth rate of 68% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, CDLX may become profitable much later than analysts predict.

NasdaqGM:CDLX Past and Future Earnings, August 13th 2019
NasdaqGM:CDLX Past and Future Earnings, August 13th 2019

Underlying developments driving CDLX’s growth isn’t the focus of this broad overview, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing I would like to bring into light with CDLX is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in CDLX’s case is 79%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on CDLX, so if you are interested in understanding the company at a deeper level, take a look at CDLX’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should look at:

  1. Valuation: What is CDLX worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether CDLX is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cardlytics’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.