Company: CDLX
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001666071-25-000034
Chunk: 120

Company: Cardlytics, Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 8
Chunk 120
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 and monitoring controls, system interface controls, automated controls, and data monitoring controls within the relevant revenue streams, as well as the controls designed to ensure the accuracy and completeness of revenue.

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•We tested the operating effectiveness of internal controls within the relevant revenue business processes, including automated controls and those in place to reconcile the information from various systems to the Company’s general ledger.

•For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recognized to source documents and testing the mathematical accuracy of the recorded revenue.

Goodwill – Certain Reporting Units – Refer to Note 2 and Note 5 to the consolidated financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair values of its reporting units, including the Cardlytics platform in the U.S. reporting unit and the Bridg platform reporting unit, to their respective carrying values as of September 30, 2024. The Company used a combination of valuation methodologies including the income approach, and to a lesser extent the market approach, to estimate fair value at the reporting date. The Company utilizes discounted cash flow models to perform its income approach, which requires management to make significant judgments related to discount rates and forecasts of future revenues and cash flows. Changes in these assumptions could have a significant impact on either the fair values of the reporting units, the amount of any goodwill impairment charge, or both.

The Company performed an interim impairment test for goodwill as of September 30, 2024. As a result of the continued slowdown in the economy and decreased consumer spend, which resulted in further declines in the Company’s stock price, the Company recognized a goodwill impairment charge of $117.8 million for the Bridg platform reporting unit, as the fair value of the reporting unit was determined to be less than its carrying value. This eliminated all remaining Goodwill allocated to the Bridg platform. No impairment charge was recorded for the Cardlytics platform in the U.S. reporting unit. The consolidated goodwill balance was $159.4 million as of December 31, 2024, the entire balance of which was allocated to the Cardlytics platform in the U.S. reporting unit.

We identified valuation of goodwill for the Cardlytics platform in the U.S. reporting unit and the Bridg platform reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair values of these reporting units. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve fair value specialists