Company: CDLX
Filing Date: 2025-04-03
Form Type: ARS
Source: 0001666071-25-000048
Chunk: 99

Company: Cardlytics, Inc.
Filing Date: 2025-04-03
Form: ARS
Chunk 99
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 or on the accounts or disclosures to which they relate. Revenue – Refer to Note 2 and 6 to the consolidated financial statements Critical Audit Matter Description The Company’s revenue generated from its Cardlytics platform in the U.S. and U.K. consists of transaction-based fees made up of a significant volume of low-dollar transactions, sourced from multiple databases. The processing and recording of revenue are highly automated and are based on contractual terms with marketers, partners, and other parties. Because of the nature of the Company’s transaction-based fees, the Company uses automated systems to process and record its revenue transactions. We identified revenue as a critical audit matter because the Company’s systems to process and record revenue are highly automated. This required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (IT), to identify, test, and evaluate the Company’s systems, software applications, and automated controls. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s systems to process revenue transactions included the following, among others: • With the assistance of our IT specialists, we: ◦ Identified the relevant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls. ◦ Performed testing of initial system set-up 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. 62

• 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