Criteo takes a more modest approach to its 2019 growth outlook

Criteo, the advertising platform for the open Internet has reported a 3 per cent increase in its revenue for first quarter ended March 31, 2019 at constant currency to $558 million. Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC2, increased 2 per cent at constant currency to $236 million, or 42.2 per cent of revenue. In Asia-Pacific, Revenue ex-TAC grew 1 per cent, or 3 per cent at constant currency, to $57 million and represented 24 per cent of total Revenue ex-TAC. 

Adjusted EBITDA decreased 6 per cent at constant currency to $69 million, or 29.2 per cent of Revenue ex-TAC. Net income increased 1 per cent to $21 million. Adjusted net income per diluted share was $0.60, in line with the prior year period. 

However, cash flow from operating activities decreased 20 per cent to $67 million. Free cash flow decreased 16 per cent to $44 million. 

Commenting on the results, JB Rudelle, CEO, Criteo, said, “While making progress on several priorities, we recognise 2019 is another transition year. We are working hard to accelerate our transformation.” 

“We maintain our adjusted EBITDA margin outlook for 2019, which highlights our commitment to profitability,” said Benoit Fouilland, CFO, Criteo. 

Operating Highlights 

• Revenue ex-TAC from new products grew 74% year over year to 9% of total.
• Customer Acquisition, Audience Match, Retail Media's transactional-Saas offering all grew triple digits.
• Same-client Revenue ex-TAC3 decreased less than 1% at constant currency.
• Criteo maintained client retention at close to 90% for all products.
• Revenue ex-TAC from mobile apps grew 32% year-over-year.
• Criteo’s header-bidding technology now connects to over 3,700 publishers and 135 app developers.
• Criteo further enriched its client platform with new self-service tools, including analytics and an audience creation feature.
• Criteo took effective measures to drive employee attrition down.

Revenue and Revenue ex-TAC 

Revenue declined 1 per cent, and increased 3 per cent at constant currency, to $558 million (Q1 2018: $564 million). Revenue ex-TAC decreased 2 per cent, and increased 2 per cent at constant currency, to $236 million (Q1 2018: $240 million). This increase at constant currency was primarily driven by the broader adoption of our new solutions by existing clients. Revenue ex-TAC margin as a percentage of revenue was 42.2 per cent (Q1 2018: 42.6 per cent). 

• In the Americas, Revenue ex-TAC grew 6 per cent, or 8 per cent at constant currency, to $86 million and represented 37 per cent of total Revenue ex-TAC.
• In EMEA, Revenue ex-TAC declined 10 per cent, or 2 per cent at constant currency, to $92 million and represented 39 per cent of total Revenue ex-TAC.
• In Asia-Pacific, Revenue ex-TAC grew 1 per cent, or 3 per cent at constant currency, to $57 million and represented 24 per cent of total Revenue ex-TAC.

Net Income and Adjusted Net Income 

Net income increased 1 per cent to $21 million (Q1 2018: $21 million). Net income available to shareholders of Criteo S.A. was $19 million, or $0.29 per share on a diluted basis (Q1 2018: $20 million, or $0.29 per share on a diluted basis). Adjusted net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, decreased 2 per cent to $40 million, or $0.60 per share on a diluted basis (Q1 2018: $41 million, or $0.60 per share on a diluted basis). 

Business Outlook 

Criteo believes that due to delays in execution, some of the new capabilities it is building to achieve the company’s transformation are going to take more time to yield expected benefits. As a result, Criteo is taking a more modest approach to its 2019 growth outlook, but maintains its 2019 outlook for profitability margin, highlighting its commitment to profitability.