Criteo 101 Investor Presentation - July/Aug 2019 - Investors
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Criteo 101 Investor Presentation July/Aug 2019
Safe harbor statement This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, projections, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition and other actions by our counterparties. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation, and nothing in this presentation should be regarded as a representation by any person that these beliefs or assumptions will take place or occur. You should read the Company’s most recent Annual Report on Form 10-K filed on March 1, 2019, and in subsequent Quarterly Reports on Form 10-Q, including the Risk Factors set forth therein and the exhibits thereto, as well as future filings and reports by the Company, completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward- looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. This presentation includes certain non-GAAP financial measures as defined by SEC rules. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix slides. 2•
Stock information and key financials
Ticker: CRTO FY 2018 Financials
• Revenue: $2,300M, (1%) at cc2
Stock Exchange: NASDAQ Global Market
• Revenue ex-TAC: $966M, +2% at cc
CUSIP: 226718104 • Adjusted EBITDA: $321M, +0% at cc
Shares Issued1: 66.2M • Adj. EBITDA margin: 33% of Revenue ex-TAC
• Free Cash Flow: $135M, 42% of adj. EBITDA
Stock Ownership1:
Treasury stock Idinvest &
Q2 2019 Revenue ex-TAC breakdown
Founders, 2% Yahoo! Japan New solutions
NEOs, 1% 10%
Management
& Employees
5%
Free float
93%
Core solution
90%
3•
1 As of June 30, 2019
2 At constant currency
A global company with scale and broad reach
$800B+ 20,000 2B 1,300B+
Annual Advertisers Criteo IDs Ads served in 2018
ecommerce sales (incl. 1000+ Brands)
3,800+ 200+ 95+ 2,900
Publishers connected to App Developers Countries Employees
Direct Bidder connected to Direct Bidder (with 31 offices) (incl. 720+ in RD/Product)
4•
Introducing the renewed Criteo leadership team
JB Rudelle Benoit Fouilland Diarmuid Gill Isabelle Leung-Tack Ryan Damon Denis Collin
CEO CFO CTO Global Communications General Counsel People Management
Jess Breslav Kenneth Pao Shruthi Chindalur Thomas Jeanjean Cédric Geoffroy Martin Alex Valle
Americas APAC EMEA Platform & Operations Vandervynkt Supply & Retail Media App & Store
Web
5•
We have strong core competencies
Shopper Platform Scale/
Data Technology Reach
6•
Market & Trends
Digital advertising’s share of global ad budgets continues to grow
50%
40%
2018 2020
8• Source: Zenith Advertising Expenditures Forecast
Digital ad spend has long overtaken TV ad spend
Digital
$300B
TV
$0B
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
9• Source: MAGNA | Data for 2017 and beyond are forecasts – Created with Datawrapper
Paid Display is the #1 Ad Spend category globally
Marketing Budget Allocation by Activities,
N=901
9% Paid Display
16%
Social Media Marketing
9%
Traditional Marketing (1)
Email Marketing
9% 14%
Content Marketing
SEO (2)
9% Search Advertising (PPC)
13% Landing Page/Website
10%
10% Affiliate Marketing
Source: Criteo & Euromonitor, State of Ad Tech 2019
(1) Print, Direct Mail, TV, Radio Ads
10 • (2) Search Engine OptimizationMobile marches on
Northern Europe and Japan are mobile leaders.
Sweden 60% New Zealand 44%
Norway 57% Austria 44%
United Kingdom 55% Switzerland 43%
Japan 55% Brazil 43%
Denmark 51% Taiwan 42%
Germany 50% Italy 41%
Finland 49% United States 39%
Netherlands 49% France 39%
Spain 48% Belgium 38%
South Korea 47% Canada 33%
Turkey 46% Poland 33%
Australia 46% Russia 30%
11 • Source: Criteo, Q2 2018. Base: sales weighted aggregate, Apps excluded (see Methodology).The open Internet offers significant opportunity
Time Spent Digital Ad Spend
50% 50% 30% 70%
Open Internet Google/Facebook
12 • on Nielsen US DCR trends, eMarketer, ExchangeWire, IDC
BasedVision
OUR VISION:
To be the leading advertising platform
for the open internet
14 •The open Internet offers multiple benefits to advertisers & publishers
Control Neutrality
Choice Transparency
of data
We have no
Advertisers and Advertisers and
Advertisers and conflicting
publishers choose publishers
publishers keep interests with
which partners to determine how to
control of their advertisers and
work with and how measure success
own data publishers
15 •Our open internet vision delivers benefits for all
Consumers
2B
Experience Criteo IDs
Consent
Advertisers Publishers
$800B+ 3,800+
Publishers
Annual
Performance ecommerce
sales
connected to
Criteo Direct Demand
Bidder
And
Automation 20,000 200+ Relevance
Advertisers
App
Developers
Control .
Incl Transparency
1,000+
Brands
16 •Criteo Platform
Criteo Platform delivers a breadth of full-funnel advertising
opportunities for commerce advertisers and brands
Marketing Solutions Retail Media
Advertisers Retailers Brands
Web App Store
Awareness Campaigns
Marketing Goals
Supply-side Buy-side
Consideration Campaigns Advertising Advertising
Technology Technology
Conversion Campaigns
18 •
Criteo PlatformFueled by a unique commerce data set and powered by AI
Lookalike Finder
Product AI Engine DCO+1 Predictive Bidding
Recommendations
$800B 2B 120+ 4.5B+
eCommerce Sales Criteo IDs Shopper Graph Intent signals/shopper Products
19 • 1 Dynamic Creative Optimization+Marketing Solutions
Full-funnel capability addressing the entire customer journey
Awareness Consideration Conversion
Marketing Goals Generate interest in your Get people to consider your Encourage interested
products or services products or services people to purchase
Brand Awareness Traffic: Web, App Conversion: Web, App
Ad Objectives
Video Views App Installs Store Conversions
Reach Visits
Purchase
Optimization (Conversions)
Views Installs
20 •Criteo Marketing Solutions
Objectives and Campaign Types replace CDR, CCA, CAM, and Manage
Ad
Marketing Goals Objective
Criteo Marketing Solutions Campaign examples
Dynamic Customer Audience
Retargeting Manage*
Acquisition Match
Web traffic campaign for new customers,
Web Traffic
visitors or existing customers
App traffic campaign for app users or
CONSIDERATION App Traffic
existing customers
App Installs campaign for existing web
App Installs
visitors or new users
Web Web conversion campaign for new
Conversions customers, visitors or existing customers
CONVERSION
App App conversion campaigns for app users
Conversions or existing customers
21 •
*Acquired in November 2018Retail Media
Enabling brands to connect with key retail audiences at all stages of their shopping journey
SUPPLY
Supply-side Advertising Technology
Awareness Consideration Conversion
Sargento
Swiss
Cheese
Slices
$3.79
Standard Commerce Display Sponsored Products
Flexible range of targeting and creative options
Buy-side Advertising Technology
22 • DEMANDCriteo Retail Media
A self-service, API and managed services solution purpose-built for retail
Ad
Marketing Goals Objective
Criteo Retail Media Campaign examples
Sponsored Sponsored Commerce
Reseller Audience
Products Products Display
Program (Storetail) Extension
Extension
Web traffic campaign for new customers,
CONSIDERATION Web Traffic ONSITE OFFSITE
visitors or existing customers
Web Web conversion campaign for new
CONVERSION Conversions
ONSITE OFFSITE OFFSITE
customers, visitors or existing customers
23 • Onsite = on a retailer’s site | Offsite = on a publisher’s siteCriteo Shopper Graph
Criteo Shopper Graph: the world’s largest shopper data set
A unified understanding of a shopper’s online journey and real-time intent data
Identity Graph: Interest Map:
matching of 2Bn Criteo IDs anonymized
cross device, same device, shopper interest
and online/offline across products
Measurement Network:
conversion and sales
25 • across retailersIdentity Graph: matching of identifiers cross device, same device,
and online/offline
Criteo’s advantages Participation
• ~75% of clients participate • Opt-in by sending hashed identifiers
via OneTag or App Events SDK
• 2B Criteo IDs
• Global coverage
• +10% average uplift Persistent
• 95% Criteo IDs rely on long-term
identifiers such as hashed emails or app
Open, transparent, secure, fair identifiers
• Encrypted and double-hashed personal • Less than 6% Criteo IDs rely on cookies
identifiable information (PII) only
• Access at no additional cost
26 •Interest Map: anonymized shopper interest across products
Criteo’s advantages Open, transparent, secure, fair
• Access to 4.5B+ products • Data isolated unless opt-in
• Large consumer reach worldwide • All data anonymized
• Understand performance of • No free riders
product attributes
• Contribution capped at 15% of pool
• 120+ shopping intent signals evaluated
• Access at no additional cost
per shopper
• 21B product interactions per month
• 600TB daily shopper data Participation
• Opt-in to share anonymized data
• Opt-out to use client data only
27 •Measurement Network: conversion and sales across retailers
Criteo’s advantages Open, transparent, secure, fair
• SKU-level sales attribution for • All retailer data anonymized
brands across retailers
Participation
• Deterministic measurement
• When clients work with us, data within
• Nearly 100 participating retailers and across retailers is aggregated
• $800B+ annual ecommerce sales
28 •Shopper Graph guiding principles
Central to our approach of the open Internet, and different from what clients may experience with walled-gardens, the
design and governance of the Shopper Graph is based on strict and differentiated guiding principles:
Openness Fairness Transparency Security
All clients contributing The Shopper Graph is Our clients' contribution As always, we apply the
data can in return designed and governed and sharing of data highest data security
benefit from the in ways such that the within the data pools are and user privacy
collective dataset, as value gained by based on a clear and standards to the
well as access relevant participating clients permission-based usage Shopper Graph
Criteo IDs and relevant largely exceeds their by Criteo for the mutual
KPIs of their campaigns individual contribution to benefits of all
to better inform and the graph participants in the
optimize their advertising Shopper Graph
29 •Privacy: a key element of the Shopper Graph
• The identity graph incorporates our fundamental Privacy by • Independently of how we receive emails,
the hashing process is automatically
Design approach that protects and safeguards your customer data completed within our application
across all standards, processes, and protocols at Criteo
• Criteo only stores SHA256 hash of MD5 hash
• Consumers can easily access our Privacy Policy and opt-out of emails: a hash of an email creates a series
using Ad Choices of characters that doesn’t permit individual
identification. For example, a hash of
name@mail.com would be
• Criteo uses state of the art data-hashing algorithms to ensure 98307a5ba02fa1072b8792f743bd8b51513605
that no directly identifying information is stored in plain form, such 56b8e5a6120fa9a04ae02c88c0
as name, surname or email address
• User identifiers (IDFA, AAID, Criteo Cookie ID)
are randomly generated IDs that are not
WE DO WE DON’T linked to or derived from any directly
identifying information, and therefore don’t
need to be hashed
- Collect only the data that is - Record any sensitive information
required to deliver our service - Record directly identifying • Both hashed emails and user identifiers are
considered “pseudonymous data”, a
- Minimize data retention information subcategory of personal data that does not
- Keep only the last 90 days of data - Store any original files containing allow the direct identification of the data
in the graph emails subject
- Use or store client’s audience data • Hashed emails and user identifiers are stored
for any other purpose on Criteo’s owned and managed data
- Use any 3rd-party owned or centers
managed servers
30 •AI Engine
Proven machine-learning technology
Shopper-level optimization to drive CTR, CR, Order Value, or Product Margin
AI Engine
Dynamic
Lookalike Product Predictive
Creative
Finder Recommendation Bidding
Optimization+
> 20,000 tests/year
run on new performance algorithms and variables
32 •Lookalike Finder algorithms create relevant audiences
Audience previously Consumers likely to be Creation of a similar Dedicated
targeted or exposed to a interested in and engage audience campaign
specific category of
products or services
33 •Offering shoppers the best product discovery experience
Leveraging the power of our shopper graph and world-class algorithms
John browses The Criteo Engine recommends Products
“Bomber products based on: we show
Jacket” John
on Uniqlo’s site
Campaign goal
Visitor’s site navigation
Recency and frequency of activity
Product type, price, and category
Most viewed products on retailer’s site
And much more...
Product recommendations
34 •We have a best-in-class Creative Studio
Enabling faster roll-out of Awareness and Consideration solutions
Creative
studio
35 •New DCO+ delivers flexible creative formats in real time
Addressing full-funnel marketing goals
AWARENESS CONSIDERATION CONVERSION
Brand creative Dynamic Brand creative Dynamic creative
Brand focus Brand & Product focus Product focus
Banner
Formats
36 •Our Predictive Bidding algorithms are industry-leading
User context Product behavior Publisher interaction
Predictive bidding
Standard bidder First-price bidder optimization Second-price bidder optimization
The right bid for the right ad placement at the right time
37 •We have immense computational power for real-time processing
9 data centers ~36,000 servers
Amsterdam (x2)
Sunnyvale Paris (x2)
CA Ashburn Tokyo
Dallas VA
TX
Hong Kong
2 Hadoop clusters
3,350 servers
240K terabytes storage capacity
530 terabytes of random-access memory
Data center locations
38 •Criteo AI Engine: Where Artificial Intelligence meets privacy
A privacy by design CPM/CPC model: an Trust requires A European player
approach since day 1: incentive to present transparency and with clear track
data minimization relevant ads control (Adchoice record in privacy
approach icon, cross device
optout)
39 •Client Management Center
We provide enhanced self-service capabilities
Integrated and modular customer platform
providing control, visibility and detailed transparency on campaigns
Client sign-up & Campaign Analytics &
onboarding Management Insights
Autonomous, fast More control for clients More transparency and
onboarding and agencies insights for clients
Accelerated midmarket
Productivity & retention Productivity & retention
client additions
41 •We offer a modular, flexible and progressively open platform
Self-service, API and managed service delivery options
Criteo Platform
User Interfaces APIs
Campaigns
Objective Audiences Creatives
Self-service
tools
Supply Coupons Catalogs
Billing Event Collection Integrations
42 •43 •
Targeting the right users with new audience creation options
Benefiting from Criteo’s unique commerce audience data
Audiences Commerce Audiences Similar Audiences Custom Audiences
• Choose from 140+ • Similar to your recent • Web visitors or app users
product interest web and app users using • Customer contact lists
categories within our Lookalike Finder AI • Offline buyers
Shopper Graph technology • Platform audiences
commerce data set
Users New customers New customers Visitors or Existing customers
Marketing Goals Awareness Awareness -
Consideration Consideration Consideration
- Conversion Conversion
44 •45 •
46 •
47 •
A full End-To-End Onboarding Flow for Midmarket
For self-service client activation
1. Create new banners from scratch
2. Update existing creative
3. Track your creatives
4. Manage promotions with coupons
1. Onboarding tools for new
clients
1. Contact form 1. Choose the objective 2. OneTag Integration
(Troubleshooting & monitoring)
2. Business details 2. Identify target audience
3. Product catalog (Monitoring,
3. Payment & billing details 3. Finalize campaign details Troubleshooting, Advanced
4. Accept T&C’s (Budget, Bid Strategy, settings)
Creative, Tracking)
48 •Solutions
Criteo Marketing Solutions
Criteo Marketing Solutions
Criteo Dynamic Retargeting
Benefits
• Bring shoppers back to buy to drive more sales and increase profitability
• Gain access to the best inventory
• Engage shoppers by delivering the right ad at the right price and device with personalized
product recommendations and 17 trillion ad set variations
What it does
• Connect across web, mobile, app, social, and video using 120 intent signals
• Optimize with continuous machine-learning against business objectives
• Increase mobile app engagement
Revenue model
• Revenue = Clicks x CPC
• Traffic Acquisition Cost (TAC) = CPM x impressions
• Revenue ex TAC = Revenues – TAC
• Revenue ex-TAC margin: Approx. 40%
51 •Criteo Marketing Solutions
Criteo Customer Acquisition
Benefits
• Generate significant new revenue from relevant new customers
• Discover new customers across a pool that covers 72% of the world’s online
shoppers
• Drive maximum ROI with the industry’s only performance-based acquisition model
What it does
• Targets highly relevant shoppers using historic shopping and browsing events from
Criteo’s identity graph
• Reaches relevant new customers with user-centric personalized product recommendations
• Only qualifies relevant shoppers, based on Criteo’s interest map, based on your optimal
customer using unique, shopper-scoring techniques
Pricing
• CPC | CPM*
52 • *tentativeCriteo Marketing Solutions
Criteo Audience Match
Benefits What it does
• Boost sales by re-engaging existing • Identify audience and campaign objective
shoppers
• Pass the audience list to be targeted
• Bring qualified traffic back to the
• Match audience with Criteo’s identity graph
advertiser’s website
with 4B+ global device IDs
• Capitalize on market leading match rate
• Deliver personalized ads to drive engaged
of up to 60%
traffic to the advertiser’s website
Use cases
Loyalty Seasonal Offline to online Top Sellers Upsell Upgrade
Audiences that Seasonal Offline Card Lapsed Bundle Audiences likely
may soon churn Buyers Buyers Holders Shoppers Offer to upgrade
Pricing
• CPC | CPM*
53 •
*tentativeCriteo Marketing Solutions
Manage
Creative Formats & Supply
• Primarily use/edit existing advertiser formats
• Single resource dedicated to CS
• ~40% video
• 100% RTB supply
Pricing
• Sell on a CPI*, optimize to CPA**
• Ability to sell on CPC or CPM for brand
campaigns
* Cost per Install
** Cost per Action
54 •Criteo Retail Media
Criteo Retail Media personalized recommendations based on
Sponsored Products
shopper’s unique journey
Benefits
Offer brands native product recommendation
based placements that increase conversion
Budget
Trade and Performance
DYSON SUPERSONIC HAIR DRYER,
FUCHSIA/IRON
259,99 €
Pricing
CPC
56 •Criteo Retail Media
Sponsored Products Extension personalized recommendations based on
shopper’s unique journey
Benefits
Enable brands to retarget customers with relevant
product recommendations across Criteo’s
DYSON Aspirateur
premium publisher network balai DYSON V7
Animal
398,25 €
Budget
Trade and Performance
Pricing
CPC
57 •Criteo Retail Media
Criteo Reseller Program
Benefits for Marketplaces
• Unlock new revenue by reselling Criteo Dynamic Retargeting
• Boost overall Gross Merchandise Value (GMV)
• Increase merchant loyalty with proven technology for sales growth
Benefits for sellers on the
Marketplace
• Access best-in-class, commerce marketing technology
• Drive incremental, high-quality traffic and more sales
• Activate campaigns immediately – no integration required
58 •Criteo Retail Media dynamic ecommerce features based on
product catalog, availability, and other
factors
Commerce Display
Benefits
Enable brands to increase consideration and
conversion with ecommerce display
placements, including guaranteed inventory
Budget DYSON SUPERSONIC HAIR DRYER,
FUCHSIA/IRON
Shopper Marketing and National Media 259,99 €
Pricing
CPM
59 •Criteo Retail Media
Audience Extension branded, standard display
Benefits
Enable brands to build shopper audience
segments and target them across Criteo’s
premium publisher network
DISCOVER
Budget
National Media
Pricing
CPM
60 •Clients & Go-to-market approach
A large opportunity to win new clients
~60,000addressable clients worldwide
in Retail, Travel and Classifieds
(excluding brands)Direct relationships with many premium commerce and brand clients 63 •
A tailored go-to-market approach to best serve our clients
Objectives 1• Adapt sales organization to a multi-solution offering
2• Provide the right level of service to each client
3• Scale operations and enhance profitability
Client tiering Consultative sales Telesales Self-service platform
Large Upper Mid- Lower Mid-
Clients Market Market
A B C D E F
Monthly $200K+ $50K+ $20K+ $10K+ $5K+Publisher inventory
Extensive supply partnerships ensures audience access
Direct Exchange Closed
partnerships partners environments
3,800+ Premium publishers Long-tail & emerging formats Additional Reach
• Flexible buying technology: RTB/S2S, Criteo direct bidder, SDK, API
• Any relevant creative formats/environment: IAB, Native, In-App, Video, Google AMP
66 •The publisher environment is constantly evolving
Changing consumer behavior Evolving technology
Transition to Mobile Social Native In App
Multiple Devices Ad Blocking Programmatic Header Bidding
67 • Our drives more value for publishersWe have always delivered user-friendly ads
Our Position
• Promote acceptable ad programs
• Invest in native formats
• Support an open tracking standard
• Define standards for retargeting
Ad blocking offers an opportunity
for players with:
• The right business model
• The right technology stack
• The right expertise in user privacy
• Premium demand
68 •Criteo Direct Bidder: Direct access to Criteo’s unique demand
• Criteo Direct Bidder (CDB) allows Criteo to bid on publisher inventory directly through the ad server without the need to
funnel demand through Supply Side Platforms (SSPs) or exchanges.
• Benefits for the publisher:
• all of the Criteo bid goes to the publisher; none is taken by the SSP for fees (typically 10%-20%)
• user matching between the Publisher and Criteo is much more timely and complete than matching reliant on a third
party
• +20-40% spend with publishers on the same inventory that was previously accessed through RTB
• Launched in Q2 2017, already connected to 3,800 publishers and over 200 app developers at the end of Q2 2019
69 •Competitive positioning
Advertising technology positioning
OPEN
CLOSED
WORKFLOW AUTOMATION PREDICTIVE PERFORMANCE
Note: based on Criteo’s qualitative assessment
71 •Criteo in the Adtech/Martech Landscape
Adtech: Paid Media Data and Operations Infrastructure
Criteo wins 90% of head-to-head tests Criteo integrates with these technologies
DSP Data Management
Platform
Retargeting
Analytics
Mobile Advertising
Sponsored Products App Measurement
Social Advertising
Data Providers
Ad Servers
Tag Management
Martech: Owned and Earned Media
Criteo complements these vendors Feed Management
Email Marketing Digital Commerce
Platform
Marketing Automation
Social Media Marketing
Web Content Management
72 •Strategy & Organization
Our growth strategy is based on two strong pillars
Grow the customer base Increase our value for clients and partners
• Scale large and midmarket clients • Enhance AI/Deep-learning technology
• Win and retain clients with our self-service • Grow and leverage Criteo Shopper Graph
platform
• Broaden self-service capabilities
• Add more brand and retailer clients globally
• Expand Marketing Solutions & Criteo Retail Media
• Broaden supply of quality inventory
74 •We are transforming our Company to support our strategic goals
Further strengthening the leading advertising platform for the open Internet
Further Broaden our Deliver Solutions on Adapt
Suite of Solutions Self-Service, API or Go-to-Market
Managed-Service
75 •We are evolving our capabilities to accelerate transformation
One-size-fits-all Seperate Orgs for
Product and Sales Fragmented Multi-layer
go-to-market Large Customers &
working in silos operations organization
approach Mid-Market
Dedicated Customer-centric Unified Integrated
go-to-market integrated product Lean and agile
regional business
per product line roadmap organization
leadership platform
76 •New blueprint: unified customer conversation
RETAIL MEDIA APPS & STORE WEB
CUSTOMER
AMERICAS
SUPPLY
APAC
EMEA
OPERATIONS MARKETING
77 •We invest in growing areas in digital advertising – and beyond
•
• Build flexible and modular client platform
• Complete expansion of solution suite •
• Leverage strong growth of apps •
• Store advertising •
78 • * Prospective2019 is a year of transition with higher focus on profitability
Increased focus on profitability going forward
More scalable way Increased focus on Maintain 2019
to sell entire effective cost profitability outlook,
product suite management increased focus
going forward
79 •Track-record of execution & Financials
Solid financial track record since IPO
Revenue ex-TAC1 ($ millions) Adjusted EBITDA2 ($ million)
37%
CAGR
941 966 321
High Expanding 310
growth profitability
730
225
534
143
403
105
238
147 42
22
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
1 We define Revenue ex-TAC as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period. Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP.
Please see the Appendices for a reconciliation of Revenue ex-TAC to Revenue, the most directly comparable GAAP measure.
81 • 2 We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense,
pension service costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. Please see the Appendices for a reconciliation of Adjusted
EBITDA to net income, the most directly comparable GAAP measure.We have a large client base and maintain high retention
Client Retention Rate1 Number of clients (in thousands)
100%
90%
19.2 19.4 19.4 19.7
80% 18.5 19.0
18.1
17.3
70% 16.4
15.4
60%
14.5
12.9
50% 11.9
11.0
40%
30%
20%
10%
0%
Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
82 • 1 The retention rate represents the percentage of live clients during the previous quarter that continued to be live clients during the current quarter. For all solutions combined.Key figures – FY 2018
REVENUE EX-TAC1 ($M) ADJUSTED EBITDA1 ($M) FREE CASH FLOW1 ($M)
941 +2%2 966 33% margin 42%
(% of Revenue ex-TAC) of Adj. EBITDA
321 137
310 135
FY2017 FY2018 FY2017 FY2018 FY2017 FY2018
1 Revenue ex-TAC, Adjusted EBITDA, and Free Cash Flow are not measures calculated in accordance with U.S. GAAP. We have provided a reconciliation of those measures to the most
83 • directly comparable GAAP measures, which is available in the Appendix slides
2 At constant currencyKey figures – H1 2019
REVENUE EX-TAC* ($M) ADJUSTED EBITDA* ($M) FREE CASH FLOW* ($M)
+1%** 27.3% 51%
of Revenue ex-TAC of Adj. EBITDA
471 460
74
147
64
125
H1 2018 H1 2019 H1 2018 H1 2019 H1 2018 H1 2019
* Revenue ex-TAC, Adjusted EBITDA, and Free Cash Flow are not measures calculated in accordance with U.S. GAAP. We have provided a reconciliation of those measures to the
84 • most directly comparable GAAP measures, which is available in the Appendix slides.
** At constant currencySolid financial model: doubled Adj. EBITDA margin since IPO
As % of Revenue LTM LTM
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
ex-TAC Q2 2018 Q2 2019
Revenue ex-TAC 100% 100% 100% 100% 100% 100% 100% 100%
Other cost of
7.9% 6.6% 6.1% 6.4% 6.9% 6.7% 6.3% 7.3%
revenue*
Gross margin 92.1% 93.4% 93.9% 93.6% 93.1% 93.3% 93.7% 92.7%
R&D* 14.9% 12.5% 13.4% 14.2% 14.7% 15.2% 14.9% 15.2%
S&O* 43.6% 39.9% 39.8% 35.3% 34.8% 33.6% 33.1% 34.5%
G&A* 16.0% 14.8% 13.8% 13.2% 10.7% 11.3% 10.5% 11.7%
Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9% 33.2% 35.2% 31.4%
Revenue ex-TAC
40.3% 40.8% 40.4% 40.6% 41.0% 42.0% 42.0% 41.8%
margin**
* Cost of revenue and operating expenses are expressed on a Non-GAAP basis, which excludes the impact of equity awards compensation expense, pension service costs, depreciation
85 • and amortization, acquisition-related costs, restructuring and deferred price consideration.
** As a % of revenueSignificant drivers of further operating leverage
Powered by a combination of
Technology Broader Upselling new Automation
innovation supply solutions & self-service
86 •Robust operating cash flow enables smart investment
PROFITS
SCALE CASH
SMART
INVESTING
DEVELOP
INVEST
& GROW
87 •Robust Free Cash Flow and strong conversion into Adjusted EBITDA
US$ ‘000
60,000 100%
53,526 51,960 90%
50,000
43,536 80%
40,192 70%
40,000
33,436 33,954 60%
30,000 50%
22,494 20,600 20,172 40%
20,000 16,032 30%
20%
10,000
10%
- 0%
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
FCF to Adjusted
EBITDA conversion 28% 62% 43% 45% 67% 33% 30% 38% 63% 36%
Average FCF to Adjusted Free Cash Flow
EBITDA conversion
88 •Our financial structure offers significant flexibility
Strong balance Significant Very low $422M
sheet cash pile debt cash
As of June 30, 2019
Total assets (in $M) Cash & cash equivalents (in $M) Financial liabilities (in $M)
1,750
€350M
1,597 committed financing
>20%
of assets
422 $150M
364 equity raise capacity*
4 4
Share buy-back
Dec 2018 June 2019 Dec 2018 June 2019 Dec 2018 June 2019
authorization**
* Based on a $1.5bn market capitalization, pursuant to the 2019 AGM authorization to issue up to 6.6m shares
89 • ** For M&A and to satisfy employee equity plan vestingFlexible capital allocation more geared to shareholder returns
•
Organic growth
•
•
•
M&A –
–
–
Share •
repurchase •
program •
90 •Investment thesis
Large market Clear vision Competitive moats Proven Attractive
opportunity track-record financial profile
Digital advertising Be the leading Shopper Data Large client base High profitability
is large and advertising platform and growing
Platform Technology ~90% client retention
growing fast for the open Internet
for all solutions Strong
Scale/Reach
combined cash flow
91 •Investor Relations Contacts: IR@Criteo.com
Edouard Lassalle Friederike Edelmann
VP, Head of Investor Relations Director, Investor Relations
32, rue Blanche 387 Park Ave South, 12th Floor
75009 Paris New York, NY 10016
+33 1 7621 2166 +1 917 837 8617
e.lassalle@criteo.com f.edelmann@criteo.comAppendix
Revenue ex-TAC reconciliation
($ in thousands) Q1’17 Q2’17 Q3'17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 H1’18 H1’19
Revenue 516,667 542,022 563,973 674,031 564,164 537,185 528,869 670,096 1,101,349 1,086,270
Less: Traffic
306,693 322,200 329,576 397,087 323,746 306,963 305,387 398,238 630,709 626,658
acquisition costs
Revenue ex-TAC 209,974 219,822 234,397 276,944 240,418 230,222 223,482 271,858 470,640 459,612
($ in thousands) 2017 2018
Revenue 2,296,692 2,300,314
Less: Traffic acquisition costs 1,355,556 1,334,334
Revenue ex-TAC 941,136 965,980
94 •Adjusted EBITDA reconciliation
($ in thousands) Q1’17 Q2’17 Q3'17 Q4'17 Q1’18 Q2’18 Q3’18 Q4’18 H1’18 H1’19 2017 2018
Net income 14,518 7,505 22,269 52,368 21,090 14,707 17,948 42,134 35,797 33,938 96,659 95,879
Adjustments:
Financial (income) expense,
net
2,333 2,094 2,886 2,221 1,325 1,006 1,007 1,746 2,331 3,328 9,534 5,084
Provision for income taxes 4,201 3,665 7,858 15,927 12,386 8,638 6,821 18,299 21,024 15,701 31,651 46,144
Equity awards
compensation expense
14,940 14,918 22,028 20,464 19,303 20,245 17,261 10,267 39,548 28,273 72,351 67,076
Pension service costs 290 299 320 321 434 419 419 419 853 785 1,231 1,691
Depreciation and
amortization expense
20,167 22,306 23,755 24,570 23,646 23,560 25,619 30,675 47,206 40,611 90,796 103,500
Acquisition-related costs 6 - - - - - 516 1,222 - - 6 1,738
Restructuring - 3,299 - 4,057 (252) 199 - - (53) 2,618 7,356 (53)
Total net adjustments 41,936 46,581 56,847 67,560 56,842 54,067 51,643 62,628 110,909 91,316 212,925 225,180
Adjusted EBITDA 56,454 54,086 79,116 119,928 77,932 68,774 69,591 104,762 146,706 125,254 309,584 321,059
95 •Free cash flow reconciliation
($ in thousands) H1’18 H1’19
CASH FROM OPERATING ACTIVITIES 124,868 120,184
Acquisition of intangible assets, property, plant and equipment (26,293) (42,104)
Change in accounts payable related to intangible assets, property, plant and equipment (24,121) (14,372)
FREE CASH FLOW 74,454 63,708
96 •You can also read
