Criteo 101 Investor Presentation February 2019
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Criteo 101
Investor Presentation
February 2019
1•
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, 2018, including the Risk Factors set forth therein and the exhibits thereto, the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 2, 2018, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, that was filed with the SEC on November 5, 2018, 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 2018 Financials
Stock Exchange: NASDAQ Global Market • Revenue: $2,300M, (1%) at cc3
CUSIP: 226718104 • Revenue ex-TAC: $966M, +2% at cc
• Adjusted EBITDA: $321M, +0% at cc
Shares outstanding1: 67.7M
• Adj. EBITDA margin: 33% of Revenue ex-TAC
Stock Ownership2:
Founders,
• Free Cash Flow: $135M
NEOs, Idinvest & Yahoo! Japan
Management & 0.8%
Employees Q4 2018 Revenue ex-TAC breakdown
15.3%
New solutions
13%
Free float
84.0%
Core solution
87%
1 As of December 31, 2018
2 On a fully-diluted basis, as of December 31, 2018, based on 72.5 M fully diluted shares.
3•
3 At constant currency
A global company with scale
Clients Ads served in 2018
Sales transactions analyzed in LTM Criteos in R&D, tech & business intelligence
Employees
Users in the Criteo Identity Graph
Countries Offices worldwide
4•
Management team
Jean-Baptiste Benoit Mollie Spilman
Rudelle Fouilland Chief Operating
Executive Chief Financial Officer, 50
Chairman and Officer, 53 Millenial Media,
Co-Founder, 48 SAP, Yahoo!,
K-Mobile, Business Objects Advertising.com,
Lucent, Time Warner
Roland Berger
Dan Teodosiu Ryan Damon Denis Collin,
Chief EVP, General Chief of Staff
Technology Counsel, 45 and People, 50
Officer, 51 Riverbed Alcatel,
Google, Technology, Nokia,
Microsoft, Charles IBM
Hewlett- Schwab,
Packard Gunderson
Dettmer
5•
Enabler, pioneer & innovator
2008 We have since innovated in many ways…
First CPC model in display
Mobile Ad Formats
App advertising Engine Optimized Segments
Identity Graph Retail Media
Passback
Adaptive
Revenue Universal
Optimizer
Match Privacy by Design Largest Hadoop
cluster in Europe
We brought
600 TB
of Data analyzed
Conversion Rate Sizeless
Install
performance-based
everyday
App
personalized
marketing
to display in 2008
Measurement Native Ads Optimizer creatives
Apple-compliant Interest Map Daily RTB: 55bn bid
solution
Travel Segments in Engine requests,1.2bn wins
Real-time Facebook
TOP!
Dynamic product banners
Bidder
Creative Onetag Exchange
Direct
App Deep linking
Optimization 4.5B products imported Unique User
AOV Optimizer from merchants everyday
Value Prediction
6•
Solutions built on key assets
Data Technology Scale Openness
7•
Our business model has unique attributes
Attractive Direct
325 75%
Net client additions Direct relationships
per quarter1 with clients2
Sticky Elastic Demand
~90% 73%
Differentiated in Marketing
Client retention rate3 Of Revenue ex-TAC from
uncapped budgets4
1 On average over the last four quarters through Q4 2018
2 Last twelve months to Q4 2018; excluding Criteo Retail Media
3 Quarterly retention rate for all solutions combined – close to 90% for 35 consecutive quarters
4 On average over the last four quarters through Q4 2018; excluding Criteo Retail Media. Represents uncapped budgets of our
8• clients, which are either contractually uncapped or so large that the budget constraint does not restrict ad buys
Market & Trends
Digital advertising’s share of global ad budgets continues to grow
50%
40%
2018 2020
10 • Source: Zenith Advertising Expenditures ForecastDigital ad spend has long overtaken TV ad spend
Digital
$300B
TV
$0B
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
11 • Source: MAGNA | Data for 2017 and beyond are forecasts – Created with DatawrapperMobile 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%
12 • 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
13 • on Nielsen US DCR trends, eMarketer, ExchangeWire, IDC
BasedVision
OUR VISION: To be the leading advertising platform for the open internet
What’s the open Internet?
Where advertisers and publishers are in control and free to choose:
How to work with Whether to share How to
different partners customer data measure
success
16 •Our open Internet vision delivers benefits for all
Consumers
1.5B+
• Experience Active
• Consent Shoppers
Monthly
Advertisers Publishers
19,500 $800B+
Advertisers Annual
• Performance
ecommerce
sales
3,500 • Performance
Premium
• Transparency incl. publishers • Fairness
• Automation • Transparency
1,000+
• Control Brands
17 •Criteo Platform
The Criteo Platform supports advertising and monetization objectives
Advertising Objectives Monetization Objectives
Criteo Marketing Solutions Criteo Retail Media
Marketing Goals Web App Offline Onsite Offsite
AWARENESS
CONSIDERATION CAMPAIGNS CAMPAIGNS
CONVERSION
Criteo Platform
19 •Fueled by a unique data set and powered by Artificial Intelligence
Leveraging the world’s largest open commerce data set
Marketing Goals Criteo Marketing Solutions Criteo Retail Media
Web App Offline Onsite Offsite
AWARENESS
CONSIDERATION CAMPAIGNS CAMPAIGNS
CONVERSION
AI Engine
Product Predictive
Lookalike Finder DCO+1
Recommendation Bidding
Criteo Platform Shopper Graph
20 • 1 Dynamic Creative Optimization+Criteo Marketing Solutions
Full-funnel capability addressing the entire buying journey
MARKETING GOALS Awareness Consideration Conversion
Generate interest in your Get people to consider your Encourage interested people
products or services products or services to purchase
• Brand Awareness • Traffic • Conversions
AD OBJECTIVES • Video Views • Web, App • Web, App
• App Installs • Store Conversions
OPTIMIZATION • Reach, Views • Visits, Installs • Conversions
21 •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
22 •
*Acquired in November 2018Criteo Retail Media
Technology for retailer and brand marketers to achieve their objectives
SUPPLY
RETAILERS Supply-side Advertising Technology
‘Monetization’
Awareness Consideration Conversion
Sar
gen
to
Swi
ss
Che
ese
Slic
es
$3.
79
Commerce
Standard Sponsored Products
Display
Flexible range of targeting and display options
BRANDS & AGENCIES
‘Sales Attribution’ Buy-side Advertising Technology
23 • DEMANDCriteo Retail Media
A self-service 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
24 • 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
Three trusted data collectives
Designed using our guiding principles
Open
Two-way exchange of data where the benefits always
outweigh the contribution
Fair
Clear and permission-based usage
Transparent
Granular data sharing
Secure
Data privacy by design
26 •Identity 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
• 1.5B+ users
• Global coverage
• +10% average uplift
Open, transparent, secure, fair
• Encrypted and double-hashed personal
identifiable information (PII)
• Access at no additional cost
27 •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
28 •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
29 •AI Engine
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
31 •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 •Product Recommendation accurately recommends the best offer
John browses Products The Criteo Engine recommends
“Bomber Jacket” we show John products based on:
on Uniqlo’s site
Campaign goal
Visitor’s site navigation
Recency and frequency of activity
Product type, price, and category
Most viewed products on Uniqlo’s site
And much more...
34 •Dynamic Creative Optimization+ delivers perfectly branded ads, optimized for every user 35 •
Predictive Bidding determines the right ad opportunities
7:45 AM 8:00 AM 9:00 AM 12:30 PM 6:00 PM 9:00 PM 11:30 PM
User context Product behavior Publisher interaction
The right bid for the right placement at the right time
36 •Criteo AI Engine: Where Artificial Intelligence meets privacy
A privacy by design CPM/CPC model: an Trust requires A European player
approach since day incentive to present transparency and with clear track
1: data minimization relevant ads control (Adchoice record in privacy
approach icon, cross device
optout)
37 •Client Management Center
Modular, flexible and open
Self-service and managed service delivery options
Criteo Platform
USER INTERFACES APIs
CAMPAIGNS
AUDIENCES CREATIVES ANALYTICS
SHOPPER GRAPH AI ENGINE CATALOGS
EVENT COLLECTION BILLING INTEGRATIONS
SUPPLY
39 •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
40 •Flexible creative formats to address full-funnel marketing goals
Awareness Consideration Conversion
1. Brand creative 2. Dynamic Brand creative 3. Dynamic creative
Banner formats
• Brand focus • Brand & product focus • Product focus
• No DCO+ • Elements DCO+ • 100% DCO+
Video • Original video • Original video • Dynamic video
Creative • 3rd party creative • 3rd party creative • 3rd party creative
• Creative • Creative • Creative
Management Platform Management Platform Management Platform
integration integration integration
41 •Full self-service campaign workflow
API and managed service options
Campaign Creation & Optimization Analytics & Insights
42 •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%
45 •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*
46 • *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*
47 •
*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
48 •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
50 •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
51 •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
52 •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
53 •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
54 •Clients & Go-to-market approach
Direct relationships with many premium commerce and brand clients 56 • * 19,419 clients at the end of Q4 2018
Go-to-market & client service
Adapting our go-to-market to best serve our clients across all solutions
1• Adapt sales organization to a multi-solution offering
Objectives 2• Provide the right level of service to each client segment
3• Scale operations and enhance profitability
Consultative sales Telesales Self-service platform
Large Upper Mid- Lower Mid-
Clients Market Market
New A B C D E F
tiering Monthly $200K+ $50K+ $20K+ $10K+ $5K+A large opportunity to win new clients
~60,000addressable clients worldwide
in Retail, Travel and Classifieds
(excluding brands)
25%
Midmarket
50% penetration
Large Clients
penetration
58 •Publisher inventory
Extensive supply partnerships
Ensures inventory-agnostic access to users
Direct partnerships Exchange partners Walled gardens Retail partner
3,500 Premium publishers Long-tail & emerging formats Access to massive scale For Criteo Retail Media
• Flexible buying technology: RTB/S2S, Criteo direct bidder, SDK, API
• Any relevant creative formats/environment: IAB, Native, In-App, Video, Google AMP
60 •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
61 • 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
62 •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 3,500 publishers at the end of Q4 2018
63 •Competitive positioning
Advertisers need a
global strategic partner
Our core
We are well positioned to win
competencies
are difficult to • ~700 R&D & Product engineers
replicate •
•
13 years of Machine Learning
20,000+ tests/year on new variables
• Global across 95+ markets
• $800B+ annual ecommerce sales
• 1.5B+ users in ID Graph
• Transparent rules on data sharing
• ~75% of clients participate in ID Graph
• No competing business agenda
65 •Advertising technology positioning
OPEN
CLOSED
WORKFLOW AUTOMATION PREDICTIVE PERFORMANCE
Note: based on Criteo’s qualitative assessment
66 •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
67 •Growth strategy
Our growth strategy is based on two strong pillars
Grow the customer base Increase our value for clients and partners
• Evolve go-to-market strategy for large and • Enhance Artificial Intelligence/Deep Learning technology
midmarket clients
• Grow and leverage Criteo Shopper Graph
• Further scale and automate midmarket
• Enhance self-service capabilities
operations worldwide
• Expand Marketing Solutions & Retail Media
• Add new brand and retailer clients globally
• Broaden quality supply of inventory
69 •We invest in growing areas in digital advertising – and beyond
•
• Build flexible and modular client platform
• Leverage strong growth of apps •
• Store advertising •
• Complete expansion of solution suite •
70 • * Prospective2019 is a year of accelerating growth momentum
We invest to drive a rebound in growth and profitability in 2020 and beyond
Driven by healthy business fundamentals and our investments into
Continuing to grow our app business
Growing our new solutions to drive broader marketing goals for clients
Accelerating client additions through our self service platform
Improving the pace of hiring
71 •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.
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,
73 • 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 continue to add clients while maintaining high retention
Client Retention Rate1 Number of clients (in thousands)
100%
90%
80% 19.0 19.2 19.5
18.1 18.5
17.3
70% 16.4
15.4
60%
14.5
12.9
50% 11.9
11.0
10.2
40% 9.3
30%
20%
10%
0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
74 • 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.Solid financial model: doubled Adj. EBITDA margin since IPO
As % of Revenue
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
ex-TAC
Revenue ex-TAC 100% 100% 100% 100% 100% 100%
Other cost of
7.9% 6.6% 6.1% 6.4% 6.9% 6.7%
revenue*
Gross margin 92.1% 93.4% 93.9% 93.6% 93.1% 93.3%
R&D* 14.9% 12.5% 13.4% 14.2% 14.7% 15.2%
S&O* 43.6% 39.9% 39.8% 35.3% 34.8% 33.6%
G&A* 16.0% 14.8% 13.8% 13.2% 10.7% 11.3%
Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9% 33.2%
Revenue ex-TAC
40.3% 40.8% 40.4% 40.6% 41.0% 42.0%
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
75 • and amortization, acquisition-related costs, restructuring and deferred price consideration.
** As a % of revenueProfitable growth and strong cash flow – FY2018
REVENUE EX-TAC ($M) ADJUSTED EBITDA ($M) FREE CASH FLOW ($M)
+2%* 966 33% margin 42%
941 (% of Revenue ex-TAC) of Adj. EBITDA
310 321 137 135
FY2017 FY2018 FY2017 FY2018 FY2017 FY2018
76 • * At constant currencyStrong drivers for further operating leverage
Powered by a combination of
Technology Broader Upselling new Automation
innovation supply solutions & self-service
77 •Robust operating cash flow enables smart investment
PROFITS
SCALE CASH
SMART
INVESTING
DEVELOP
INVEST
& GROW
78 •Our financial structure offers significant flexibility
Strong balance Significant Very low $364M
sheet cash pile debt cash
As of December 31, 2018
Total assets (in $M) Cash & cash equivalents (in $M) Financial liabilities (in $M)
1,597
€350M
1,531 committed financing
>20%
of assets
414
$170M
364 equity raise capacity*
4 4
Share buy-back
Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018 Dec. 2017 Dec. 2018
authorization**
* Based on a $1.8bn market capitalization, pursuant to the 2018 AGM authorization to issue up to 6.6m shares
79 • ** For M&A and to satisfy employee equity plan vestingFlexible capital allocation prioritizes growth
•
Organic growth
•
•
•
M&A –
–
–
•
Share repurchase
•
program
80 •Compelling investment thesis
Large market Clear vision Competitive moats Proven Attractive
opportunity track-record financial profile
Digital advertising Be the leading Technology Client growth Plan to return to
is large and advertising platform Growth
Scale ~90% client retention
growing fast for the open Internet
for all solutions Increasing
Openness
combined profitability
Strong cash flow
81 •Investor Relations Contacts: IR@Criteo.com
Edouard Lassalle Friederike Edelmann
VP, Head of Investor Relations Director, Investor Relations
32, rue Blanche 387 Park Ave South, 12th Floor
75009 Paris New York, NY 10016
+33 1 7621 2166 +1 917 837 8617
e.lassalle@criteo.com f.edelmann@criteo.comAppendix 83 •
Revenue ex-TAC reconciliation
($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18
Revenue 401,253 407,201 423,867 566,825 516,667 542,022 563,973 674,031 564,164 537,185 528,869 670,096
Less: Traffic acquisition
238,755 240,969 247,310 341,877 306,693 322,200 329,576 397,087 323,746 306,963 305,387 398,238
costs
Revenue ex-TAC 162,498 166,232 176,557 224,948 209,974 219,822 234,397 276,944 240,418 230,222 223,482 271,858
($ 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
84 •Adjusted EBITDA reconciliation
($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4'17 Q1’18 Q2’18 Q3’18 Q4’18 2017 2018
Net income 18,527 13,339 14,724 40,740 14,518 7,505 22,269 52,368 21,090 14,707 17,948 42,134 96,659 95,879
Adjustments:
Financial (income) expense, net 1,317 94 570 (1,435) 2,333 2,094 2,886 2,221 1,325 1,006 1,007 1,746 9,534 5,084
Provision for income taxes 7,944 4,450 7,574 13,161 4,201 3,665 7,858 15,927 12,386 8,638 6,821 18,299 31,651 46,144
Equity awards
compensation expense
8,370 7,695 13,965 13,229 14,940 14,918 22,028 20,464 19,303 20,245 17,261 10,267 72,351 67,076
Pension service costs 129 131 132 133 290 299 320 321 434 419 419 419 1,231 1,691
Depreciation and amortization
expense
12,516 13,300 14,771 16,190 20,167 22,306 23,755 24,570 23,646 23,560 25,619 30,675 90,796 103,500
Acquisition-related costs - 148 1,793 980 6 - - - - - 516 1,222 6 1,738
Acquisition-related deferred
price consideration
40 44 3 (3) - - - - - - - - - -
Restructuring - - - - - 3,299 - 4,057 (252) 199 - - 7,356 (53)
Total net adjustments 30,316 25,862 38,808 42,255 41,936 46,581 56,847 67,560 56,842 54,067 51,643 62,628 212,925 225,180
Adjusted EBITDA 48,843 39,201 53,532 82,995 56,454 54,086 79,116 119,928 77,932 68,774 69,591 104,762 309,584 321,059
85 •Free Cash Flow reconciliation
($ in thousands) FY2017 FY2018
CASH FROM OPERATING ACTIVITIES 245,458 260,726
Acquisition of intangible assets, property, plant and equipment (122,203) (116,984)
Change in accounts payable related to intangible assets, property, plant and equipment 13,692 (8,494)
FREE CASH FLOW 136,947 135,248
86 •You can also read
