Criteo S.A.(CRTO) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Revenue for Q3 2021 was $509 million, growing 8% year-over-year, with 72% of growth driven by existing customers and 28% by new clients [30] - Revenue ex-TAC grew 14% to$ 211 million, with a margin of 41.5%, up 200 basis points year-over-year [31][32] - Adjusted EBITDA was $68 million, up 37% at constant currency, resulting in a margin of 32%, up 6 points year-over-year [40] - Free cash flow was$ 35 million in Q3, reaching $112 million for the first nine months of 2021 [46] - The company repurchased 1 million shares in Q3 at an average cost of$ 38.6 per share, with a total share buyback program extended to $175 million [47][48] Business Line Performance - New Solutions grew 66% year-over-year, now representing 28% of total business, up 3 points compared to Q2 [14] - Marketing Solutions saw strong performance, with retargeting growing 1% despite identity restrictions, and Audience-first Targeting solutions growing close to 50% [16][17] - Retail Media delivered 65% growth in Revenue ex-TAC, accelerating by 16 points versus Q2, with 70% year-to-date growth [20] - Omnichannel solutions now represent 20% of New Solutions within Marketing Solutions, growing about 140% [18] Market Performance - Americas: Revenue ex-TAC grew 18% at constant currency, driven by Retail Media and strong performance with Strategic and Core Retail customers [35] - Asia-Pac: Revenue ex-TAC grew 15% at constant currency, driven by Retail business recovery in Japan and enterprise clients in South-East Asia and Korea [36] - EMEA: Revenue ex-TAC grew 8% at constant currency, with strong traction from Retail customers in Germany and Retail Media in France [37] Strategic Direction and Industry Competition - The company is focused on its Commerce Media Platform, leveraging first-party data and AI to drive sustainable growth and long-term shareholder value [6][9] - Retail Media is a key growth area, with the Retail Media Platform now accounting for 62% of Retail Media revenue, up from less than 5% in Q3 2020 [37][38] - The company is well-positioned to capitalize on the shift away from third-party cookies, with 60% of daily active users on the web addressable through direct media integrations [25][28] Management Commentary on Operating Environment and Future Outlook - The company expects a strong holiday season, with ecommerce remaining strong and retailers accelerating investments in multi-channel fulfillment [49][50] - Inflationary pressures and supply chain challenges have not materially impacted the business, with the company's diversified customer base providing resilience [52] - The company raised its full-year 2021 Revenue ex-TAC growth guidance to approximately 10% at constant currency, with new solutions expected to grow above 50% [55] Other Important Information - The company has a global consumer reach of 650 million Daily Active Users and access to over$ 900 billion of ecommerce sales [8] - The Total Addressable Market for Commerce Media is expected to reach $100 billion by 2024, growing 22% per annum [9] - The company is actively working on alternative solutions to iOS and Chrome, with less than 10% of Revenue ex-TAC exposed to Apple users [10][12] Q&A Session Summary Question: Agency Partnerships and Supply Chain Impact [58] - Agency partnerships have grown significantly, with about a third of business running through agencies today, and further growth expected [59][61] - Supply chain challenges have not significantly impacted advertising spend, with clients shifting focus to promoting available stock [63][64] Question: Bonus Provisions and Travel Recovery [67] - Bonus provisions for 2021 are based on performance, with no catch-up expected in 2022 [69] - Travel business is recovering, with growth double that of last year but still about half of 2019 levels, with new bookings expected in Q4 [70] Question: Privacy Impact and Clean Rooms [72] - The company expects less than$ 60 million in incremental privacy impacts for 2022, primarily from ATT and iOS 15 [73][74] - Clean rooms are seen as an opportunity, with the company actively partnering with major players to integrate first-party data [75][76] Question: Google Cookie Elimination and Retargeting [80] - The company is well-positioned for Google's cookie elimination, with a focus on building first-party data and product development [81][82] - Retargeting remains resilient, with growth expected to continue in Q4 and 2022 [83] Question: Contextual Advertising and Shoppable Video Ads [88] - The company's contextual advertising capabilities are enhanced by its first-party data and AI expertise, making it a strong player in the market [89][91] - Shoppable video ads are a key focus, with initial testing showing promising results, particularly in online video [94] Question: UID 2.0 Progress [95] - The company is actively supporting UID 2.0, with a focus on interoperability and ecosystem readiness [96][97]