Criteo S.A.(CRTO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Criteo S.A. reported record revenue of $1.9 billion for 2024, with contribution ex-TAC growing by 11% at constant currency to over$ 1.1 billion [37] - Adjusted EBITDA margin improved to 35%, a 500 basis point increase year-over-year, driven by operational leverage and productivity [38] - Free cash flow reached approximately $182 million, up 65% year-over-year, representing 47% of adjusted EBITDA [39] Business Line Data and Key Metrics Changes - Retail media revenue was$ 258 million, with contribution ex-TAC growing by 25% year-over-year at constant currency [38] - Performance media revenue was $1.7 billion, with contribution ex-TAC increasing by 8% at constant currency, driven by a 32% growth in commerce audiences [38][41] - Retargeting represented 40% of the business as of the end of 2024, down from nearly 90% in early 2020 [27] Market Data and Key Metrics Changes - Retail media business saw a remarkable 31% year-over-year growth in media spend, exceeding$ 1.5 billion [13] - In the Americas, retail media spend increased by 46% year-over-year [87] - The number of brands advertising across Criteo's network grew by close to 20% compared to the previous year [45] Company Strategy and Development Direction - Criteo is focused on enhancing its commerce media platform, integrating AI-driven solutions, and expanding partnerships with retailers and agencies [15][34] - The company aims to empower advertisers with full funnel strategies and optimize performance through first-party data integration [17] - Criteo's strategy includes a modular approach to serve various retailers, enhancing its competitive positioning against Amazon [106] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within the retail media space, highlighting the competitive advantages gained over the years [81] - The outlook for 2025 anticipates mid-single-digit growth in contribution ex-TAC, with potential upside from new capabilities and partnerships [56] - Management noted that the company is no longer planning around the deprecation of third-party cookies, reflecting a shift in strategy [61] Other Important Information - Criteo's capital allocation strategy includes a focus on high ROI investments and returning capital to shareholders through share buybacks, with $225 million deployed for repurchases in 2024 [54][55] - The company has a strong financial position with approximately$ 782 million in total liquidity and no long-term debt [53] Q&A Session Summary Question: Insights on retail media strength in Q4 and future drivers - Management highlighted the exceptional performance in retail media driven by significant media spend and the number of brands advertising, with expectations for continued growth in 2025 [87][89] Question: Margin profile and outlook for 2025 - Management indicated that Q4 adjusted EBITDA benefited from top-line outperformance and operational leverage, with expectations for continued strong margins despite some headwinds [93][96] Question: Competitive landscape with Amazon - Management noted that Amazon's new retail ad service targets a different market segment and that Criteo's neutral positioning and comprehensive product suite provide a competitive edge [102][106] Question: Contribution from Microsoft partnership - Management confirmed that contributions from the Microsoft partnership are included in the 2025 guidance, with some retailers expected to launch in the first half of the year [121] Question: Visibility into 2025 budget and competitive edge from wider inventory access - Management emphasized a rigorous planning process for 2025 budgets and the competitive advantage gained from access to a broader pool of inventory, including social media platforms [145]