Post on 22-May-2020
1 •
Criteo 101
Investor Presentation October 2018
2 •
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 assumedfuture results of operations, business strategies, financing plans, projections, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.
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, and the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 2, 2018, 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.
Safe harbor statement
3 •
Stock information and key financials
Ticker: CRTO
Stock Exchange: NASDAQ Global Market
CUSIP: 226718104
Shares outstanding1: 67.2M
Stock Ownership2:
1 As of September 30, 20182 On a fully-diluted basis, as of September 30, 2018, based on 75.6 M fully diluted shares. 3 At constant currency
• 2017 Financials
• Revenue: $2,297M, +27% at cc3
• Revenue ex-TAC: $941M, +29% at cc
• Adjusted EBITDA: $310M, +35% at cc
• Adj. EBITDA margin: 33% of Revenue ex-TAC
Free float, 84.7%
Founders, NEOs,
Management & Employees,
14.6%
Idinvest & Yahoo! Japan, 0.7%
4 •
We are building the advertising platform for the open Internet.
4 •
5 •
A global company with scale
User identifiers in the Criteo
Shopper Graph
Clients
Countries
Sales transactions analyzed in LTM
Ads served in 2017
Criteos in R&D, tech & business intelligence
Employees
Offices worldwide
6 •
Management team
Jean-Baptiste
Rudelle
Executive
Chairman and
Co-Founder, 48
K-Mobile,
Lucent, Roland
Berger
Dan Teodosiu
Chief
Technology
Officer, 51
Google,
Microsoft,
Hewlett-
Packard
Mollie Spilman
Chief Operating
Officer, 50
Millenial Media,
Yahoo!,
Advertising.com
Time Warner
Benoit
Fouilland
Chief Financial
Officer, 53
SAP,
Business Objects
Ryan Damon
EVP, General
Counsel, 45
Riverbed
Technology,
Charles
Schwab,
Gunderson
Dettmer
Jonathan
Opdyke
Chief Strategy
Officer, 41
HookLogic,
Xerox, Beyond
Interactive
7 •
Enabler & pioneer
We brought
performance-based
personalized
marketing
to display in 2008
We have since pioneered the industry in many ways…2008First CPC model in display
Real-time
Creative
OptimizationAOV Optimizer
Privacy by Design
Exchange
Universal
Match
Apple-compliant
solutionTravel Segments in Engine
Conversion Rate
Optimizer
4.5B products imported
from merchants everyday
TO
P!
Daily RTB: 55bn bid
requests,1.2bn wins
Product Category level
CPC bidding
600 T
B of Data analyzed
everyday
Largest Hadoop
cluster in Europe
Dynamic product banners
Engine Optimized Segments
Pa
ss
ba
ck
Sizeless
creatives
On
eta
gApp Deep linking
Unique User
Value Prediction
Mobile Ad Formats
App advertising
Native Ads
Adaptive
Revenue
Optimizer
Kin
eti
c
Desig
n
Dynamic
Ads
Dir
ec
t
Bid
de
r
Identity Graph
Interest Map
8 •
The advertising platform for the open Internet
Criteo collects
data
PricingAvailabilityConversio
nsFormatsCategoryContext
ViewedBasketProductBough
tBrandBidsWinRateClicksIm
pressionsHashedUserIdentif
ierCRMBrowsingSKU
Criteo Engine
600TB Data/day
8 data centers
Criteo Engine
bids
600K+ RTB
bids/sec
Banner is
created by AI
Product Recommendation
Look & Feel
Based on Prediction & Scoring
User Specific
Banner is shown
40K+ ads/sec
User reacts
9 •
Criteo offices
Campaigns in countries
offices in countries
nationalities
Boston2012
Barcelona2014
Tokyo 2011
Singapore 2013
São Paulo 2011
Shanghai 2016
Palo Alto2009
New York 2011
Chicago2012
London2008
Madrid 2014
Paris2005
Stockholm 2010
Milan 2012
Munich 2010
Amsterdam2011
Beijing 2013
Seoul 2010
Sydney 2011
Dubai2015
Moscow 2014
San Francisco2014
Osaka 2014
Los Angeles2015
Miami2015
Istanbul2015
Toronto2015
New Delhi2016
Grenoble2014
Ann Arbor2016
Market & Trends
11 •
Web and mobile have changed shopping behavior
of shoppers
showroom
and webroom
shoppers visit 2+
retailer sites when
shopping online
of commerce
transactions
involve mobile
12 •
Digital advertising’s share of global ad budgets continues to grow
Source: Zenith Advertising Expenditures Forecast
40%
50%
2018 2020
13 •
Digital ad spend has long overtaken TV ad spend
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
$0B
$300B
TV
Digital
Source: MAGNA | Data for 2017 and beyond are forecasts – Created with Datawrapper
14 •
Northern Europe and Japan are mobile leaders.
Mobile marches on
Source: Criteo, Q2 2018. Base: sales weighted aggregate, Apps excluded (see Methodology).
New Zealand 44%
Austria 44%
Switzerland 43%
Brazil 43%
Taiwan 42%
Italy 41%
United States 39%
France 39%
Belgium 38%
Canada 33%
Poland 33%
Russia 30%
Sweden 60%
Norway 57%
United Kingdom 55%
Japan 55%
Denmark 51%
Germany 50%
Finland 49%
Netherlands 49%
Spain 48%
South Korea 47%
Turkey 46%
Australia 46%
15 •
The open Internet is highly under-monetized,creating a huge opportunity for Criteo
50%50%
Time spent
70%
30%
Ad spend captured
Facebook/Google
Open Internet
Based on Nielsen US DCR trends, eMarketer, ExchangeWire
Vision
17 •
What haschanged over the past 3 years?
Facebook, Amazon and Google have significantly increased their footprint in the Internet ecosystem and advertising value chain
Apps are the new frontier for commerce
18 •
Amazon has caused significant disruption across the retail landscape
Our data assets and products enable retailers to fight back collectively
What haschanged over the past 3 years?
19 •
To navigate the fast-changing environment
Advertisers need a strategic partner
Advertisers need:
Large scale data and powerful technology to activate it
A reliable partner with no competing agenda
20 •
Our vision is to be the advertising platform for the open Internet.
The open Internet
• Allows all players –big and small– to interact directly with audiences and consumers
• Provides access to data and transparent measurement
• Ensures neutrality with no conflicting agendas
Criteo Shopper Graph
22 •
Three trusted data collectives
form the Criteo Shopper Graph
Carefully designed using our guiding principles
Open
Two-way exchange of data
Secure
Highest data security and privacy
Transparent
Clear and permission-based usage
Fair
Value gained exceeds contribution
A unified understanding of a shopper’s online journey and real-time intent data
Criteo Shopper Graph: the world’s largest shopper data set
23 •
Identity Graph: matching of identifiers cross device, same device, and online/offline
Criteo’s advantages
• ~80% of clients participate
• 4B user identifiers
• Global coverage
• +10% average uplift
Open, transparent, secure, fair
• Encrypted and double-hashed personal
identifiable information (PII)
• Access at no additional cost
Participation
• Opt-in by sending hashed identifiers
via OneTag or App Events SDK
24 •
Interest Map: anonymized shopper interest across products
Criteo’s advantages
• Access to 4.5B+ products
• Large consumer reach worldwide
• Understand performance of
product attributes
• 120+ shopping intent signals evaluated
per shopper
• 21B product interactions per month
• 600TB daily shopper data
Open, transparent, secure, fair
• Data isolated unless opt-in
• All data anonymized
• No free riders
• Contribution capped at 15% of pool
• Access at no additional cost
Participation
• Opt-in to share anonymized data
• Opt-out to use client data only
25 •
Measurement Network: conversion and sales across retailers
Criteo’s advantages
• SKU-level sales attribution for
brands across retailers
• Deterministic measurement
• Nearly 100 participating retailers
• $760B+ annual ecommerce sales
• $33B annual post-click sales
Open, transparent, secure, fair
• All retailer data anonymized
Participation
• When clients work with us, data within
and across retailers is aggregated
Criteo Engine
27 •
Criteo Engine
Predictive BiddingProduct
RecommendationsKinetic Design
Shopper-level optimization to drive CTR, CR, Order Value, or Product Margin
Proven machine-learning technology
> 30,000 tests/year
run on new performance algorithms and variables
28 •
Our Engine solves highly complex problems in real time
Creates
Product
Recommendation
Personalized creative
Unique user value
predictionClient 2
Client 3
Client 4
Client 5
For each user
Internal advertiser
auction
Publisher/platform bid
Custom ad serving
Less than 100ms to perform the entire process
>40,000 ads served/sec600,000+ RTB bids/sec
Client 1
Creates
Product
Recommendation
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
prediction
29 •
Product Recommendation accurately recommends the best offer
✓ 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...
The Criteo Engine recommends
products based on:
Products
we show John
John browses
“Bomber Jacket”
on Uniqlo’s site
30 •
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
The right bid for the right placement at the right time
User context Publisher interactionProduct behavior
31 •
Kinetic Design delivers perfectly branded ads, optimized for every user
32 •
A privacy by design approach since day 1: data minimization
approach
CPM/CPC model: an incentive to present
relevant ads
Trust requires transparency and control (Adchoiceicon, cross device
optout)
A European player with clear track
record in privacy
Criteo Engine: where Artificial Intelligence meets privacy
Advertising Solutions
34 •
Standard full funnel framework
Awareness Consideration Conversion
ADVERTISING OBJECTIVES
• Reach
• Views
• Traffic
• App installs
• App engagement
• Web sales
• App sales
• In-Store sales
MONETIZATION OBJECTIVES
Monetization
• Revenue per impression • Revenue per click
35 •
An example of Criteo as a strategic partner for retailers
*In beta or test
Conversion
Encourage people to purchase
Web retargeting
App retargeting
Sales
Objective
Capability
Measure
Awareness
Generate interest in offerings
Video ads*
Views
Consideration
Drive visits to learn more about products
Web prospecting*
Visits
Monetize
Win larger share of brand budgets
Storetail
Revenueper impression
Sponsored Products
Revenueper click
Criteo Marketing Solutions Criteo Retail Media
Client Management Center
37 •
Client Management Center
• Real-time monitoring and
optimization of marketing efforts
• Insights on performance and
budget
• Granular reporting and attribution
across all products in the client’s
product catalog
Business model
39 •
CPC-based revenue model
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = CPM x impressions
Revenue ex TAC = Revenues – TAC
Revenue ex-TAC margin: Approx. 40%
40 •
Predicting the right bid for the highest value client
Client 4
We take CPC bids
from clients
Clients
$0.30 x 0.95% = $2.85
We convert those bids into
pCPM (predicted CPM)
CPC x CTR = pCPM
(predicted CPM)Publishers
$0.50 x 0.75% = $3.75
$0.40 x 0.61% = $2.44
$0.80 x 0.45% = $3.60
$2.00
Clearing Price
(CPM)
Highest bidder
Bid = CPC pCTR pCR pAOV
Client 1
Client 2
Client 3
We buy
inventory from
publishers in
real time
CPM = Cost per Thousand impressions, CTR = Click-through rate, CR = Conversion rate, AOV = Average Order Value
41 •
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = Revenue share with Retailer
Revenue ex TAC = Revenue – TAC
Revenue ex-TAC margin = 26%-28%
Sponsored Products revenue model
*In beta or test
42 •
Revenue = cost/impressions x 1,000
Traffic Acquisition Cost (TAC) = Revenue share with Retailer
Revenue ex TAC = Revenue – TAC
Storetail revenue model
*In beta or test
43 •
Our business model has unique attributes
Differentiated in Marketing
Attractive Direct
Sticky Elastic Demand
1 On average over the last four quarters through Q3 20182 Last twelve months to Q3 2018; excluding Criteo Sponsored Products3 Quarterly retention rate, excluding Criteo Sponsored Products – close to 90% for 34 consecutive quarters4 On average over the last four quarters through Q3 2018; excluding Criteo Sponsored Products. Represents uncapped budgets of our clients, which are either contractually uncapped or so large that the budget constraint does not restrict ad buys
75%Direct relationships
with clients2
480Net client additions
per quarter1
90%Client retention rate3
76%Of Revenue ex-TAC from
uncapped budgets4
Clients & Go-to-market approach
45 •
Direct relationships with many premium commerce & brand clients
* 19,213 clients at the end of Q3 2018
Commerce: Retail, Travel and Classifieds Brands
46 •
Transforming our go-to-market to best serve our clients across all solutions
Go-to-market & client service
A
$200K+
B
$50K+
D
$10K+
E
$5K+
F
<$5K
C
$20K+
Large
Clients
Upper Mid-
Market
Lower Mid-
Market
Monthly
ad spend
Highly customized service and proactive insights/proposals
Efficient, high quality, scalable and automated serviceto the highest number of clients
New tiering
Objectives
• Adapt sales organization to a multi-solution offering
• Provide the right level of service to each client segment
• Scale operations and enhance profitability
Consultative sales Telesales Self-service platform
1
2
3
47 •
Enabling our clients to “tune the Engine” themselves opens new opportunities
Self-service opens new markets
• Thousands of ad agencies worldwide who want to add value
for their clients
Self-serving
• Sophisticated marketers who want to adjust their
campaign settings in real time and by themselves
• Mid-market clients who can on-board faster
and more easily
48 •
A large opportunity to win new clients
25%Midmarket
penetration50%Large Clients
penetration
~60,000 addressable clients worldwide
in Retail, Travel and Classifieds
(excluding brands)
Publisher inventory
50 •
Direct partnerships with large, high quality publishers
Preferred Access To Premium Media Inventory
Preferred Access To Retailer Inventory
All Major Public Exchanges, Global And Local
Indir
ect
inte
gra
tion
/ R
TB
Direct in
teg
ration
51 •
The publisher environment is constantly evolving
Transition to Mobile Social Native
Multiple Devices Header BiddingAd Blocking
Changing consumer behavior Evolving technology
Programmatic
Our drives more value for publishers
In App
52 •
We have always delivered user-friendly ads
Ad blocking offers an opportunity for players with:
• The right business model
• The right technology stack
• The right expertise in user privacy
• Premium demand
Our Position
• Promote acceptable ad programs
• Invest in native
• Support an open tracking standard
• Define standards for retargeting
53 •
Header bidding has changed the advertising environment
More bidders canmean higher yields
Less dependent on a single monetization platform
Allows programmatic buyers to bid for premium inventory
Impact on Publishers Impact on Programmatic Buyers
More inventory available for auction
More complex bidding environment can lead to higher costs andless efficiency
54 •
Header bidding has created opportunities for smart players
Short-term, temporary changes in the publisher market place
More sophisticated buyers like Criteo have a technology premium
Time
BEFORE HB GROWTH OF HB BUYERS ADJUST TO HB
Unsophisticated buyers
Sophisticated buyers
Technology
premium
Inve
nto
ry c
os
t
55 •
• 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 2,600 publishers at the end of Q3 2018
Criteo Direct Bidder: Direct access to Criteo’s unique demand
Competitive positioning
57 •
To navigate the fast-changing environment
Advertisers need a strategic partner
Advertisers need:
Large scale data and powerful technology to activate it
A reliable partner with no competing agenda
58 •
We create value for all stakeholders
• Performance
• Transparency
• Self-service
• Product discovery
• Consent management
• Performance
• Direct access
PublishersAdvertisers
Consumers
59 •
We are a strategic partner to advertisers worldwide
PRODUCT SOLUTIONS
Awareness
Conversion
Consideration
Monetization solutions(Sponsored Products,
Reseller Program…)
TECHNOLOGY PLATFORM
Criteo Engine
Shopper Graph
Consent Management
Creative Services
Universal Catalog
GO-TO-MARKET
& CLIENT SERVICE
Self-service platform
Consultative sales
Telesales
Criteo Marketing Solutions
Criteo Retail Media
60 •
We are well positionedto win
Advertisers need a global strategic partner
• ~700 R&D & Product engineers
• 13 years of Machine Learning
• 30,000+ tests/year on new variables
• Global across 95 markets
• $760B+ annual ecommerce sales
• 4B user identifiers in Identity Graph
• Transparent rules on data sharing
• ~80% of clients participate in ID Graph
• No competing business agenda
We bring the right assets and competencies
61 •
Advertising technology positioning
CLOSED
OPEN
WORKFLOW AUTOMATION PREDICTIVE PERFORMANCE
Note: based solely on Criteo’s qualitative assessment
62 •
DSP
Retargeting
Mobile Advertising
Sponsored Products
Social Advertising
Ad Servers
Email Marketing
Marketing Automation
Social Media Marketing
Web Content Management
Data Management
Platform
Analytics
App Measurement
Data Providers
Tag Management
Feed Management
Digital Commerce
Platform
Adtech: Paid MediaCriteo wins 90% of head-to-head tests
Martech: Owned and Earned MediaCriteo complements these vendors
Data and Operations Infrastructure Criteo integrates with these technologies
Criteo in the Adtech/Martech Landscape
Growth strategy
64 •
• Evolve go-to-market strategy for large and
midmarket clients
• Further scale and automate midmarket
operations worldwide
• Add new brand clients globally
Grow the customer base Increase our value for clients and partners
• Enhance AI/Deep Learning technology
• Grow and leverage Criteo Shopper Graph
• Enhance self-service capabilities
• Expand Marketing Solutions & Monetization Solutions
• Broaden quality supply of inventory
Our growth strategy is based on two strong pillars
65 •
Transforming our go-to-market to best serve our clients across all solutions
Go-to-market & client service
A
$200K+
B
$50K+
D
$10K+
E
$5K+
F
<$5K
C
$20K+
Large
Clients
Upper Mid-
Market
Lower Mid-
Market
Monthly
ad spend
Highly customized service and proactive insights/proposals
Efficient, high quality, scalable and automated serviceto the highest number of clients
New tiering
Objectives
• Adapt sales organization to a multi-solution offering
• Provide the right level of service to each client segment
• Scale operations and enhance profitability
Consultative sales Telesales Self-service platform
1
2
3
66 •
We invest in growing areas in digital advertising – and beyond
• Leverage strong growth of apps
• Omnichannel advertising
• App
• Store-to-web retargeting*
Shopping
environments
• Awareness*, Consideration
• Data and audience
monetization for retailers*
• Complete expansion of solution portfolio
• Build flexible monetization platform
Advertising/
Monetization
objectives
• Video• Incremental inventoryMedia
* Prospective
67 •
Standard full funnel framework
Awareness Consideration Conversion
ADVERTISING OBJECTIVES
• Reach
• Views
• Traffic
• App installs
• App engagement
• Web sales
• App sales
• In-Store sales
MONETIZATION OBJECTIVES
Monetization
• Revenue per impression • Revenue per click
68 •
Our key priorities for 2018/2019
Offering our
technology
platform in a more
flexible and
modular way
Realigning and
training of our
sales team
Track-record of execution & Financials
70 •
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, 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.
Solid financial track record since IPO
Revenue ex-TAC1 ($ millions) Adjusted EBITDA2 ($ million)
147
238
403
534
730
941 971
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 LTM Q32018
2242
105
143
225
310336
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 LTM Q32018
41%CAGR
High
growth
Expanding
profitability
71 •
9.310.2
11.011.9
12.914.5
15.416.4
17.318.1 18.5 19.0 19.2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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
We add many clients while maintaining high retention
Client Retention Rate1 Number of clients (in thousands)2
1 The retention rate represents the percentage of live clients during the previous quarter that continued to be live clients during the current quarter. All products excluding Criteo Sponsored Products.2 Including all products
72 •
Solid financial model: doubled Adj. EBITDA margin since IPO
As % of Revenue
ex-TACFY 2013 FY 2014 FY 2015 FY 2016 FY 2017
LTM Q3
2017
LTM Q3
2018
Revenue ex-TAC 100% 100% 100% 100% 100% 100% 100%
Other cost of
revenue*7.9% 6.6% 6.1% 6.4% 6.9% 7.1% 6.4%
Gross margin 92.1% 93.4% 93.9% 93.6% 93.1% 92.9% 93.6%
R&D* 14.9% 12.5% 13.4% 14.2% 14.7% 15.0% 15.0%
S&O* 43.6% 39.9% 39.8% 35.3% 34.8% 35.8% 33.4%
G&A* 16.0% 14.8% 13.8% 13.2% 10.7% 11.5% 10.6%
Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9% 30.7% 34.6%
Revenue ex-TAC
margin**40.3% 40.8% 40.4% 40.6% 41.0% 40.6% 42.1%
* 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 and amortization, acquisition-related costs, restructuring and deferred price consideration. ** As a % of revenue
73 •
We expect -1% to +1% Revenue ex-TAC growth at constant currency
2018 is a transition year for Criteo
ITP significantly impacts our business in 2018
• Reducing our year-over-year growth
In the short term, the company-wide transformation slows down our growth and drives up employee attrition
We are evolving to a multi-solutions platform …
• Internal reorganization
• Offer technology platform in modular ways
…and adapting our go-to-market strategy accordingly
• More granular client segmentation
• Re-allocate resources
• New hiring plan
• We expect the transformation to take 6 to 12 months
• We aspire to return to double-digit growth in H2 2019
74 •
+2%*664
694
9M 2017 9M 2018
* At constant currency
Profitable growth and strong cash flow
REVENUE EX-TAC ($M) ADJUSTED EBITDA ($M) FREE CASH FLOW ($M)
+7%* +14%
190
216
9M 2017 9M 2018
83
95
9M 2017 9M 2018
75 •
Technology innovation
Broader Supply
Upselling incremental solutions and
products
Operating excellence and
productivity
Strong drivers for further operating leverage
spending budgetsat limited incremental costs
Powered by a combination of
76 •
Robust operating cash flow enables smart investment
INVESTDEVELOP & GROW
CASHSCALE
PROFITS
SMART
INVESTING
77 •
Our financial structure offers significant flexibility
* Based on a $1.8bn market capitalization, pursuant to the 2018 AGM authorization to issue up to 6.6m shares** For M&A and to satisfy employee equity plan vesting
Strong balance
sheet
1,531 1,516
Dec. 2017 Sep. 2018
Total assets (in $M) Financial liabilities (in $M)
Very low
debt
4 5
Dec. 2017 Sep. 2018
Cash & cash equivalents (in $M)
Significant
cash pile
414459
Dec. 2017 Sep. 2018
>30% of assets
$459Mcash
As of September 30, 2018
€350Mcommitted financing
$180M equity raise capacity*
Share buy-back authorization**
78 •
Flexible capital allocation prioritizing growth
•
•
–
–
–
•
•
•
Organic growth
M&A
* Average for fiscal years 2012, 2013, 2014, 2015, 2016 and 2017
•
•Share repurchase
program
79 •
Large market
opportunity
Clear vision Competitive moats Proven
track-record
Attractive
financial profile
Compelling investment thesis
Digital advertising
is large and
growing fast
Become the
advertising platform
for the open Internet
Technology
Scale
Neutrality
Client growth
90% client retention
for full-funnel
products
Plan to return to
Growth
Increasing
profitability
Strong cash flow
80 •
We are building
the advertising platform for the open Internet.
VP, Head of Investor Relations32, rue Blanche
75009 Paris+33 1 7621 2166
e.lassalle@criteo.com
Director, Investor Relations387 Park Ave South, 12th Floor
New York, NY 10016+1 917 837 8617
f.edelmann@criteo.com
Friederike EdelmannEdouard Lassalle
Investor Relations Contacts: IR@Criteo.com
Appendix
83 •
($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4’17 Q1’18 Q2’18 Q3’18
Revenue 401,253 407,201 423,867 566,825 516,667 542,022 563,973 674,031 564,164 537,185 528,869
Less: Traffic acquisition
costs238,755 240,969 247,310 341,877 306,693 322,200 329,576 397,087 323,746 306,963 305,387
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
Revenue ex-TAC reconciliation
($ in thousands) 2016 2017
Revenue 1,799,146 2,296,692
Less: Traffic acquisition costs 1,068,911 1,355,556
Revenue ex-TAC 730,235 941,136
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 2016 2017
Net income 18,527 13,339 14,724 40,740 14,518 7,505 22,269 52,368 21,090 14,707 17,948 87,329 96,659
Adjustments:
Financial (income) expense, net 1,317 94 570 (1,435) 2,333 2,094 2,886 2,221 1,325 1,006 1,007 546 9,534
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 33,129 31,651
Equity awards
compensation expense8,370 7,695 13,965 13,229 14,940 14,918 22,028 20,464 19,303 20,245 17,261 43,259 72,351
Pension service costs 129 131 132 133 290 299 320 321 434 419 419 524 1,231
Depreciation and amortization
expense12,516 13,300 14,771 16,190 20,167 22,306 23,755 24,570 23,646 23,560 25,619 56,779 90,796
Acquisition-related costs - 148 1,793 980 6 - - - - - 516 2,921 6
Acquisition-related deferred
price consideration40 44 3 (3) - - - - - - - 85 -
Restructuring - - - - - 3,299 - 4,057 (252) 199 - - 7,356
Total net adjustments 30,316 25,862 38,808 42,255 41,936 46,581 56,847 67,560 56,842 54,067 51,643 137,243 212,925
Adjusted EBITDA 48,843 39,201 53,532 82,995 56,454 54,086 79,116 119,928 77,932 68,774 69,591 224,572 309,584
85 •
Free cash flow reconciliation
($ in thousands) Q3 2017 Q3 2018
CASH FROM OPERATING ACTIVITIES 61,727 50,256
Acquisition of intangible assets, property, plant and equipment (20,999) (60,627)
Change in accounts payable related to intangible assets, property, plant and equipment (6,774) 30,971
FREE CASH FLOW 33,954 20,600