CRTO - Earnings call transcript Q3 2017

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Operator

Good morning and welcome to the Criteo Third Quarter 2017 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] And please note this event is being recorded. I would now like to turn the conference over to Edouard Lassalle, Head of IR. Please go ahead.

Edouard Lassalle

Nicole. you, Thank and everyone, Criteo’s XXXX QX Good welcome call. earnings morning to CEO, are Fouilland, today us and Eric With Eichmann, Benoit Officer. Chief Financial

may During anticipated other These differ to risks, plans, future anticipated such timing management forward-looking call, and services, may statements. results law. of events demand and contained various by not required and of forward-looking timing to products operating or statements results course expansion assumptions. investment forward-looking obligation except or strategies, any update These do by from financial include the and materially subject or predicted will business uncertainties, Actual We undertake statements implied metrics, results market any are as herein anticipated statements. projected forward-looking the make this the certain or opportunities, statements. and

In indication results were most non-GAAP of our an release to the earlier be of will published provided earnings considered of reconciliations future these our addition, as discuss should financial measures we Definitions comparable GAAP performance. and measures Also reported in not metrics directly today. performance. the

Lastly, call call against will Criteo’s same unless in in comparisons growth that, period With prior Chief over the are to the Officer. year. Eric now the Executive of course turn otherwise I all the stated, this made Eichmann,

Eric Eichmann

for Edouard, you, Criteo. quarter to and strong Thank good another morning pleased everyone. am report I

deliver while cash growth increasing to high continue and We profits flow.

reach the scale. mass the and fast up serve me One, driving intelligently. retailers stores, as sales requires gathering organizing retailers three, marketers. more three from buy the and and today Brands us to social. online optimization of inspiring measured and data The evolving devices trusted with scale built important, Interest challenges is Network, and This across of powered convert, drive and this they is measurable than brands search them and customers social, results, gets state real-time on intent environments; online know Shopper a has and commerce data, among to a real our marketers. granular the by of get quarterly acquire, we activation help words on and let site attribution as Marketing Criteo to across on sales of two, for both And of XX% of and and your commerce and happens at Graph, search the of and people The scale, data time, as thousands emerging are emerging in a to ecosystem get success dataset profits and journey contribute. reengage marketers things the say and us digital, sales. much their category these the is by the ability consumer for across that highest directly publishers. Ecosystem sharing more revenue marketing commerce learning, for limited Commerce Graph, advertising in battleground two, offline, quickly advertising Criteo participant purchasing shopper retailers $XXX and data and over match The billion shopper increasingly understanding at technology, And made and brands take even comes brands to delivers inventory. multiple trends, depends seamless machine the the on still Every walk consumer marketing retailers. predictive customers associated Commerce not reach players, for and is the sales of unrivaled performance through shifted opens Before to they through opportunity large performing profits next big collecting market. few offline. serve Marketing in Commerce It Ecosystem performance, it unlike marketing after Map, and focuses To participants, to for requires retailers; is sales we and ecosystem art users’ to One, for across commerce open collectives. allowing close Identity data advantage brands. building retailers and online the intent identities Measurement user providing about and

Marketing This with are Marketing well Ecosystem Commerce Forbes willing the of to that retailers to resonates Insights pool. study A contribute Our Chief XX% provides with them Officers found recently data worldwide. a commerce this believe level ideal comes field the when environment. online the with be partner and commerce playing to it to evolving We in fast largest players opportunity technology, scale. marketing the to data,

Shopper with for QX we ex-TAC constant and quarters our scale XX% been align $XXX comes existing better a rev ex-TAC ex-TAC At objectives further to have make at X.X and prediction our want entire strongly across revenue XX% representing that XX% budgets. our rev drove I with products, Graph, This from adjusted strong that out new XX% efficiency. adjusted clients. performed increased results, margin times grew across EBITDA currency, technology engine, million. demand the with three access grew revenue we improved well of ex-TAC, client to we we EBITDA the and exceeded Turning now uncapped highlight all ex-TAC to guidance. for data and constant innovation, and areas; our inventory $XX regions clients, engine We currency. to spending. collectives that rate. various One, and our in the to have broadened again, inventory, Two, row Starting rolled of added our in in Better and to delivered gross clients QX transparency We across We clients’ innovation Shopper elastic and to grew increased have three and XX% Criteo clients XX Criteo features the new business. revenue products. same Graph client million up access the

than onboarding the better largest Internet world-class as CRM Graph rates good provides players. Our Identity or

ID, the user universal data helps across in addition, is Interest our each that business. are strong believe retailers for The paying are we comprehensive ads, Three, In solid clients new supplies name, by displayed are and ecosystem. product compelling level more purchasing products. with of our level our customized will catalog reports significantly and user information in increase increasing a clients transparency now domains These transparency impression publisher Graph build such timestamps are IDs, are build clients in providing detailed progress of changing retailers. price which as Shopper the have shown, their showing includes ads clients making We foundation our that we more without of product across further impression. Map Criteo our dynamics core platform Many to intent information. building brand the and a encrypted us confidence the category, universal where sharing

We reports standardized quarters. been coming Criteo have the interface, for which building the in be will available made

supply of partner out Direct roll continued and we’ve LA bidder the Criteo globally. Axel Internet, side the additions Baidu, XXX Bidder, header United include Times. business, to to technology, to the now connected eBay, Recent Springer, publishers Moving our large

XX% to publishers We focusing XX% incremental also yield market, Bidder APAC the Criteo we publisher developed good overall In the a solution business. is signing gaining specifically are is our from Direct of about The is largest additional first. traction. ecosystem to XX%, which on for each which

We strengthening environments. as first for optimization our price bidding and more auction strategies for have such several opportunities year next, this

supply, large Fifth Sponsored like in Saks and our Criteo in Product and broadened the side, mySupermarket the the On signing retailers Jet UK. inventory we U.S., Off

time, our external three strengthened improved preserved our the internal Trustworthy from many Finally, at from vendors. We processes filter the brand specialized including ensure suspect and to the we clients our invalid of and brand all the of initiatives out to IP times. Accountability in Group is safety list real lists that equity inventory of traffic addresses systems

to our also continues XXX product. are We in the plans by fast supported clients all currency. new client with recommendations XX% grow client XX% core than friendly compliant the Coalition Ads ad products, the The retention core closed three maintaining well user sizes, the continued our at XX,XXX midmarket performance its all are to formats. and part perspective, of We brand expansion, for added across we for close and retailer ex-TAC growing quarter with across while and most The grew regional of at Google, over constant we net with regions, year-over-year. trajectory, Better as their XX% with for group business. a regions. increase the XX% XX% business total revenue executed a faster Americas’ ex-TAC representing line and clients, to From revenue Switching

sizes, the in XX% constant XX% in Criteo’s and ex-TAC tier at spends clients. large region, driven business by at client driven verticals client across the now retailers our high Predictive expanded new growth European in business currency, the incurred the in existing Sponsored by both Within new X across XX% large midmarket to and Criteo markets. pace you I our Japan at We Products growth increased seed exceptional largely EMEA by to in APAC clients update revenue costs additions Korea existing midmarket X of the continued tier and of particular currency, grew in constant led and the product publisher accelerated revenue growth currency, and with and clients Search. ex-TAC constant region. future on region. will U.S.

disruptive new strict And a what resources its making the products, and have Innovation and performance customer continue new Predictive of Predictive retirement With products depend measurement portfolio, Given associated testing time the product. uplift launch and to at proposition. the though Ecosystem for on as we Commerce the volatile, marketing build will our to products performance performance heart the prospect we had we over specific country Criteo it evaluate of a Every we the to to all be Marketing of circumstances. to redeploy create Search, its of decided competition exciting performance-based market client to mean with very Search and product, is other add projects. Criteo difficult discontinue proven good will has and we we Search R&D scalability created of scalable traction, to associated the a Criteo we expectations. do. The

UK, Criteo intent acquire October exciting retailers. beta helps across a this test that Germany. and are beta able to was information orders in more Two, The Speaking reengage two Match extending sales. per this a Redoute, four compared retailer, shoppers. cost to drive Shopper New saw lapsed order shoppers the and already the more two we With version Acquisition customers their in are to by retailers innovation, we Customer out markets acquisition rolled launched of a pool Japan. now fashion all capabilities XX% prospecting sales product, fashion to the After La a customers of able U.S., currently new from was lapsed XX. using of partners. across retailers display new a Customer retailer online successful allows France, the products Match of Acquisition the Criteo of With in UK-based homeware in and beta to on except leverage increase their Look, of version lower One, generate Audience other match times and order at Criteo their accurately Criteo products a XX% Criteo target their These product, CRM Graph. new Audience system French XX% to is

to will the able and consumer journey With be these additional brands. products, retailers for we entire cover

or Safari me a it mobile by enabled data Apple’s Intelligent Prevention, and party on desktop. words access is more know providers ITP. on third to and difficult Let for about ITP say default makes few users Tracking

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solution to environment. to in potential our beneficial consumers, continue and data-driven, alike. advertising advertisers Apple privacy that is to believe new will We We friendly adapt the environment publishers, a changes

allows Our half ITP. solution us impact from the of for mitigate potential about currently users Safari to

QX, the Given ITP Based revenue XXXX, on expectations XX, on a than impact million. was net on it minimal for rollout iOS ex-TAC less on released our our for have our of coverage our $X impact base ex-TAC September ITP in in net negative had we between of QX to case users, relative revenue our Safari X% a quarter. and XX% to expect and the negative projections

Safari for We coming will quarters. solution over continue our the to improve and deploy users

we into four fourth the on Looking quarter, focused priorities. key are

lookalikes, I executed as capabilities growth Ecosystem new on out Marketing the solid scale core Criteo impact roll you build ecosystem, the Map, the Apple our Shopper latest develop users we and product have our Graph results. profitability and app entire our and Match, across high profits With Criteo cash. our pleased business, financial continue data such We Products, collectives, First, sustained on closing, and to ITP forward third, you Graph, and benefit based further Customer improve omni-channel. to to and Network, walk In Criteo’s detail. through the to with installs, am updating three season product look as delivered and the Sponsored leverage Identity the and while U.S. across drive Acquisition portfolio our and further for Interest will mitigate products, for retailers fourth, and and increasing and during brands. now and our CFO, business strengthen well results Measurement execute and Audience successfully I second, Fouilland, that, Commerce sales Criteo build and Criteo our core guidance solution the in of holiday and Benoit build I

Benoit Fouilland

am our also with you, I Eric, pleased morning and everyone. performance. Thank QX good

clients year addition expectations growth deliver the driven at by for both of core with changes healthy walk was constant This on across with new remains $XXX Revenue constant and the Revenue performance increased prior to currency growth and coupled business the XX% we key guidance you to monitor client ex-TAC currency. was same use ex-TAC In per combination stronger show up of an investing tier profit cash ex-TAC guidance through Japanese and continued revenue constant had QX in will performance, currency. and the the assumptions, XX% midmarket metric regions, XX%, line strong revenue revenue model. the share driven our full in XX% $XXX approximately XXX grew business. in $X.X million, to ForEx ex-TAC, free key differentiator our client a million, continue with high in QX the yen. positive quarterly Compared while sizes, euro X at growth attractive XXXX. by year in We level. I and the flow business, margin revenue ex-TAC, impact to and million net our products. and and the clients at

In the ex-TAC to prior basis points represented of growth. addition, a in compared with tailwind revenue approximately ForEx XX year, changes

plans Quota-carrying plans. with midmarket. XX% an XX% XX% by million, to $XX our function, to driven largely and the of cost to a R&D hosting and by million, R&D party grew costs, to $XX XX% Graph. headcount data our our investment and also line in increased XX% operating expenses hosting XX% of driven Moving of coming revenue, well in Sales XX% Identity data in additional across employees. comprised data grew third $XX grew million, centers expenses, grew capacity employees. complement as other as with expenses by to quarter OpEx. X,XXX product XX%, from related was to non-GAAP grew This headcount grew increased increase XX% in XX% also expenses over of employees. XXX, $XXX operations’ headcount growth On $XXX expenses with Non-GAAP to Headcount X,XXX over expenses Operating XX% to operating represented largely by with and to XXX increase headcount driven basis million. million. line to GAAP Global closing the a

expenses million $XX headcount to G&A in XXX a employees. XX% X% Our decreased despite to increase

in line exceptional EBITDA margin a revenue of year. with XXX to legal seasonality, fees driven sustained Criteo in or with contribution to basis was and XX% Sponsored by last fees excluding XXX basis ex-TAC QX Products HookLogic strong the in connection across points had EBITDA organization. in currency QX over negative Excluding Adjusted adjusted adjusted a quarter. points, the to constant incurred expected legal the EBITDA operating G&A at exceptional ex-TAC, up in the profitability, after Switching non-GAAP revenue In $XX grew leverage XXXX OpEx growth incurred XX% grew litigation, million, XX%. and acquisition

impact margin to Criteo the adjusted increase compared Sponsored Excluding of ex-TAC, XXXX. EBITDA revenue over of an Products, XXX was XX% points of QX basis

XX%, growth. compensation November the EBITDA us equity adjusted HookLogic for by in million for of with of grant one-time Equity of XX% puts full XXXX, acquisition margin XXXX which driven in months connection expense plan the the awards nine Our represents increased first the ahead year. our the $X.X largely

approximately XX% equity million increased million primarily was accounting. and tax to was to of amortization driven rate income on the price of by marginally of and amortization in relating $X the for awards dollar We fiscal tax to increased on XXXX. composition effective and of million in expense including rate HookLogic expect effective to Financial of assets taxes. higher acquisition. the our Net XX% expand financial XX% provisions intangible euro ex-TAC The driven revenue continue higher expense $X.X Depreciation represent income income estimated increased cost related or interest X% in exchange XX% by to hedging by operations from purchase the expense dollars the for funding XX% fiscal $XX partially XX% XXXX. HookLogic increase rate offset based on

the to This flow changes months $X.XX. of income capital. in line and of and compensation a Excluding investments income operating over data and $XX nine in IT intangibles, from driven awards non-cash XX% contribution center accounting into strong CapEx with XX% cash from profitability Cash of equipment, from leasehold Adjusted HookLogic rate XXXX. and capitalization flow operations XX% to in the growth working projections. share EBITDA XX% by first continued our conversion net equity diluted in quarter from increased the per adjusted negative of million, increased a in increased improvements, $XX represented million, projects, to driven impact XX% XX% grew operations million. quarter, acquisition $XX the by amortization on offset of by to net

flow in the cash over slower stronger free As million, by operations growth increased period. $XX XX% result, cash CapEx from flow the driven a to and

Based coverage rollout to we of the I QX Safari nine users, provide by the of you net the and of have projections between on forward-looking million for guidance in our ex-TAC $XX a today, the expectations first QX revenue fiscal X, and our will as XXXX. X% year to million. with of ITP base to following reflect iOSXX relative $XXX and Finally, now our and our XX% expectations The XXXX. for negative quarter. equivalents months cash impact for statements our expect in increased case cash November

a growth, tougher more These eight addition, In included a to year. comes compared QX. provide two the for with was for QX QX challenging growth comparable year-over-year HookLogic backdrop factors in as weeks in QX last

million. revenue and $XXX year-over-year we positive be XXX changes have impact of on XX% And basis and $XXX ForEx between in adjusted $XXX improvement result, QX. implies a growth points. sequential XXX This quarters. of ex-TAC XXXX million fourth year-over-year reported be we million. EBITDA QX for currency margin The decrease the points base between in year-over- a XX%. of As in million prior will growth expect basis basis QX of XXX XXXX assume $XXX EBITDA in driving to the seven to to quarter expect a points to to QX We the in point XXXX drives year a constant compared adjusted growth our HookLogic approximately inclusion approximately that

For margin XXXX. adjusting the improve to XX% our in for changes EBITDA a We as to adjusted reported parallel, between guidance we XXX against are for ForEx on in fiscal XXXX. our the fiscal assume constant adjusted have increasing reported by impact currency reflect are we and points XXXX growth EBITDA In XXX growth fiscal EBITDA measured basis adjusted for revenue fiscal to to of points ex-TAC our margin XX% to year. now basis We XX.X% the in ITP at full impact margin expect in we XX positive XXXX, of expectation our QX.

of EBITDA for operations see we believe addition, adjusted we will flow XX% to of transformation continue into in fiscal XXXX. a cash excess strong from In

CapEx Finally, our to for revenue. we X% of XXXX expect program be approximately

costs costs QX in we Criteo As across Search adjusted usual, underlying restructuring to for morning. anticipate published be will XXXX year. be that guidance and quarter adjusted retiring will our cash restructuring from EBITDA. assumptions earlier of the next Predictive QX ForEx release These Separately, that are million, included earnings the in approximately fourth was this result cash $X.X the accrued

In after addition, QX some operating approximately the we savings rate, of expenses million to generate to of annual run starting XXXX retirement redeploying new of projects. resources in on expect the $X associated an

margin Criteo currently pleased to prospects. negative Apple quarter and In impact XXXX. addressable building net EBITDA With These that highlight of Commerce adjusted year. growth business results continued to our time. we QX, in ITP for This XXXX in parallel, expect the our the to base profitable call position users at We end which for year. and to assumes our year the the questions. a in cash drive growth and we improve remain your of ITP In the increases X% assumes Ecosystem the turn back have that case ability on performance on continues I relative mitigate ex-TAC also and closing, delivered sustainable our XX% that, will that to projections roll-out ITP on confident Looking beyond. This XX% our generation. of strong plans take XXXX, impact the strong focused operator with the Marketing Apple’s confidence could on our the to on rate next our for executing next are of that our impact fourth significant am growth over I our revenue of flow the to by strengths should not a summer iOSXX

Operator

question BMO Salmon first Please Dan comes from Thank Our you. [Operator go Markets. Instructions] Capital ahead. of

Dan Salmon

about with how you a just a data offline And get little to working bit particular? love mentioned on expand to you bit of morning hear you’re performance. you Eric, in remarks more data retail around on second, prepared good Could to decision little of bit everyone. I partners you your spent time that retire sales on I’d bit Good think perhaps amount variability expand Thanks. then retailer traction just a that. in Search? little Predictive co-op. the a could and a little

Eric Eichmann

Okay, Dan. you, Thank great.

couple to on Predictive mention about So things let a Criteo it. talk Search; first of me

doesn’t First line. have for really know, on significant XXXX this is, impact a as our you top

in market, guidance perspective. We market have clients period of it’s nine minimal have for And And X%, live we’ve about clients we XXX with had We eight, so Criteo when proud for Predictive the sort I place to we X% up. the been in months. some the put of so of to time, the been effort provided sort Search. very signed of about from have mentioned now in that team traction in get has that that

challenges other that we a established to no to One for the One, has out had like probably protocols solutions. sort is were couple of do difficult got a to the that since the the And proven performance in-market, there’s beginning, have head reasons. a and display. you as ability very of there measure solution appreciation in be the we to head we thing of better over

in display, so one And and the of partners. is not to think sort work sort standard had stable And to with is elasticity hard we but of to our industry don’t in this enough, of the exists uplift in unlike sales. have that of the of you establish it’s which one metric it’s second sort implement that, we own,

achieve. is you’re sales achieve partner two into for come of that play. that that and to the able often able to cost the you’re metrics You One sort have the

And to so, those metric of calculating always an metrics one easy sort comparison. two don’t

could co-ops, in make clients we have we has and didn’t in which of into that was those and the that this sort have today, we the Ecosystem resources opportunity data – those And scalable a sort them, Marketing too a that to we we redeploy we the thought just second I’ll make of to products, to believe clients about given it those markets a talked talk wiser opportunity And obviously so a building product Commerce clients, work of of products. we a sort happy it we though with that many with other product on and are a could take of big that us. about but in for bring of number the what we have number

search. So that’s regarding

establish also obviously great we’re to to just excited More activate lot the from a as but to we’re reception of are that realizing When retailers you position the of become that is data. and to not co-ops, terms perceived to a and scale we in cost. being a more of that. this. of to and partner co-op, need In people that need you for about the offline sometimes great as fact the data data the we what’s one about of these those the liabilities two CMOs technology it things, talk capability we sort do to as assets do offline comes opposed don’t them assets – have which sales, their perceive because And

data the relies Our ability into those ID bring on to heavily co-op our Graph.

XX% regions to it Our with the ID of in. on the data that XX%, Graph allows associate online or depending identities to us to take tune CRM and convert into we’re that

from the stores online that in history. or of visitors offline into the And we’re And customers call Web sort to retargeting. targets about test data so their that basically taking for running we then earnings those to the those store offline and things purchase talked about last one account of with was takes

the sort data of So of that old lot of early of be I sort would at data. of say But systems bring potential part that for to that time to and activate using you data of go have in. In we’re a lot over we stages that just a data co-op. cases, see to the sometimes through

Dan Salmon

Great. Eric. Thanks,

Operator

Please of Simon comes question Sarah go from next ahead. Our Berenberg.

Sarah Simon

me? Yes, can hear you

Eric Eichmann

Yes, yes.

Sarah Simon

I’ve got couple questions. of

just how whether on will have and is also people terms a one something that to point you marketing have are margin. previously give sort of e-commerce And issues of the versus I proposition sense for that First market impact obviously what encounter has acquisition thing, development is search, going say disappointing. of terms the e-commerce a us market about e-commerce marketing feel on we’re some one, But also, staying the to opportunity here relative retiring for the – in with any opportunity. know the up And can is of the overall talking the fact were been customer you of same you’re search here in could measurability you But you reception of search? quantified second e-commerce? in the also do sort the take there was

margins QX year-on-year, impact say your lot the by and let’s Your QX implied – a that’s margins guidance the ITP. quite increased increase of despite or

of sorry, on you FX, go terms whatever’s sort And and of components the Thanks. terms were through terms of like-for-like drag, in ITP? guidance, going or, your sorry, just QX QX in the what can in – of HookLogic

Eric Eichmann

you, thank Sarah. And Great.

let me it the first Benoit. I’ll on So maybe just then and questions, couple take to pass

I would marketing well one, on that And has say existing the the we’re lot received. obviously, platforms e-commerce creating by pressure helped a businesses. large very are been commerce fact, So of narrative

the and are urgency of of and we the helped. something that them of understanding a technology value today, and serving doing sort around call what customer sort data understanding has the So driving your lot appropriately,

use us sort as found of value coming environment I data able to in you ability a And what tenets certain where what in intent search are the is think, done optimization, with an already sites. But technology we value. extent to have would happen, that well, is that as what also top significant. I Map, that we’ve have stated which with said, on is the the products we’ve keywords Map to one look the the was and the technology – think able search from we’re collective, the we’re the of of calling Interest add have, a clients on done sort we of the our not and looking the at look, or if what you see that shoppers Interest of I to at we’re

of very talking Marketing In an suppliers, by we’re so sort products and we similar the that about, is the driven to two Ecosystem measure in Commerce rely ability open much terms of and on dynamic is what do the success to or a lot of environment them one not retargeting.

there see way there’s a well And very so don’t we comparables. looking of established at because problem a

users up quite sort the the was a to beginning, the since search, limited. see particular of always split that difficult, and think one because where was I doing another over was more technology ability impact market of

the Commerce the all much the heavily search. One was of on I data think about I’ve talked the and the case collectives, products things don’t the rely as is in about Marketing that with Ecosystem exciting that all call

strongly that unique what to can supply turning we expertise network is the not we a quite very only have, we have technology leverage asset. that be to bring bear can we but we So feel and out the that

tests do we technology the – you. is we You of our acquisition. They’d that more and or we done launched acquisition in customers about the customers biggest to Having up over launching of that before from we’ve actually much of site. what can what it broadly we is of sort rolling a when like sort they test potential to improve else we’ve as this spending UK customer it funnel XX%, retargeting. on the move bigger us for come the that, believe sort seen customers out time. Customer their the of the we that sort spend probably In them – in ask for ask also about haven’t said bring one-five, asked

ROI more customer And at the more do so, not retargeting, can you is the something spend. the if people right will acquisition unlike

of able be to and well sort think we’re So potential, data it the sort the of leverage able well how reliant, build pool. like I the on will how to technology we’re

questions So to it with about just answer that, let for me Benoit QX. margins the turn to the

Benoit Fouilland

Yes.

margin thanks the question. – So for the

we a fact of mix we’ve margin QX. it’s several of and combination in a QX, factors. a we outlook better for for for nine that months, have It’s the better delivering expect also margin plan of and QX ahead are – been to the deliver the delivering our On been

hiring had we focused critical disciplined very a First, and on functions.

If you R&D of on the increase a functions. prioritizing we resources we’ve in modest look have at where hand, been hiring, hand, on with MMS other in on other terms one been

and So we had paced hiring. a focused

which also variable I to of multiple pretty allows of the pull- some the have pushing We compensate that for margin leverage pay we been now the quarters. levers is And – to for our through point of model that third result deliver as company. a highlight have continues would us operating policy ITP QX, on standpoint fact internally our cost have respect pay a the through effective from the impact with to variable the

provided we of for at release still impact look if have the communicated just that to never was earnings QX, QX, time ITP. at at So had like to we QX – the of caution specifically point as the that it estimate I’d We guidance guidance remind some around early QX. for caution the some were we –

prior see above But to – have decrease resource, the in the year, approximately is prior we ex- outlook a look outlook is respect also year had is revenue variance impact indicated million margin year, ITP impact and the compared year. around down that our our search to for I explains allocating next to next of So we not TAC With that essentially compared because to for to in given impact if we obviously what should achieve that full it’s less is highlighted search, the at that we million could believe year. $XX in impact the this focus one on the this for that we QX. adjusted drive when $XX we for ITP. essentially small margin the the have given that year, it had ITP that from the outlook we EBITDA the significant just year for you the impact are from believe is, going There from a compared next

Sarah Simon

Okay, thanks.

Operator

Kelley Mark from Please comes question of Citigroup. next ahead. Our go

Mark Kelley

for first Thanks my one ITP. just back taken morning. questions. good is Hi, on

released. nuances now version you the still then changes little have make some or more you of the these impact. that there seen into versus some in since a that react And the publishers You talked about offset second, been the know solutions more Are or beta improving talking and differences you Can it’s detail public to just any I procedural to? technology over a there? and Thanks. are are adopt ITP already go to bit implement, just But you’ve then need and clients need you was to you month a to changes bit deploying developed, them? version about little you’ve that

Eric Eichmann

Okay, Mark. you, great. Thank

we so on sort a servers. cookie quite that. ITP, for sort and The continue friendly privacy within not friendly relies good and the solution. the ability we about of that So solution of is developed already our a to transfer websites is we’ve And but We information have a identifier between an solution of on is privacy couple things. feel What have that, to just do Safari a users. allowed

things you how this evolve. in to terms of we if expect think us, new and two to of we the for sort will. have technology a kinks, it’s I One, so out work

is sort the are And sure thing and make so that here of box have we then to connected works directly work. we’re when best there those other to And a publishers. it

directly, So have a for perspective we we’re rolling these out the and direct on presence more bidder it with better is us. the a publishers

The of working transferred make other to information exchange. the change can sort that the exchanges is with sure be that through

in this the haven’t of implementation. terms others and some exchanges, difficult than all done We across are more

if what you sort how sort we it of that’s of part so can will, of And mitigate. of of some around of much creates uncertainty sort the,

place the why, be. couple But in of that was public terms were – be is clear what there between clear or before by released, had and mobile quickly. way iOSXX that to was technology was a what expect, of it the It of is on back And difference public it a it’s wasn’t the on what going that’s solution sort it the they what we to moment that not. we changes in days at now expected sort were we default. we was going putting or and the very wasn’t of terms In working in large, it of by

answers question. that hopefully So the

Mark Kelley

Thanks does. Eric. That

Operator

go Anmuth from JP question of next Morgan. Please ahead. Our Douglas comes

Douglas Anmuth

for then early XXXX? just bit on the maybe second, then working in and then the both think up guess little the on might inventory I And solely you about the revenue in us Thanks question. lower can from Thanks. some thoughts GDPR a key GDPR first, give what in publisher you how more your are just inventory us And ITP, ITP we you’re also to be bit can or any about there solutions follow just of how if differences about there? exchange wondering, Benoit’s that XX% if is thinking is there to help some ITP-based? just X% impact Eric, of taking from XXXX, little comments here in a on and understand detail

Eric Eichmann

you, great. Doug; right, question. All Thank great

strict the which of store consent we sort field precise, this forth, cookies. privacy users, done bit solution, is where protocol. transport on the like before. within a another said so field seek more an had Again, and So without it just we that the to to ITP, like you be in HSPF use to ID sort from And having friendly we and of since a on that end, I’ve beginning, uses solution call information our HTTP security the back the just allows that’s goes just

sort mechanism. this And using conversations of good. to for are the most of so the it And using okay is them, they exchanges, this they when are question, comes are of or sort

Some are them of already implemented.

exchange to the mechanisms data. can could think ways constantly. mechanism see of sort just yes, you this you It in them that others, over we with and it’s why to to need that some of we – we where one continuously of the And work are For sort data other our things where harder get time. There that. that’s we solutions, need use could the is adapt find ourselves about one and

a do means we that consent, about sort specific to excited still something it of though that the easier bit sure what there’s in a and a about. think One, the there clear we’re today. Two, is of a concerns it sense information, going believe to so gives be past, is that. a yet good is uncertainty we as it’s – GDPR that for it. as hopefully to make exactly. What having one we’ve is do third it’s to we looking And sort quite element sort good the website which this. as for of of about not from things quite understand wide. sort said feel perspective, again to for couple I GDPR, that is the bit I about of for we the of So is then does legitimate ask it looking have of quite sort that And a track hasn’t and it, it been makes commission you one to us ways we feel better country of about. clunky it GDPR; each of regulation specific think there’s takes And of that be region things is that of on for they’re sort reason

and I on to – guidance. the pass So question Benoit about I the then

Benoit Fouilland

for guidance, the negative the indicated this additional the stage to respect already – We expected indicated been GDPR don’t see on top from has any we impact year next the the a with we ITP, at impact for ITP. impact So impact on top for don’t expect coming for of GDPR. what

Douglas Anmuth

both. Thank Great. you,

Operator

of Bedouelle go Please Exane. ahead. Charles from comes question next Our

Charles Bedouelle

Good morning everyone.

So, questions two really.

how in way. dollars impact initiatives before? Thanks. of of bit U.S. on your the be diverse QX CMOs on mention, revenues? the work way maybe ITP is a you can than two mention also think impact indicated just you you the revenues of a year’s really year back next investments one off think terms you of impact, revenues? just but seems come sense take well will the And how little sure you it next what we do and around the – next give take and new getting to do more a and both also, The was make I Because to years, to the impact in you your this to deeper as in more first maybe it higher understand percentage maybe total us or if much Can and really any – a in a with

Eric Eichmann

you, Thank Charles. Great.

XX survey the that when practice this initiatives pool. the of acquisition the eight have actually mentioned share customer of ran XX% are in data seen a the and in to we we as CMOs willing beta on Out in we sharing that CMOs, pool. part new Forbes the a customers, So Insights And of showed UK. okay data a were

very also sort second is we the to retailer what thing So really from we line red consistent of can get planning making across one exists retailer to retailers we for Interest to of in to can is in all the Map data permissions and do the we in a companies so need need see data that collective. do we’re with invest I And it. already at data. so at sure to What that do is terms then is be have with investments, think of Remember we hat able the the the much that sort link red the find information another that retailers. hat this across

of We of the haven’t bring Commerce large we’re footing equal in a haven’t of this. e-commerce part Ecosystem these I’ll portfolio in of allows funnel us it the But them that way the the And Benoit… in client, also to that across against provided We to obviously on ITP Marketing level companies or with, the a their defensible in needs any have data about just activating about products of talking certainly at a sort guidance an more for at In going talking any to but real. sort product, filling an work puts excitement as a CMOs platform. let conversation products. is of higher the to sort we because makes revenues on them guidance and the year talking this next opportunity not for provided of Again, see potential terms us. significant we being about a we’re offline, now

Benoit Fouilland

Products respect add months into respect for we new our had compare XX ITP, before where integration into R&D significant we products seen the especially to year I I investment where year, this an on investment So XX to technology to now are roadmap. we months with next the what core on of with we’ve Sponsored wanted mention –

secondary down which specialists the coming force results integrated with will you dollar With an from Products, we next force terms know, effort this ITP, our integration. respect we requirement are had and year, it’s to ex-TAC. around should in lower to for complete full the will specific this And ITP $XX year for to to to So the with that have indicated so with only when sales an sales just force in guide we market revenue we negative Sponsored as around next now put February. QX, respect going should next in the see also we year, Products, for Obviously, Sponsored the integrated next we respect we we amount of year. next perspective investment sales for impact that year release million as of on

X% to chosen over we that respect which to give around continue is our to factors current plateau in the anticipating are range to what are impact the to at anticipate XX% with rollout XX%. what And of to on that negative believe, by the also with well it? ability And mid XX% about time. increase the experience. that year, to XX% we or based would close is we’ve a increase percentage, you the So we the are going offset, what as First so behind be which is to of iOSXX the we is reach

So these are the two components.

year, offset. with in risk we around QX, believe of increase increase we result are next that risk XX%. our and And the year XX%; to this – to XX%, approximately the be to offset the we And of to at ability I is, penetration we So XX%, believe of iOS. at – risk; XX% going is XX% the going around reach revenue at today, a as say, at ex-TAC of next at revenue But XX%. we slightly at not we are revenue if XX%, at revenue risk would to look look you XX%, respect we are if above that as which and well increased

today. share these the with parameters are So that we you can

Charles Bedouelle

three the if than quarters a Because should you mentioned basis. probably when is quarter last year? be just comparable next lap more on ITP since on actually Yes. quite next big you’ve year on into a I a in QX, QX, of But year full had shouldn’t be full weeks And Benoit, the may the actually that one, this impact you few – you year. of QX rather and

Benoit Fouilland

absolutely. approximately absolutely; yes, No, –

in impact carry by initial not would And a be that any year, growth this be will of we should will then say QX at point. then us. next impacted be we the behind ITP will more I While pace

Eric Eichmann

Right.

extent of what the resets Another sort a way working of certain saying base possibility a a So right? that obviously we which, to of a once – ITP, is core mitigate what our also part ITP in there’s we’re we that’s And of sort business. on. that growth larger obviously, of back go from we’re it, to

Charles Bedouelle

Okay. That’s clear. very much. Thank you very

Eric Eichmann

Thank you.

Operator

question comes Arete Please next go from our of Richard Kramer And Research. ahead.

Richard Kramer

sort higher market increase and follow-on should lower And to there, the sources just couple one CPMs and inventory of other one, so with mitigate to inventory and in the difficulties that’s last isolation, questions. people having one in other Safari can about you bids impact see are kind sources? Hi, on take source We’re rates of the buying lead of that inventory if inventory talking question.

in back a us meaningful is same maybe third Benoit, move or it was you into the the was year almost about can one, should back Second, And the situation in but I before ex-TAC revenue that I help suggested CSP, to it in one know the past, at you where think the implied that And cash contributor understand and next that be loss a we’ve the profits? now XQ. was won’t was talked the what exactly just $X it’s level to about it bought HookLogic, level. million,

putting the keep a you had you some dilution you’ve slide price. how or into the but wouldn’t that of equity, or somehow? reflected a back generating in look to work Because cash cash it’s mitigate share why in buyback cash more in not use Given that at least Thanks. at

Eric Eichmann

Great.

Richard. you, thank So

just it take the for two. one on pass Benoit Let ITP to other the I’ll and me

that find sort hard of Apple restrictions in work but their in of Apple about IDs. not there’s to the we part their are Chrome, find other they places. environment find users accessing in history has But using lose. they’re devices, can it’s activity easy. they’re users ITP, where no sort or using to as PC those is them, go certainly to general, can we it a app Google of and So We most if of them If

our Now is ITP accessing cannot we’re the inventory people that positive side many through obviously of that access. solution

So inventory of is that lower. much the competition

the find some of with and sort we the that of being on unlike ourselves not some profile we So buying might only have inventory. accessing the of effects that the inventories, ones

And so sometimes. we is. a that of an frankly better in higher of The that users just be good and to can prices inventory take hard other it’s them inventory. net If find don’t of exclusively effect not seen. get rates browsers, still is have it’s sort sort Safari on that using again, We idea what But of source places. are to

to So pass it other on with Benoit two that, me just questions. let the about

Benoit Fouilland

Yes.

loss resulting right. million to the approximately Sponsored respect you for quarter. are loss from the with $X Products, on So It’s EBITDA

EBITDA. impact adjusted the impact So a at slightly dilutive looking absolute year we’re for on terms in still of

would terms middle say loss. digits I in So

see there turning by EBITDA the year, not see a but of for you’re the significant the as the of sales also the Products as next margin expect effort contributor So on to the in and will next the R&D that – force, the integration, cash, year. integration to we to absolutely to should right. we time respect Products. EBITDA, we yet With to Sponsored And a integration to Sponsored R&D lowering growth integration complete growth the – in result

not are point pre… restored cash at where balance, have the We yet the we the

Eric Eichmann

Almost.

Benoit Fouilland

pretty with And on could that there the almost. we cash get But soon. for QX, comments flow would you expect made

selective look back will shares. is at a the looking have alternative potentially acquisition cash, the business tradeoff terms the at investment for might versus between which we So best that needs in buying of use always of

Eric Eichmann

companies retailers, Ecosystem would I significant can Marketing that build there. products bring of of And certainly outside big or at And we brand continuously. organically, equation in a embarking acquisitions a Commerce we’ll propositions and endeavor there. see well a what do say a opportunity that to we’re to we received, that obviously And as see we’re going been number look for on there’s we a has

Richard Kramer

Okay. Thanks.

Edouard Lassalle

the will you. thank Eric. today. day. session. a rest the Thank This We Q&A follow-up Criteo our call everyone questions. of you Goodbye and attending Thank The fully you, concludes any great for team available have be have if

Eric Eichmann

Thank you.

Operator

today’s now attending concluded. has you presentation. conference The for Thank

may You now disconnect.

Criteo (CRTO) 1 Nov 172017 Q3 Earnings call transcript