EBM: Criteo, the advertising platform for the open Internet, has just announced its fourth quarter and fiscal year 2018 results. I’m joined here today by the founder and CEO of Criteo, JB Rudelle. JB, thank you very much for speaking to us.
JB Rudelle: Thank you!
EBM: So JB, another strong quarter from Criteo. Could you talk us through the highlights?
JB Rudelle: So the highlights, indeed, I am pleased with our Q4 results showing encouraging improvement as compared to Q3 and marking an inflection point in our Revenue ex-TAC trajectory. With our growth turning positive again, we feel good about the direction of Criteo.
We generated Revenue ex-TAC of $272 million and Adjusted EBITDA of $105 million, both $12 million above the high-end of guidance at constant currency.
These results were primarily driven by a record Holiday season in the U.S. but also in Western Europe where we observed an increasing seasonal peak.
Importantly, our new solutions grew 54% year-over-year and represented more than 13% of Revenue ex-TAC, compared to 10% in Q4 2017.
EBM: In 2018, you’ve talked a lot about self-service. What does that mean for clients?
JB Rudelle: Our new self-service platform offers clients a powerful tool to plan and execute their marketing operations dedicated to the open Internet. Our new platform fundamentally transforms how clients perceive and interact with our solutions. We are no longer perceived as an opaque black-box, but more like an easy-to-use powerful tool to serve their marketing operations.
There are actually two aspects to self-service.
The first is a platform that allows our midmarket sales teams to greatly reduce friction in the process of signing up new clients and significantly increase the productivity of our client management teams
In particular by the end of Q2, we plan to release our new fully automated onboarding module in particular. This will allow us to significantly accelerate the sign-up and onboarding of small and medium clients, and we expect it will result in additional momentum for our mid-market client net additions in the second half of the year and later.
The second – and probably less obvious aspect around self-service – are the powerful tools we are providing to all our clients across the board. By making those tools available on a self-service basis, we let our clients exercise more control over the set-up and monitoring of their campaigns – something many clients, large and small, have requested.
We believe both aspects of our self-service platform will have an important contribution to our positive traction in the future.
EBM: And what about your new technology platform Criteo Retail Media?
JB Rudelle: Criteo Retail Media is our retailer-facing technology platform that allows retailers to monetize their inventory and audiences with brands. This offering integrates Sponsored Products and Commerce Display into a broader offer covering all monetization scenarios on and off a retailer’s website and mobile app.
Our Retail Media offering gained significant traction in 2018, in particular in the U.S., growing by close to 30%, and we believe this sets a solid foundation for 2019.
The reason we think the time is right for Retail Media is that most large retailers now realize they have a massive opportunity to meaningfully enhance their bottom line by monetizing their consumer assets to brands.
Interestingly, an important trend specific to Criteo Retail Media is the rapid evolution of our business model. We are indeed seeing a greater uptake by our large clients for our pure technology platform as compared to our traditional managed solution. This new transactional Software-as-a-Service model is growing much faster than the rest of our Retail Media business and could fairly soon represent a majority of our revenues for this product line.
EBM: Looking ahead, what are your priorities for 2019?
JB Rudelle: We are keenly focused on executing on four priorities:
First, grow midmarket clients in a scalable and profitable way through the deployment of our self-service platform.
Second, further increase adoption of our self-service platform by all clients, including large ones, for them to consume our solutions on their own terms.
Third, continue to grow our mobile app business.
And fourth, accelerate the growth of our Consideration solutions, as part of the full-funnel Marketing Solutions we offer to assist our clients in winning new customers.
EBM: Last but not least, you recently announced a share buy-back program. What can you tell us a bit more about it?
JB Rudelle: We completed our $80 million buyback program in Q4 and repurchased 3.5 million shares.
We plan to cancel 50% of repurchased shares. And, to limit future dilution to shareholders over the next 18 months, we plan to allocate the remaining 50% shares to satisfy equity obligations to employees in lieu of issuing new shares.
We are open to consider further opportunities to buy back shares in the future if conditions are right. In fact, we expect to request an authorization to increase our flexibility to buy back and subsequently cancel shares at our next annual shareholder meeting to be held in Q2.
EBM: So all in all it sounds like things are looking good for Criteo…
JB Rudelle: I feel good about our progress, the inflection point in our trajectory and the positive momentum ahead of us. Our long-term opportunity is massive and our 2019 goal is to focus on executing along our plans.
EBM: JB Rudelle, Criteo’s founder and CEO, thank you so much for joining us today.
JB Rudelle: Thank you!
