EuroBusiness Media (EBM): Criteo, the commerce marketing company, has just announced its 3rd quarter results. I’m here today with Criteo’s CFO Benoit Fouilland. Benoit, thank you so much for joining us today. So Benoit, we’ve seen another strong quarter from Criteo. Tell us about it.
Benoit Fouilland: Indeed we had another great quarter of profitable growth and cash flow generation. We exceeded our guidance for 16 quarters in a row. Revenue ex-TAC grew 32%. Same client revenue ex-TAC grew 14%. Adjusted EBITDA grew 45%. And we generated $34mn of free cash flow.
EBM: And what were the main drivers of this success?
Benoit Fouilland: The 3 main key drivers were: innovation across existing and new products, broader access to inventory, and new clients across all regions and sizes.
With regards to innovation, I want to highlight 2 things: the Criteo Shopper Graph, and our initiatives around transparency.
First, Criteo Shopper Graph comprised of 3 data collectives grew further in scale and efficiency. Our identity Graph provides as good or better CRM onboarding rates than the largest internet players in the space. Regarding our Interest map, many of our client now provide richer product-level information, such as brand name, category and a universal product ID. This helps us build our Universal Catalog across retailers.
Second, we are significantly increasing Transparency by providing clients with customized reports showing detailed impression-level information, such as publisher domains where their ads are shown, time stamp of displayed ads, the price they are paying for each impression. So this transparency will further increase the confidence clients have in our platform.
EBM: So that was innovation. What about the other two drivers?
Benoit Fouilland: With respect to inventory, we continued to roll out Criteo Direct Bidder, our header-bidding technology, now connected to 950 large publishers worldwide, including eBay and the Los Angeles Times. We are still early in capitalizing on this opportunity and we will deploy Criteo Direct Bidder with new publishers in the coming quarters. We broadened our inventory supply for Criteo Sponsored Products signing large retailers like Jet or Saks Off 5th in the US, or mySupermarket in the UK.
Important to mention, we strengthened our brand safety initiatives for clients. First, we improved our internal systems and processes to filter out inventory in real time including by partnering with the Trustworthy Accountability Group and three specialized vendors. Second, we are part of the Coalition for Better Ads supported by Google, and we are compliant with their recommendations for the most user-friendly ad formats.
And the third driver. We added 930 net new clients across all regions and sizes. We maintained client retention at 90% for the core product and closed the quarter with over 17,000 retailers and brand clients, which is a 34% increase year-over-year. Midmarket continued its fast trajectory with revenue ex-TAC growing close to 70% and representing 34% of our total business.
EBM: And this quarter you launched two new products. Tell us about them.
Benoit Fouilland: Yes, absolutely! We launched two exciting new products on October 10th. These two additional products leverage the capabilities of the Criteo Shopper Graph. With these additional products, we will be able to cover the entire consumer journey for retailers and brands.
Criteo Customer Acquisition helps retailers acquire new customers by using their intent information across a pool of retailers. New Look, a fashion retailer in the UK, was able to generate 4 times more orders at a 74% lower cost per order compared to their other prospecting acquisition partners.
Criteo Audience Match allows retailers to target and re-engage customers that are already in their CRM system in order to drive sales. La Redoute, a French fashion and homeware retailer, was able to match 70% of their lapsed shoppers online and saw a 50% increase in sales from lapsed shoppers.
EBM: What are your priorities for the last quarter of 2017?
Benoit Fouilland: For the fourth quarter of 2017 we are focused on four key priorities:
First, execute successfully during the U.S. Holiday Season across the core product and Criteo Sponsored Products.
Second, improve and roll out our solution for Apple users and mitigate the impact of ITP on the core business.
Third, build and leverage Criteo Shopper Graph – based on the three data collectives Identity Graph, Interest Map and Measurement Network – to further strengthen our product portfolio and benefit the entire ecosystem.
And fourth, further develop and scale our latest products, Criteo Customer Acquisition and Criteo Audience Match, and build new capabilities, such as lookalikes, app installs and omnichannel.
EBM: So all in all we’ve seen another strong quarter for Criteo…
Benoit Fouilland: Yes. I am pleased with our strong performance in Q3, which delivered sustained profitable growth and high cash flow generation. These results highlight the strengths of our business. We remain focused on executing in Q4 and building the Criteo Commerce Marketing Ecosystem for continued growth in 2018 and beyond.
EBM: Benoit Fouilland, Criteo’s CFO, thank you so much for joining us today.
Benoit Fouilland: Thank you!
