EBM: Criteo, the advertising platform for the open Internet, has just announced its third quarter 2019 results. I’m here today with Criteo’s CFO, Benoit Fouilland. Benoit, thanks so much for joining us today.
Benoit Fouilland: Jessica, happy to be here!
EBM: So Benoit, Criteo has some exciting news this quarter. Tell us about them.
Benoit Fouilland: Yes, indeed! Let’s start with the news outside of earnings.
Our founder and CEO, JB Rudelle, has decided, with the full support of Criteo’s Board of Directors, to bring a new Chief Executive Officer on board. We are excited to have Megan Clarken join us at the end of November. JB will remain Chairman while day-to-day operations will be in the hands of Megan.
A few words about Megan: She is originally from New Zealand and currently resides in New York. She has a unique global profile combining deep industry knowledge and a proven track record in driving complex transformations.
With Megan, we are adding great leadership capacity to drive the second phase of our transformation.
EBM: Congratulations! Now, what can you tell us about your third quarter performance?
Benoit Fouilland: We continued to make progress on our operating priorities and our transformation.
We reached the top end of our Q3 guidance on the topline and exceeded our Adjusted EBITDA target.
Net client additions were again positive, with 240 net new clients, driven by focused execution and improved productivity in our midmarket sales teams.
Our new solutions grew 57% on a Revenue ex-TAC basis to 11% of total, up from 7% a year ago.
And we expanded our direct publisher network: Our Direct Bidder technology is now connected with the web inventory of 4,000 publishers and 200 app developers.
EBM: What else can you tell us about your new solutions?
Benoit Fouilland: Within new solutions, Retail Media, our family of solutions that help retailers generate advertising revenues on their digital properties, grew more than 25%, even faster than in prior quarters. In particular, our transactional-SaaS Retail Media offering for large retailers continued to grow triple-digit.
I am also pleased with the early traction of our Web Consideration product, priced on a Cost-per-Impression basis, that we launched in Q3. While revenue contribution was still modest, we already had 400 live clients and received encouraging customer feedback about its performance.
EBM: These are indeed positive developments. What about Criteo’s core retargeting business?
Benoit Fouilland: We saw again a decline in the mid-single digit range on a Revenue ex-TAC basis in our retargeting business. This softness was mainly concentrated in the large customer segment and is driven by two main factors: first, the much higher penetration we have reached in this segment compared to midmarket, and second, large clients are late in investing in mobile app marketing.
EBM: Finally, Benoit, what can you tell us about your strategy to manage your business going forward?
Benoit Fouilland: One of our key priorities is to make our revenue model more recurring and resilient in the future, in particular against external factors. This means broadening our value proposition beyond pure performance.
As with Retail Media, some of our most sophisticated retailers are seeking more transparency and control over their ad tech stack.
We see an opportunity to engage more strategically with those large clients. This might involve evolving our pricing model from traditional cost-per-click towards a transactional-SaaS model for some of our larger Marketing Solution clients, quite similar to what we are seeing in Retail Media.
A transactional-SaaS offering that addresses specific client needs will allow us to capture a bigger share of the market opportunity. It will also contribute to make our business more resilient in the long run.
EBM: Benoit Fouilland, Criteo’s CFO, thank you so much for joining us today.
Benoit Fouilland: Thank you!
