Criteo SA · NASDAQ:CRTO
Criteo SA — Q4 2020 Earnings Presentation
44 slides from Criteo SA's earnings presentation, Feb 10, 2021
Slide 1: Criteo Q4 & Full Year 2020 Earnings
Criteo Q4 & Full Year 2020 Earnings Investor Presentation February 10, 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 assumed future results of operation
Slide 3: Commerce Media Platform Progress & 2021 Priorities
Commerce Media Platform Progress & 2021 Priorities Megan Clarken CEO 3
Slide 4: 2020 accomplishments despite COVID
✓ Kept people safe through efficient work-from-home model We delivered ✓ Increased focus on ecommerce 97% ✓ Helped clients achieve their marketing and monetization of original Revenue objectives, providing performance and strong ROI ex-TAC guidance* ✓ Accelerated Criteo’s transformation plan to retu
Slide 5: Client-first focus and refined strategic roadmap
✓ Embraced a client-first focus across the company ✓ Refined company vision and strategic roadmap to return to sustainable, profitable growth ✓ Increased ecommerce focus and investment through Retail Media – now central piece of strategy ✓ Reshaped C-level leadership and created Transformation Offic
Slide 6: Our Vision: The World's Leading Commerce Media Platform
Our Vision The World’s Leading Commerce Media Platform for Brands, Marketers & Retailers 6
Slide 7: We Lead Marketing And Monetization For Commerce
We Lead Marketing And Monetization For Commerce ✓ Deep focus on ecommerce ecommerce ✓ Criteo shepherds the buying and selling of advertising and promotions for goods and services Commerce Media Platform ✓ Massive network using 1st-party identity and commerce data media marketing monetization ✓ All o
Slide 8: Commerce Media Platform Case Study: Omnichannel Retailer
Commerce Media Platform Case Study: Large NYC-Based Omnichannel Retailer Retailer Client Needed To Optimize Marketing & Monetization During Q4 Holiday Season MARKETING MONETIZATION $9M Challenge Challenge Revenue ex-TAC Move potential shoppers down the Yield strong ad revenues to capitalize in Q4’20
Slide 9: Growing Marketing And Monetization Through Our Commerce Data, Tech & AI
Growing Marketing And Monetization Through Our Commerce Data, Tech & AI • First-party data • 445B bid requests on single day • $2.5B+ daily transactions • 64M+ campaigns per second • 21,000+ commerce clients • 700 TB/day shopper data • 4B product SKUs • AI Engine gets faster and smarter • 3,500 prod
Slide 10: Expanding Marketing And Monetization Through Our Media Network
Expanding Marketing And Monetization Through Our Media Network Premium Open Internet Publishers Large Retailers 10
Slide 11: Our Transformation Is Already Generating Positive Results
Our Transformation Is Already Generating Positive Results New Solutions For Marketing And Monetization Grew ~50% And Represent ~20% Of The Business Criteo Commerce Media Platform Analytics & Insights Measurement Retail Media Leading Performance Retail Media Extension • 50%+ of U.S. Advertising Platf
Slide 12: Three Priorities For 2021 and Beyond
We Are Laser-Focused On Three Priorities For 2021 and Beyond 1 Growth: Focusing on ecommerce, Accelerating momentum, Investing Thoughtfully, Attracting talent 2 Execution: High-performance environment to foster growth and drive accountability 3 1st-Party Data: Strengthen our lead in leapfrogging com
Slide 13: Product Objectives & 2021 Priorities
Product Objectives & 2021 Priorities Todd Parsons Chief Product Officer 13
Slide 14: Return to Growth, Future-Proof Criteo
Return to Growth Future-Proof Criteo New Performance Audiences Simplify Use of 1st Party Data Expanding API Integrations Provide Durable Identity New Stakeholder Monetization Protect Consumer Privacy 14
Slide 15: Returning To Sustainable Growth With New Product Initiatives
Returning To Sustainable Growth With New Product Initiatives New Performance Audiences Expanding API Integrations New Stakeholder Monetization Commerce Media Audiences Planning Retailer $'s Contextual Q1 Advertising MVP Persona- Predictive Measurement Retail Media lization Bidding Audience Sponsored
Slide 16: Client Case Study: Large U.S. Home Improvement Retailer
Client Case Study: Large U.S. Home Improvement Retailer Digital Ad Spend $ in 2021 $20M Awareness $15M Consideration $25M Conversion Sources: 16 Kantar, McKinsey & eMarketer, 2019 Criteo CRM
Slide 17: Client Case Study: Large U.S. Home Improvement Retailer
Client Case Study: Large U.S. Home Improvement Retailer Prior year spend with Criteo 12% Share of Wallet $20M Open Internet Ad Spend in 2021 $60M $15M $25M $7M Retargeting 17
Slide 18: Client Case Study: Criteo Addressable Budget 3x
Client Case Study: Large U.S. Home Improvement Retailer Criteo Addressable Budget 3x from $7M to $21M+ $20M +$3M Open Internet Ad Spend in 2021 $60M $15M +$9.7M $25M $7M +$1.7M 18
Slide 19: Taking Criteo's Potential Share of Wallet from 12% to 36%
Client Case Study: Large U.S. Home Improvement Retailer Commerce Media Platform 3x: Taking Criteo’s Potential Share of Wallet from 12% to 36% Household / Device Audience by CTV / Video $3M Open Internet Ad Spend in 2021 Retail Media RM Shopper Audiences Contextual Audiences $60M $9.7M Cohort Audienc
Slide 20: Future-Proofing The Business Through Our 1st-Party Media Network
Future-Proofing The Business Through Our 1st-Party Media Network Simplify Use of 1P Data Provide Durable Identity Protect Consumer Privacy Adv2 Adv1 1P Cookie Adv3 UID2.0 Phone Yes/No Consent Security Data Federation Criteo & Auditing Single Privacy Identity Sign-On Controls Backbone Data Monetizati
Slide 21: Financial and Operational Update
Financial and Operational Update Sarah Glickman CFO 21
Slide 22: We Delivered Stronger Than Expected Results In Q4
We Delivered Stronger Than Expected Results In Q4 % YoY Excl. COVID impact vs. Q4 Outlook % YoY Midpoint Revenue $661M +0%* +10% Revenue ex-TAC $253M -6%* +3% +10%* Adj. EBITDA $103M -9%* +22% $37 Million COVID Privacy Non-GAAP EPS $0.98 -9% impact ** Headwinds ** $(26)M / 10 ppts $(16)M / 6 ppts Fr
Slide 23: Robust Topline And Adj. EBITDA In 2020, Despite COVID
We Delivered Robust Topline And Adj. EBITDA In 2020, Despite COVID % YoY Excl. COVID impact vs. FY Outlook % YoY Revenue $2,073M -8%* +3% Revenue ex-TAC $825M -13%* -1% +$25M Adj. EBITDA $251M -17%* +$19M $37 Million COVID Privacy Non-GAAP EPS $2.17 -19% impact ** Headwinds ** $(106)M / 11 ppts $(37
Slide 24: Solid Execution Along Our Four Strategic Pillars
Solid Execution Along Our Four Strategic Pillars 1 2 3 4 Strengthen Expand Explore Strategic Drive Tech & the Core Product Portfolio Game Changers Operational Excellence ✓ Strong “Cyber-30” ✓ New solutions +38% Q4, ✓ Retail Media API ✓ Invest in Retail Media, 1P Shopping Season +47% 2020 to ~20% of
Slide 25: Delivering Strong Cost Performance While Investing In Growth
Delivering Strong Cost Performance While Investing in Growth YoY Non-GAAP Opex Variation ($M / %) Restructuring and Transformation-related expenses($M) Q4 2020 FY 2020 2020 2019 +$21M +$4M (Gain) from forfeitures of share-based (3) (8) compensation awards $(11)M D&A expenses - 1 -8% Facilities and i
Slide 26: Strong Balance Sheet And Cash And Liquidity Position
We Have A Strong Balance Sheet And Cash And Liquidity Position $960M* Free cash flow Cash Balance sheet total financial liquidity Free Cash Flow Cash & cash Total assets ($M) equivalents ($M) ($M) €350M Committed financing ~29% until March 2022 of total assets 1,790 1,853 125 120 $150M 530 equity ra
Slide 27: 2021 Outlook Moves Criteo To A Progressive Return to Growth
2021 Outlook Moves Criteo To A Progressive Return to Growth Backdrop The prolonged impact from the pandemic is driving higher ecommerce, a still muted economic growth, and continued challenges for the Travel and Classified verticals Revenue Targeting low to mid-single digit growth at constant curren
Slide 28: Encouraging Q1 outlook
Encouraging Q1 outlook Backdrop The prolonged impact from the pandemic is driving higher ecommerce, a still muted economic growth, and continued challenges for the Travel and Classified verticals Revenue Around $200 million or -4% YoY decline at the midpoint ex-TAC • Continued solid Retail performan
Slide 29: CFO Priorities: Drive Growth and Operational Excellence
CFO Priorities: Drive Growth and Operational Excellence Across Criteo • Ensure best resource and investment allocation to priority Commerce Media Platform growth areas across Retail Media, 1st-party Data, Contextual advertising, Video, CTV and Commerce Insights • Partner with commercial team to incr
Slide 30: Closing Remarks
Closing Remarks Megan Clarken CEO 30
Slide 31: Why We Will Succeed
Why We Will Succeed • Massive ecommerce tailwinds and increasing TAM • Superior Commerce Media assets, unique marketing and monetization capabilities • Solid product roadmap to return to growth and future-proof the business • New product offerings growing ~50% and expected to represent ~30% of busin
Slide 32: Further Questions? Please Contact Investor Relations
Further Questions? Please Contact Investor Relations at IR@criteo.com Edouard Lassalle Clemence Vermersch SVP, Head of Market Relations Director, & Capital Markets Investor Relations +33 6 7593 8696 +33 6 7599 6751 e.lassalle@criteo.com c.vermersch@criteo.com 32
Slide 33: Appendix
Appendix 33
Slide 34: Marketing Case Studies
Marketing Case Studies U.S. Pure Play Ecommerce Leading French Retailer For Pets Ecommerce Retailer Challenge Challenge Drive new sales to capitalize on booming Build awareness for launch ecommerce & lockdown-related new pet owners of new travel service Criteo Solution Criteo Solution Audience Targe
Slide 35: Monetization Case Studies
Monetization Case Studies U.S. Beauty Retailer U.S. Grocery Delivery Service Challenge Challenge Enable brands to influence product placements Develop monetization strategy to capitalize on Create incremental profit stream from traffic CPG ad dollars shifting to retail media as consumers Ensure nati
Slide 36: Differentiated Assets Uniquely Position Us for Success In Commerce Media
Differentiated Assets Uniquely Position Us for Success In Commerce Media Commerce Reach Retail Insights & Global Presence Data Media Measurement & Financial Profile Shopper Graph Exclusive access to Unique opportunities for Ability to measure 21,000+ clients aggregates $2.5B daily large retailers’ b
Slide 37: Direct Relationships With Many Premium Brand And Retailer Clients
Direct Relationships With Many Premium Brand And Retailer Clients 37
Slide 38: We Are A Global Company
We Are A Global Company Amsterdam Stockholm Toronto 2011 2010 2015 London Grenoble Ann Arbor 2008 2014 Moscow 2016 2014 Chicago Paris Munich 2012 2005 Seoul Boston 2010 2010 San Francisco 2012 Istanbul Beijing 2013 2014 Milan Madrid 2012 2015 2014 Tokyo New York 2011 2011 Barcelona 2014 Dubai Osaka
Slide 39: Estimated COVID-19 Impact By Vertical
Estimated COVID-19 Impact By Vertical Revenue ex-TAC in $m Q1’20 Q2’20 Q3’20 Q4’20 FY 2020 Retail -3 -2 -3 -3 -11 Travel -4 -21 -20 -17 -62 Classifieds -3 -19 -10 -7 -39 Retail Media 0 +4 0 0 +4 TOTAL -10 -37 -33 -26 -106 Overall Retail impact relates to impact from bankrupt customers, curtailment o
Slide 40: Revenue ex-TAC Reconciliation
Revenue ex-TAC Reconciliation Revenue 661.3 470.3 437.6 503.4 652.6 522.6 528.1 558.1 Revenue 2,072.6 2,261.5 Less: Traffic Less: Traffic acquisition 408.1 284.4 257.7 297.4 386.4 301.9 304.2 322.4 acquisition 1,247.6 1,314.9 costs costs Revenue ex- Revenue ex- 253.2 185.9 179.9 206.0 266.3 220.7 22
Slide 41: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Net income 46.8 5.3 6.2 16.4 41.5 20.6 12.5 21.4 74.7 96.0 Adjustments: Financial expense 0.1 0.5 1.0 0.3 1.5 0.9 1.4 2.0 1.9 5.7 Provision for income taxes 20.3 2.3 2.6 7.0 15.9 7.9 5.7 10.0 32.2 39.5 Equity awards compensation expense 9.0 6.8 7.2 8.5 9.1 11.7 14.4 13
Slide 42: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation CASH FROM OPERATING ACTIVITIES 185.4 222.8 Acquisition of intangible assets, property, plant and equipment (67.3) (82.7) Change in accounts payable related to intangible assets, property, plant 1.8 (15.2) and equipment FREE CASH FLOW 119.9 124.9 * Unaudited 42
Slide 43: Foreign Exchange Impact on Actual Results and Guidance
Foreign Exchange Impact on Actual Results and Guidance Q4 2020 Actual FX @ Q4 2020 FX USD million @ Q4 2019 FX Actual Actual impact guidance FX impact Rev enue ex-TAC $ 249.5 $ 3.6 $ 253.2 $ 249.5 $ 3.7 $ 253.2 Q1 2021 Guidance FX Guidance USD million @ Q1 2020 FX impact Midpoint* Rev enue ex-TAC $
Slide 44: Q1 IR Events
Q1 IR Events EARNINGS • Feb 10 Q4 & FY 2020 Virtual earnings call (before market) CEO, CFO, CPO ROADSHOWS • Feb 12 Virtual “US” roadshow with JP Morgan CEO & CFO • Feb 16 Virtual “Paris” roadshow with Berenberg CEO & CFO • Feb 17 Virtual “London” roadshow with Arete Research CEO & CFO CONFERENCES &