Criteo SA · NASDAQ:CRTO
Criteo SA — Q2 2020 Earnings Presentation
32 slides from Criteo SA's earnings presentation, Jul 29, 2020
Slide 1: Q2 2020 Financial Results
Q2 2020 Financial Results Investor Presentation July/August 2020
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: Current Business Context
- Current Business Context - Q2 Performance - Criteo Strategy - Online Identification - Operational Priorities Megan Clarken CEO
Slide 4: Commerce Trends
Commerce Trends 1 2 3 4 Retailer sales are Ecommerce growth Buy online, pick Marketers move shifting online, benefits non-large up in store large parts of eCommerce platform retailers (BOPIS), or click- trade marketing growing from 16% of and Direct-to- and-collect, is growing, to digital, mainly to
Slide 5: Better than expected Q2 performance
Better than expected Q2 performance Revenue ex-TAC Adjusted EBITDA $180 million $39 million 21% above the high end of initial guidance $30 million above the high end of at constant currency initial guidance at constant currency * Revenue ex-TAC, Adjusted EBITDA, and Free Cash Flow are not measures c
Slide 6: Q2 COVID-19 Context and Business Recovery
Q2 COVID-19 Context and Business Recovery - Midmarket business remains resilient and continues to grow, especially in Retail - Large customers in Travel, Classifieds and brick and mortar retail remain deeply affected - Direct response and targeted marketing remain key - Higher commerce triggered by
Slide 7: To power the world's marketers
To power the world’s MARKETERS with trusted and impactful advertising
Slide 8: Strategy
Strategy Build and operate a world-class demand side platform (DSP), specifically for commerce companies. With this platform, we want to earn additional marketing budgets from existing clients and win new consumer brand and commerce clients.
Slide 9: We have unique assets to win
We have unique assets to win Advertisers & Publishers Commerce Data & Retail Media Over 20,000 commerce clients Reach Platform and retailers 2.5B users in ID Graph For brands and Incl. 1,000+ brands 120+ intent signals per retailers 4,700 direct publishers shopper 9
Slide 10: Four strategic pillars drive our 2020 execution roadmap
Four strategic pillars drive our 2020 execution roadmap 1 2 3 4 Strengthen Expand Product Explore Strategic Drive Tech & the Core Portfolio Game Changers Operational Excellence 10
Slide 11: Strengthen the core
Strengthen the core - We added new DSP capabilities to our platform: - Enhanced Commerce Audience Targeting – allows to group more product categories and brands for additional audience segmentation - Reporting Dashboards – provide additional transparency on the performance and measurement of their c
Slide 12: Expand our portfolio
Expand our portfolio Revenue ex-TAC by Solution New solutions grew 67% year over year • Of which Retail Media grew 84% New solutions 20% • App Consideration grew nicely • And Omnichannel (instore) grew 120%+ Core 80% 12
Slide 13: Strategic game changers
Strategic game changers We continued to grow our partner network to build a full stack DSP - Extended partnership with Yahoo! Japan to include our Consideration solutions - Signed partnership with Zaius to strengthen audience capabilities for online and in-store targeting - Broadened partnership wit
Slide 14: Drive tech and operational excellence
Drive tech and operational excellence • Tech • Enhanced our platform with new DSP features for audience targeting and reporting • Strengthened our contextual targeting capabilities • Invested in our identity solutions • Operational • Promoted David Fox to Chief Commercial Officer • Hired Todd Parson
Slide 15: Online identification
Online identification Changes bring more consumer privacy but challenges for the open Internet and consumer experience Our assets that set us apart from other Adtech players. Ability to do First-party Consumer data contextual and footprint – integrated & ID Graph with 2.5 cohort-based with over 20,0
Slide 16: SPARROW
SPARROW Secure Private Advertising Remotely Run On Webserver In May 2020, to address shortcomings of Google’s TURTLEDOV proposal, Criteo proposed SPARROW to expand capabilities in Chrome’s three areas of focus: 1. Audiences: Adding the ability to drive awareness by creating lookalike campaigns based
Slide 17: Revocable ID solution
Revocable ID solution - Allows users to build their own privacy profile and adapt it as their preferences evolve - Personal profile available across all Web and App environments - Not owned by any commercial entity, not limited to a software, operating system or device 17
Slide 18: Short and mid-term priorities
Short and mid-term priorities 1 2 3 4 5 Align Develop Ensure Support organization enduring, Execute employee clients with and cost industry- against full- safety and Direct structure to leading stack DSP business Response support solutions for strategy continuity marketing strategic plan online ID 1
Slide 19: Q2 Performance
- Q2 Performance - Guidance Dave Anderson Interim CFO
Slide 20: Covid-19 impacted Q2 2020 Revenue ex-TAC by $41 million
Covid-19 impacted Q2 2020 Revenue ex-TAC by $41 million YoY Reported decline COVID number at CC impact Revenue ex-TAC (RexT) $ 180M -18% 19 points* Retargeting RexT -27% 20 points* Same client RexT -14% 21 points* RexT Americas $ 70M -15% $14M RexT EMEA $ 70M -18% $16M RexT APAC $ 40M -24% $11M * Po
Slide 21: Operational Highlights
Operational Highlights – New solutions represented 20% of total RexT, growing 67% yoy Excluding COVID, retargeting only declined 7% at CC (vs -27% unadjusted) Revenue $438 Million Net client additions were flat, ended $180 Million Q3 with close to 20,400 clients Revenue ex-TAC Revenue ex-TAC margin
Slide 22: Regional performance
Regional performance – Q2 2020 Revenue ex-TAC Mix by Region including COVID impact Growth* by Region: 22% -15% Americas +2% excluding COVID 39% -18% EMEA +1% excluding COVID 39% -24% APAC -3% excluding COVID 22 * At constant currency
Slide 23: Expenses and Adjusted EBITDA
Expenses and Adjusted EBITDA Adjusted EBITDA* ($M) Reduced total expenses by $34 million (GAAP) and 22% of Revenue ex-TAC $27 million (Non-GAAP) Operating expenses declined 22% (GAAP) and 56 20% (Non-GAAP) 39 Q2 2019 Q2 2020 23
Slide 24: Robust free cash flow and strong conversion into Adj. EBITDA
Robust free cash flow and strong conversion into Adj. EBITDA FCF to Adjusted EBITDA conversion 60,000 50% 45% 50,000 40% 35% 40,000 30% 30,000 25% 20% 20,000 15% 10% 10,000 5% - 0% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Free Cash Flow Average FCF to Adjusted
Slide 25: Q3 Guidance
Q3 Guidance We expect a slower pace of recovery from the Pandemic Revenue ex-TAC - July Revenue ex-TAC performance: -20% year over year, August and September expected to be slightly more positive - Expected net COVID impact on Q3 Revenue ex-TAC: $40 million - Headwinds from iOS14 and more stringent
Slide 26: FY 2020 Outlook
FY 2020 Outlook We are not in a position to quantify the COVID-related impact beyond Q3 2020 We withdrew our 2020 guidance on April 1, 2020. Current Q4 Revenue ex-TAC assumptions - Little economic recovery - Early impact from iOS14 starting mid-September - Increase adoption of explicit consent in Eu
Slide 27: Further Questions? Please contact investor relations
Further Questions? Please contact investor relations IR@criteo.com Edouard Lassalle Friederike Edelmann Clemence Vermersch VP, Market Relations Director, Investor Relations Associate, Investor Relations 32, rue Blanche 387 Park Ave S., 12th Floor 32, rue Blanche 75009 Paris New York, NY 10016 75009
Slide 28: Appendix
Appendix
Slide 29: Foreign Exchange impact on actual results and guidance
Foreign Exchange impact on actual results and guidance Q2 2020 Actual FX @ Q2 2020 FX USD million @ Q2 2019 FX Actual Actual impact guidance FX impact Revenue ex-TAC $ 183.2 $ (3.3) $ 179.9 $ 177.7 $ 2.2 $ 179.9 Q3 2020 Guidance FX Guidance USD million @ Q3 2019 FX impact Midpoint* Revenue ex-TAC $
Slide 30: Revenue ex-TAC reconciliation
Revenue ex-TAC reconciliation Revenue 564,164 537,185 528,869 670,069 558,123 528,147 522,606 652,640 503,376 437,614 Revenue 2,300,314 2,261,516 Less: Less: Traffic Traffic acquisition 323,746 306,963 305,387 398,238 322,429 304,229 301,901 386,388 297,364 (257,698) acquisition 1,334,334 1,314,947
Slide 31: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation Net income 21,090 14,707 17,948 42,134 21,401 12,537 20,557 41,474 16,428 6,150 96,659 95,879 95,969 Adjustments: Financial (income) 1,325 1,006 1,007 1,746 1,974 1,354 900 1,521 334 1,003 9,534 5,084 5,749 expense, net Provision for income 12,386 8,638 6,821 18,299 10
Slide 32: Free cash flow reconciliation
Free cash flow reconciliation CASH FROM OPERATING ACTIVITIES 52,964 33,377 Acquisition of intangible assets, property, plant and equipment (28,812) (29,471) Change in accounts payable related to intangible assets, property, plant (3,980) 10,939 and equipment FREE CASH FLOW 20,172 14,845 32