Criteo SA · NASDAQ:CRTO
Criteo SA — Q3 2020 Earnings Presentation
32 slides from Criteo SA's earnings presentation, Oct 28, 2020
Slide 1: Criteo Strategic Update & Q3 2020 Earnings
Criteo Strategic Update & Q3 2020 Earnings Investor Presentation October 28, 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: Our Vision & Strategy
Megan Clarken CEO Our Vision & Strategy 3
Slide 4: Powerful Secular Trends Support Our Vision
Powerful Secular Trends Support Our Vision 1 2 3 ecommerce Trade Marketing Adtech Remains Key is Booming Shifts to Digital for Brands and Retailers • COVID has accelerated the use • Digital Trade Marketing grew • Media owners depend more on of the Open Internet for product 82% CAGR between 2016-2019
Slide 5: Marketers Need Better Commerce Media
Marketers Need Better Commerce Media Marketers Needs Market Dynamics Solving for… • Understand the consumer path Marketers heavily rely on • Commerce outcomes to purchase Walled Gardens for advertising • Activating the right data to … … connect the right • Target and Reach the right Transparency
Slide 6: We Will Lead Commerce Media for Brands and Retailers
We Will Lead Commerce Media for Brands and Retailers Marketers Needs We Can… Value Proposition • Understand the consumer path ✓ expand our business deeper into ecommerce • Commerce insights on every to purchase consumer journey ✓ focus even more on • Targeting and Retargeting for • Target and Reach
Slide 7: Differentiated Assets Uniquely Position Us for Success
Differentiated Assets Uniquely Position Us for Success Shopper Reach Retail Insights & Global Presence Data Media Measurement & Financial Profile Shopper Graph Exclusive access to Unique opportunities for Ability to measure 20,000+ clients aggregates $2B daily large retailers’ brands to advertise on
Slide 8: Our Transformation Is Already Generating Results
Our Transformation Is Already Generating Results Criteo’s assets enhancing partner solutions are growing 53% YTD and represent ~20% of the business Criteo Commerce Media Platform Analytics & Insights Leading Performance-Based Display 1P Media Network Video/CTV/Native Privacy-focused Advertising Plat
Slide 9: Why We Will Succeed
Why We Will Succeed • Global reach with 20,000+ advertisers across 100+ countries • Extensive Shopper data and 1st-party media network • New growth engines already representing ~20% of our business today, growing at 50%+ • Solid product roadmap surrounding the identity challenge • Massive ecommerce
Slide 10: Product Update
Todd Parsons Chief Product Officer Product Update 10
Slide 11: Product Objective 1: Grow Strong Base of Data, AI & Supply Assets
Product Objective 1: Grow Strong Base of Data, AI & Supply Assets DATA Scaled (1p) Commerce Data in Real Time • $2B commerce transactions daily • 500M DAUs 50% identified by hashed • 4B SKUs, 3,500 product categories email • 75M daily buyer journeys • 100+/DAU daily ad opportunities HIGHER STRONGER
Slide 12: Product Objective 2: Navigate our Customers to Post-Cookie Marketing
Product Objective 2: Navigate our Customers to Post-Cookie Marketing We have the right combination of assets and network effects to succeed almost irrespective of where the industry is heading 1 2 3 Next Addressable Next Audience Next Contextual Advertising Advertising Advertising Expand Permission
Slide 13: Product Objective 3: Become the Network Operator of the Buyer Match
Product Objective 3: Become the Network Operator of the Buyer Match Marketing APIs to address every buyer journey First-Party Media Network • Audience: Insights and Planning • 1p Audience Data: Onboarding, Criteo Commerce • Ads: Bidding, Dynamic Creative, Optimization Data Clean Room, CDP integratio
Slide 14: Financial and Operational Performance Update
Sarah Glickman CFO Financial and Operational Performance Update 14
Slide 15: We Delivered Stronger Than Expected Q3
We Delivered Stronger Than Expected Q3 % YoY Pre-COVID vs. Midpoint % YoY of Q3 Outlook Revenue $470 Million -11%* +4% Revenue ex-TAC $186 Million -16%* -2% +8% Adj. EBITDA $49 Million -27%* +55% $37 Million COVID Privacy Non-GAAP EPS $0.40 -26% impact ** Headwinds ** • $(33)M Q3 / 15 ppts • $(10)M
Slide 16: 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 ✓ Introduce multi-year MSA ✓ New solutions +43% YoY, ✓ Launched CTV ✓ Invest in Retail Media, DSP, contracts with large clients +5
Slide 17: Delivering Strong Cost Performance While Investing in Growth
Delivering Strong Cost Performance While Investing in Growth Non-GAAP Opex Decline (YoY, $M / %) Restructuring and Transformation-related expenses($M) Q3 2020 2020 YTD $18M 2019 YTD 2020 YTD $3M (Gain) from forfeitures of share-based (3) - compensation awards D&A expenses 1 - $(25)M -18% Facilities
Slide 18: We Have a Strong Balance Sheet, Cash and Liquidity
We Have a Strong Balance Sheet, Cash and Liquidity Free cash flow Cash Balance sheet $870M+ total financial liquidity YTD Free Cash Flow Cash & cash Total assets ($M) equivalents ($M) * ($M) Cash as of Sep 30, 2020 +18% YoY ~34% of total assets 1,790 1,843 €350M* 98 Committed financing 627 until Mar
Slide 19: Encouraging and Realistic Q4 outlook
Encouraging and Realistic Q4 outlook “As of now, we continue to see a significant impact to our business related to the pandemic, continued economic uncertainty, customer demand and supply chain logistics of our clients” Revenue ex-TAC $223-$230 million or -15% YoY decline at midpoint • Assumes less
Slide 20: CFO Priorities to Foster Growth and Operational Excellence
CFO Priorities to Foster Growth and Operational Excellence Support Profitable Growth Drive Operational Excellence • Ensure best resource and investment allocation • Reduce fixed costs including data centers and office footprint • Shift to high-growth markets • Optimize support functions automation •
Slide 21: Closing Remarks
Megan Clarken CEO Closing Remarks 21
Slide 22: CEO Achievements
CEO Achievements ✓ Taken a client-first focus across the company ✓ Refined company vision and strategic roadmap to return to sustainable growth ✓ Strengthened product roadmap to revive growth and address identity challenges ✓ Expanded ecommerce exposure through Retail Media - Position it as central
Slide 23: We Are Focused on the Future and Driving Shareholder Value
We Are Focused on the Future and Driving Shareholder Value 1 Plan against our Commerce Media Platform strategy to drive growth 2 Deliver product roadmap embracing identity 3 Execute with discipline and focus 4 Implement organization and cost structure to support strategic plan 5 Invest in compelling
Slide 24: Further Questions? Please Contact Investor Relations
Further Questions? Please Contact Investor Relations IR@criteo.com Edouard Lassalle Clemence Vermersch SVP, Head of IR Associate, Investor Relations +33 1 7621 2166 +33 6 7599 6751 24
Slide 25: Appendix
Appendix 25
Slide 26: Commerce Media Platform Addresses Marketer/Retailer Needs
Commerce Media Platform Addresses Marketer/Retailer Needs Brands and Retailers Want to… Criteo Commerce Media Platform Brings 1. Understand every buyer journey ✓ Deep commerce insights through data and analytics 2. Grow business through smart marketing ✓ State-of-the-art user matching technology ✓ C
Slide 27: 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 28: Revenue ex-TAC Reconciliation
Revenue ex-TAC Reconciliation Revenue 564.2 537.2 528.9 670.1 558.1 528.1 522.6 652.6 503.4 437.6 470.3 Revenue 2,300.3 2,261.5 Less: Less: Traffic Traffic acquisition 323.7 307.0 305.4 398.2 322.4 304.2 301.9 386.4 297.4 257.7 284.4 acquisition 1,334.3 1,314.9 costs costs Revenue Revenue 240.4 230.
Slide 29: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Net income 21.1 14.7 17.9 42.1 21.4 12.5 20.6 41.5 16.4 6.2 5.3 96.7 95.9 96.0 Adjustments: Financial expense 1.3 1.0 1.0 1.7 2.0 1.4 0.9 1.5 0.3 1.0 0.5 9.5 5.1 5.7 Provision for income taxes 12.4 8.6 6.8 18.3 10.0 5.7 7.9 15.8 7.0 2.6 2.3 31.7 46.1 39.5 Equity awards
Slide 30: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation CASH FROM OPERATING ACTIVITIES 43.3 51.2 Acquisition of intangible assets, property, plant and equipment (27.2) (16.3) Change in accounts payable related to intangible assets, property, plant 3.3 3.4 and equipment FREE CASH FLOW 19.3 38.3 30
Slide 31: Foreign Exchange Impact on Actual Results and Guidance
Foreign Exchange Impact on Actual Results and Guidance Q3 2020 Actual FX @ Q3 2020 FX USD million @ Q3 2019 FX Actual Actual impact guidance FX impact Revenue ex-TAC $ 184.3 $ 1.6 $ 185.9 $ 180.9 $ 5.0 $ 185.9 Q4 2020 Guidance FX Guidance USD million @ Q4 2019 FX impact Midpoint* Revenue ex-TAC $ 22
Slide 32: Q4 Events
Q4 Events EARNINGS • October 28 Q3 2020 Virtual earnings call (before market) CEO, CFO, CPO ROADSHOWS • October 29 Virtual “Boston” roadshow with BMO Capital Markets CEO & CFO • October 30 Virtual “New York” roadshow with Deutsche Bank CEO & CFO • November 2 Virtual “London” roadshow with Berenberg