Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Criteo SA (CRTO, Financial) achieved double-digit organic growth for the third consecutive quarter.
- The company reported record top-line and adjusted EBITDA margin for Q2 2024.
- Criteo SA (CRTO) extended its partnership with Microsoft, enhancing its retail media suite.
- Strong client retention with close to 90% and significant growth in retail media activated media spend.
- The company raised its financial guidance for 2024, expecting Contribution ex-TAC to grow 10% to 12% year over year.
Negative Points
- The transition of Criteo SA (CRTO)'s largest retail client to a direct sales model impacted Q2 results.
- Foreign currency headwinds negatively affected revenue by $6 million.
- The company faces macroeconomic uncertainties that could impact future performance.
- The integration of Microsoft Advertising's client base may require incremental investment.
- Retail media offsite campaigns are still in early stages, indicating potential challenges in scaling.
Q & A Highlights
Q: With Google's recent announcement about third-party cookies, how do you see this evolving, and what does it mean for Criteo?
A: (Megan Clarken, CEO) Google is still working through the details, but this is good news for us and the industry. We expect to retain more third-party signals, which will benefit our performance. (Todd Parsons, Chief Product Officer) Google aims to provide clear trade-offs for consumers, which should result in more favorable opt-in rates compared to previous models like IDFA.
Q: Can you elaborate on the impact of the Microsoft partnership on Criteo's retail media landscape?
A: (Megan Clarken, CEO) This partnership signifies a consolidation in retail media, positioning Criteo at the center. Microsoft will bring its extensive demand to our network, and we will integrate their retail clients onto our platform starting in 2025. This will create a compelling offering for advertisers and strengthen our position in the market.
Q: How do you see the future of retargeting given the changes in identity solutions and third-party cookies?
A: (Megan Clarken, CEO) Retargeting remains a crucial part of our performance portfolio. We are seeing renewed focus and excitement around it, complemented by our commerce audience solutions. (Todd Parsons, Chief Product Officer) We aim to preserve retargeting reach while expanding into new environments like social media, ensuring performance for our clients.
Q: What are the next steps for expanding Criteo's retail media supply?
A: (Megan Clarken, CEO) We continue to onboard more retailers and build out our capabilities. Our strategy focuses on creating a flywheel effect where increased supply attracts more demand, and vice versa. This includes expanding our geographic footprint and enhancing our advertising formats.
Q: How is Commerce Max performing, and what are the future expectations?
A: (Megan Clarken, CEO) Commerce Max has been successful, particularly in enabling agencies to access our retail media networks. We are also seeing early success in offsite campaigns, extending retailers' advertising reach across the open internet. We expect continued growth and adoption of Commerce Max.
Q: What are the implications of Google's user consent model for Criteo's business?
A: (Todd Parsons, Chief Product Officer) Google's approach aims to provide clear and balanced messaging to consumers, which should result in higher opt-in rates. We do not expect any business disruptions and are working closely with Google to ensure a smooth transition.
Q: How is Criteo addressing the variability in agency workflows and retail media networks?
A: (Megan Clarken, CEO) We are building tools that cater to agency needs, such as SKU-based buying, which simplifies the process of buying across multiple retailers. Our collaboration with agencies is strengthening, and we are continuously improving our offerings to meet their requirements.
Q: Are there any alternative IDs at scale that Criteo is considering?
A: (Todd Parsons, Chief Product Officer) While alternative IDs are part of our strategy, none currently provide the scale needed to replace third-party cookies. We are investing in multiple addressability approaches and leveraging advanced AI to minimize data requirements while maintaining performance.
Q: What are the financial implications of the Microsoft partnership and the required investments?
A: (Megan Clarken, CEO) The partnership involves integrating Microsoft's retail clients onto our platform, which may require some incremental investment. However, the overall investment is not significant as we are leveraging existing infrastructure and capabilities.
Q: How do you see the future of performance media and its integration with retail media?
A: (Megan Clarken, CEO) The integration of performance and retail media is crucial for our strategy. We are leveraging our core capabilities in data and AI to enhance both segments. The recent internal leadership changes are aimed at driving accountability and maximizing the synergies between performance and retail media.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
