Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Criteo SA (CRTO, Financial) reported strong Q3 results with robust top-line growth, achieving a 9% increase in contribution ex-TAC at constant currency.
- Retail media segment showed significant growth, with a 23% increase in contribution ex-TAC, driven by strong performance in the US, Germany, and the UK.
- The company successfully doubled its brand count and activated media spend over the past two years, reaching $1.5 billion on a trailing 12-month basis.
- Criteo SA (CRTO) continues to expand its global footprint, securing new retail partnerships with major retailers like JCPenney, Office Depot, and Metro AG.
- The company is leveraging AI-driven performance enhancements, which contributed to a double-digit million range increase in contribution ex-TAC within performance media.
Negative Points
- Criteo SA (CRTO) faces challenges with lower adtech services and supply, primarily due to reduced spend from a large adtech client.
- The company is experiencing some crowding out on supply due to political advertising, affecting retailer spending decisions.
- There is a noted softness in consumer discretionary categories, with some larger enterprise clients in the US reducing their marketing budgets.
- The transition of Criteo's largest retailer client to a direct sales model is expected to impact take rates in the future.
- Criteo SA (CRTO) is dealing with the impact of foreign currency headwinds, which affected Q3 results by $1 million.
Q & A Highlights
Q: Are there any incremental operating expenses related to the Microsoft progression as you set up to address that demand? Also, what can we expect for retail media take rates following the transition of your largest client to in-house demand?
A: (Megan Clarken, CEO) We don't anticipate significant operating expenses as we move clients across from Microsoft. The platform is already in place for this transition. (Sarah Glickman, CFO) Retail media is performing well, with a 29% increase in activated media spend. We expect the transition of our largest client to in-house demand to complete by Q1 2025. While we aren't providing specific guidance for 2025, we anticipate some take rate adjustments as we scale.
Q: Can you expand on the adtech services comments, particularly the 16% decline driven by one client? Also, can we expect continued growth in retargeting?
A: (Megan Clarken, CEO) The decline in adtech services is linked to a non-strategic product from the IPONWEB acquisition, which is susceptible to one client. We have a plan to address this. (Sarah Glickman, CFO) The decline was significant in Q3 but is isolated to one partner. Retargeting remains resilient, and we're seeing growth in commerce audiences and customer acquisition.
Q: The guidance for Q4 implies a step down in contribution ex-TAC growth. Can you unpack the reasons behind this?
A: (Sarah Glickman, CFO) The tightening of the guidance range is primarily due to the isolated impact of adtech services. We also face tough comps from last year and some temporary changes in marketing strategies from larger enterprise clients. Despite these factors, we are confident in our strategy and expect strong performance in Q4.
Q: Can you provide more insight into the offsite retail media opportunity, particularly with clients like Costco and United Airlines?
A: (Megan Clarken, CEO) We're seeing significant growth in offsite capabilities, with large clients like Costco and United Airlines utilizing this as part of their retail media strategy. This is an exciting area of growth, alongside our display offerings and other use cases that enhance our retail media proposition.
Q: How is AI contributing to performance media, and what investments are critical for maintaining a competitive edge in AI?
A: (Todd Parsons, Chief Product Officer) AI is central to targeting and activation across fragmented spaces, driving performance and efficiency. Our investments focus on optimizing consumer experiences and internal operations. We have a strong base of AI engineers and will continue to make incremental investments to enhance our platform.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
