Cr ite o 101
Inve stor Pre se nta tion Ma rc h 2018
Cr ite o 101 Inve stor Pre se nta tion Ma rc h 2018 Safe har - - PowerPoint PPT Presentation
Cr ite o 101 Inve stor Pre se nta tion Ma rc h 2018 Safe har bor state me nt This presentation contains forward-looking statements that are based on our managements beliefs and assumptions and on information currently available to
Inve stor Pre se nta tion Ma rc h 2018
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This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and
environment, potential growth opportunities, potential market opportunities and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking
Risk Factors set forth therein and the exhibits thereto, completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future. This presentation includes certain non-GAAP financial measures as defined by SEC rules. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix slides.
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Ticker: CRTO Stock Exchange: NASDAQ Global Market CUSIP: 226718104 Shares outstanding: 66.1M Stock Ownership*:
* On a fully-diluted basis, as of Dec 31, 2017, based on 73.7M fully diluted shares. ** At constant currency
$2,297M, +27% at cc**
$941M, +29% at cc
$310M, +35% at cc
33% of Revenue ex-TAC
Free float, 84.7% Founders, NEOs, Management & Employees, 13.1% Idinvest & Yahoo! Japan, 2.2%
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User identifiers matched in the Criteo Shopper Graph Clients Countries Sales transactions analyzed in 2017 Ads served in 2017 Criteos in R&D, tech & business intelligence Employees Offices worldwide
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Jean-Baptiste Rudelle Executive Chairman and Co-Founder, 48 K-Mobile, Lucent, Roland Berger Eric Eichmann Chief Executive Officer, 50 Living Social, Rosetta Stone, McKinsey & Co. Dan Teodosiu Chief Technology Officer, 51 Google, Microsoft, Hewlett-Packard Mollie Spilman Chief Operating Officer, 50 Millenial Media, Yahoo!, Advertising.com, Time Warner Benoit Fouilland Chief Financial Officer, 53 SAP, Business Objects Jonathan Opdyke Chief Strategy Officer, 41 HookLogic, Xerox, Beyond Interactive Tom Aurelio Executive Vice President, Human Resources, 52 Priceline, GE, Symantec, CheerNetworks Patrick Wyatt Senior Vice President Product Management, 35 Yahoo!, Estin & Co.
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Build the highe st pe r for ming and ope n Comme r c e Mar ke ting E c osyste m Conne c t shoppe r s to the things the y ne e d and love De live r pe r for manc e at sc ale to par tic ipating r e taile r s and br ands
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Technology Performance Scale Global Presence
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We brought performance-based personalized marketing to display in 2008
We have since pioneered the industry in many ways… 2008
First CPC model in display
AOV Optimizer
Apple-compliant solution
4.5B products imported from merchants everyday
Daily RTB: 55bn bid requests,1.2bn wins Product Category level CPC bidding
everyday
Largest Hadoop cluster in Europe Dynamic product banners Engine Optimized Segments
Passback
Sizeless creatives
Mobile Ad Formats
Adaptive Revenue Optimizer
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CPC model
Transparent performance information in 24/7 client interface
Constant
Continuous tracking
Established post-click attribution
Client Service Teams R&D and Product Teams
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individual shoppers matched
commerce and brand clients
Machine-learning technology
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Commerce Data & Shopper Graph Consumer Reach 17,000+
Retailers & Commerce ~1,000 Brands 1,000’s Direct publishers 6x Shopper Engagement* $600B+ Annual online sales 1.2B+ Individual shoppers matched in our Shopper Graph
Brand Funding $29B
Annual post-click sales
Mass Personalization Technology
* Our average click-through rate, or the ratio of clicks generated by our advertisements over the number of advertising impressions we purchased ("CTR"), was over 0.84% in 2017, which represents a factor
0.14%, as measured by the DoubleClick display benchmark tool for March-April 2017.
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Campaigns in countries
countries nationalities
Boston
2012
Barcelona
2014
Tokyo
2011
Singapore
2013
São Paulo
2011
Shanghai
2016
Palo Alto
2009
New York
2011
Chicago
2012
London
2008
Madrid
2014
Paris
2005
Stockholm
2010
Milan
2012
Munich
2010
Amsterdam
2011
Beijing
2013
Seoul
2010
Sydney
2011
Dubai
2015
Moscow
2014
San Francisco
2014
Osaka
2014
Los Angeles
2015
Miami
2015
Istanbul
2015
Toronto
2015
New Delhi
2016
Grenoble
2014
Ann Arbor
2016
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showroom and webroom shoppers visit 2+ retailer sites when shopping online
transactions involve mobile
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YESTERDA Y TODA Y
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Technology / AI Media Brands Others Others
Others Granular shopper information at massive scale Partial, fragmented, unstructured view of the shopper Data
Others
Offline Online
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Ce nte r s on inspir ing pe ople to buy things Me asur e d by pe r for manc e – dir e c tly dr iving sale s and pr
Not limite d to digital
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Criteo’s original technology was a product recommendation engine for retail This engine formed the basis of Criteo Dynamic Retargeting Primarily applied to online commerce: retail, travel and classifieds Expanding to include data cooperative across retailers to build an omni-retailer solution Extending to include offline data for a full omni-channel solution
Commerce Marketing focuses on inspiring people to buy things and is measured by performance, directly driving sales and profits for marketers.
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Privacy by Design
Product Recommendation Predictive Bidding Kinetic Design
Criteo Engine
Identity Graph Interest Map Measurement Network
Criteo Shopper Graph
Commerce Data
Product Portfolio
Criteo Customer Acquisition BET
A
Criteo Dynamic Retargeting Criteo Audience Match BET
A
Criteo Sponsored Products
Publisher Network
Direct Integration Indirect Integration
Client Platform
24/7 Client Management Center Media Retailers Real-Time Bidding Platforms
Privacy by Design
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Carefully designed using our guiding principles
Two-way exchange of data Highest data security and privacy Clear and permission-based usage Value gained exceeds contribution
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Criteo’s advantages
Open, transparent, secure, fair
identifiable information (PII)
Participation
via OneTag or App Events SDK
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Criteo’s advantages
product attributes
Open, transparent, secure, fair
Participation
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Criteo’s advantages
brands across retailers
Open, transparent, secure, fair
Participation
and across retailers is aggregated
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Creates Product Recommendation Personalize d creative Unique user value prediction
Client 2 Client 3 Client 4 Client 5
For each user
Internal advertiser auction Publisher/ platform bid Custom ad serving
Less than 100ms
to perform the entire process
>40,000 ads served/sec 600,000+ RTB bids/sec
Client 1
Creates Product Recommendation Personalize d creative Unique user value prediction Creates Product Recommendation Personalize d creative Unique user value prediction Creates Product Recommendation Personalize d creative Unique user value prediction
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Campaign goal Visitor’s site navigation Recency and frequency of activity Product type, price, and category Most viewed products on Uniqlo’s site And much more...
The Criteo Engine recommends products based on: Products we show John John browses “Bomber Jacket”
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7:45 AM 8:00 AM 9:00 AM 12:30 PM 6:00 PM 9:00 PM 11:30 PM
The right bid for the right placement at the right time
User context Publisher interaction Product behavior
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Media
Direct Integration
Retailers
Real-time Bidding Platforms
Indirect Integration
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budget
across all products in the client’s product catalog
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Be ne fits
What it doe s
Use d by le ading r e taile r s Availability:
T A
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Shoppers with the highest scores are targeted with personalized ads featuring the given retailer’s products to drive sales Each prospective customer is assigned a unique score across all participating retailers based on the ideal customers, that show the likelihood to convert for a given retailer New prospective customers within the Criteo Shopper Graph get isolated Participating retailers share aggregated shopping and browsing events with the Interest Map, which covers 4.5B products and browsing habits of 1.2B+ monthly shoppers, to qualify new customers
7 1 6 5
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Use d by le ading r e taile r s
1 In testing
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Be ne fits
What it doe s
Use d by le ading r e taile r s Availability:
T A
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CRM data, e.g. from customer in-store loyalty programs, is “onboarded” into the Identity Graph During onboarding, the CRM data is matched with users already in the Identity Graph Online campaigns with specific objectives re- engage those CRM customers that were already found online
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Top Sellers Offline to Online Loyalty Upsell New product offers Cross-Sell Upgrade Seasonal
Lapsed shoppers Offline Buyers Loyalty Card Holders Audiences that may soon churn Bundle Offer Best Candidates for Buying Targeted Cross-Sell Audiences likely to upgrade Seasonal Buyers
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Par tic ipating br ands
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John searches for “coffee makers” on a retailer’s website John’s search triggers sponsored ads on retailer site John’s click on sponsored ad leads to product page Measurable sales on retailer site
We deliver measurable sales and profits for commerce and brand clients.
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Revenue = Clicks x CPC Traffic Acquisition Cost (TAC) = CPM x impressions Revenue ex TAC = Revenues – TAC Revenue ex-TAC margin: Approx. 40%
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Client 4
We take CPC bids from clients
Clients
$0.30 x 0.95% = $2.85
We convert those bids into pCPM (predicted CPM)
CPC x CTR = pCPM (predicted CPM)
Publishers
$0.50 x 0.75% = $3.75 $0.40 x 0.61% = $2.44 $0.80 x 0.45% = $3.60 $2.00
Clearing Price (CPM)
Highest bidder
Client 1 Client 2 Client 3
We buy inventory from publishers in real time
CPM = Cost per Thousand impressions, CTR = Click-through rate, CR = Conversion rate, AOV = Average Order Value
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Revenue = Clicks x CPC Traffic Acquisition Cost (TAC) = CPM x impressions Revenue ex TAC = Revenues – TAC Revenue ex-TAC margin: Approx. 40%
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Revenue = Clicks x CPC Traffic Acquisition Cost (TAC) = CPM x impressions Revenue ex TAC = Revenues – TAC Revenue ex-TAC margin: Approx. 40%
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Revenue = Clicks x CPC Traffic Acquisition Cost (TAC) = Revenue share with Retailer Revenue ex TAC = Revenue – TAC Revenue ex-TAC margin = 26%-28%
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Attractive Direct Sticky Elastic Demand
Direct relationships with clients2
Net client additions per quarter1
Client retention rate3
Of Revenue ex-TAC from uncapped budgets4
1 On average over the last four quarters through Q4 2017 2 Last twelve months to Q4 2017; Excluding Criteo Sponsored Products 3 On average over the last 25 quarters through Q4 2017; All products included 4 On average over the last four quarters through Q4 2017. Excluding Criteo Sponsored Products. Represents uncapped budgets of our clients, which are either contractually uncapped or so
large that the budget constraint does not restrict ad buys
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Excluding Criteo Sponsored Products. This client cohort analysis tracks the quarterly spend of clients since inception of their relationship with Criteo.
Average revenue per client cohort (quarterly)
Number of quarters $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17
Client cohorts
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2013 2014 2015 2016 2017 Existing clients New clients
88% 89% 90% 90% 92%
Revenue per client type
Includes Criteo Dynamic Retargeting, Criteo Customer AcquisitionB
E T A, Criteo Audience MatchB E T A and Criteo Sponsored Products.
Existing clients in a given year are clients that started working with Criteo prior to that given year. New clients in a given year are clients that started working with Criteo within that given year.
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* 18,118 clients at the end of Q4 2017
Commerce: Retail, Travel and Classifieds
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Top-tier comScore sites (typically top-50 or top-100)
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Midmarket penetration
Tier 1 penetration
~60,000 a ddre ssa b le c lie nts wo rldwide
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PREFERRED ACCESS TO PREMIUM MEDIA INVENTORY ALL MAJOR PUBLIC EXCHANGES, GLOBAL AND LOCAL PREFERRED ACCESS TO RETAILER INVENTORY
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Direct Partnership Private Auction Open Auction
RTB Ad Exchanges Custom integration
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Transition to Mobile Social Native Multiple Devices Header Bidding Ad Blocking
Programmatic
Our drives more value for publishers
In App
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More bidders should mean higher yields Less dependent on a single monetization platform
Impact on Publishers Impact on Programmatic Buyers
More inventory available for auction More complex bidding environment can lead to higher costs and less efficiency
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Short-term, temporary changes in the publisher market place More sophisticated buyers like Criteo will get a technology premium
Time
BEFORE HB GROWTH OF HB BUYERS ADJUST TO HB Unsophisticated buyers Sophisticated buyers Technology premium
Inventory cost
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server without the need to funnel demand through Supply Side Platforms (SSPs) or exchanges.
(typically 10%-20%)
matching reliant on a third party
through RTB
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CLOSED OPEN WORKFLOW AUTOMATION PREDICTIVE PERFORMANCE
Note: based solely on Criteo’s qualitative assessment
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DSP Retargeting Mobile Advertising SEM Platforms Social Advertising Ad Servers Email Marketing Marketing Automation Social Media Marketing Web Content Management Data Management Platform Analytics App Measurement Data Providers Tag Management Feed Management Digital Commerce Platform
Adte c h: Paid Me dia Criteo wins 90% of head-to-head tests Mar te c h: Owne d and E ar ne d Me dia Criteo complements these vendors Data and Ope r ations Infr astr uc tur e
Cr i teo i ntegr ates wi th these tec hnol
es
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Win r ate in he ad- to- he ad te sts* (% )
* Based on 42 head-to-head tests (38 won vs. 4 lost) tracked by Criteo on a global basis across Tier-1 and midmarket advertisers over Jan 2017-Dec 2017
Re ason for not winning te sts
2 – Agency managed spend 2 – Performance/creative reasons
42 tests
75 • 7,832 8,564 9,290 10,198 10,962 11,874 12,882 14,468 15,420 16,472 17,299 18,118 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017
50 100 150 200 250 300
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
* Annual average of quarterly client retention rates, defined as the percentage of live clients during the previous quarter that continued to be live during the current quarter
Client retention rate* (%) Clients Revenue ex-TAC ($ millions)
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Revenue ex-TAC ($ millions)
20 40 60 80 100 120 140
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Adjusted EBITDA ($ millions)
50 100 150 200 250 300
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17
Actuals Guidance
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147 238 403 534 730 941 2012 2013 2014 2015 2016 2017
1 We define Revenue ex-TAC as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period. Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. Please see the Appendices for a reconciliation of Revenue ex-TAC to Revenue, the most directly comparable GAAP measure. 2 We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. Please see the Appendices for a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure.
Revenue ex-TAC1 ($M) Adjusted EBITDA2 ($M)
+45% CAGR
High growth Expanding profitability
22 42 105 143 225 310 2012 2013 2014 2015 2016 2017
+70% CAGR
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225 310
2016 2017
730 941
2016 2017
ADJUSTED EBITDA ($M) FREE CASH FLOW ($M)
76 137
2016 2017
REVENUE EX-TAC ($M)
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As % of Revenue ex-TAC FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Revenue ex-TAC 100% 100% 100% 100% 100% Other cost of Revenue* 7.9% 6.6% 6.1% 6.4% 6.9% Gross margin 92.1% 93.4% 93.9% 93.6% 93.1% R&D* 14.9% 12.5% 13.4% 14.2% 14.7% S&O* 43.6% 39.9% 39.8% 35.3% 34.8% G&A* 16.0% 14.8% 13.8% 13.2% 10.7% Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9% Revenue ex-TAC margin** 40.3% 40.8% 40.4% 40.6% 41.0%
* Cost of revenue and operating expenses are expressed on a Non-GAAP basis, which excludes the impact of equity awards compensation expense, pension service costs, depreciation and amortization, acquisition-related costs, restructuring and deferred price consideration. ** As a % of revenue
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T e c hnology innovation Br
Supply Upse lling inc r e me ntal pr
c hanne ls Ope r ating e xc e lle nc e and pr
spending budgets at limited incremental costs
Powe r e d by a c ombina tion of
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INVEST DEVELOP & GROW CASH SCALE PROFITS SMART INVESTING
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* Based on a $2B+ market capitalization, pursuant to the 2017 AGM authorization to issue up to 15,6m shares ** For M&A and equity grants to employees
Strong balance sheet
1,211 1,531
Total assets (in $M) Financial liabilities (in $M)
Very low debt
86 4 Cash & cash equivalents (in $M)
Significant cash pile
270 414
>25%
cash
As of December 31, 2017
committed financing
equity raise capacity*
authorization**
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– –
growth M&A
* Average for fiscal years 2013, 2014, 2015, 2016 and 2017
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Criteo Sponsored Products Gr
Inc r e ase the value for c lie nts and par tne r s
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Criteo Shopper Graph, built on data pooling among ecosystem participants, is the foundation of all new product investments
Flexible audience-targeting platform Omnichannel marketing
Incremental inventory
Marketing
Shopping environments Media
* Prospective
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Technology Innovation New Supply
Revenue ex-TAC uplift (%)
Conversion Optimization
Dynamic Creative Optimization
Revenue Optimization
RTB integration improvement
in Japan
Worldwide
Native
Selected significant examples over time…
Note: the uplift in Revenue ex-TAC from technology innovation corresponds to the increase in Revenue ex-TAC for Criteo on a representative sample of clients, where clients use the corresponding new Engine feature on 50% of their user pool and do not use the corresponding new Engine feature on the other 50% of their user pool, pursuant to a proven 50/50 A/B test methodology. The uplift in Revenue ex-TAC from new sources of inventory supply and new channels corresponds to the increase in Revenue ex-TAC for Criteo on a representative sample of clients, comparing the Revenue ex-TAC generated from those clients before and after the introduction of such new source of inventory supply or new channel.
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L ar ge mar ke t
tunity Cle ar str ate gy Compe titive moats Pr
tr ac k- r e c or d Attr ac tive financ ial pr
Co mme rc e Ma rke ting is q uic kly e me rg ing a s the ne xt b ig ma rke ting c a te g o ry Build the hig he st pe rfo rming a nd o pe n c o mme rc e ma rke ting e c o syste m T e c hno lo g y Sc a le a nd ne two rk e ffe c ts Ope nne ss Stro ng c lie nt g ro wth with 90% re te ntio n E xc e e de d g uida nc e 17 q ua rte rs in a ro w F a st g ro wth Inc re a sing pro fita b ility Stro ng c a sh flo w
VP, Head of Investor Relations 32, rue Blanche 75009 Paris +33 1 7621 2166 e.lassalle@criteo.com Director, Investor Relations 387 Park Ave South, 12th Floor New York, NY 10016 +1 917 837 8617 f.edelmann@criteo.com
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($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4’17 Revenue 401,253 407,201 423,867 566,825 516,667 542,022 563,973 674,031 Less: Traffic acquisition costs 238,755 240,969 247,310 341,877 306,693 322,200 329,576 397,087 Revenue ex-TAC 162,498 166,232 176,557 224,948 209,974 219,822 234,397 276,944
($ in thousands) 2016 2017 Revenue 1,799,146 2,296,692 Less: Traffic acquisition costs 1,068,911 1,355,556 Revenue ex-TAC 730,235 941,136
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($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4'17 2016 2017 Net income
18,527 13,339 14,724 40,740 14,518 7,505 22,269 52,368 87,329 96,659
Adjustments: Financial (income) expense
1,317 94 570 (1,435) 2,333 2,094 2,886 2,221 546 9,534
Provision for income taxes
7,944 4,450 7,574 13,161 4,201 3,665 7,858 15,927 33,129 31,651
Equity awards compensation expense
8,370 7,695 13,965 13,229 14,940 14,918 22,028 20,464 43,259 72,351
Pension service costs
129 131 132 133 290 299 320 321 524 1,231
Depreciation and amortization expense
12,516 13,300 14,771 16,190 20,167 22,306 23,755 24,570 56,779 90,796
Acquisition-related costs
1,793 980 6
6
Acquisition-related deferred price consideration
40 44 3 (3)
Total net adjustments
30,316 25,862 38,808 42,255 41,936 46,581 56,847 67,560 137,243 212,925
Adjusted EBITDA
48,843 39,201 53,532 82,995 56,454 54,086 79,116 119,928 224,572 309,584
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($ in thousands) Q4 2016 Q4 2017 2016 2017 CASH FROM OPERATING ACTIVITIES 71,658 79,002 153,470 245,458 Acquisition of intangible assets, property, plant and equipment (30,163) (47,367) (85,133) (121,642) Change in accounts payable related to intangible assets, property, plant and equipment 7,182 21,891 7,752 13,131 FREE CASH FLOW 48,677 53,526 76,089 136,947