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Criteo 101
Investor Presentation February 2019
Criteo 101 Investor Presentation February 2019 1 Safe harbor - - PowerPoint PPT Presentation
Criteo 101 Investor Presentation February 2019 1 Safe harbor statement This presentation contains forward-looking statements that are based on our managements beliefs and assumptions and on information currently available to
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Investor Presentation February 2019
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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 operations, business strategies, financing plans, projections, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition and other actions by our counterparties. 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 statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation, and nothing in this presentation should be regarded as a representation by any person that these beliefs or assumptions will take place or occur. You should read the Company’s most recent Annual Report on Form 10-K filed on March 1, 2018, including the Risk Factors set forth therein and the exhibits thereto, the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 2, 2018, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, that was filed with the SEC on November 5, 2018, as well as future filings and reports by the Company, 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
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 outstanding1: 67.7M Stock Ownership2:
1 As of December 31, 2018 2 On a fully-diluted basis, as of December 31, 2018, based on 72.5 M fully diluted shares. 3 At constant currency
2018 Financials
$2,300M, (1%) at cc3
$966M, +2% at cc
$321M, +0% at cc
33% of Revenue ex-TAC
$135M
Free float 84.0% Founders, NEOs, Management & Employees 15.3% Idinvest & Yahoo! Japan 0.8% Core solution 87% New solutions 13%
Q4 2018 Revenue ex-TAC breakdown
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Users in the Criteo Identity Graph Clients Countries Sales transactions analyzed in LTM Ads served in 2018 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 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 Ryan Damon EVP, General Counsel, 45 Riverbed Technology, Charles Schwab, Gunderson Dettmer Denis Collin, Chief of Staff and People, 50 Alcatel, Nokia, IBM
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We brought performance-based personalized marketing to display in 2008
We have since innovated 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
everyday
Largest Hadoop cluster in Europe Dynamic product banners Engine Optimized Segments
Passback
Sizeless creatives
Mobile Ad Formats
Adaptive Revenue Optimizer
App Install Measurement
Interest Map
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Data Technology Scale Openness
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Differentiated in Marketing Attractive Direct Sticky Elastic Demand
1 On average over the last four quarters through Q4 2018 2 Last twelve months to Q4 2018; excluding Criteo Retail Media 3 Quarterly retention rate for all solutions combined – close to 90% for 35 consecutive quarters 4 On average over the last four quarters through Q4 2018; excluding Criteo Retail Media. Represents uncapped budgets of our
clients, which are either contractually uncapped or so large that the budget constraint does not restrict ad buys
Direct relationships with clients2
Net client additions per quarter1
Client retention rate3
Of Revenue ex-TAC from uncapped budgets4
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Source: Zenith Advertising Expenditures Forecast
2018 2020
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2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 $0B $300B TV Digital
Source: MAGNA | Data for 2017 and beyond are forecasts – Created with Datawrapper
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Source: Criteo, Q2 2018. Base: sales weighted aggregate, Apps excluded (see Methodology).
New Zealand 44% Austria 44% Switzerland 43% Brazil 43% Taiwan 42% Italy 41% United States 39% France 39% Belgium 38% Canada 33% Poland 33% Russia 30% Sweden 60% Norway 57% United Kingdom 55% Japan 55% Denmark 51% Germany 50% Finland 49% Netherlands 49% Spain 48% South Korea 47% Turkey 46% Australia 46%
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Digital Ad Spend
Based on Nielsen US DCR trends, eMarketer, ExchangeWire, IDC
Time Spent
Open Internet Google/Facebook
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O U R V I S I O N:
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Where advertisers and publishers are in control and free to choose:
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Publishers Advertisers Consumers
19,500
Advertisers incl.
1,000+
Brands
3,500
Premium publishers
$800B+
Annual ecommerce sales
1.5B+
Active Shoppers Monthly
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AWARENESS CONSIDERATION CONVERSION
Criteo Retail Media Criteo Marketing Solutions Web App Offline Onsite Offsite
CAMPAIGNS CAMPAIGNS
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CAMPAIGNS CAMPAIGNS
AI Engine Shopper Graph
AWARENESS CONSIDERATION CONVERSION
Lookalike Finder Product Recommendation DCO+1 Predictive Bidding
Web App Offline Onsite Offsite Criteo Retail Media Criteo Marketing Solutions
1 Dynamic Creative Optimization+
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AD OBJECTIVES
OPTIMIZATION
Awareness Generate interest in your products or services
Consideration
Get people to consider your products or services
Conversion
Encourage interested people to purchase
MARKETING GOALS
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CONSIDERATION CONVERSION
Criteo Marketing Solutions Marketing Goals
Ad Objective
Campaign examples
Dynamic Retargeting Customer Acquisition
Audience Match Manage* App Traffic Web Traffic App Installs Web Conversions App Conversions
Web traffic campaign for new customers, visitors or existing customers App traffic campaign for app users or existing customers App Installs campaign for existing web visitors or new users Web conversion campaign for new customers, visitors or existing customers App conversion campaigns for app users
*Acquired in November 2018
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Awareness Consideration BRANDS & AGENCIES ‘Sales Attribution’
Buy-side Advertising Technology
Sar gen to Swi ss Che ese Slic es $3. 79Supply-side Advertising Technology
RETAILERS ‘Monetization’
DEMAND SUPPLY
Conversion
Standard Commerce Display Sponsored Products Flexible range of targeting and display options
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CONSIDERATION CONVERSION
Criteo Retail Media Marketing Goals
Ad Objective
Campaign examples
Sponsored Products Sponsored Products Extension Reseller Program Commerc e Display (Storetail) Web Traffic Web Conversions
Web traffic campaign for new customers, visitors or existing customers Web conversion campaign for new customers, visitors or existing customers
Audience Extension ONSITE OFFSITE ONSITE OFFSITE OFFSITE Onsite = on a retailer’s site | Offsite = on a publisher’s site
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A unified understanding of a shopper’s online journey and real-time intent data
Two-way exchange of data where the benefits always
Granular data sharing
Data privacy by design
Clear and permission-based usage Designed using our guiding principles
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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
per shopper
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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Shopper-level optimization to drive CTR, CR, Order Value, or Product Margin
run on new performance algorithms and variables
Lookalike Finder Product Recommendation Dynamic Creative Optimization+ Predictive Bidding
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Dedicated campaign Creation of a similar audience Audience previously targeted or exposed to a specific category of products or services Consumers likely to be interested in and engage
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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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A privacy by design approach since day 1: data minimization approach CPM/CPC model: an incentive to present relevant ads Trust requires transparency and control (Adchoice icon, cross device
A European player with clear track record in privacy
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ANALYTICS BILLING EVENT COLLECTION CATALOGS INTEGRATIONS SHOPPER GRAPH AUDIENCES SUPPLY CREATIVES AI ENGINE APIs USER INTERFACES
CAMPAIGNS
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Users Visitors or Existing customers New customers New customers
Marketing Goals Awareness Consideration
Consideration Conversion
Conversion Custom Audiences Similar Audiences Commerce Audiences Audiences
web and app users using Lookalike Finder AI technology
product interest categories within our Shopper Graph commerce data set
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Awareness
Consideration
Conversion
Banner formats Video Creative
Management Platform integration
Management Platform integration
Management Platform integration
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creation
efforts
and budget
attribution across all products in the client’s product catalog
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Revenue model
What it does
Benefits
product recommendations and 17 trillion ad set variations
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What it does
Criteo’s identity graph
customer using unique, shopper-scoring techniques
Benefits
shoppers
Pricing
*tentative
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What it does
with 4B+ global device IDs
traffic to the advertiser’s website
Benefits
shoppers
advertiser’s website
Use cases
Offline to online
Offline Buyers Card Holders
Loyalty
Audiences that may soon churn
Seasonal
Seasonal Buyers
Top Sellers
Lapsed Shoppers
Upsell
Bundle Offer
Upgrade
Audiences likely to upgrade
*tentative
Pricing
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Creative Formats & Supply
Pricing
campaigns
* Cost per Install ** Cost per Action
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DYSON SUPERSONIC HAIR DRYER, FUCHSIA/IRON
259,99 €
Benefits
Offer brands native product recommendation based placements that increase conversion personalized recommendations based on shopper’s unique journey
Budget
Trade and Performance
Pricing
CPC
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398,25 €
DYSON Aspirateur balai DYSON V7 Animal
Benefits
Enable brands to retarget customers with relevant product recommendations across Criteo’s premium publisher network personalized recommendations based on shopper’s unique journey
Budget
Trade and Performance
Pricing
CPC
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Benefits for sellers on the Marketplace
Benefits for Marketplaces
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DYSON SUPERSONIC HAIR DRYER, FUCHSIA/IRON
259,99 €
Benefits
Enable brands to increase consideration and conversion with ecommerce display placements, including guaranteed inventory dynamic ecommerce features based on product catalog, availability, and other factors
Budget
Shopper Marketing and National Media
Pricing
CPM
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DISCOVER
branded, standard display
Benefits
Enable brands to build shopper audience segments and target them across Criteo’s premium publisher network
Budget
National Media
Pricing
CPM
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* 19,419 clients at the end of Q4 2018
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A $200K+ B $50K+ D $10K+ E $5K+ F <$5K C $20K+ Large Clients Upper Mid- Market Lower Mid- Market
Monthly ad spend
Highly customized service and proactive insights/proposals Efficient, high quality, scalable and automated service to the highest number of clients New tiering Objectives
Consultative sales Telesales Self-service platform
1 2 3
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Midmarket penetration
Large Clients penetration
~60,000 addressable clients worldwide
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3,500 Premium publishers
Long-tail & emerging formats
Access to massive scale
For Criteo Retail Media
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Transition to Mobile Social Native Multiple Devices Header Bidding Ad Blocking
Changing consumer behavior Evolving technology
Programmatic
Our drives more value for publishers
In App
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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 Sponsored Products 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
Adtech: Paid Media
Criteo wins 90% of head-to-head tests
Martech: Owned and Earned Media
Criteo complements these vendors
Data and Operations Infrastructure
Criteo integrates with these technologies
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midmarket clients
Grow the customer base Increase our value for clients and partners
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* Prospective
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Continuing to grow our app business Improving the pace of hiring Driven by healthy business fundamentals and our investments into Accelerating client additions through our self service platform Growing our new solutions to drive broader marketing goals for clients
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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 ($ millions) Adjusted EBITDA2 ($ million)
147 238 403 534 730 941 966
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
22 42 105 143 225 310 321
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
CAGR
High growth Expanding profitability
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9.3 10.2 11.0 11.9 12.9 14.5 15.4 16.4 17.3 18.1 18.5 19.0 19.2 19.5
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018
Client Retention Rate1 Number of clients (in thousands)
1 The retention rate represents the percentage of live clients during the previous quarter that continued to be live clients during the current quarter. For all solutions combined.
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As % of Revenue ex-TAC FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Revenue ex-TAC 100% 100% 100% 100% 100% 100% Other cost of revenue* 7.9% 6.6% 6.1% 6.4% 6.9% 6.7% Gross margin 92.1% 93.4% 93.9% 93.6% 93.1% 93.3% R&D* 14.9% 12.5% 13.4% 14.2% 14.7% 15.2% S&O* 43.6% 39.9% 39.8% 35.3% 34.8% 33.6% G&A* 16.0% 14.8% 13.8% 13.2% 10.7% 11.3% Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9% 33.2% Revenue ex-TAC margin** 40.3% 40.8% 40.4% 40.6% 41.0% 42.0%
* 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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941 966
FY2017 FY2018
+2%*
* At constant currency
REVENUE EX-TAC ($M) ADJUSTED EBITDA ($M) FREE CASH FLOW ($M)
33% margin
(% of Revenue ex-TAC)
42%
310 321
FY2017 FY2018
137 135
FY2017 FY2018
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Technology innovation Broader supply Upselling new solutions Automation & self-service
Powered by a combination of
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INVEST DEVELOP & GROW CASH SCALE PROFITS SMART INVESTING
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* Based on a $1.8bn market capitalization, pursuant to the 2018 AGM authorization to issue up to 6.6m shares ** For M&A and to satisfy employee equity plan vesting
Strong balance sheet
1,531 1,597
Total assets (in $M) Financial liabilities (in $M) Very low debt
4 4
Cash & cash equivalents (in $M) Significant cash pile
414 364
>20%
$364M
cash
As of December 31, 2018
€350M
committed financing
$170M
equity raise capacity*
Share buy-back
authorization**
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– –
M&A
program
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Large market
Clear vision Competitive moats Proven track-record Attractive financial profile
Digital advertising is large and growing fast Be the leading advertising platform for the open Internet Technology Scale Openness Client growth ~90% client retention for all solutions combined Plan to return to Growth Increasing profitability Strong cash flow
VP, Head of Investor Relations 32, rue Blanche 75009 Paris +33 1 7621 2166 e.lassalle@criteo.com Director, Investor Relations 387 Park Ave South, 12th Floor New York, NY 10016 +1 917 837 8617 f.edelmann@criteo.com
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($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Revenue
401,253 407,201 423,867 566,825 516,667 542,022 563,973 674,031 564,164 537,185 528,869 670,096
Less: Traffic acquisition costs
238,755 240,969 247,310 341,877 306,693 322,200 329,576 397,087 323,746 306,963 305,387 398,238
Revenue ex-TAC
162,498 166,232 176,557 224,948 209,974 219,822 234,397 276,944 240,418 230,222 223,482 271,858
($ in thousands) 2017 2018 Revenue 2,296,692 2,300,314 Less: Traffic acquisition costs 1,355,556 1,334,334 Revenue ex-TAC 941,136 965,980
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($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4'17 Q1’18 Q2’18 Q3’18 Q4’18 2017 2018 Net income
18,527 13,339 14,724 40,740 14,518 7,505 22,269 52,368 21,090 14,707 17,948 42,134 96,659 95,879
Adjustments: Financial (income) expense, net
1,317 94 570 (1,435) 2,333 2,094 2,886 2,221 1,325 1,006 1,007 1,746 9,534 5,084
Provision for income taxes
7,944 4,450 7,574 13,161 4,201 3,665 7,858 15,927 12,386 8,638 6,821 18,299 31,651 46,144
Equity awards compensation expense
8,370 7,695 13,965 13,229 14,940 14,918 22,028 20,464 19,303 20,245 17,261 10,267 72,351 67,076
Pension service costs
129 131 132 133 290 299 320 321 434 419 419 419 1,231 1,691
Depreciation and amortization expense
12,516 13,300 14,771 16,190 20,167 22,306 23,755 24,570 23,646 23,560 25,619 30,675 90,796 103,500
Acquisition-related costs
1,793 980 6
1,222 6 1,738
Acquisition-related deferred price consideration
40 44 3 (3)
(252) 199
(53)
Total net adjustments
30,316 25,862 38,808 42,255 41,936 46,581 56,847 67,560 56,842 54,067 51,643 62,628 212,925 225,180
Adjusted EBITDA
48,843 39,201 53,532 82,995 56,454 54,086 79,116 119,928 77,932 68,774 69,591 104,762 309,584 321,059
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($ in thousands) FY2017 FY2018 CASH FROM OPERATING ACTIVITIES 245,458 260,726 Acquisition of intangible assets, property, plant and equipment (122,203) (116,984) Change in accounts payable related to intangible assets, property, plant and equipment 13,692 (8,494) FREE CASH FLOW 136,947 135,248