Q1 2021 Criteo SA Earnings Call
Good morning, and welcome to <unk> first quarter 2021 earnings call all participants will be in a listen only mode should you need assistance. Please press star zero to someone's the operator.
After the prepared remarks, there will be an opportunity to ask questions to ask a question. Please press Star then one.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference ever to Edward Lasalle SVP market Relations and capital markets. Please go ahead.
Thank you Chad.
Good morning, everyone and welcome to credit first quarter 2021 are in school, we hope, you're all doing well and keeping price.
Joining me on the call today, CEO, Megan Clarken and she has so sorry, glickman I'm going to share some prepared remarks. After these remarks, Doug Boston, the Chief product officer, and Joe swap market.
General manager of our growth portfolio will join us for the Q&A session as usual for either wants convenience, you'll find our investor deck on our website.
When we get started I'd like to remind you that our remarks today will include forward looking statements. These statements reflect <unk> judgment and analysis only as of today.
And actual results may differ materially from current expectations based on a number of factors affect from crisp business.
For more information please refer to the risk factors discussed in our earnings release as well as a must for some form 10-K and form 10-Q filed with the SEC.
We do not undertake any obligation to update any forward looking statements discussed today.
Except as required by law.
Well also discuss non-GAAP measures of our performance on the call it for.
Nations and a rectal gel reactions to the most directly comparable GAAP metrics are included in the earnings release published today finally, unless otherwise stated all growth comparisons made during this call are against the same periods in the prior year with that it's my pleasure to hand, it over to Megan.
Well, thanks, Dan and good morning, everyone. Thank you all for joining US today, I hope, everyone is doing well and staying safe.
On al and I have to say, we feel good today, we've had a strong start to 2021.
And have already achieved a number of solid things in a year and return to growth for pretty young.
We're seeing good momentum across our three priorities of growth execution and first party data in.
In Q1, we've already returned to growth and good trends in E Commerce and online shopping continued to sustain the growth in our client business and.
Our leadership is firmly in place and our teams are aligned and focused on steady thoughtful execution.
And recent market developments highlight the need for the industry to grow its five years from first party data.
Validating the strategic importance of that on first party media network.
In short our market opportunity is big.
Strategic priorities are clear and execution is strong.
All of this supports our commerce media platform vision that I've talked to you through on our past two earnings calls.
Day, and looking at 2021 sorry, Bob I'm, feeling very good about the momentum around that vision coming to life.
Together with Sara well.
I will discuss three topics on our call today.
Value of our content media platform, what it brings to the market share.
How about steady and thoughtful delivery across the three priorities of growth execution and first party data is driving momentum in our business.
And what drove that other performance against guidance in Q1, and what this means for Q2, and then 2021 growth momentum.
Our comments media platform, our strategy of building the world's leading comments media platform brings together the best of <unk> to deliver small consumer experiences.
Comments Meteor is a category of digital advertising that drives growth I'm, sorry that drives comment outcomes for brands retailers and publishers by delivering smart experiences to in market audiences.
As they browse and purchase online.
As a marketing category Commerce media is real and growing fast it out there and it's big.
I've said before we view the comments meatier opportunity.
As a $16 billion plus Tam for us.
Our placement comments media is based on a from road position at the intersection of E Commerce marketing and media monetization how are you.
You need platform makes commerce media work for everyone driving powerful outcomes for all those that we sell.
Brands like Eddie debt or PNG generate commerce results through powerful comments like is targeting measurement and optimization capabilities.
The weighted by our both our unique retail media inventory and how huge network of media properties, providing brand with a combination of commerce capabilities and unmatched scale, even by the walled garden standards.
Retailers like target.
Comments outcomes and create new high margin AD revenue streams for themselves through targeted promotions publish.
Publishers access existing and new brand marketing dollars previously spent below the line and all.
All of us as consumers get to enjoy better shopping experiences through better content and personalized AD experiences while enjoying continued access to AD supported content online.
Now commerce media platforms unique combination of homeless focused marketing and media monetization capabilities makes us ideally suited to address the complex needs of our customers for example.
We recently helped one of the world's largest retailer execute their marketing and monetization strategy in Canada.
This big client has been laser focused on growing the rois of its digital marketing investment at scale during the holiday season, and early 2021 while at the same time monetizing it in market audiences and media with multiple CPG brands.
Getting sentences for them focused on converting the visitors on their site and apps leveraging our strong creative and product recommendation Swapes trusted brand safety capabilities.
And flexible budget allocation tools to 10, this site and app visitors into buyers.
On the media monetization side, we help them launched native and sponsored product ads across their sites and apps.
<unk> added new AD placements on the growth streams specific inventory.
For the Q4 and Q1 the value we deliver to this large retailer helped drive an increase 195 per cent year over year in product sales.
Sliding into a 100% growth in revenue for us.
In 2021 and beyond we see great opportunities for this REIT Tyler to further leverage our full suite of marketing and media monetization solutions.
With available audiences to drive commerce outcomes on and off its properties for the brand manufacturers It works with.
As you can tell from this example, we focus on being the leader in marketing and media monetization for commerce outside of wound guidance.
Our unified offering we ship it to buying and selling of advertising and promotions for goods and services with a strong focus on commerce across a massive network of brands retailers and media partners.
We continue to work on making the seamless flow.
Our first party data across our Commerce media network, a big part about differentiation.
Moving to my second point.
Outstanding delivery driving growth.
We're making good progress on each of our priorities growth execution and first party data.
The positive momentum, we're seeing across our business is supported by our teams solid planning and focus.
For decision, making.
And high standard of execution.
I hope that you can see.
We're executing on a well thought out transformation plan and other becoming unprecedented circumstances.
Let's start with our first priority growth.
Our growth turned positive in Q1.
Elliot implants, leveraging continued health and online Commerce I'm.
I'm pleased to get a better than anticipated performance was driven by solid momentum across all solutions.
Since I joined pretty a focus on growth has required us to better utilize our assets.
We're growing the business by expanding our product suite and growing the uptake of our new solutions across existing and new clients.
Benefiting from our larger calmness media product portfolio, our re targeting product continues to show solid resilience and support performed better than expected.
In fact <unk>.
I just thought about other performance against our guidance in Q1 came from re targeting highly.
Highlight things that our clients continued debt there continued need for superior performance and converting their customers.
Whether that convention is aided by re targeting brand building audience targeting read a direct retail promotion superior access to buying and selling other Ed real estate. This is the power of the Commerce media platform at work.
Our new solutions that represents about 176 million revenue ex Tac on the last 12 months basis and now is now 21 per cent about business growing it grew 60% from Q1 <unk>.
Accelerating from both Q3, and Q4 2020 with strong growth across the board.
Retail media's growth dramatically accelerated to over 120 per cent as we further expanded our business with new retailers brands and agencies and grew our share of wallet with existing ones.
We were already worked with over 50 per cent. The top 25 American and topped 20 European e-commerce retailers with monetization programs and we continue to expand our business with them well.
While retail media is a central piece about commerce media platform strategy all of our new solutions continue to grow fast.
We're investing in contextual advertising and audience target targeting for brands on video and CTV.
We continue to expect all of our new solutions combined to growing by close to 50% in 2021.
And last point on growth, we are driving profitable growth too as we significantly increased our adjusted EBITDA margin in Q1.
While continuing to invest in our growth initiatives.
Execution is our second priority the team continues to deliver steady thoughtful execution on all fronts.
The spends out execution playbook across organic builds and partner on.
On the organic side, we saw continued solid momentum across the business.
And our new solutions business, we continue to focus our efforts our.
The crops out new solutions in Q1, we had growth it might for 160, because the standard.
And now omni channel solutions, and mid teens now audience targeting products.
This solid growth is enabled by our team to focus on best addressing instead this thing that commerce media needs of our customers big or small.
On the product side and as discussed in that last call. We launched our next level contextual advertising solution as well.
<unk> is a first of its current product that connects first party comments data like Siemens recent purchase of any debt weekends.
For the real time contextual signals like in particular, a new site or app or a key topic of an article.
It's capability paves the way for marketers to continue to drive and measure incremental revenue in a post cookie world, we're already seeing good customer adoption and good performance for marketers.
In supply, we launched out direct SDK product with a top U S news at adding to the scale of that direct access on the largest news apps.
We also started testing and to Asian markets with one of the largest messaging platforms in APAC with huge scale.
A significant strategic win for us in the region as.
As a reminder of how important.
To supply partners premium publishers like N B C Globo.
The Wall Street Journal unfolds.
Direct access to the inventory because they know we deliver high yields for Ed unit combined with advertiser demand at scale and brand sales and consumer friendly ways.
In speaking Oh, blocking and highly differentiated supply.
In retail media we.
Executed strongly with new business wins and growth in our existing customer base.
On new business, we had signs.
Three our global preferred partnership with Caf for.
The agreement calls for the deployment of the retail media platform and nine kept for group countries.
With France with critical it will be the exclusive partner for the marketing of retail media inventories to advertisers and agencies.
The other retail media platform will power advertising promotions on net products on all comfortable with digital assets.
I E.
On its web and App shops through innovative solutions, 100% integrated into the Shopper's journey.
Kept for joins retailers like Costco target, Macy's and best buy and granting us privileged access to the media inventory because our retail media solutions generate high margin.
AD revenue, while protecting the shopper experience through relevant comments native ads.
Also in retail media, we signed a multiyear agreement with a very large U S home improvement retailer.
Along with agreements with five other new retailers in Q1.
We expect these contracts together with potential similar agreements in the future to continue to sustain and strength in retail media is growth over the next months it for years.
In Q1, we also fully integrated our preferred deals offering previously called comments display into I'll read it retail media platform, providing retailers brands and agencies from a single unified platform for managing all ad formats.
Across retail sites and mobile apps.
On the partnership front, we continue to expand our strategic API partnership program.
Making it easier for brands and agencies to buy with Cortina.
Good day, our API and partners drive greatest stickiness and long term growth for credit card.
Including acceleration.
Alright.
Retail media offering for brands across the open Internet.
Moving to our third priority first party data.
As everyone knows this is a critical area for the industry and for US an area.
Well, we're actively and methodically securing a moat and differentiation.
Festival.
All of the retail media onsite solutions leverage first party data and do not rely on third party cookies. This means that our growth in retail media onsite is not on a tremendous in size, but also shelton from changes in third party identification and therefore bring steady durable predictable growth.
It is important and lots about fast growth in this business and the central role that retail media plays and the traction of our Commerce media platform.
Secondly.
And their early March blog post Google Interestingly reminded every one of the strategic importance of first party data.
To the entire online ecosystem, we found google's reps to be music to al is as the foundation of our comments media platform is first party data that we operate on behalf of our partners.
Our first party media network enables this data to power, our marketing and monetization across the open internet at scale.
In partnership with our clients the constant state from protected flow of first party data within our broad network is the cornerstone of that data identity strategy.
As changes come in Iowa's 14, and third party cookies go away.
Well for the leading into this asset and continue to offer our clients the ability to achieve the marketing and monetization goes via first party data.
As I mentioned earlier, our strong focus of US is to make our clients first party identity data fully interrupt for a per BOE at cross sell for its probably media network to ultimately Pao the commerce media platform in the mines seamless way this means.
Creating durable connections between growth probably identity data operating on the demand side.
How 'bout business with first party data operated on the supply side of that business.
If it requires investment in the infrastructure for seamless data rights management privacy protection and integration with the programmatic ecosystem to differentiate.
But in collaboration with industry partners and we further advanced the integration of the Universal identify you I D. Two solution into our Commerce media platform.
We worked with the trade desk now.
Now new single sign on software called open Pos built to support U I D. Two and to provide publishes and retailers the tools to use first party data as an alternative to third party cookies.
Moving past software will be open sourced and available for all publishers and retailers to easily installed on their site and technology stack.
We started testing open Pos with consumers publishers and retailers in Q1, and Q2, and then pitch and anticipate that it will take up to about 12 months to build scale.
As we've said before I'm from a Pos and UAV to a built for interoperability with other consents.
Consent and identity solutions and other impossible operates with identify other than U I D too, which means both will also enhance other solutions publishes and.
And retailers choice to use.
And finally, we're excited about our customers' interest we're already seeing them in our first of its kind of contextual advertising product. It's built the best of <unk> II to manage content classification with first party transaction data.
Close the loop between what between the cohorts of consumers buy.
And their affinity for specific content.
In the very early going we've seen incremental let's say for our clients and believe this product will thrive in a post the party cookie world.
It's also important to note that our shopper graph data for it is particularly relevant for cohort advertising use cases to drive higher reliance for.
For consumers and performance from market as we believe this positions US well ahead of testing Google's flock can pledge proposals over the coming months and quarters in short our team has delivered steadily thoughtfully and with discipline across our strategic priorities in early 2021.
Looking ahead, we remain laser focused on the same three priorities first on growth.
Accelerating the momentum we've built.
Focusing on strong secular trends in e-commerce.
Making the right thoughtful decisions on investments and continuing to attract and retain the best and brightest talent out there.
Second on execution.
But sticking to a strict we do what we say we'll do discipline.
We nurture a culture of high performance and accountability in everything we do.
And third on first party data using our competitive moats are protected first party data across our advertiser and publisher network.
And focusing on the various techniques, we have available to us we feel good about our position in the market price cookies.
In closing I'm very proud about team's solid delivery achieved with grit and conviction I feel good about the momentum we've created.
Commerce media platform and how we're tracking against our transformation plan to turn our business around.
And to discuss sales strategy and execution plans in more detail. We're excited to host you roll it out 2021 investor day.
Which will take place virtually on June 3rd and during this event.
Our extended leadership team will explain why the new Chris here. We are today is best positioned to offer the worlds, leading comments media platform to brands retailers and publishers.
And all details will soon be available on our IR website, and I hope that you're all able to join US with this and looking forward to seeing you all attend our Investor day I'm pleased to turn it over to Sarah <unk>, who.
It will take you through the Q1 performance and outlook for the rest of 2021 and I'll be back for the Q&A session Sarah.
Thanks, Meghan and yesterday, it's exciting to see our momentum and good morning, everyone I'll discuss the operating and financial drivers about Q1 performance and I will share our financial outlook for Q2 and 2021.
Let me start with headline numbers.
Revenue grew 7% in Q1 or 4% in constant currency to $541 million, we beat guidance for revenue ex Tac and adjusted EBITDA for each while over performance across retail getting and our new solutions.
On a non-GAAP basis revenue ex Tac was $213 million up 4% also percent of constant currency and $13 million above our expectation.
Adjusted EBITDA of $76 million up 21% in constant currency drove a 36% margin.
This results in adjusted diluted EPS of <unk> 67 cents.
Free cash flow of 64 million, representing 84% of adjusted EBITDA.
Even with Q1 seasonal uplift in cash collections. This was the highest level for 21 quarters.
We estimate that the COVID-19 impact incremental to early 2020, with a negative $18 million or about nine points of year over year growth.
Excluding this estimated incremental COVID-19 impact our revenue ex Tac grew close to 9%.
Incremental identity and privacy impact strength of size minions other reduction in revenue ex Tac.
And our revenue ex Tac margin was 39% of revenue down 150 basis points year on year in line with expectations due to the evolving put up makes about business and I'll go to market strategies.
Our performance was strong across pretty out entire business revenue ex Tac growth with IBM for points above our guidance and improved about seven points compared to the rates in Q4.
We continue to operate <unk> as a single operating segment.
To provide additional transparency, we have disaggregated revenue and revenue ex Tac to show, both marketing solutions and retail media.
Most of these solutions revenue ex Tac declined 5% compared to Q1 2020, largely related to an estimated $18 million impact from COVID-19.
Close to 90% of its impact was in travel.
Excluding this estimated incremental impact marketing solutions revenue ex Tac was up 4% driven by better performance in retail getting across all regions and audience targeting growth of 14%.
Growth you know omni channel product accelerated to over 100 and safety per cent due to continued strong demand in retail.
In Q1 retail media grew a 122% on a revenue ex Tac basis, driven by strong momentum across existing clients and the onboarding of new retailers and brands.
And those are real our new solutions across Cristiana, including retail media grew 60% to 21% of total revenue ex Tac.
For our existing client business same client revenue ex Tac growth of 3% improved for points relative to Q4.
Marketing solutions, our retail business went up 9% this quarter.
Both metrics highlight the healthy momentum underlying our cool business continuing into Q2 2021 and on new solutions traction.
Moving to our regional momentum.
Revenue ex Tac in the Americas grew 6% or 8% at constant currency, improving 13 points of growth compared to Q4, driven by retail re targeting audience targeting and strong momentum of retail media with large retailers and brands.
In Europe, EMEA revenue ex Tac grew 5% on a reported basis, but declined 2% at constant currency driven by continued weakness in travel offset by retail new business and strong traction in retail media in particular in our preferred sales offering.
Revenue ex Tac in Asia, Pac declined, 2% or 5% at constant currency, improving by over 12 points compared to Q for.
This was driven by a still depressed travel vertical and an improving classifieds business still down year on year offset by the return to growth of our retail business in particular in Japan and Korea.
Okay.
We added a for 120 net new clients in Q1 as commercial momentum built on across all escalations over 75% of these new life science related to retail could team with about 25% up so two new solutions campaigns as well.
Our current metric, which is a lagging indicator counting all clients that have been live with us over the preceding 12 months.
Q1 reflected the annualized impact of client churn that peaked in Q2 2020, when COVID-19 started to impact the global economy.
We continue to invest in growth while wisely managing the expense base. We are seeing returns from our investments in all commerce media platform, including expansion of our retail media sales team and product and R&D investments in our first party media network and related infrastructure.
She'll advertising video CTV and commerce insights.
G&A cost increased as we have also scaled up the back office capabilities and tools to support new products.
Our growth investments are largely funded through productivity and cost savings, enabling topline leverage as we commercialize new products and capabilities.
In Q1, non net expenses were $137 million down 8% at constant currency net.
Non-GAAP opex reduced by $8 million or 8% at constant currency declining minus 13% before the impact of our growing stock price on social charges.
On that same basis, we reduced employee costs by $7 million 12 per cent of constant currency after investing in R&D product and retail media.
We continue to work with strategic partners to accelerate innovation and expand our capabilities, particularly in contextual advertising retail media and the build out of our first party media network.
These partnerships are reflected in the evolution of our R&D Opex line.
As you can see in our non-GAAP reconciliation, we incurred just shy of $12 million of pre tax restructuring and transformation costs largely related to real estate and severance costs.
We anticipate expenses of $20 million to $25 million in pre tax restructuring cost in 2021 split between real estate portfolio reductions and employee severance.
Moving down our P&L on DNA expenses reduced 9% and share based compensation expense declined 7%.
This combined with our business performance and good cost management drove a 44% increase in income from operations and a 43% increase in net income, reflecting flat financial expenses and a 30% GAAP effective tax rate.
Our weighted average diluted share count was $64 million up 3% as a result of our increasing stock price over the period.
Diluted EPS is 35.
40% and adjusted diluted EPS was <unk> 67 debt up 29%.
Our strong cash generation and cash position continue to provide ample flexibility for execution.
Free cash flow grew 41% to $64 million in Q1, 2021, reflecting strong cash collections offset by pay out of the 2020 bonus and some restructuring payments.
In Q1, we purchased approximately $5 million worth of shares as part of a new 100 minions other share buyback program.
Our balance sheet continues to be very strong as we closed Q1 with $566 million from cash and marketable securities.
We look to maintain flexibility in our capital allocation to btu organic and potentially inorganic investments and have an active M&A pipeline focused on our growth areas.
As of March 31st we had total financial liquidity of around $1 billion, providing strong flexibility for investments as well as enabling the execution of 100 millions of other share repurchase over time.
In the quarter, we repurchased 150000 shares at an average cost of $32 97.
I'll now provide our guidance and business outlook for Q2, 2021, which which reflects our expectations as of today may five.
This guidance reflects our views of secular trend sustaining an ecommerce expect takes genes sorry expectations for more retail reopening coupled with muted global economic growth and lower than expected recovery of the travel vertical we continue to monitor the impact of I O S 14.
Changes over the coming weeks and months.
As we head into Q2, we continue to see good traction in all Commerce media platform with continued strength in retail strong momentum in retail media and solid growth across our new solutions.
We do not anticipate any significant rebound in the travel vertical given extended lockdowns we.
We do expect growth you'd be targeting in Q2, partly driven by the favorable comp in retail in classifieds from the trough of the COVID-19 impact in Q2 last year.
As we had a very strong comp in Q2 2020 that was helped by COVID-19, we expect our retail media basis to grow in the high thirties.
Taking all of this into consideration we are guiding for revenue ex Tac in Q2 of approximately $208 million or about 14% growth at constant currency.
This includes $11 million of incremental identity and privacy impacts relative to the 2020 run rate.
On the profitability side, we expect Q2, adjusted EBITDA of approximately $60 million and anticipate expenses to increase low single digit year over year constant currency after increased investments in our growth areas.
For fiscal 'twenty 'twenty 'twenty, sorry for fiscal 2021, we maintain our guidance of mid single digit growth in revenue ex Tac at constant currency and adjusted EBITDA margin above 30% of revenue ex Tac.
We refined our assumption on incremental identity and privacy impacts to $55 million in 2021 relative to the 2020 run rate, mostly as a result of day later than expected release of Athens, ATT in Iowa for team.
Based on a great start to 2021, I'm happy with the way, we're executing on fostering profitable growth and operational excellence.
In closing I want to thank our customers and Chris you guys for that.
Steady momentum our business is enjoying pallets by disciplined execution and strong lasting commerce trends.
We are laser focused on our transformation and our plans to offer the worlds, leading commerce media platform.
Work to drive sustainable and profitable growth and create long term value for our shareholders.
As a female CFO I'm also very proud to work for a company that ensures gender pay parity.
We are looking for to hosting you all on our June 30 Investor day.
On this day, we will share our views on other opportunities are more insights on our strategy and provide you an opportunity to me our team.
We will not be sharing a formal financial outlook.
We are committed to continue to share updates with you on our transformation and installations and on crown mitigation as a strategy and product launches evolve going into 2022.
We'll be pleased to see you all on line, there and with that I'll now open up to your questions.
Thank you we will now begin the question and answer session.
I ask a question you May press Star then one on your telephone keypad.
You are using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question will come from Tim Nolan with Macquarie. Please go ahead.
Hi, Thanks very much.
I've got a lot of questions, but I'll keep it to one or two.
It looks like your re targeting business. If my basic math is right. It was still down in Q1, but you're calling for it to turn positive in Q2. It looks like that is partly on the relatively easy comparison year over year, but could you just talk about the trends and we're targeting as the year progresses and.
When Google Chrome third party cookies are eliminated and Google focuses on its flock system does this open up a much bigger opportunity for your re targeting business.
Going into 2022 am I thinking about that the right way.
Yeah.
Good to hear from good to hear from you all let me just direct the topic here a little bit.
I'm trying to direct the first part of the Christian Center from sort of the 2021.
The recycling business.
Sara just in terms of trends, we're seeing in the market segments come back.
And then I wanted to jump quickly to two cards I'm gonna utilize the fact that we have Todd and Jeff farmer from so I'm gonna jump for them pretty quickly to talk about the impact of of current on the re targeting business.
Uh huh.
I think that that's an appropriate one for him.
Sure do you want to just kicked this off without yeah yeah.
Absolutely I mean, your thoughts are right, we were doing very well in re targeting we're definitely very pleased with Q1.
See that traction continuing into Q2.
And we obviously inspect expect some impact actually from iOS 14 kind of coming into Q2.
Oh, good on retail destiny on that wave and see really terrific traction.
All regions in credit and across our customers. So excited to continue that momentum, but I'll hand over to tell to you can talk more of them on the other topic.
Yeah. Thanks, a lot share Jim How're, you doing and Ah.
I think this is a pretty easy one.
The use of any cohorts through Google really presents a great opportunity for us.
To expand our advertising solutions in general for our client base and you know you've heard US talk a lot about our product strategy being to future proof the business and that's a combination approach where what we're doing or will do with Google as we go through testing.
To to get cohorts into our product mix is just one of three things that we're doing to expand our capabilities, while we future proof the business.
[noise] plaque is is just underway and testing.
It's delayed in Europe pledge it looks like it's pushed to the end of 2021 that's the Google solution, which.
Most closely approximates re targeting them and we're excited to test both of them were in the queue on block now and of course, we're very hungry to test sludge.
In either case, it will be building our portfolio of solutions towards taking everything that Google throws at us.
As well as developing our first party media network, which will preserve one to one targeting <unk> and.
And open up other opportunities for us to use our own cohorts you heard Megan talk about our new contextual solution.
In in many senses that is a cohort solution, that's a buying cohort solution applied in a privacy safe way onto the open internet by U R. L C.
So we're already doing a cohort marketing in some ways it.
Our Caribbean just not cohorts as they relate to Google's proposals, but we're very much in line with from a product perspective to take advantage of those the moment that they are testable.
Thanks from slip in another question about retail media place it looks like you've got very strong growth.
A decent amount of which must be coming from new customers.
Could you just talk about brand new customers coming on as retail media.
<unk> versus existing and if it's possible to share a number of you know percentage or number of retailers that are using our existing retailers that are using the service.
Let me direct to Jeff why don't you, probably you want to take that.
Yes.
Thank you and a great Richard and team. Thank you so much.
As Megan just discussed in the in our prepared statements, we announced a very big deal, which called for as you know in Q1, and we signed six new retailers now what's really interesting resolve business is we are continuing to gain market share as the metro side with.
He made that day.
Overall retail major markets is growing at about 20% CAGR worldwide, excluding embezzlement and excluding China and as you heard we grew a total of 22% in Q1, so we are gaining market share.
And the way we're doing debt is by signing a new retailers, but also by increasing their share of wallet for existing retailer and just to share a little bit of data, we already work with over 50% of the top 20 clubs U S retailers that have monetization on sites and over 50% of the dog.
'twenty EMEA retailers. So when you look at the gross debt for a generic thing it's a combination of again, increasing their share of wallet for.
You're just seeing retailers that we have signing in your retailers.
The retailers on the other quarterly visits and also expanding toward a new dual groceries, where historically, we haven't been present, yet for example in APAC.
And finally addressing a new client types like market places.
So that's why we are very excited about the growth prospects are for retail media and Thats why we are expecting in retail me Joe to grow around 50% for this year.
Okay. Thanks, very much nice to see the turnaround taking shape congrats thank you.
Thank you.
Thanks, Tim.
The next question will come from Dan Salmon with BMO capital markets. Please go ahead.
Hey, good morning, everybody, maybe the first one for Megan and Sarah.
You mentioned, Japan and Korea.
As sort of leading the retail response I'm wondering how much of a.
For recovery in retail that you saw I'm wondering how much of that maybe due to better COVID-19 responses.
Because when I look at the impact from COVID-19 versus privacy headwinds on this quarter. It would suggest that the privacy headwinds even being twice as big in the second quarter. It's still really the COVID-19 comps is the most significant headwind to your top line is that still the right way to look at this.
And then just second maybe.
I'll just add one more for Todd if I.
I can squeeze it in for you.
Maybe take us one level deeper on the contextual solution.
You know, we know that first party data from our retailers is a big important part of it but why is that different from traditional contextual solutions and certain types of look alike modeling if you could spend more time on that.
Yeah. So I'll start on Asia Pac will just on COVID-19 in general and.
No travel for US it is a challenge and we are seeing some some coming back but it's obviously up a very small base and that has not come back as quickly as we expected. So Japan is insignificant locked down and that's impacting really travel as well as classifieds.
So that's except for Asia Pac had slight it's a big business.
For us in the Americas travel is a smaller part of our business Europe and Asia Pac is a larger part of our business and they've had more significant lockdowns. So we anticipate we are expecting that travel kind of sluggishness frankly to continue throughout the year, we'd love it to come back, but we see that pony.
Being more towards the end of Q4 and 2022, the other comment I'll make on travel as we're seeing a lot of investment not surprising me from travel bureaus Federal government state government as well as I would say some free advertising from others. So.
Net for US re targeting is it's going to become all through all of that likely towards the end of last year into 2022, everything else retails doing well.
Obviously opening up.
The high streets. The game is something that we're very fun.
It's just starting again in the in Europe, and then in Asia Pac as well.
And Todd I can I can jump in on the second one Dan.
Great question.
Our approaches is actually very unique what it draws on is our very large store of <unk>.
<unk> offline transactional data and product data across our network of advertisers. So the way to think about it is that.
Our shopper graph, which is a combination of those two things is a very rich place to create a buying cohort that is.
Anonymously a group of transactions around a group of products and then to apply that or map that back to media in our network. What that does is it gives us kind of the reverse of what contextual advertising is is known for mostly today, which is scanning.
Earl for a piece of content on a euro and.
And providing or extracting the meaning of that object and then putting it into a category, which is targeted by an advertiser.
And in the traditional approach advertisers have to bet that the way that the content is being interpreted is a good place.
For them to advertise to reach an audience that's interested in whatever the product is because we're doing it the opposite way, we're looking at people who buy them.
The Ali does sneakers as Meghan said earlier across the things that they read and what that does is it is it not only helps us.
Use a completely unique approach at contextual, but it also helps us find consumers in places that are less likely to be.
To five by traditional.
Content classification and made available for targeting so its very exciting its a new approach.
We will be doing this sort of thing with our shopper graph.
More and more this is just the first.
And I think I just want to emphasize we are live, but we're alive and for markets in our in the U S. Here in the U S in the U K, France and Germany.
And it is it is the early going but it's.
If I had to be honest, it's hard to not be quite excited about what we're seeing thus far and we think this is going to be a very disruptive innovation for the market.
Awesome, Thanks, Todd and thank you Sir.
And the next question is from Doug Anmuth with J P. Morgan. Please go ahead.
Great. Thanks for taking the questions I just wanted to ask about guidance to start just given the <unk> outperformance and then and then the <unk> guide.
It looks like for the full year unchanged at mid single digit growth and I think that's just privacy headwinds or are actually improving relative to three months ago. So just curious if that's all the delay in travel recovery that you mentioned or if there's something else. We should think about and then just second related.
To the Apple iOS for teen changes just curious if given your large network of first party I E. Commerce data just if youre seeing any benefits here in the early days as advertisers look to other data sources. Thank you.
Hi, Greg it's great to hear from you so other financial guidance.
Q1 was solid we were executing across the board on all of transformation in Q2 outlook.
That's very good so.
Yeah, we have we're really hoping that Q2 kind of pieces all of US However, kids age to become a little tougher and that is as you said the privacy identity impacts that we've assumed $55 million over the next three quarters and as you recall, we had 60 million for the year.
Q2, it seems about $11 million of incremental identity. So we're doing really really well we are executing well certainly in retail and e-commerce and now Unfortunately, some of the goodness is kind of stepped up with the privacy impact on travel we.
Had you.
We've assumed a relatively muted kind of recovery.
Unfortunately no.
Significantly as fast as we would like and I think we've and we've talked a lot about that and lost.
Last quarter, so I don't want it to overtake all the goodness, but right now we're just not seeing that come back quickly enough to get.
It's a kind of again ensure that we can.
Higher higher returns for the year.
Getting to mid single digit growth as opposed to low to mid single digit growth.
That's really where our focus is to get to level set to exceed expectations, but certainly trending more towards the midpoint at this point, which we're very happy about.
And now I'll hand over to touch on your other questions.
Yeah, I think where you were headed as you know.
Have we seen a change in our ability overall to target audiences I would just say, it's a it's a little early to say because obviously.
Tumor behavior has to catch up with the.
For the ATT, the seven day window, and we have we have to actually get a read on.
On their response rates versus the disappearance of Ids that are not permitted.
So far it's.
Safe to say that the consumer response to it a little better than the market.
Predicted which is positive, but we're not getting ahead of ourselves to talk about what we see in terms of impact to audience targeting overall until enough time has passed that that we can take a new baseline.
So more from us on out later, Meanwhile, absolutely not sitting still and waiting to see the contextual solution that I described for instance.
Is useful.
For web and mobile companion properties as well as for web only so we're taking the approach of.
Doing some testing there.
Obviously, there are other things, we can do with with cohorts.
And you heard Megan talk about are some of our direct SDK wins.
Just get a better direct supply path to the application market. Despite what was happening with AT&T at a T T. Rather it's hard not to say AT&T by the way it is.
I feel bad for the company. So that's the picture it's it actually looks.
Pretty good and we feel like we've got a full slate of options to be running with its just a matter of time now.
And just when you say consumer response was a little bit better than what the market predicted you just mean for very early opt in rates or is there something else that's right that's right and I haven't seen.
I've seen anecdotal data on that important to say, we're not quoting any data.
But the early returns seem to be in certain markets slightly higher opt in rates than were expected and again.
Debt that is punditry I'm I'm not sure.
That anyone has a good read on this and would expect us to get some decent data.
Or two out from now.
Got it that's helpful. Thank you.
Youre welcome.
And our final question today will come from net working with Truest Securities. Please go ahead.
Hey, good morning, everybody. Thanks for taking the question, maybe maybe two if I could.
You're coming back to Google It seems that they are exiting the one to one targeting market at least away from there were owned and operated <unk>.
<unk> and so on my first question is does that open up an opportunity for for <unk> and <unk>.
So if there's any way to size or dimension that.
And then just just secondly, not to beat a dead horse, but maybe sir when we think about the full year. It seems to me that the messaging here is look <unk> was better and yes, ADT has pushed out so that is incrementally positive and it sounds like the only incremental negative we should come away with is travel just isn't kind of coming back maybe as fast as we had hold price when it makes.
Sure.
Got the messaging right there any color would be helpful. Thanks, everyone.
I can take the first one.
That's a great question and I'm glad you asked it because we're very excited about about the.
For the moves that Google is making we think that there's probably no better time to for a company with a lot of access to first party data to be.
In AD tech to be building a business on the open Internet you have.
From tectonic shifts working in our favor and and certainly Google I'm looking more inward on the identity front is one of them. So we're very excited about it I would say.
No no sizing them on on the on the opportunity new or incremental just yet.
But it's safe to say if you look at.
At at the way Google reports revenue that it's large.
Yeah, and I can address the second part I think you're reading is right. So we are and we feel good across the board on retail icon teen retail.
Classified from travel and are kind of creeping up but nowhere close to where we've licensed certainly way below 2019 levels still and especially travel.
Privacy.
The bigger impact for the next three quarters although.
What I would say overall is that we feel really good about across the board, we targeting is going well.
All our new solutions are going well they are only in the REIT space as Todd said, and we're still trending for 50% growth.
Year on year on a new solutions. That's all that's all our focus and also okay. So.
I would say open track in the right direction.
His top up.
With privacy impact, but then.
New product launches those numbers are small so yeah. We're very excited about some texture, whereby 90 day buyout of video.
But we there's smaller net growing and so it's hard to replace you know that.
John of re targeting and the.
And it's incredibly resilient.
Happy about it.
Yeah.
Looking to reinvest and focus on our clients and help them through their own transformation as they think about the post.
Post cookie world as well so all moving in the right direction, but it's definitely a marathon and not wait.
Well. Thank you Sarah Megan and team is now concludes our call for today, we'd like to thank everyone for joining and Dr. Atkins available for any additional Phillips as usual.
We wish you all a good day thanks.
No.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Sure.
Okay.
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