Q2 2023 Criteo SA Earnings Call
Good morning, and welcome to <unk> second quarter, 2023 earnings call.
All participants will be in listen only mode should you need assistance. Please press the star key followed by zero.
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.
Now I'd like to turn the conference over to Melanie debris.
This president Investor Relations. Please go ahead.
Good morning, everyone and welcome to <unk> second quarter 2023 earnings power Gen.
Jeremy that's all good for today, Chief Executive Officer, Megan Clarken, Chief Financial Officer.
I wanted to share some prepared remarks, some firsthand our chief product officer will join us for the Q&A session.
As usual you can find our investor presentation on our IR website now as well as our prepared remarks I'll try to answer the core.
Before we get started I would like to remind you that our remarks will include forward looking statements.
Kudos judgment assumptions.
Just on the FF today, our actual results may differ materially from current expectations based on a number of factors.
Okay.
Except as required by law, we do not undertake any obligation to update any forward looking statements discussed today.
For more information please refer to the risk factors discussed in our earnings release, I'm glad I'm not speaking for them.
<unk>.
We will also discuss non-GAAP measures the FERC prefer it definitely sounds like a reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today.
Finally, unless otherwise stated all growth comparisons made during this call are against the same carrier in the prior year with that let's hand, it over to Megan.
Thanks, Melanie and good morning, everyone. Thank you all for joining US today I'm pleased to report that we delivered a strong performance in the second quarter driven by our team's outstanding execution, despite ongoing macroeconomic volatility.
We have demonstrated resilience in the current environment and despite the market practice.
We are where we said we'd be in.
In the pole position and in the center I'll comment the comments media ecosystem. We believe that we are uniquely equipped to provide the market leading tech clients prospects and partners, who are looking to capitalize and one of the fastest growing areas of digital advertising Commerce media.
Our transformation to a commerce media powerhouse continues to unfold and now Commerce media platform vision is coming to life.
One year after the acquisition of iPhone with we have successfully completed the integration of our teams and we're leveraging the iPhone with access to accelerate our strategy.
This includes the imminent launch of that.
Demand side platform called comments Matt.
And the launch of our supply side platform called comments Greg. These.
These capabilities bookends, Aztec and the differentiation that they bring unlocks the full potential of our comments media platform and positions <unk> to become an end to end platform of choice.
<unk> media.
Starting with comments Matt.
We look forward to the general availability of our comments DSP next month.
Stay tuned for more details on the official launch.
Our beta testing has progressed well with various retailers and brands across multiple geographies.
As we expected results at our beta testing so increasingly strong results in terms of conversion rates on integrated onsite and Offsite campaign.
This proves the value to our clients of the advantage that the end to end platform all of this.
We're very encouraged by our growing pipeline of retailers and brands that have already signed up to use comments, Matt and.
And we expect the rental part to be gradual over the coming quarters.
Brands and agencies are excited to finally have a single access point to buy premium retail media inventory on site.
Both are internet inventory upsides, while also taking advantage of differentiated features like closed loop measurement.
Product win science data and leveraging unique audiences built on rail shopping behaviors to drive performance.
Retailers are also excited to leverage comments matched the best amount of times, they're almost like inventory.
And the valuable first party data to increase the revenue and bring more shoppers to their sites.
Moving onto comments Greg.
We're pleased with the successful launch of our comments SSP.
<unk> was our launch partner and we have since expanded access to other agency hauled colors in the U S and EMEA.
With combines a pretty direct supply with iPhone with capabilities to create a unique value proposition for the market.
For the fifth time Commerce grid brings our comments audience data like shopper intent signals and audience segments, which publishes can package with their inventory.
For retailers comments, Greg Greg brings additional monetization opportunities and allows retailers to curate their first party audiences and make them available for access through all DSP is important right.
That is great expand access to third party demand so the agencies and brands can reach comments audiences through any DSP.
Congress grid is both complementary and supplemental to commerce Macs, making our comments media platform interoperable to drive incremental demand mainly from agencies that have already committed spend to other DSP.
For agencies that that can be the first step to participate in retail media.
And they will leverage comments Max to access sponsored listing with onsite and real time, Ken campaign optimization for both onsite and Offsite with close links reporting.
Ultimately it all contributes to attracting more demand to our platform and increasing advertising revenues from media owners.
This is the power of Commerce media platform, allowing data flows and client access across one platform.
Turning to our second quarter performance, we're pleased with our growing momentum.
As we continue to shift towards a broader solution portfolio centered on the fast growing comments made your opportunity.
Our new solutions now represent around half of our top one and we expect this will become a larger part of our Mexico and forward as we laid out at our Investor day.
In Q2 Q2 performance also demonstrates our strong focus on execution as we continue to do what we said we would do.
Starting with retail media, we bring out seven years of experience to a growing number of reef Highlands now 210 retailers.
2400 brands and their agency partners globally.
We're pleased to say that our retail media growth has accelerated and our third quarter to date as we're ramping up newly signed partnerships.
We're proud to win the trust of an increasing number of retailers across all regions.
We're also expanding our footprint online marketplaces, including most recently dividends and spreads are good.
<unk> <unk> for their superior technology and monetization opportunities.
We're making great strides into adjacent Congress, Alberta coal as exemplified by our Google partnership.
Throughout platform capabilities CPG brands can that promote their brands and products by the sponsored ads on the D E F and multiple countries.
We're pleased with the continued ramp up of this exciting partnership and we have ambitions to launch additional formats in markets.
In the coming months.
More broadly we are scaling our existing retailer relationships in this quarter launch new inventory with seven top U S and EMEA clients to help them expand their monetization opportunities.
Our access to unique and premium retail media inventory at scale has been instrumental in attracting more demand.
We added nearly 100, new brands in Q2, and retail media spending driven by agencies grew over 50% in the U S. This quarter.
The agency partners are increasingly leaning into Korea.
We're independent meaning we don't own media when other retailer and we're not part of any agency where independence. We also value. They also value the tools, we bring to maximize performance for their brands.
This includes our unique AI powered digital shelf analytics, providing visibility into this share of shelf.
Sharon category and.
More product level insights as part of our DSP.
Unlike <unk> applies AI to digital retail shelf analytics, and we were granted a U S patent on systems and methods, including the integration of AI and digital shelf display earlier this year.
It's still very early days, but we're already seeing top brands harnessed. The power of these insights to strategically designing campaigns to win or defend market share.
Looking now at marketing solutions, we delivered strong growth in commerce audiences as we continue to diversify our business by combining large scale comments data and breakthrough AI technology to power relevant advertising and environments deprived of third party signals.
I'll ask audiences represents close to half of our contribution ex Tac with new clients in Q2 up for money instead of a new business a year ago.
This reflects our ability to unlock targeting opportunities in signal limited environments that others cannot address.
Leveraging our large scale commerce data and AI powered audience modeling tick defined in market shoppers commerce.
Commerce audiences.
The most valuable audiences to brands and an integral part of our Commerce media strategy.
These capabilities also create the foundation of our success in retail AVR upsides as we help retailers extend their advertising reach beyond their own rules across the open internet.
Importantly, we have made great strides in cross selling our solutions with about 100 more clients now using more than one <unk> solution, who tend to last quarter.
Clients like calories are embracing the power of our comments media platform and now leveraging our suite of always on customer acquisition and retention solution. In addition to our retail media capabilities.
Re targeting benefit from benefited from our latest release of AI, driven performance and henman enhancements too.
To optimize campaigns and unlock additional budgets and they're still uncertain macroeconomic environment.
In addition, we continued to scale, our first party media network to reach target consumers with first party data matching and cookie less environments. We.
We saw a sequential increase in cash emails that in this quarter and the results are encouraging and top U S publisher partner.
So our immediate list of close to 140% in CPM or Safari browser traffic.
Which contributed to a year on year increase of 70% and media spend after enabling hashed E mails as a targeting signal for its authenticated logged in users.
This demonstrates that our publishers can have confidence around continuity for.
When third party cookies, and defer created on crime and Android.
As part of a multi pronged addressed ability strategy. We also remain one of the largest scaled partners in the privacy sandbox.
<unk> recent announcement of scanner testing with 1% of crime uses for the web before the plan and deprecation of third party cookies is it positive developments in line with our recommendations to get real World results.
It is also expected to represent an integral part of the UK CMA ends assistant.
We believe that chretien leaning into a close collaboration with crime to develop specific use cases will enable us to deliver superior performance.
Last quarter, we shared our thoughts on the potential of generating AI to reshape advertising.
I'd like to provide an update on what that means for Chris yet.
Unlike others in the industry, we have privileged access to the largest commerce dataset on the open Internet, we leveraged twice as much E Commerce sales is Amazon.
With more than one trillion dollars every year of close to $3 billion in daily transactions to feel comments driven pay our models. Thanks.
Thanks to our Caribbean AI less experience expertise and models incorporates deep learning at scale and combined with our substantive comments data delivered breakthrough performance across the entire buyer journey.
We are integrating generative AI into our platform with a focus on three specific areas.
For.
Improving performance.
Enhancing the user experience for our clients and their customers shopping online with applications, such as chat bot interactions for product recommendations.
And optimizing our service delivery price pass through code pilots to drive efficiencies.
Our clients are at the center of everything we do.
Client retention remains close.
Hi at close to 90%.
The meaningful year over year improvement in our average customer satisfaction score is a testament to the hard work of our teams we have focused on bringing value to our clients through service and performance with our client Centricity lens everything that we do.
You will see that score this year was the highest it has been for three years.
Cardiome is working across the industry to establish standards for retail media that we expect will help encourage further adoption and drive long term growth for the ecosystem.
One example of particular importance to me as mentioned.
Measurement is an imperative for advertisers to make data driven decisions demonstrate value and ultimately achieve better results.
Brands also needs to compare results across marketing channels to create benchmarks.
Recognizing this.
Recognizing this need.
We're leading the way with a first of its kind partnership with integral AD science to bring industry extended durability and inbound traffic measurements on any onsite Ed can format.
Crosstown network of retail partners.
It's expected to unlock new budgets from advertisers that adhere to strict media buying standards.
So it concludes our focus on execution is front and center every level of that organization.
We believe we've built a highly scalable comments media platform and we are confident in our future. We are focused on profitable growth and we have multiple initiatives underway to generate operating leverage over time, all with a focus on driving shareholder value.
With that I'll turn it over the call I would Sarah who will provide more details on our financial results and our outlook Sara.
Thank you Maggie and good morning, everyone. Our second quarter performance reflects our clear focus on performance and execution.
Revenue was $469 million in contribution ex Tac was $240 million reported contribution ex Tac reflects a year over year $2 million unfavorable forex impact.
At constant currency, our second quarter contribution ex Tac grew by 17% on top of 7% growth in Q2 2022.
Although organic performance was flat driven by marketing solutions down 5% year over year, which we called the team down 15% as expected offset by commerce audience growth at 41%.
Retail media was up 20% year over year, and iPhone <unk> contributed 21 $29 million.
We continue to shift our topline makes to our fast growing new solutions for retail media commerce audiences and drive home what that represented around half of contribution ex Tac in our second quarter.
Our client retention at 90% continued to be resilient and we had great new client wins this quarter.
Turning to our business segments in retail media revenue was $45 million.
Contribution ex Tac grew 20% at constant currency to $44 million and lift up 62% on a two year stack basis in a traditionally low quarter.
This was primarily driven by our client base in the U S and our online marketplace, it offset by lower spend in France due to temporary government measures to cut inflation.
In Q2, we added 10 week tighter than 100 brands and I'll say retailer contribution ex Tac retention was 118%.
We also saw strong growth from our agency partners and robust brand booking mainly in CTG, our largest that's cool.
As we anticipated our retail media growth rates accelerated in July .
And marketing solutions revenue was $395 million and contribution ex Tac was $168 million with strong growth in commerce oriented offset by lower retail king.
As expected, we targeting the down 15% year over year or down 12% when excluding the $4 million impact from signal loss.
Our clients continue to operate in a choppy economic retail and consumer environment with significant focus on their marketing investment.
In the second quarter retail online traffic and online transactions improved sequentially. However, retail online transactions were lower across all regions in Q2 compared to last year.
I've traveled logical is performing well up 36% in Q2 and 111% on a two year stack basis.
The optimization of campaign performance with strong ROA.
Using our deep learning algorithms and it's bounced back to a database technology a lot more budget as we progressed through the quarter.
We delivered strong growth in commerce audience is up 14, 1% year over year and up 62% on a two year stack basis as more clients transition to full funnel audience strategies to acquire and retain customers.
As we capitalize on cross selling opportunities, we see that our clients value, having one partner to help them engage with consumers across their entire buying journey.
One year after completing the acquisition, we have successfully integrated iPhone way, which has been instrumental in accelerating our E Commerce media platform strategy.
On a standalone basis iPhone web performance was up mid single digits in a seasonally low quarter.
We delivered an adjusted EBITDA of $56 million in Q2 2023.
non-GAAP operating expenses increased 6% year over year, primarily due to iPhone wet partially offset by a planned cost reduction actions.
A key part of our transformation is to realign our organization and optimize our operating model to enable scale and operational efficiencies we.
We have already executed against the majority of our targeted cost savings this year and we continue to streamline our processes to work better and solve stuff.
Moving down the P&L depreciation and amortization increased eight 2% in Q2 2000 $23 million to $27 million.
Noncash share based compensation expense increased to $28 million, including an $11 million related to treasury shares granted to iPhone Webb founder as part of the acquisition.
We incurred restructuring cost of $22 million.
Offset by the partial reversal of the kinase contingency.
Combined with the margin dilution from my Palm web in a seasonally low quarter. These factors resulted in a net loss of $2 million in Q2 2023.
We reported <unk> diluted net loss per share of <unk>.
And adjusted diluted EPS of <unk> 49 per share.
We have a strong financial position with solid cash generation and none of long term debt.
We had $747 million in total liquidity as of the end of June which gives us significant financial effectively parity to execute our growth and capital allocation strategy.
As expected free cash flow was negative by $35 million year to date due to capex related to the planned five year renewal cycle about data centers and infrastructure.
We anticipate positive free cash flow generation in the second half of the year in line with the seasonality of our business, including retail media and iPhone wet.
We expect the kidney or payments in Q3, which will impact our free cash flow in Q3.
The primary goal of our capital allocation is to invest in high ROI organic investments and value enhancing acquisitions and to return capital to shareholders via our share buyback program.
We deployed $75 million of capital for share repurchases in the first half of 2023.
This included <unk> 7 million shares repurchased in Q to Q2 at an average cost of $32.30 per share.
Turning to our financial outlook, which reflects our expectations as of today August backend.
We remain cautiously optimistic about our outlook for the remainder of the year and we anticipate high single digit to low double digit contribution ex Tac growth at constant currency in 2023.
This is James low single digit organic growth and a full year impact from our acquisition of iPhone web.
We now expect contribution ex Tac growth of 25% to 30% for retail media, reflecting first half performance and unchanged expectations for growth the remainder of the year.
Commerce audiences, we expect contribution ex Tac growth of 25% to 30% as advertisers continue to shift more budget and adopt full funnel activation.
We do not expect signal loss impact in the second half of the year.
I live in rural as a reminder, we expect more pronounced seasonality with Q4 as our business mix is evolving.
We continue to anticipate an adjusted EBITDA margin of approximately 28% for 2023, including about 200 basis points of dilution from iPhone web.
We are on track to deliver over $60 million in annualized cost savings over the course of the year largely offsetting young realized impact of about 2022 gross investments.
Given the seasonality, we expect approximately 45% of our full year adjusted EBITDA to be realized in Q4.
We expect a normalized tax rate of around 25% in 2023, we anticipate capex of about $19 million, mainly related to the time when you're always about data center for which most banks have been cuts been incurred in the first half of the year.
For modeling purposes, we assume a flat number of shares outstanding in 2023.
As we enter the second half of the year, we are ready for back to school and the holiday season, and we have seen retail media brand spend to accelerate.
Overall, we expect Q3 contribution ex tax of $238 million to $242 million growing by 7% to 9% at constant currency.
This is she is low to mid single digit organic growth and one month of iPhone with inorganic growth.
We estimate Forex changes to drive a positive year over year impact of about 8 million to $10 million contribution ex Tac in Q3.
We expect adjusted EBITDA between $58 million and $62 million, reflecting the dilution from iPhone web.
Looking ahead, we remain focused on executing our transformation to drive long term shareholder value.
These include operational excellence initiatives across all aspects of our business.
Capitalizing on our whole position in retail media, our priority is to enable sustainable growth and margin expansion as we continue to scale on this media platform.
And <unk> a few things there I was hoping we could just parse out a little bit in terms of lower span across all segments and I think he had mentioned some lower spend.
The French government.
And then you also talked about July growth accelerating sort of what that might be attributing contributed too and then.
Maybe overarching just to take right.
Sort of assumptions or <unk> or you're thinking there I know you had.
I made a dry call out on take right sure in the on the first quarter call with that you know.
Would continue to come down just maybe refresh is there in terms of the trajectory uptake rate.
Thanks, much I appreciate it.
Mmk.
Yeah.
Yes, we do have to say sounds like a big part of a European business in Europe with that.
A lot of that traffic another online transactions 70 to see that.
<unk> and I just had a philosophy <unk> 10 freak out that matches that were taken to to cause inflation effectively left brown spend coming coming in that has now been painted in July .
I have a really peaceful sounds, Texas predominant me I would say the retail sector.
Typically fashion that continues to a slightly <unk>.
And <unk>, we do see strong signs in July and continues to <unk> <unk>.
More acceleration in a bride price so we feeding confidence that yeah. It makes it the 25 to 30 per cent off the areas, where <unk> has already a code and we did see another credit in the queue to that being said the <unk>. The first half of 66 to sent to you is that you have on your stomach pain.
I still feel very confident.
<unk> on all customers. The branch discussions we are having with the Brian Tonight and see that will incredibly positive Ah me too confident outlook on the 10th grade <unk>. There's really two faxes here. One is available we have anticipated that take great throughout time continue to reduce weight scale.
Increasing.
That being said, we also have market places being a large part about business and that has <unk> Ah congestion nathan's at some of the <unk>. The segment. So that has impacted the tank right <unk> very confident about we getting marquee, Brian bringing more and more.
As in Yeah as recently as last night, some very good night coming in with some large fries spend and we all feeling cautiously optimistic knowing that we continue to have the <unk> economic outlook and of course, our biggest C. As in being a holiday season, which is yet to come so.
Painting painting pretty good I don't understand the fact is related to Q too.
Thanks, Sir Super helpful <unk>.
The next question comes from ego.
Ah Runion with Citigroup.
Please go ahead.
Okay.
Thank you one morning, everyone maybe.
On that but on Thomas audiences <unk> more strength.
Like the environment, you have to move away from third party and.
Huge truckers, but there is more of an opportunity. There may be then you guys weren't smoking before can you talk about what you're seeing there and and how that's evolved and if you think.
There's more potential growth there and then a bigger.
Fix your question on retail media that we get off from <unk>.
Trying to understand the environment.
Hear news often about or we felt this all on this quarter with a large retailer that kind of broke.
Broke up their partnership with with one of your competitors and we hear often about this give and take with moving.
Moving things in house, particularly as you guys got bigger.
Maybe maybe you can just.
Upon on that a little bit more than what you're seeing there what <unk> what.
<unk> what that balance is as we move forward in retail immediate that's that's better.
[noise] [noise] let.
Let me, let me just I'm Gonna do this in a couple of times, but that's okay uhm. The fifth one I'll do a highlight belong or comments audience gross I'm always saying, there and how excited the Saturday hours for us.
Hi that appointment all set across to talk to get into some more detail around for four months and then I'll come back to the second part of that question after that uhm on the <unk>.
They're not even the ninth of that comment so audiences.
The audience is so important to have our clients people who are actually shopping.
Roman Empire Jenny at critical it's that was what he insists that they ultimately what <unk> wanted to get on the front house not 40, and it says that are doing some other activity and sorry, we expect a couple minutes there to be to be high at the time. It was invested in this area.
And so what we're experiencing now is L team internally that has been traditionally selling re targeting or retention targeting Ah has has now really found their face in terms of cross selling and bringing commerce audiences to our clients. So I'll look.
For a time it is targeted solutions.
And that's where we need to see a lot of the <unk> come in and I'll ability to cross out and use the clients that we already had much 19000 clients to extend them beyond reached targeting and into order tavern and capabilities using Thomas audience is at the core and again, we find that to be the <unk>.
Performing for us as well so it's hard to talk about the product and how it's performing yeah.
I <unk> I think uhm just to add to magenta point, obviously commerce audiences are.
Benefiting from the data that we operate across that trillion dollars to spend that we talked about before and a key point that magenta Max that's helping drive the adoption is that their purpose bill to drive a commerce dotcom. That's what is counting for interested in the market when people want to sell something.
And Ah Commerce audience is a very good place to turn and then too I think something else that you pointed out uhm because of our multipronged Addressability strategy Uhm enabled us to use commerce data that we offer a uhm and protect the way that we can expand those audiences add.
Cookies disappear uhm, we've seen this work well alrighty with Safari in Firefox and other cause he was traffic uhm and we anticipate it to continue as we move into the closed Cromwell. So those are the main factors from a product perspective, better teaming up to make commerce audience is grill and worthwhile.
<unk>.
Okay, Let me quite the the second part of the question in House I'm I'm, just gonna broadly in housing cause you're you're talking about a competitor I'm not sure, but let me just uhm, let me talk to have you feel about that there are some very big place that's well in house and I'd be one Dumont you might be talking about this.
Taking their business off that contained it turned out when the spice to in house.
And what do you think about what they've done is they've been investing in building capability surround retail media how to create onside activation how to perhaps do offside activation.
How to develop their their marketing team to be able to get the mangled by five to manage themselves all of this stuff. They're a specialist area isn't it takes very big players to really take that long to do that themselves any scene that with the likes of Vermont.
Uhm and others, who had.
<unk> <unk> successfully donuts and then found that Pops of that has been very difficult and then <unk> afterwards, and Kreuger was a very good example of that and Kreuger has still to Memphis environment and channel a N 64, fish, Oh, sorry, iPhone 51, <unk> they've been working.
<unk> for you know Ikea. So sorry. This 1400 of <unk> I think they've added another hundred two that spice. It just really points to the size of the operation that's needed to be able to do this <unk>.
<unk> four platform and so we can do all of that or we can do a piece of pets, and we might get status available and that sort of environment. If there's something that I really wanted to don't want to do a task I've known experts in that area and then we can look that up for them. So again in housing is something.
That belongs to the top paying this town, where she has to provide a platform on which people appliance Ken ultimately you zoloft or do you use a piece of that in the case of that's very glad to finally see I was looking to bring that on both themselves.
Alright, thank you so much.
The next question comes from Doug <unk> with J P. Morgan please.
Please go ahead.
Thank you for doing the questions. Megan you talked about three areas, where you're utilizing jenner today I was hoping you could help us understand how far along you are realizing some of the benefits on performance enhancing user experience and optimizing service delivery, maybe how we should expect these benefits to layer into your business going.
Forward and just curious also if you're already achieving engineering and coding efficiencies types of January alright. Thanks.
Yeah. Thanks for the question that good to good to hear Okay, Uhm, which I'll I'll just start by saying with head I got capabilities in house for a long long time.
Pretty <unk> now hitting any five year or not celebrating that says here and so it's that lab plus those who are really leaving N. Six what we know <unk> is around its generative AI and everything that you can do so all of the intelligence that we do with <unk> <unk>.
Themselves all of that and also anything that we bring an extent only catch that has has had it comes from the Lady said that as well <unk> area is working incredibly hard on the stomach at three different things like pulled out on Nicole I come directly out of the tub area. So Keith <unk>.
But no color on the ninth of what's going on there.
Thanks, Megan Hi, Doug we are very far along with the model development and we're actually accelerating that model of development that we've used to drive performance Uhm, that's already in production and it's an investment that's ongoing and progressing uhm. So.
You you should count that as well and motion on top of an already mature start is magenta pointed out secondly, when it comes to our internal strategies Uhm, we have been using co pilot Uhm for development for some time now and we are building a variety of other co pilots or different.
<unk> functions to use them for people in terms of tasks for instance, in finance Uhm and campaign management and delivery service delivery Uhm to name a couple and then thirdly uhm, we have some really exciting developments that are newer but are moving along.
Quite fast this coming quarter, Uhm, which go to enhancing the way that our customers experience. Our products you can think of <unk>, adding to have media planning is done across the very fragmented a tricky environment.
Commerce media, it's a brand new marketplace any I can help a lot there and is hoping and then you can also think about how we can expand our sponsored products business significantly as a retailer partners are picking up chatbots over onsite search S. B, two really specific areas of <unk>.
<unk> of our team's development those are probably about a half of what we're doing uhm. There is going to be some other interesting things to talk about but I think there are the most relevant for now.
Great. Thank you both.
The next question comes from Mark Kelly with Stifel. Please.
Please go ahead.
Alright. Thank you good morning, everyone and I apologize and ask them kind of bouncing around but.
The the full your guide for retail media you know obviously.
Three per cent now you kind of have a range wrapped around that is that is entirely due to the chocolates you saw.
Thank you too and obviously you know it sounds like the the <unk> quarter today and three Q have improved.
Or is there something else going on there.
And then the second question is Uber you know they had a nice trivial call out on their call yesterday would love to just get kind of the lay of the land in terms of that relationship. How it's ramping you know and what we might expect you know I'm 24 I'd be out thank you.
Sorry did you say you have to answer your question. It is 22222 I mean, the 20th of St pricing is it yeah on the 20th at 62%, we <unk>, we have a tough <unk>.
Funny name isolated any customer like too yeah.
You're welcome and Brown I would stay in certain countries in Europe , but obviously you have had more of an impact than others and then just in general.
He noticed the M. I tried to come transaction in certain sections of you know escalate 11th and people with with like but actually what he was saying yeah. Good traction in July of close to your line <unk> shopping days, and if Amazon and set up a day and all the other big days and.
But what we have done 16 pull up the traffic related to that specific events, which is obviously you know has a halo effect for every one of <unk>.
More specifically the treadmill and the treadmill and it's positive so let me feel good about the the guy for the year.
That'd be understand the factors behind key too.
Oh, Jonathan on the in the front.
We're excited about the relationship with with <unk> simply announced that last quarter and it was great to get the shot out yesterday. It sounds it shows that this is important to him.
Is it is important to us and we expect uhm to continue the relationship and the direction that they want a gallery, which is to extend this further with that with multiple Max Payne upcoming L. Y Uhm I wanted to stress that this is actually the fever relationships.
Really shines a light on <unk>, maybe we'd spend a lot of time talking about <unk>, and then call Max media comments media.
<unk> tied with respectable market for us and play the seven up retailers that are obviously comments play as in a Verizon a really good example of that so we loved the fact that town that we're able to work with Damon and land and bring this to many more comments players.
It just gives us the ability to <unk> market places that we extend beyond what we're doing tonight once the division of of comments medium, which we laid out an ambitious today.
Thank you Sir Thank you bye.
Okay.
The next question comes from Matthew Thornton with Truest. Please go ahead.
Hey, good morning, Megan Sara Todd maybe two if I could be coming back to retail me I guess it does we think about.
The back half of 23 any of the 24, there's an implied.
Acceleration there maybe you can just cut out.
Walk us through what the the most important drivers of that or whether it's using com for macro or some of the new products.
Verification things like that and then just secondly, maybe this one's for Todd obviously, the privacy sandbox continued to developing come a long hair and I know you're a close partner with Google on that you know you guys have in beds expectations for the impact of third party Cookie deprecation in 24, 25 am curious if you've seen any.
Being in the efficacy of the privacy sandbox that perhaps is accretive to those expectations uhm to to date Uhm, a doctor will be helpful. Thank God.
Yeah, I'll I'll stop just again at a high level on <unk> and the second part of the year, a few things uhm more clients, we continue to add clients to.
Two a roster retailing media clients and then with those clients and existing clients. We continue to push for more infantry to come to come online, which were saying I was saying that we we we live out a lot of them in training to to be expected that continuous retail media and Congress meat.
Yeah grows to to where it it it it will rug with that drives activated <unk> with that drives demand answer those platforms. We also are excited about <unk>, Max which launches on the 12th of September which drive demand intervene Tyler.
Which again increases mm mm <unk> plus revenue for the in and drive <unk> to be lit up on their site. So all of this is is about compounding or snowmobiling the growth of the platform and.
The growth of the comments Mediaset, there uhm out over the coming years <unk> at two four I should say is a waste of big quota for us as well. So this my name is Sarah has already said this already is it's special this shopping days it had been in Q4. So we expect they will also drive extra tunes.
For us.
Alright, well I'm privacy sandbox, Matt we're really just sticking to a plan that's incredibly well resource.
We've got our expertise all over this topic and have had for a long time is everyone on the call probably knows what we're seeing now without having the benefit of C. A.
Q1, you know full full fully retired cookie a cookie was traffic from from the 1%.
Figure that is going to be provided for for real world testing what was able to do now is is look at life traffic uhm in a fairly open way of juice blood testing between.
Our existing code of cookies for to traffic and our our address ability strategy, which includes privacy sandbox and we see promising results from that so we feel confident we're on plan Uhm nothing has changed for us, but S privacy sandbox rolled out.
It's cookie was traffic, we expect to learn more and improve on the work that we've already done things are going great.
Was there a follow up Mr function.
No that's it for me thanks, everyone.
Thank you. The next question comes from Brian Fitzgerald with Wells Fargo. Please go ahead.
Oh, Thanks Commerce audience is strong acceleration, they're wondering if you're seeing any demand unlock I noticed ah segments come available via your D. S. P. M. S. S P versus the more traditional insertion order type process.
And then <unk>.
Part of the story with the acceleration you sure and in Q2 is that a continuation of that.
Uhm Z S. P. I'll take the first one on the D. S. P. We obviously are just getting ready for T. M. B S. P and we will test a variety of commerce audience is there because they're available across our entire portfolio Uhm <unk>.
Can run our D. S P because we need to be safeguarding or retailer.
Retailers data in the in the while we property commerce audiences, but I used to take away here is that Congress audiences are a great advantage for all of our users no matter, which of our products in the platform, they're using and you should expect that bill you some flavor of commerce audiences across the board.
And that will continue you will our growth whether it's through R. V S P or whether it's true or broke product or a recently launched farmers grip.
Yeah, I'll I'll strips on that.
[noise], we are focused on commerce L. D. S T. As a comment C. S. D O S. S T as a comment B E S P.
The state of pocketing guys to come in so what are your innocence.
And and this is a huge differentia throughout the ability to actually.
No about 40 inches know about the products that they are interested in know about their biogenic can access the skill level diner and apply that to everything that we do from the demand side.
To the supply side across audience instead of <unk> across publishes through I S. S T.
And the last name in which the demand sides is operating on <unk>, I'm buying inventory or an egg at <unk>.
All of that is is fueled by our ability to know about how many <unk> and all about products. So you'll see to this comment somebody it says <unk>.
Pippin across the solution.
But you really see it right now and and in targeting and the comments audience, having things in the middle of the sign up to the top of the final at we live up now every year ago might be near again, sorry. This is again the suit snowball effect of bringing <unk> <unk> <unk> <unk>.
<unk>, two and add tech environment.
And just to add to that and and I also kind of may decide to smooth that kind of traditional marketing solutions customers now priced too <unk>.
Like using more than one solution <unk> I see that the <unk> <unk> <unk> <unk> <unk> you have a campaign 15, you application campaigns, it seemed perfect and kind of pink.
And everyday and everything great great <unk> nine is that where you're moving from the sale of more traditional information to taking on the acquisition and retention kind of on a budget.
That we deliver and it is based on all superior performance Saddam models.
Got it Sarah Ah Megan.
Thank you very much.
Okay. Thank you.
The next question comes from Tim Dolan with Macquarie. Please go ahead.
Hi, Thanks for taking the question I've got a couple of things I'd like to ask you about the commerce grid. Please first of all.
Could you talk about what I d's or contextual signals you will be incorporating into that I know you mentioned at one point and call about hashed emails just curious kind of what your approaches to identity and contextual as well and then also related lead you know with the launch of Commerce grid, and then separately Commerce Max I guess.
Kind of go hand in hand, all the other separate things D. S. P. N S. S. P will there be incentives for advertisers to use both or indeed, bill there'll be incentives for you to have advertising using both as in both together.
I can start back to from on this one I mean be incentive for advertisers is one of convenience that is accretive to our retailers. It's really simple opening up risk is an advertiser yet another path for us for for us too.
<unk> at Ah retailers and sell more commerce media Uhm. So you can think of Congress spread as as as a matter of convenience and choice for advertisers and one that ultimately brings more dollars into our ecosystem uhm. So the incentive is really up to them on what they want to use.
<unk>.
Secondly on the on the counter spread identity point and it.
It comes back to Congress audiences were built in our multi prong identity strategy Uhm, We have first party media network, which is matching first party data. The first party data uhm that is possible through as a a deal in getting grit and we also have audiences which are built.
Contractual but benefit from an overlay of farmers signals uhm that would imply were shopping interest is out on the open internet and those are available and commerce grip. So you've got you know you can actually pick and choose between which audiences are most effective for you and not truly.
The aim behind commerce audiences, we wanna be giving as many options as possible for our advertisers to fine performance and for our retailers to monetize that's exactly what we're doing.
Okay. Thanks.
Yep.
The next question comes from Richard Kramer with <unk> Research. Please go ahead.
Thanks, very much Hello, ladies and Todd first one can you laid out that's depending G E Commerce, Max and you described it as a gradual ramp my question really is how much line of sight do you have an committed campaign spend heading into the end of the year or is this something you'd rather have a suspect accelerating in the sixth.
12 months is marketers get more experience with a platform and then my second question for any of you really is can we get more of a breakdown of where the increases in activated media spend are coming from.
Not just in terms of Brandon versus performance, but also whether you're materially tapping into trade marketing budgets and equally whether you can size. It all for us to kind of spend you think you can bring in on the S. S. P side from media grid, thanks very much.
Yeah can I just I mean, yes, we do have five customers are committed <unk> great pipeline.
So far we've got.
<unk> tend to mention that his ex settlement, so, but I would say, we absolutely have a pipeline and is thought about peaceful ranch style.
Well, we're gonna go on September 12th and we expect some of that to come in you can cancel but obviously with mental coming into 24 25, so feeling good about.
About the conversations with retailers agencies, and Brian and please do address that is drink community <unk>.
So is it really good uptake and excitement et cetera.
<unk> feeling good about the comprehensive kind of give you that we have in terms of the excavated Midi S and.
<unk>.
Saturday not exactly how much is from trademark seems <unk>, what I will say is that we see significant.
<unk> and commitment starting to come in but I have already started to come in from very large brand names and so I would anticipate that sure that is coming from trademark themed bedroom set the incremental spent as well I'll come back with more specifics once we get some.
Feedback from C, Max, but absolutely we see very strong.
Flight from brands.
Yeah, Let me just add about Hampshire uhm. So so the recent gradual is there is because probably because of the mark maturity the buying dynamics and what we've learned in our data I just wanted to point out Uhm, we are maniacally focused on making sure that the join between onsite and Offsite Commerce media <unk>.
Typically perform together, okay. We've learned a time during the course bar beta testing about how to make that work one of the things that we learned as the buying functions of the advertisers that we serve and agencies uhm are still not necessarily together between search and programmatic and so not only kind of doing that.
Planning, but getting the operating those budgets together to benefit from the closed loop measurement that we provide and the performance that we are committed to is a bit of a process. I think you know the marketplace. So we're doing a lot of work educating our partners building best practices to use our platform so that the.
Performance falls out of it so we want to be a little bit smart about how we're going to market with us well. We don't want to do is sell a lot of things that don't get renewal and don't perform so that's what's behind that word.
Okay Fair enough, we'll put a watch and wait for the next couple of quarters. Thanks very much.
Yeah.
The next question comes from Matthew Cold with Morgan Stanley . Please go ahead.
Hi, everyone great. Thanks for taking my question just to be visiting Commerce audience is you know we saw in the quarter and it seems like it's your expectation going forward that will will see continued growth in commerce lobbied against your potential more headwinds it'd be targeting overtime I guess, when we think about commerce audience.
In terms of building audience is and then you know targeting them you know at least for someone to just off site. It sounds like it's available across your whole portfolio, but for off site usage of commerce audience.
Is there a reason it doesn't face the same targeting issues that re targeting does and a cookie, let's world like why will this in a <unk>.
More signal constrained environment be able to pick up the slack for be targeting going for it. Thank you.
Yeah, I mean, that's a pretty simple one re targeting is based on direct response, it's a one to one sort of thing or a one two very close cohort of people that have been exposed to a product category products a certain set of sites that they've landed on the solid type of product and then.
And then targeting them, okay. That's not somebody that's covered by the two in a first party data at our first party media network and also it looks very promising as I mentioned before on the protected audience is a V. I S. Privacy sandbox, okay. So uhm commerce audiences on the other hand is really really.
A different commerce audiences are actually taking the signals that I, just described and mapping them to things that have nothing to do with people that have everything to do with the concept that they're using to inform themselves about the products that they are considering brands that they haven't discovered or things that there. There there I was looking to compare to one another.
Uhm, that's more about content than it is about people and the joint of the shopper signals that I described earlier with that world of content that makes commerce audience is scale and so powerful because we get those performance M scale together and that opens up a huge amount of supply uhm, which is under sir.
At this point and right for us to buy to make perform for our advertisers and to be hugely accretive to our margins here as well pretty pretty exciting.
Oh, that's a great explanation so would it be fair then to describe it as it's based on contextual signal informed by all the data that you have about commerce audiences.
100%.
And to add to that it's it's Anna how much data is that we have is a trillion dollars of transactions that Megan spoke about in the three <unk> dollars per day that all relates to shellfish and so what they're doing at that time and <unk> were the only people that have pets.
That level of signal at that that's a safety related to call back.
Okay.
Got it thanks.
I would now like to turn the call back to Melanie.
<unk> for closing remarks.
Thank you <unk> for today, thanks, everyone for joining us the Investor relations team innovative or for any additional questions. We we wish you are a good day.
The conference has not concluded. Thank you for attending today's presentation you may now disconnect.
Mmm.
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