Q2 2024 Criteo SA Earnings Call

Yeah.

Speaker Change: Good morning, and welcome to the <unk> second quarter 2000, 2024 earnings call all participants will be in a listen only mode should you need assistance. Please press the star key followed by zero.

Melanie Debris: After the prepared remarks, there will be an opportunity to ask questions 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 over to Melanie debris Vice President Investor Relations. Please go ahead.

Melanie Debris: Good morning, everyone and when it comes to credit it was second quarter of 'twenty 'twenty four earnings scored.

Speaker Change: Joining us on the call today, Chief Executive Officer, Megan Clarken, and Chief Financial Officer, Sarah Glickman are going to share some prepared remarks.

Operator: Todd Parsons, our chief product officer, will join us for the Q&A session. As usual, you will find our investor presentation on our investor website now, as well as our prepared remarks and transcript after the call. We will also discuss non-GAAP measures of our performance; definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today.

Speaker Change: Person or a chief product officer will join us for the Q&A session.

Speaker Change: As usual I'll argue redefined our investor presentation on our Investor website, now as well as our prepared remarks and transcript after the call.

Speaker Change: Before we get started I would like to remind you that our remarks include forward looking statements, which reflect credit with judgment assumptions and then you just on the as of today or.

Speaker Change: Actual results may differ materially from current expectations based on a number of factors that could change pretty much did that.

Speaker Change: Except as required by law, we do not undertake any obligation to update any forward looking statements discussed today.

Speaker Change: For more information please refer to the risk factors discussed in our earnings release as well as our most recent forms 10-K, and 10-Q filed with the SEC.

Speaker Change: We will also discuss non-GAAP measure was appropriate for me.

Speaker Change: Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today.

Speaker Change: Finally.

Speaker Change: Unless otherwise stated all growth comparisons made during this quarter are against the same period in the prior year.

Speaker Change: With that let me now hand, it over to Megan.

Megan Clarken: Thanks, Melanie and good morning, everyone. Thank you for joining us for our second quarter earnings call.

Megan Clarken: The quarter, it's being security.

Megan Clarken: I'm excited to share that we delivered another strong performance with double digit organic growth for the third consecutive quarter.

Megan Clarken: Notably we achieved record top line and adjusted EBITDA margin for Q2.

Megan Clarken: These results reflect the outstanding work that teams are driving momentum across the business.

Megan Clarken: Before delving into this quarter's performance I'd like to address Google's recent announcements to move away from their original plan just fully deprecate third party cookies.

Megan Clarken: Crime.

Megan Clarken: They are now proposing a new framework to continue to support third-party cookies with user choice. Although it's premature to pinpoint the timeline and precise impact of this change, our vision is quickly coming to life as we continue to transform our company into a commerce media powerhouse. We continue to build out capabilities that focus on reaching consumers throughout their buyer journey from discovery to purchase, leveraging our unique commerce data assets, best-in-class AI, and our supply and demand side relationships, creating a flywheel effect and making us the perfect platform for a unified commerce media ecosystem. Partnerships are vital when scaling our value for all marketers and media owners. The collaboration with Microsoft is twofold. First,

Megan Clarken: They are now proposing a new framework to continue to support third party cookies with use of choice.

Megan Clarken: This means that we expect to benefit from ongoing access to third party signals for opt it and use it and that Google will continue to support privacy sandbox for opted out skus it.

Megan Clarken: As a result, we expect that any given scenario would lead to a small signal loss impact than previously anticipated.

Megan Clarken: We look forward to our continued collaboration with Google to shape This new framework.

Megan Clarken: Although it's premature to pinpoint the timeline on the precise impact of this change we.

Speaker Change: We welcome them that's good news.

Speaker Change: Which provides more clarity and publish it stability ultimately benefiting the entire advertising landscape.

Speaker Change: Now next generation address ability strategy remains unchanged with additional strength coming with the news that small third party signals.

Speaker Change: We remain confident in our ability to provide scalability.

And run time intra inter operability of privacy safe solutions for more open unified and efficient ecosystem that supports multiple address ability options.

Speaker Change: Allegiant is quickly coming to life as we continue to transform our company into a call minutes media powerhouse.

Speaker Change: We continue to build out capabilities that focus on reaching consumers through out there by a journey from discovery.

Speaker Change: Pitches, leveraging our unique comments date or exits best in class AI.

Speaker Change: And how supply and demand inside relationships, creating a flywheel effect.

Speaker Change: Making us the platform for a unified commerce midyear ecosystem.

Speaker Change: Partnerships are beitzel when scaling our valued for all market as the media owners.

Speaker Change: Over the past few years with what closely with Microsoft to bring commerce audiences to the high quality nature advertising, we deliver all Microsoft properties.

Speaker Change: And with now excited to extend our long standing partnership with Microsoft to our retail media suite.

Speaker Change: How much recent announcement reinforces the belief that the world of retail media is converging and together pretty out of Microsoft.

Speaker Change: Can play a more central role and I'm walking its full potential partners.

Speaker Change: And for clients.

Speaker Change: The collaboration with Microsoft is twofold.

Speaker Change: First.

Megan Clarken: We're excited to bring Microsoft Advertising's extensive demand to our global network of 225 retailers. This first-of-a-kind integration will enable retailers to tap into new budgets from Microsoft's 500,000-plus advertisers, expanding the value and reach of their inventories in the process. We expect this to further strengthen our position as the leading ad tech player in retail media while creating an even more unified access for all media buyers. Together, we aim to elevate retailer monetization and advertiser outcomes across the consumer journey, tapping into world-class strengths and predictive modeling to drive privacy-enhancing targeting, and product recommendation.

Speaker Change: We're excited to bring Microsoft advertising extensive demand to our global network of 225 retailers.

Speaker Change: This first of a client integration will enable retailers to tap into new budgets from Microsoft.

Speaker Change: 100000.

Speaker Change: Advertisers.

Speaker Change: Expanding the value and reach of their inventories in the process.

Speaker Change: Integration design and planning are underway and we look forward to capitalizing on this opportunity together, it's more budget shift to retail media.

Speaker Change: Chickens, Microsoft chose <unk>.

Speaker Change: The preferred onsite partner.

Speaker Change: And we're working to consolidate their reach on media supply onto our platform.

Speaker Change: The transition of these retailers from Microsoft advertising to the Caribbean platform is expected to start in 2025.

Speaker Change: We expect this to further strengthen our position as the leading player in retail media, while creating an even more unified Texas for all media buyers.

Speaker Change: How should focus on innovation as a unifying force behind our expanded partnership.

Speaker Change: Together, we aim to elevate retail of monetization and advertiser outcomes across the consumer journey tipping.

Kim: Tapping into world class drinks and predictive modeling to drive privacy enhancing targeting product recommendation Kim.

Speaker Change: Same thing with toys and creative formats.

Speaker Change: We're really excited with this work and the opportunities that working with Microsoft.

Speaker Change: No.

Megan Clarken: On top of this exciting development with Microsoft, we continue to gain market share in retail media in the second quarter with 30% year-over-year growth and retail media activated media spend, outpacing the market. We had notable retailer wins across all regions over the past few months. In Europe, we're proud to work with Euronics.

Speaker Change: On top of this exciting development with Microsoft we continued to gain market share in retail need here in the second quarter with 30% year over year growth in.

Speaker Change: And reach out to either activated media spend outpacing the market.

Speaker Change: We have a leading market footprint, including 65, but since the top 30 retailers in the Americas.

Speaker Change: And 50% of the top 30 in EMEA.

Speaker Change: And we believe we have become the hub of retail media to complement Amazon.

Speaker Change: We had notable retailer wins across all regions over the past few months.

Speaker Change: In the U S. We're excited to partner with new large retailers, including dollar General <unk>.

Speaker Change: GBC and Belk.

In Europe, we're proud to work with your own it.

Speaker Change: Global leader in distribution of crime appliances and electronics.

Speaker Change: And we expanded our relationship with my Teresa.

Speaker Change: Global luxury e-commerce retailer that is now using both our performance marketing.

Speaker Change: And retail media capabilities.

Speaker Change: We're also partnering with luxury department store Selfridges to power the online retail media advertising technology on their E Commerce website.

Megan Clarken: Lastly, we're broadening our retail media presence in APAC and LATAM, including new retailers in Peru and Brazil. Our momentum carries into adjacent verticals such as tech-enabled services. For instance, we added Grab, a leading app in Southeast Asia, providing everyday services such as mobility, deliveries, and digital financial services to over 38 million users.

Speaker Change: Lastly, we are broadening broadening our retail media presence in APAC, and Latam, including new retailers in Peru, and Brazil.

These retailers are coming to us for a global prison ability to scale quickly now.

Speaker Change: Our end to end capabilities simple to use products.

And performance and world, leading sales and product expertise.

Speaker Change: Oh learnings and carries into adjacent verticals such as taking their services.

Speaker Change: For instance, we added grab the leading act in South East Asia, providing everyday services such as mobility.

Speaker Change: It varies and digital financial services to over 38 million users.

Megan Clarken: We've also seen strong demand and revenue growth for Uber Eats since we expanded our partnership to the spirits and beverages category across various regions earlier this year. Importantly, we continue to experience strong client retention and expansion. We're also very encouraged to see that over half of our retailers in the Americas and EMEA are leveraging multiple ad formats for their retail media network, building out their advertising offerings. We added about 200 new brands in Q2, and we're pleased to see agencies lean in with our Commerce Media Demand Side Platform, or DSP. In the U.S., agency spend accelerated sequentially, and we saw the major holding companies grow more than 50 percent year over year.

Speaker Change: We are also seeing strong demand and revenue growth.

Speaker Change: Since we expanded our partnership to the spirit and beverages category across various regions earlier this year.

Speaker Change: Importantly, we continued to experience strong client retention and expansion.

Speaker Change: Our multi year and after the exclusive contracts with deep technical integration contributes to the stickiness of our retail media business.

Speaker Change: We're also very encouraged to see that about half of their retailers in the Americas and EMEA are leveraging multiple ed's formats, but their retail media network building out their advertising offering.

Speaker Change: A recent example is expansion of the dock Morris partnership.

Speaker Change: With the launch of native video ads this activity drive scale.

Speaker Change: We ended about 200, new brands in Q2, and we're pleased to see agency glean them.

Speaker Change: Without commerce media demand side platform or DSP.

Speaker Change: As we give them a single entry point to reach out valuable network of retailers.

Speaker Change: In the U S agency spend accelerated sequentially and we saw the major holding companies growing more than 50% year over year.

Speaker Change: As a result agencies now account for two thirds of combo Smack, Spain and the U S.

Speaker Change: This quarter, we launched the capability I'll call that smacks without new SKU base decline until.

Megan Clarken: This further enables brands and agencies to buy sponsored product ads across our 225 retail media networks within one simple, consolidated workflow. So, instead of executing campaigns on multiple retail media networks individually, brands and agencies can leverage our DSP to promote their products at any retailer in our network where their product is sold. This allows marketers to focus on what really matters, namely Deli Products. Promise Max also brings demand to off-site campaigns, meaning using retailers' data assets to extend their reach across open internet inventory. French toy giant, Joy Club, is a recent addition to our off-site campaigns that we run with our DSP in Europe.

Speaker Change: This further enables brands and agencies to buy sponsored product ads across that 225 retail media networks within one simple consolidate the workflow.

Speaker Change: Did the executing campaigns on multiple retail media networks individually.

Speaker Change: Brands and agencies can deliver jud DSP to promote their products on any retailer and what where their product is sold.

Speaker Change: All in one streamlined campaign activation with management optimization workflow and closed loop measurement.

Speaker Change: This allows market is to focus on what really matters.

Speaker Change: Selling products.

Speaker Change: In turn is expected to bring more demand for a larger number of retailers, enabling brands to reach the majority of the world's retail supply outside of Amazon.

Speaker Change: Homeless Max also brings demand upside campaigns, meaning using retailers data assets to extend their reach across the open internet inventory.

Speaker Change: Fringe toy join joined club is a recent addition to our upside campaigns that we robbing without DSP in Europe and.

Megan Clarken: And we're currently bringing one of the biggest US retailers on board, turning to performance media, which encompasses our targeting capabilities, including retargeting, commerce audiences, and our supply and ad tech services. We're seeing continued strong momentum for commerce audiences, up 41%. We're leveraging the largest set of commerce data and shopping intent signals on the open internet to reach valuable audiences across the entire shopping journey to drive more sales and grow customer lifetime value.

Speaker Change: And we're currently bringing one of the biggest U S retailers on board.

Megan Clarken: Today, 80% of our performance media revenue, excluding supply and ad tech services, comes from clients using commerce audiences in addition to retargeting. We launched our Commerce Grid supply-side platform, or SSP, a year ago, and we're pleased with our progress to date. Commerce Grid gives agencies and brands access to our Commerce Audience packages with publisher inventory for highly targeted campaigns through third-party DSPs, like Google's Display & Video

Speaker Change: Turning to performance media.

Speaker Change: Which encompasses our targeting capabilities.

Speaker Change: Including re targeting almost audiences and how supply in Ed Tech services.

Speaker Change: We're seeing continued strong momentum for our core mass audience is up 41%.

Speaker Change: We're leveraging the largest set of comments data and shopping intent signals on the open internet to reach valuable audiences across the entire shopping journey to drive more sales and grow customer lifetime value.

Speaker Change: Similar to prior quarters, we benefited from the accelerated.

Speaker Change: Adoption of first party data driven solutions successful cross selling efforts are you like driven performance enhancements and incremental third party demand through.

Speaker Change: That's great if it's Pete.

Speaker Change: Today, 80% of the outperformance media revenues, excluding the supply in Ed Tech services comes from clients using comments audiences. In addition to read Tiger.

Speaker Change: This was always they'll go and we're continuously innovating to appeal to a larger pool of potential clients.

Speaker Change: Our re targeting solution has returned to growth for the second quarter in a row, including the growing activations involved mixes large scale inventory in combination with open Internet inventory. We're pleased to see continued success at cross sell Facebook and Instagram campaign, adding reach with <unk>.

Speaker Change: Goldman's for example, read the clearly the U K one of the Uk's, leading Korean marketplace partner.

Speaker Change: Continent, with Korea towards Assessable, thin-skinned, social environment and effectively link open with candidate contains our social channels.

Speaker Change: Our integration with meta enabled them to generate thousands of additional applications, while reducing the cost to application by approximately 8%.

Speaker Change: We launched a communist grid supply side platform or is this team a year ago.

Speaker Change: And we are pleased without progress to date.

Speaker Change: As grid its agencies and brands access to our promise audience packages.

Megan Clarken: It represents another path for us to capture incremental commerce media budgets and leverage the power of commerce media at scale. We continue to grow our premium roster of publishers and most recently added top names like the New York Times. We have also introduced new commerce formats like Plana, which is the first payment app to launch advertising with Commerce Grid.

Megan Clarken: And we're already seeing high demand for its high shopping intent requirements with our large base of performance clients. The objective of our comprehensive addressability strategy is to add value throughout the consumer buying journey with relevant, personalized, and trusted advertising while meeting our clients' performance expectations. We leverage our deep learning models at the intersection of proprietary interest groups, commerce data, and media data across retailer sites, social media platforms, and the open internet. This work sits as the foundation of Criteo's commerce media platform, serving both sides of our business with advanced targeting capabilities that set a new performance paradigm and ensure consumer privacy and control. To conclude,

Speaker Change: Patients.

Speaker Change: We leverage our deep learning models at the intersection of proprietary interest interest groups Commerce data and media data across retailer sites, social media platforms and the open internet.

Speaker Change: This works it since the foundation of <unk> Commerce media platform, serving both sides of that business with advanced targeting capabilities that set a new performance paradigm and ensure consumer privacy and control.

Speaker Change: To conclude.

Speaker Change: We're right, where we said we'd be as we progressed through our transformation to be a world leading commerce media platform.

Megan Clarken: We have strong conviction in our business strategy, and we're well positioned to drive sustainable, profitable growth in 2024 and beyond. We recently announced the promotion of key leaders to further propel growth and continue building momentum in retail media and performance media. Thank you, Megan, and good morning, everyone.

Speaker Change: We have strong conviction towards our business strategy, and we're well positioned to drive sustainable profitable growth in 2024 and beyond.

Speaker Change: We recently announced the promotion of key leaders to further propel growth and continue building momentum in retail media and performance media.

Speaker Change: We're ready to see the exciting opportunities ahead, and we remain committed to delivering shareholder value.

Megan Clarken: We delivered record Q2 results with strong operating leverage enabled by top-line growth and disciplined cost management. Our two segments, Retail Media and Performance Media, delivered double-digit growth in Q2. As previously communicated, our Q2 results included the expected transition of our largest retailer client to their direct sales model. On the demand side, we now partner with 2,900 global brands and have onboarded about 200 new brands this quarter.

Speaker Change: <unk> growth was primarily driven by our client base in the U S, Germany and the UK.

Speaker Change: Growth from existing clients remained strong with thing retain a contribution ex Tac retention at 131%.

Speaker Change: We benefited from the ramp up of newly signed retailers.

Speaker Change: We have unmatched scale and continue to experience strong client retention in retail media.

We are also excited to transition Microsoft advertising onsite retailers to our monetization technology stack, starting in 2025 and further scale our footprint.

Speaker Change: On the demand side, we now partner with 2900 global brands and have onboard at about 200, new brands this quarter.

Speaker Change: Activated media spend in Q2 grew 30% year over year above market demonstrating that we continue to gain share.

Speaker Change: We saw strong growth from our agency partners and robust brand bookings, mainly in CPG categories like beauty.

Megan Clarken: In performance media, revenue was $417 million, and contribution XTAC was $213 million, up 11% at constant currency. Retargeting grew 4%, and supply and antech services were up 3%. Travel remains our fastest-growing vertical, up 31%, followed by classified and retail. We delivered adjusted EBITDA of $93 million in Q2 2024, up 67% year-over-year. Non-GAAP operating expenses decreased 6% year-over-year, reflecting continued rigor on resource allocation. Our weighted average diluted share count was $59 million, which resulted in diluted earnings per share of $0.46 per share.

Speaker Change: Compassion.

Speaker Change: We delivered adjusted EBITDA of $93 million in Q2, 2024 up 67% year over year.

Speaker Change: All double digit topline growth and a lower cost run rate resulted in strong operating leverage.

Speaker Change: We also benefit from the timing of some investors investments that moved into the second half of the year at one of the reduction in bad debt expense due to lower dsos for retail media and a milestone payment related to one of our large partnership.

Speaker Change: non-GAAP operating expenses decreased 6% year over year, reflecting continued rigor on resource allocation.

Speaker Change: We are driving our transformation by investing in growth areas and optimizing our operating model the scalability and efficiency.

Speaker Change: We are also enhancing our operational effectiveness with streamlined processes and the deployment of AI powered productivity tools.

Megan Clarken: We continue to benefit from a strong financial position and robust balance sheet with solid cash generation and no long-term debt. We had about $675 million in total liquidity at the end of June, which gives us significant financial flexibility to execute our growth strategy and disciplined and balanced capital allocation. We are confident in our business strategy and financial strength, and we are fully committed to driving shareholder value. Our key priority is to continue to invest in our commerce media platform to enable sustainable organic growth alongside value-enhancing acquisitions.

Megan Clarken: We have a long-standing record of returning significant capital to our shareholders, and we are on track to repurchase $150 million of stock in 2024, including $40 million deployed in Q2. We also cancelled 2 million shares in early Q2. At the end of June, we had $166 million remaining in our board share buyback authorization.

Speaker Change: <unk> stuck in 2024, including $40 million deployed in Q2.

Speaker Change: This included one 1 million shares repurchased at an average cost of $36 70 per share.

Speaker Change: We also cancelled two 2 million shares.

Speaker Change: In Q2.

Speaker Change: At the end of June we had $166 million remaining in our board share buyback authorization.

Megan Clarken: Turning to our financial outlook, we have raised our guidance for the year based on our expectations as of today, August 1st, 2024. For 2024, we now expect contribution XTAC to grow 10 to 12% year over year at constant currency with growth in both segments. This is an increase from our prior guidance of high single-digit growth and is a meaningful acceleration compared to our organic growth of 4% in 2023. As a reminder, comparisons to the prior year become tougher as we progress through the year.

Speaker Change: Turning to our financial outlook, we write we have raised our guidance for the year based on our expectations as of today August <unk> 2024.

Speaker Change: Despite macro uncertainties, we enter the second half of the year in a position of strength and confidence to deliver double digit growth with continued margin expansion.

Speaker Change: The 'twenty 'twenty four we now expect contribution ex Tac to grow 10% to 12% year over year at constant currency with growth in both segments.

Megan Clarken: In retail media, given our year-to-date performance, we are confident in our ability to deliver contribution ex-tac growth of 20% to 22% at constant currency in 2024. This is an increase from our initial guidance of approximately 20% and includes the impact of our largest client transitioning demand to a direct sales model as previously communicated. We have also raised our adjusted EBITDA margin from 31% to 32% for 2024.

Megan Clarken: This reflects our confidence in operating leverage from top-line growth, strong expense management, and a transformation of our operating model as we continue to invest in areas of growth. For 2024, we expect a normalized tax rate of 25% to 30%.

Megan Clarken: Lastly, we expect a free cash flow conversion rate of approximately 45% of adjusted EBITDA before any non-recurring items. For Q3 2024, we expect contribution XTAC of $264 million to $268 million. While this is recent news, we expect to retain more third-party signals, and we continue to advance our addressability strategy, including Privacy Sandbox APIs. In closing, we have strong conviction in our strategy and resilient business model. We are well positioned for continued success, and we are committed to maximizing shareholder value. To ask a question, please press star, then 1. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Potential loss of signal in crime would have a smaller financial impact than previously communicated.

Speaker Change: In closing we have strong conviction in our strategy and resilient business model. We are well positioned for continued success and we are committed to maximizing shareholder value.

Speaker Change: The future is wide open for pretty young.

Speaker Change: With that I'll hand, it over to the operator to begin the Q&A session.

Megan Clarken: To withdraw your question, press star, then 2. At this time, we will pause to assemble our roster. The comparison to AT&T that you mentioned, I think it's important to say that because we're close with the Google team, we have it straight from the top of that team that the objective in user choice design is going to emphasize clarity for the consumer trade-off between opting in or opting out, as well as take a fair and balanced approach to that messaging.

Speaker Change: To ask a question. Please press Star then one if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question Press Star then two at this time, we will pause to assemble our roster.

Yigal <unk>: Your first question comes from Yigal <unk> with Citi. Please go ahead.

Yigal <unk>: Hey, guys good morning.

I guess it was the the Google announcement, we will start with with cookies and Youre, giving the color.

Speaker Change: Helpful to understand that.

Speaker Change: Second will also be less and that's going to have a less of an impact on.

Speaker Change: On the revenue.

Speaker Change: But can you just maybe talk through your expectations for how this evolves.

Megan Clarken: So, what I do think will be different this time around is that the language that consumers are addressed with and the way that they're educated should be more favorable, focusing on the Microsoft partnership on the retail media side a little bit. You know, understanding that it's not going to have a material impact in 2024. If you could help us maybe, the Ecosystem of Retailers, which is... Not an alternative, but a supplement to or a way to not have to buy across Amazon in a retail environment. This is it.

Speaker Change: Some easier has.

Speaker Change: It's the fastest growing.

Speaker Change: Medium digital medium that there is today and if you look out a few years.

Speaker Change: The numbers.

Speaker Change: It continues to be that way.

Speaker Change: And it takes things it takes.

Speaker Change: <unk> like this.

Speaker Change: To bring that to life.

Microsoft: This is this is Microsoft.

Speaker Change: Identifying a player who is.

Speaker Change: But the work and that we have and as well leading to trust with their clients.

Speaker Change: Past their supply clients across the <unk> platform and that's that's that's trust that they've given us enough not towards the need to consolidate.

Speaker Change: The ecosystem.

Speaker Change: And we don't take that lightly and we don't take that for granted we have to nurture those clients as well, but bringing.

Speaker Change: A.

Speaker Change: Network of retailers onto <unk>.

Megan Clarken: This is other retailers coming to life and having a compelling offering for advertisers. So we're very excited about this move. And we can give you more color on what this means from a financial perspective as we get sort of closer to the implementation of the product set and the client, and then for 2025. Thank you so much. Your next question comes from Mark Kelley with Steve... Great, thanks very much. Good morning, everyone.

Todd Parsons: I want to go back to the cookie deprecation stuff really quick, but maybe first a clarifying question. Todd, when you said... Yeah, so we would say favorable to both. I mean, I think my reflection on ATT was that the prompt to consumers, advertisers, and publishers, which are all helped by that. Okay, all right, perfect.

Todd Parsons: Thank you for clarifying that. You know, you already have a big footprint. You're bringing on this Microsoft supply. You know, when you take a step back and look at it, you're adding incremental supply. I guess, are there any obvious end markets or geographies, or I guess, you know, where is the next component of the retail media opportunity in your view? Thank you. Good question, good question, but an easy one. The actual stack or the, I called it a flywheel earlier on. It is a flywheel.

Megan Clarken: So by having both the demand and, you know, sort of sandwiching the retail media offering on the supply at the bottom and demand at the top, and then building out capability through the center that our retailers can continue to enjoy and can feed us back the things that they need to continue to bring scale or have the opportunity to bring scale into their assets is also something that we're leaning into. And those two things together, if supply attracts demand, and demand, you've got a lot of demand coming in and it's looking for supply, and supply is sort of building out because it's getting scaled, you're getting geo-footprints, you're getting, you know, as I've talked about, other clients, some of our clients who are doing more and new things with their advertising format, all of this thing is just a creation of a flywheel that just drives more supply and more demand.

Megan Clarken: So for us, we're focusing on making sure that that wheel is moving, and we're contributing to that wheel as we see momentum, which we're seeing, and also that we're helping our clients who are on the supply side, the retailers, get scaled, because right now, in some pockets, it is still nascent, they are still trying to work out how this works, they are still trying to grow, and there's no doubt that they are growing, but this is all the momentum that we're building, and it comes with, you know, these sorts of announcements, huge demand coming at us, more supply coming at us, more capabilities being offered to the supply side, this flywheel being built up that starts to move faster and faster, and that's exactly what we're doing here at Criteo. Does this change your long-term strategy for retargeting?

Your long term strategy for re targeting obviously, when you look at and talk to retailers they love the product.

Megan Clarken: Obviously, when you look at and talk to retailers, they love the product, but in the new world of different identity providers and solutions, as well as having some of the legacy still available, it seems like it's as hard to step away as ever from this business. How are you kind of thinking more strategically about putting some of the changes in place or, you know, just give us some sense of how you're thinking?

Speaker Change: But in the new World.

Speaker Change: No different identity providers and solutions.

Speaker Change: As well as having some of the legacy.

Speaker Change: I'll available it seems like it's hard to step away as ever from this business. How are you kind of thinking just more strategically about putting some of the changes.

In place or just give us some sense for how you're thinking and then just on tax you executed very well.

Megan Clarken: And then just on TAC, you executed very well, coming in 8% below what the street, I think, was expecting. What were the drivers here, and do you expect that momentum to continue? Thanks. Okay, good. Thank you.

Speaker Change: Coming in April O, 8% below what the street was expecting what were the drivers here and do you expect that momentum to continue.

Megan Clarken: Thanks, Brian. Let me take the first one for the beginning of it, and then I'm going to hand it over to Todd for some more detail on how he's driving the product roadmap for retargeting. But retargeting, for us, or the entire... Retargeting is part of the entire performance portfolio, with commerce audiences coming across the top, for instance. And the fact that our clients now are using both of those tactics is just testament to how well they work together and how sticky that entire targeting environment up and down the funnel from a performance perspective has become. I think it's now 80% of clients are now moving their money between the retargeting capability or tactic and the commerce audience tactic. And I say tactic because both of them serve slightly different purposes.

Megan Clarken: Their objective is the same, but the way that they work and go about getting that objective is slightly different. And our clients want to be able to do both at different times for different reasons.

Todd Parsons: If you think about the performance-minded buyer, which, of course, everything we do is focused on performance. But if you think about the traditional performance-minded buyer, we're now supporting all of their performance activities within the budgets that they control. Retargeting is just one of those tactics, and it's nothing for us to run away from.

Todd Parsons: It's something for us to preserve as much as we possibly can so those budgets can spend and get the performance that they've always gotten from Criteo. The way that we have approached that from a product roadmap perspective is through our multi-pronged addressability strategy, expanding from the open auction, open RTV, into social environments where we're able to get new reach and still maintain performance expectations for our partners. And, of course, we'll continue to do that, Mark.

Todd Parsons: So our goal for retargeting is to provide as much retargeting reach as possible for our customers while maintaining their performance. And we're not going to stop emphasizing that as a goal, but, as Megan said, it is important to point out that we're servicing two different tactics in addition to that these days. So, Brian, retention is something we've talked about before. We've talked about customer acquisition and the fast growth of our commerce audiences. And so those things together really help de-emphasize retargeting for being what it is, a single tactic in the performance mix.

Operator: And I apologize, Brian, we couldn't hear the second part of your question. Oh, sure. Sorry.

Operator: Just about TAC. You obviously outperformed on your TAC. Yeah. And then, you know, how sustainable are those improvements in TAC? If you just give us some of the drivers there, thanks.

Megan Clarken: I mean, generally speaking, I'll answer that as well. Generally speaking, and I think we've talked about this quite a bit before, we are doing more with direct supply, which has been part of the company's lineage for a long time. And we're doing more with supply path optimization with our indirect supply partners. So what you're seeing coming through is a combination of those two things.

Megan Clarken: And of course, you know, we're excited to produce Upside in our ability to acquire traffic Doug Anmuth with J.P. and work with them to migrate across to the Criteo platform. Again, we don't take this one for granted because we have to understand, we have to fill in any gaps that might be caused by moving from one platform to the other. They don't all look the same.

Speaker Change: Up and running or do you feel like you're in a good place and not much more like incremental investment is needed.

Max: Second on Commerce, Max I mean, it's been almost a year since its launch and it sounds like you've had some pretty good client wins, they're just taking a step back can you provide an update on how this has been progressing relative to your initial expectations. Thanks.

Speaker Change: Yeah, Hi, Tony good to hear from you.

Speaker Change: Thanks for the questions.

Max: On the Microsoft.

Speaker Change: To start with especially yes, it's very exciting news for us and a fantastic project for us to get.

Speaker Change: <unk> been too.

Speaker Change: There's not a lot of investment in here. So if you can imagine.

Max: But from the demand side, you know Microsoft Woods.

Max: Mike.

Megan Clarken: So in there, there may be some incremental investment to make sure that we're giving that client base what they need to make that transition smooth. But from an overall standpoint, there's nothing here that's being built. We're not reproducing anything or building anything from scratch. It's a migration, and it's the welcoming of Microsoft's advertising client base. On the Mac side of the house, You know, this has been terrific in terms of having it. There are two sides to Max. Remember, one side is that Max is the gateway, if you like, the pathway for agencies to get access to our retail media networks. So they're buying them through Max.

Max: Networks, so they are buying through mix.

Max: And.

Speaker Change: That buying all that demand grew $150 million through Max's fitness for the second consecutive quarter. So this is multi year partnerships that we have with agencies, who are just increasing that spend is that commentary Max to get access to the retail our retail media inventory.

Speaker Change: So we're extremely happy with that.

Speaker Change: Agencies are doing a terrific job.

Speaker Change: Working with us on that front.

Megan Clarken: On the other side of MAX, which is what we call off-site, it is early innings for off-site or the use of off-site as an advertising vehicle for retailers everywhere, like in terms of retailers using off-site to extend their advertising campaigns with their brands out across the open internet. I'm just curious, if you think about the roadblocks or what's preventing more volume from coming from the agencies, I'm just curious how much of that was caused by bottlenecks, is just breaking agencies' spend from their existing DSP relationships and getting that sort of funneled to you versus, Hey, Mark. I'll take the first one, then.

Max: The other side of Max switches.

Speaker Change: They won't be called upsides.

Speaker Change: It is early innings for off site or the use of off site as our advertising vehicle for retailers.

Speaker Change: It's early innings.

Speaker Change: Everywhere.

Speaker Change: Relationships and getting that sort of funnel to you versus the variability that we hear from.

Speaker Change: Agencies ourselves in terms of just.

Speaker Change: How yeah.

Speaker Change: Retail media networks in general are set to accept or buys and how they take their inventory just a lot of variability at a you know aside from the fragmentation that that we hear.

Speaker Change: That would be helpful. Thanks.

Megan Clarken: Obviously, we stay incredibly close to Google as well as to the CMA and many partners who are and have been supportive of the Privacy Sandbox rollout. What I can say about timing is that, across the board, things are very much in the discovery phase. Google is solicitous of our feedback. We work a lot with them to help inform how they might think through presenting user choice, and that work has just begun. The same is true with the CMA. The CMA has been directly solicitous of our feedback, and we have given it to them in the same way.

Speaker Change: Hey, Mark I'll take the first one and then obviously, but we stay incredibly close to to Google.

Speaker Change: As well as to the CMA and many partners, who are and have been supportive of.

Megan Clarken: So, I would say it's still early to talk about timing, and it will be a process to get that right. But it's clear that there's thoughtfulness around it. So, to your point about business disruption, we don't expect any business disruption from this, and of course, we'll make sure that in our closeness with all those parties that we're always working to continue making sure there is no disruption. Firstly, again, you know, the ecosystem has got to find its feet in terms of the tools that it uses to get access to, and we feel like we're in a terrific position with MACS.

Megan Clarken: I mean, we're getting so much closer to the agencies who, as I said, put $150 million through MACS for the second consecutive quarter, and we expect that we'll just continue to see them increasing their presence there. One of the things we know, I think everybody knows, is that, As we just continue to bring tools to market that tick the boxes with retailers, and we've brought some terrific talent into Criteo over the last 12 months that are helping us understand exactly what it is that we need to put together for retailers, these bridges have been sort of, you know, brought closer and closer together, and our relationships with agencies are only getting stronger.

Speaker Change: And and become very strong partners with them and we're building out tools that are getting done what they need to get closer to us. So this is a bridge that's coming together.

Speaker Change: Talk before about.

Speaker Change: The SKU based buying tool that we've just put in place which enables.

Speaker Change: And agency to buy multiple retailers through Max.

Speaker Change: Where.

Speaker Change: Where the brand is actually appearing across those those retailers sort of same product across multiple retailers through one.

Speaker Change: One product one access point.

Megan Clarken: So we're really excited about what's in front of us here and the collaboration that we have with agencies now and going forward. And maybe a quick question for Todd: outside of retail media where you can absorb first-party data, do you see any alternative IDs that are at scale now, and how much would be enough third-party cookie inventory to model off of to sort of sustain your signal in retargeting? Hey Richard, thanks for that. Good, all good questions from everyone.

Speaker Change: Inventory to model off of to sort of sustain your signal in retargeting.

Megan Clarken: The performance question is too early to tell. I think we covered that earlier on. It relies a lot on, as you know, how Google sets this thing up and their timing, and we maintain where we are for 24, but 25 is a little hard to read until we get closer to exactly what it is that they're doing.

Speaker Change: Hey, Richard Thanks for that good all good questions.

Speaker Change: Hi, everyone.

Speaker Change: The the performance question, it's too early to tell I think we covered that earlier on I realize a lot of them as you know how Google set this thing up and their timing.

Speaker Change: We maintain will be out for 'twenty, four but 25 is a little hard to read until we get closer to two.

Speaker Change: Exactly what it is that they're doing on the on the shuffle internally.

Megan Clarken: So on the shuffle internally, there's nothing too much to read into that, but let me just say a couple of things. Firstly, you know, I'm very much a believer in having a team of extremely strong professionals who can do a lot of things, and when we need things done, we need to shuffle people around to do them quickly and effectively and efficiently. And so that's one of the objectives of changing the landscape a little bit to make sure that we've got, you know, accountability and drive throughout the organization.

Speaker Change: Nothing too much to read into that but let me just say a couple of things.

Speaker Change: Firstly I'm very much believed before having a.

Megan Clarken: I also think it's just a sign, you should read it also as a sign of, you know, just high performing professionals at Criteo who I want to stretch and give a challenge to. But also the last thing I'll say on that one is that you've read something here into the move around and it's close to what I said in the opening remarks around. The power of what Todd's doing from a base, a Criteo base of performance, and the tools that we have access to, the data that we have access to, the AI that sits on top, and now you can hear our excitement about the opportunity that Microsoft's AI capabilities can bring to us as we learn from them, all of this creates this foundation of which performance media and retail media sits on top of, and the two are very strong together, and I want to be able to exploit that and make sure that both sides of our business are really benefiting from the power of that core, the power of our addressability, the power of our performance, and that we bring that out to our clients, and so I just have to move the team around internally.

Speaker Change: In that business are really benefiting from the power of that pour the power about address the ability of the power of outperformance and that we bring that out to our clients and so I just had to move.

Speaker Change: The team around and satellite there, they're athletes and and I expect that the team move around to make sure that we can deliver and we can do that quickly and effectively and that's that's what that was all about.

Megan Clarken: They're athletes, and I expect that the team will move around to make sure that we can deliver and we can do that quickly and effectively, and that's what that was all about. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: Yeah, No I cannot Richard how are you.

Speaker Change: I can answer the second piece I mean, I think first of all alternative Ids, we at least those that are tied to deterministic data. We don't see the scale of not the scale that that a company like us who would need to be successful into.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].