Q4 2024 Criteo SA Earnings Call
Music
Speaker Change: Good morning and welcome to Criteo's fourth quarter and fiscal year 2024 earnings call.
Speaker Change: 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.
Speaker Change: To ask a question, please press star, then 1. To withdraw your question, please press star, then 2.
Speaker Change: Please note, this event is being recorded. I would now like to turn the conference over to Melanie Dambre, Vice President, Investor Relations. Please go ahead.
Melanie Dambre: Good morning, everyone, and welcome to Crédit Résumé 4th Quarter and Fiscal Year 2020 for Earnings Report.
Melanie Dambre: Joining us on the call today, Chief Executive Officer Megan Clarken and Chief Financial Officer Sarah Glickman are going to share some prepared remarks.
Melanie Dambre: Subperson or Chief Product Officer will join us for the Q&A session.
Melanie Dambre: As usual, you will find our investor presentation on our investor relations website now, as well as our prepared remarks and transcript after the call.
Melanie Dambre: Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect CREDO's judgments, assumptions, and analysis on the as of today.
Melanie Dambre: Our actual results may differ materially from current expectations based on a number of factors affecting credo's design.
Melanie Dambre: Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today.
Melanie Dambre: 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 FCC.
Melanie Dambre: We will also discuss non-gap measures of our performance. Definitions and reconciliations to the most directly comparable gap metrics are included in our earnings release published today.
Melanie Dambre: Finally, unless otherwise stated, all growth comparisons made during this fall are against the same period in the prior year.
With that, let me now hand it over to Megan.
Megan Clarken: Thanks, Melanie. And good morning, everyone. Thank you for joining us today.
Megan Clarken: As we enter 2025, I'm thrilled that Michael Komosinski will be stepping in as our new CEO. I'm confident that he's the right leader to take the reins and continue to execute against Criteo's vision and the exciting journey ahead.
Megan Clarken: With over 20 years of ad tech expertise and a proven track record of driving accelerated growth and AI-driven innovation all at scale, Michael brings a sharp focus on execution and agility to keep building on the momentum we've created.
Megan Clarken: You'll officially join us on February 15th, and for my part, I remain deeply passionate about this company and its future, and I'll be available to ensure a seamless transition.
Megan Clarken: Looking back at the past five years, I'm incredibly proud of what we've accomplished together, from a single product retargeting solution, which was in decline, to a multifunctional platform addressing ad tech needs in the fastest growing sector of advertising commerce media.
Megan Clarken: Our momentum is evident as we continue to deliver strong results, with 2024 being our best year to date.
Megan Clarken: We've become the platform of choice for the buying and selling of communist media with promising prospects for the future.
We've come a long way from that point solution business.
Megan Clarken: It's been an incredible journey and as I pass the bathroom, I do so with excitement for what I know that Criteo can achieve.
Megan Clarken: Let me start off by sharing our top level results for 2024.
Megan Clarken: Our high saving ratio and strong execution have translated into double-digit growth for the third consecutive year, while also expanding our adjusted EBITDA margin for the second consecutive year.
Megan Clarken: These record results reflect the outstanding work of our teams who are driving us forward every day.
Megan Clarken: A highlight for us was the shift of our top-line mix, where we racked up 2024 with our retail media business exceeding $250 million in revenue.
Megan Clarken: We bolstered our position as the leading independent retail media ad tech provider and continued to gain market share in 2024.
with a remarkable 31% year-over-year growth in media spend.
Megan Clarken: which translated to above 1.5 billion dollars. Our momentum keeps building.
Megan Clarken: If I zoom out and focus on Criteo's strategy, we're laser focused on bringing together our most powerful assets.
from our legacy of best-of-breed performance targeting.
Megan Clarken: to our direct access to thousands of websites that attract consumers along their buyer journey.
Megan Clarken: who have privileged access to retailer data and premium inventory, we've developed a commerce media platform that seamlessly consolidates the buying and selling of commerce-focused ads at scale.
Megan Clarken: The flexibility of our platform to extend beyond traditional audience reach and enter ROI and attribution at scale is the promise that Criteo can make.
Megan Clarken: To deliver high ROI optimized attribution measured consistently and to industry standards is our direction, a direction that will propel digital advertising to the next level.
Megan Clarken: Our strategy is focused on ensuring a unified commerce experience which is central to the future of advertising.
Megan Clarken: With two decades of Commerce AI and rich data from our supply and demand side partners, we deliver targeted ads throughout the buyer journey from discovery to purchase.
Our goal is to empower advertisers with full-funnel strategies.
that reach shoppers across multiple channels, optimize performance.
Megan Clarken: and seamlessly integrate first-party data for enhanced personalization and to activate it all through the video commerce media platform.
Megan Clarken: We've successfully elevated and differentiated our positioning in the market and we're proud to have major enterprise clients like Macy's now utilizing all parts of our platform to meet their needs.
Megan Clarken: This includes our demand-side capabilities with Commerce Growth and Commerce Max, and our supply-side solutions through Commerce Grids and Commerce Yield.
Megan Clarken: Our holistic commerce media value proposition, independence, and AI-driven best-in-class performance are our key differentiators.
Megan Clarken: Importantly, our platform value proposition positions us to win with agencies.
which continue to be a strategic channel for us.
Megan Clarken: Our agency business growth outpaced the growth of the rest of our business in 2024, and we expect to accelerate further on this momentum.
Megan Clarken: We're excited to see that our major whole code agencies increasingly leverage our comprehensive commerce media platform as an enterprise play.
Megan Clarken: We're thrilled to announce the recent renewal and expansion of our three-year U.S. partnership with a leading holding agency to now become a global strategic deal leveraging more of our platform's powerful commerce solutions.
Megan Clarken: Our expanding agency relationships are a testament to the value of our strategic focus and industry-leading capabilities.
Megan Clarken: When it comes to retailers, we understand their needs and we're proud that they trust Critio with more ad placements, ad formats, first-party data than ever.
Megan Clarken: As we highlighted during our retail media update, we have a unified offering set up for scale.
Megan Clarken: We've created a supply wheel, meaning the more retailers we partner with, the more brands we attract.
Megan Clarken: Our multifaceted demand strategy helps brands and agencies scale while our modular approach and professional services support retailers' growth in the fastest-growing advertising channel.
Megan Clarken: We recently secured significant new retailer partnerships worldwide as part of our strategic, exciting strategic collaboration with Microsoft Advertising and we're happy to announce five new retailer wins across regions.
Megan Clarken: Those retailers are expected to launch in the first half of 2025.
Megan Clarken: In EMEA, we're thrilled to announce a new partnership with Harrods in the UK, expanding our presence in the luxury department store category.
Megan Clarken: We delivered another quarter with over $150 million in agency spend going through our Commerce Max DST in the U.S. alone, resulting in more than 50% growth with U.S. holding agencies in 2024.
Megan Clarken: Our strength in retail media has been largely driven by our work in powering sponsored ads for our clients. We see this as an on-ramp for newer formats that represent a growing opportunity.
These include display ads, video, and off-site advertising.
Megan Clarken: Retailers benefit most when they take a holistic approach to their media strategy and that's exactly what our platform enables.
Megan Clarken: Most recently, we launched new on-site formats, including display with Albertsons and Giant Eagle, and video ads with Costco and Doogla.
Megan Clarken: We've also been seeing an uptick in the adoption of retail media off-site campaigns where retailers extend their advertising reach across the open web.
Megan Clarken: We have about 30 retailers now participating in this opportunity with Criteo, including the recent addition of one of Europe's leading toy retailers, Dewey Club.
Megan Clarken: Meanwhile, we're pleased to see that 3,500 brands are now leveraging our platform globally to reach shoppers across multiple retailer sites.
In 2024, we added 1,000 brands.
Megan Clarken: which is three times the number of brands we added in 2023.
Megan Clarken: Our retail media business continues to perform well with strong growth and a leading market position. We feel great about our program.
Megan Clarken: Now, turning to performance media, we delivered strong growth in commerce audiences, up 32% this year, while retargeting grew slightly.
Megan Clarken: Retargeting represents 40% of our business as we exited 2024 compared to close to 90% of our top line in early 2020.
Megan Clarken: Today, we're positioned at the forefront of the changes in our industry. We believe we're prepared for any scenario, and we no longer plan our business around the deprecation of third-party cookies.
Megan Clarken: The combination of our advanced AI and unique access to commerce data to achieve high performance outcomes for clients has enabled us to secure more targeting budgets.
Megan Clarken: with a strong track record of delivering the performance our clients demand.
Megan Clarken: We're the ideal partner to execute full final strategies and drive measurable results at every stage of the biojourney. We're encouraged by our recent success in capturing budgets.
from Traditional Open Web Upper Funnel DSP.
Megan Clarken: Our advertisers are seeing benefits when they plan, buy and optimize across multiple channels including open web and social.
Megan Clarken: In Q4, we saw a 45% sequential increase in media spend allocated to our social campaigns as we help our clients and reach with performance.
Megan Clarken: For Facebook and Instagram, we're excited to expand our offering beyond retargeting, enabling advertisers to activate meta-inventory at the SKU level for our commerce audience campaigns in 2025.
Megan Clarken: Our testing for Commerce audiences shows a significant performance uplift with Methodist large-scale inventory and powerful communities.
So we're moving to general availability this quarter.
Megan Clarken: With social proving to be an effective channel for bringing commerce recommendations and experiences to consumers, we plan to expand into more social environments in the future.
Megan Clarken: Our AI innovation fuels our growth and continues to set the stage for our future success in 2024.
Megan Clarken: We saw significant advancements in AI-driven performance as our Criteo AI Lab has continued innovating to optimize campaigns and unlock additional budgets.
Megan Clarken: Cognos Go is our next generation AI powered automation and optimization toolset.
Megan Clarken: It's designed to make campaign creation and management faster and easier and was rolled out in Q4.
Megan Clarken: We're rapidly advancing towards a self-service model to drive scale, enabling clients to launch a campaign in just five clicks.
Megan Clarken: Our clients value the easy setup and are pleased with the results they're getting as our advanced AI automates decisions around audiences, channels, ad formats, and creatives to maximize results.
Megan Clarken: We're off to a great start and very pleased with the activation of hundreds of campaigns with Commerce Go since the beginning of Q4.
Megan Clarken: We've seen great adoption with small clients driving more than half of our Commerzco revenue and this is expected to remain a big area for us in 2025.
Megan Clarken: As CREO enters 2025, we're focused on growing our scale through cross-selling, up-selling and the expansion of our strategic partnerships to fully harness commerce media.
Megan Clarken: We see the ongoing convergence of commerce and advertising as an opportunity to shape the future of advertising by leveraging our massive commerce data, 20 years of AI expertise, and innovative ad formats to drive product discovery, engagement, and sales.
powered by our AI engine.
Megan Clarken: which processes trillions of intent signals. We deliver personalized product recommendations across 5 billion SKUs, enhancing the shopping experience, increasing basket sizes and maximizing sales requirements.
Speaker Change: We're operating from a position of strength with the best competitive position we have ever had.
Speaker Change: We're excited to seize the opportunities ahead and confident in our strategy to drive sustainable, profitable growth and shareholder value. Everything we've achieved has been a true team effort driven by our talented criteos and valued clients.
Speaker Change: And I personally want to express my deepest gratitude to our investors for your unwavering support. The foundation we've built is stronger than ever, and with Michael at the helm, I believe Criteo is well positioned for continued growth and success.
Speaker Change: With that, I'll turn the call over to Sarah, who will provide more details on our financial results and our outlook.
Sarah Glickman: Thank you, Megan, and good morning, everyone. We delivered record results in 2024 with double-digit growth, significant margin expansion, and strong cash flow generation.
Starting with our financial highlights for 2024.
Sarah Glickman: Revenue was $1.9 billion and Contribution X Tax grew by 11% at constant currency.
reaching over 1.1 billion dollars.
Sarah Glickman: In retail media, revenue was $258 million and contribution x-tax was $254 million, up 25% year-over-year at Ponson Currency as we continue to expand with our retailers, brands and agency partners.
Sarah Glickman: In performance media, revenue was $1.7 billion and contribution x-tax was $868 million, up 8% at constant currency.
Sarah Glickman: This includes 32% growth in commerce audiences due to clients' continued strong adoption of our AI-powered targeting solution and a 2% increase in retargeting over last year.
Please see the complete disclaimer at https://sites.google.com
We delivered a strong adjusted epidermal margin of 35%.
Sarah Glickman: at 500 basis points year-over-year driven by operating leverage enabled by top-line growth and greater operational productivity where we continue to invest in fueling our future growth.
Sarah Glickman: We delivered free cash flow of $182 million, up 65% year-over-year. This represents 47% of adjusted EBITDA.
Sarah Glickman: Our adjusted net income increased 40% year-over-year to $268 million, and adjusted EPS was up 44% to $4.57 in 2024.
Sarah Glickman: Turning to our fourth quarter performance, revenue was $553 million and contribution excess was $334 million. This includes a year-over-year headwind from foreign currencies of $5 million, mainly reflecting the weakening of the Euro against the U.S. dollar.
Sarah Glickman: A constant currency Q4 Contribution X-Tax grew by 7%, primarily driven by a 23% growth in retail media.
Sarah Glickman: Performance media was up 3% year-over-year with commerce audience targeting up 15% year-over-year and 75% on a two-year stack basis.
Sarah Glickman: Partially offset by lower retargeting and ad tech services and supply down 2% and 4% respectively.
Sarah Glickman: After a slower start to the quarter, retargeting went back to growth in December.
Sarah Glickman: Overall, we have continued to benefit from a broad and diverse client base and high client retention of close to 90 percent.
Sarah Glickman: As mentioned during our investor event in November, we saw trends normalize after the U.S. election, and our team performed exceptionally well during their holiday season.
Sarah Glickman: This follows a temporary distortion in the advertising market caused by the political advertising cycle. As a reminder, Critio, as a commerce media platform, has no political advertising funds.
Sarah Glickman: Turning to our business segment, in retail media, revenue was $92 million, and contribution x-tax grew 23% at constant currency to $90 million, on top of 29% growth last year.
Sarah Glickman: Our growth was driven by continued strength in retail media on-site and an uptick in off-site campaigns.
Sarah Glickman: Growth from existing clients was strong, with same retailer contribution XTAC retention at 126%, driven by multi-year contracts and exclusive partnerships with most of our retailer clients.
Sarah Glickman: We've had another exceptional holiday season and saw advertising spend grow in all categories during the traditional Cyber 6P.
Sarah Glickman: During Cyber 6, media spend grew 37% for our 10 largest retailers, and the number of brands advertising across our network increased by close to 20% compared to last year.
Sarah Glickman: Given our outsized performance during the holiday period, late in the quarter we benefited from higher fees for achieving annual volume thresholds.
Sarah Glickman: Of three and a half thousand global brands, including the addition of 400 new brands in Q4, are prioritizing retail media as a key channel for their investments to reach relevant audiences and sell more products.
Sarah Glickman: We also experience significant momentum with agencies through our multi-year partnerships with agency health codes.
Sarah Glickman: In performance media, revenue was $461 million and contribution XTAC was $244 million, up 3% of constant currency. We had a successful Cyber Week and saw sustained momentum throughout December, which has continued into the beginning of this year.
Sarah Glickman: We benefited from our latest AI-driven performance optimization, which drove a Contribution X-TAC uplift in the double-digit million range again this quarter.
Sarah Glickman: Some end markets did incredibly well, while others experienced a more challenging backdrop.
Sarah Glickman: Travel remains our fastest-growing vertical, up an impressive 46%, followed by classified and retail.
Sarah Glickman: Within retail, fashion was down 1%, offset by solid trends in categories such as consumer electronics and hobby and leisure.
Sarah Glickman: We delivered strong growth in commerce audiences up 15% with over 80% of our media spend from clients using both commerce audiences and retargeting to reach consumers across the entire buyer journey.
Sarah Glickman: We also saw some budget shifts to broader campaigns, resulting in lower retargeting and higher commerce audiences.
Sarah Glickman: Lastly, Ad Tech Services was down 4%, a significant sequential improvement following a dip in performance in Q3.
Sarah Glickman: reflecting proactive actions we have taken to mitigate the impact of reduced spending by a major ad tech client in our media trading marketplace.
Sarah Glickman: We delivered an adjusted EBITDA of $144 million in Q4 2024. NUMGAP operating expenses increased 12% driven by planned growth investment, partially offset by our continued focus on productivity, a slower pace of hiring for investment roles, lower bad day expense due to strong cash collection, and lower than expected social charges for our RSUs.
Sarah Glickman: lower due to a foreign exchange rate benefit on a euro-based cost.
Sarah Glickman: Moving down the P&L, depreciation and amortization increased by 11% in Q4 2024, and share-based compensation expense was $22 million, including $4 million related to shares granted to Ipomweb's founder.
Our income from operations
Sarah Glickman: was $95 million in Q4 2024 and our net income was $72 million up 16% year over year.
Sarah Glickman: Our weighted average diluted share count was $57.6 million. This resulted in diluted earnings per share of $1.23.
Sarah Glickman: Our adjusted diluted EPS was $1.75 in Q4 2024, up 15% year-over-year.
Sarah Glickman: We cancelled a total of 3.6 million shares in 2024, including 1.4 million shares cancelled in Q4.
Sarah Glickman: We benefit from a strong financial position with solid cash generation and no long-term debt.
We had about...
Sarah Glickman: $782 million in total liquidity as of the end of December, which gives us significant financial flexibility to execute our growth and capital allocation strategy.
Sarah Glickman: We generated strong free cash flow of $182 million in 2024, up 65% year-over-year, including $146 million in the fourth quarter.
Sarah Glickman: We continue to have a disciplined and balanced capital allocation strategy.
Sarah Glickman: and Value Enhancing Acquisitions and to return capital to shareholders via our Shared Buyback Program.
Sarah Glickman: In 2024, we deployed a record $225 million of capital, or 124% of our free cash flow for the year for share repurchases.
Sarah Glickman: This included six million shares we purchased at an average cost of $37.60 per share.
Sarah Glickman: As of December 31st, 2024, there was $44 million remaining under the current authorized share repurchase program. And we shared this morning that the board increased our remaining share buyback authorization to up to $200 million.
Sarah Glickman: Our capital allocation strategy demonstrates our confidence in our business strategy, financial strength and our ongoing commitment to enhance shareholder value.
Sarah Glickman: Turning to our financial outlook, which reflects our expectations as of today, February the 5th, 2025.
Sarah Glickman: For 2025, we expect Contribution XTAC to grow mid-single digits at constant currency with growth in each of our segments.
Sarah Glickman: We are confident in our guidance, to which we anticipate potential upside depending on the progress of key initiatives and new capabilities, integration of partnerships and ramping of newer client relationships.
Sarah Glickman: We will keep you abreast of our trajectory as we report throughout the year.
Sarah Glickman: We estimate forex changes to drive a negative year-over-year impact of about $15 million to $20 million on contribution ex-tax for the full year.
Sarah Glickman: In retail media, we expect to continue to grow rapidly from a scaled $250 million revenue base. We expect media spend to grow faster than the market as we anticipate further share gains.
We forecast 20-22% growth in Contribution XTAC at Constant Currency.
Sarah Glickman: We have deep integration with retailers and our retail media playbook is expected to drive durable growth and scale across our network.
Sarah Glickman: As you know, we successfully completed the transition of our largest client to a direct sales model in 2024, and our 2025 guidance reflects the remaining impact until we fully lap the gradual transition in the later part of the year.
Sarah Glickman: We expect continued strong momentum across our client base and look forward to ramping up our partnerships with Microsoft advertising retailers.
Sarah Glickman: We expect Contribution X-TAC to grow low single digits for performance media as we anticipate continued traction in our suite of solutions to drive performance for advertisers throughout the buyer journey, from product discovery to purchase, despite lapping significant AI-driven performance enhancements from 2024.
Sarah Glickman: We're excited about our platform innovation and look forward to ramping up commerce go over the course of the year while continuing to see benefits from our AI driven optimization focused on expanding client bank budgets and gaining share and scale by driving superior outcomes.
Sarah Glickman: We continue to review our disclosures to ensure they align with how we operate our business, our go-to-market strategy, and as we enter the next chapter in our transformation.
Sarah Glickman: We no longer plan our business around the deprecation of third-party cookies.
Sarah Glickman: This, along with over 80% of client budgets now leveraging multiple solutions throughout the buyer journey, means that we will no longer isolate the retargeting tactic when discussing our financial performance going forward.
Sarah Glickman: We are disciplined in strategically allocating our resources to higher growth areas while enabling productivity and cost efficiencies.
Sarah Glickman: In 2025, we are investing in high ROI initiatives that are incremental to our commerce media platform, enabling both scale of media spend and optimization of our operating model.
Sarah Glickman: Overall, we anticipate an adjusted EBITDA margin of approximately 33% to 34% for 2025.
Sarah Glickman: This reflects disciplined cost management while investing for the future growth of our commerce media platform, including scaling retail media capabilities and continued investments in AI innovation and performance.
Sarah Glickman: It also includes the cost of a company-wide internal event plan for Q2, representing one percentage point of adjusted EBITDA margin.
Sarah Glickman: This is a high ROI investment in our team and at an ideal time with Michael joining as our new CEO and as Critio celebrates its 20th anniversary as a company.
Sarah Glickman: As demonstrated in previous years, we prioritize high-return investments that lead to strong growth enabling margin expansion. We anticipate that the investments we are making this year will position us for continued top-line growth and strong cash flow generation for the coming years.
Sarah Glickman: We expect a normalized tax rate of 22% to 27% under current rules.
Sarah Glickman: Consistent with prior years, our overall capex is expected to be between $90 million and $100 million as we continue to invest and optimize our leading AI infrastructure.
Sarah Glickman: We expect a free cash flow conversion rate of about 45% of adjusted EBITDA before any non-recurring items. And for modeling purposes, we assume a flat number of shares outstanding in 2025.
Sarah Glickman: We're off to a solid start in January. For Q1 2025, we expect contribution x-tax $256 million to $260 million, growing up 3% to 5% of constant currency.
Sarah Glickman: At the midpoint, this represents growth of 21% on a two-year stack basis.
Sarah Glickman: We are lapping a tougher comparison in Q1 2024, as the prior year period included the benefits of Leap Day and an earlier Easter, which accounted for 2 percentage points of
Sarah Glickman: in Q1 2024 and won't repeat this year, as well as significant AI-driven performance enhancement.
Sarah Glickman: We estimate 4X changes to drive a negative year-over-year impact of about $5 million to $7 million on contribution X-TAC in Q1. We expect adjusted EBITDA between $68 million and $72 million in a seasonally low quarter.
Thank you. Bye.
Operator, do we have any calls coming in?
Speaker Change: Yes, thank you ladies and gentlemen. We will now begin the question and answer. To ask a question, please press the star then 1. If you are using a speakerphone, please pick up your handset before pressing the keys.
Sarah Glickman: To withdraw your question, please press star, then two. At this time, we will pause to assemble our roster.
Speaker Change: The first question comes from Igor Aronian of Citi. Please go ahead.
Igor Aronian: Hey, good morning, Tim. Sorry, I want to double-check. Michael's on the call, right?
for Q&A.
No, he's not.
He's not with us yet, February 15th.
All right, great. So, well, Megan.
Igor Aronian: Congrats on your accomplishments here at Criteo. Good luck on your retirement and next steps from here. We'll miss you here. And so, as you exit, just a bigger picture retail media question.
Igor Aronian: on just maybe what the surprises were in 4Q on the strengths and then
Speaker Change: Yeah, let me do this in a couple of ways. I'll open it up for any big picture and actually I'll pass it across to Todd to talk about the sorts of things he's hearing in the marketplace around retail media.
Speaker Change: because it's hot as you know and then any color financially, I'll pass it to Sarah.
Speaker Change: The client base that we have, the size of those clients that feel very secure to us given the work that we're doing with them.
Speaker Change: the competitive drop-off meaning the lack of competitors that we've seen in the marketplace compared to when we started this.
Speaker Change: It is to get there. So when I talk about the five-year, four-year story here.
Speaker Change: That's how far ahead we are, and so for companies wanting to move into the space, they have to catch up. We were delighted to be asked by Microsoft last year to basically
Speaker Change: partnered with them for their retail media play because they wanted to focus on other things.
So... Thank you. Bye bye.
Speaker Change: You know, I feel terrific. Michael feels terrific. The entire company is leaning into this opportunity, as is our clients.
Speaker Change: And we're hearing more and more in the marketplace about the opportunity that is retail media and not just what it is today, but what it will be tomorrow as it really sort of embraces what it has to offer with scale. And the last thing I'll say, because I'll give this to Todd, is...
I talked a lot in the opening remarks about
The
Speaker Change: The holistic view of advertising with retailers being a big part of that.
and Criteo's ability to provide precision, performance, ROI, attribution.
Speaker Change: Yeah, I can add to that, Egal. Nice to hear from you. I think there are only a couple of points to make in addition. One, we are tracking very well with our agency and large brand spend relationships.
Speaker Change: As I think everyone knows, our relationships with the holding companies and agencies are relatively new, and they're beginning to bear fruit as we gain share and momentum with each of those partnerships.
Speaker Change: In the course of managing those partnerships, we have several different product solutions which give
Speaker Change: Demand paths for gross media spend to increase over time. Obviously, we have Commerce Max, which is growing.
We also have...
begun to gain traction with
Speaker Change: our Commerce Grid solution, which serves the agency's other choices of DSPs.
Megan Clarken: So, a combination of our product mix and our relationships is really putting a bloom on gross media spend overall, and we're set up for handsome growth as the years unfold ahead of us, as Megan said.
And I can just take the financial questions.
Megan Clarken: For the Cyber 6 we, you know, we grew across our largest retailers. We saw the number of brands advertising going up 20% year over year. One of the key reasons why we were higher than our expectation was we triggered some higher fees for achieving annual volume thresholds that happened late in the quarter.
Megan Clarken: and that will also slightly benefit the Q1 2025 comp as well.
Megan Clarken: So, just exceptional performance by the team and as we go into 2025, we're in a fantastic positioning. We have a strong growth from the $250 million base.
from 2024.
Megan Clarken: As we talked about in the retail media day, we, you know, we are looking at retail media as a rule of 40 business So we're doing all the things right. We're investing in fueling the future
Megan Clarken: We have continued to sign global whole co-deals. We continue to see spend coming in from other categories into this space. And in terms of the guidance, 20 to 22 percent for 2025.
Megan Clarken: And we represent Laffing a pretty spectacular year, as well as for some of the known changes we made this year with the largest retailer as well.
Don't look.
Megan Clarken: I'm very, very excited where we are, where we're going, and we see this fueling our growth for the foreseeable future.
Speaker Change: Great, got triple answers to that question. I feel a little bit bad asking a follow-up but just um maybe just real brief on on the margin profile and an outlook was there also any
Speaker Change: specific one-time things in 4Q, given how big of a beat that was relative to expectations. And as we think about next year, even with the one-point drag you pointed out, you know, you're well ahead of...
Speaker Change: the margins you set out at the 2022 Investor Day. How do you think about the margin opportunity, growth, and investments? Thanks.
Speaker Change: Yeah, so in terms of the Qport-adjusted EBITDA, which was also a fantastic result, about three million of that came from the top-line outperformance and operational leverage.
Speaker Change: About five million dollars of that is from the week in Euro so you know we as you know have a significant
technology base in in Europe and so we benefited from
from Fx.
Speaker Change: And also, just lower people costs. We had a pretty high ask in terms of incremental investments, in particular in R&D, and just with Q4 and people holding until, I guess, till bonus season and then coming, they are coming more in Q1 versus Q4, so some of that is timing. And also, we had a spectacular traction in our collections processes.
Thank you.
Speaker Change: And then I think you were asking me, did you also ask about 2025?
Speaker Change: Yeah, just how you think about kind of margins, but in a word. I'm taking up a lot of time, so I'll have to make it quick and move on to others. Thank you.
Okay, great. Thank you.
Speaker Change: Thank you. Our next question comes from Mark Kelly of Stifel. Please go ahead.
Speaker Change: Great, thank you very much. And Megan, congrats. Looking forward to hear what you think.
Speaker Change: are going to do in retirement. It's been a pleasure working with you. Two quick questions. One, I would love to hear your thoughts on Amazon Retail Ad Service and just, I guess, the puts and takes.
Speaker Change: you know, as they'd like to maybe try to compete with you a bit more. And then second, on the bid switch, you know, headwinds in Q4, it sounds like you took some actions to kind of
Speaker Change: fix whatever the issue was. Is that something we can expect to go forward or does that large ad tech partner maybe revert back to older behaviors that were a little bit more favorable? Thank you.
Thanks, Mark.
Speaker Change: Firstly, thanks for your comments and I will surely call you and tell you what I get up to in my retirement.
Great question.
Speaker Change: I'm going to hand them off to folks, but let me start with sort of the Amazon one, and I'll take it from a high level and then Todd will dig into that. On the BitSwitch side, you know, we have taken some actions. The business is certainly performing.
Sarah Glickman: It has a better 2025 profile, but I'll pass it across to Sarah to give you some color on that.
Speaker Change: I think they have three clients. It's a very small client based onto their new service. It is a very long tailed play.
Speaker Change: It doesn't focus on our client base in retail media. In retail media, we are...
Speaker Change: More at the top of town, the 225 clients that we have are focused on very specific things. And for the most part, what we hear from our clients is a reluctance to partner with Amazon for services.
because a. they compete against Amazon and b.
There is a notion that if there's another offer available,
Speaker Change: to spread the service around. So not just not have eggs, all eggs in one basket, which is certainly something that our clients, not just on the retail side, but the branding side.
are aware of.
Speaker Change: And so, this one is, you know, all of these things are always worth looking out for, but it really does touch a different part of the market than where we service, and we're going to continue to do what we do at the higher end of the market base that we have.
who told me when I had some trouble.
Speaker Change: I can add a couple of things to that, Mark. Nice to hear from you.
First of all, just to emphasize what Megan said,
Speaker Change: Our product suite is, you know, built with neutrality and interoperability between, you know, the entire landscape of retail media and mine.
Speaker Change: That's directly opposed to Amazon's positioning. So it's challenging for them as Megan said to
Speaker Change: get into the market, especially with data sharing concerns that exist for small retailers and large retailers alike.
Speaker Change: but our neutral position is very important. On top of that, from a product perspective, we take a modular approach in serving retailers.
Of those 225 that are focused today, which.
can be easily ported to the long tail. So.
Speaker Change: The coverage of our product mix, which goes well beyond Amazon's focus on sponsored products here with this offering,
Speaker Change: is important to point out because we are covering the whole page with video and display.
Speaker Change: and sponsored products for our retailers. As I said, that is a portable solution.
Speaker Change: and of course we cover off-site as well so the scope of our solution the fact that we are neutral and the fact that we can take that to different parts of the market as it matures and grows as an opportunity is our option.
Speaker Change: And that is a very good place to be in today relative to what you're seeing from Amazon.
Speaker Change: I can just take on the ad tech services. Yeah, I mean, the biggest challenge for 2024 was, you know, the largest ad tech player.
Speaker Change: training moved basically in-house, if you will. But we've taken a lot of mitigation actions here and.
Speaker Change: We do have many customers, you know, customers within the space that are accelerating, moving into new platforms and formats. We're doing programmatic trading for CTV. So there's been a number of actions in this
Speaker Change: business but ultimately and ultimately we will lack those the knowledge
Speaker Change: Ad Tech Player in 2025. So, the right actions on the top line, but also importantly on the bottom line. So, overall, we look at our entire business as rule of 40. We look at how do we ensure we have the right resources and investments going into the right place.
Speaker Change: and we continue to see a strong operational leverage across all our businesses from the top line to the bottom line.
Very helpful. Thank you very much.
Speaker Change: Thank you. Another question comes from Mr. Mark Skutovic. Please go ahead, sir.
Mark Skutovic: Thank you. Good morning, Megan and Sarah. A really nice upside on the retail media takeaway, at least relative to our expectations. I was just curious,
Speaker Change: How much of that benefit or upside that you saw in fourth quarter was sort of lapping that large client transition?
Speaker Change: that I think you may be lapping here now, and then how meaningful or off-site volumes in terms of driving that take rate relative to on-site efficiencies that you continue to see. Thanks.
Speaker Change: Yeah, I mean, first of all, for the most part, we saw significant growth in on-site sponsors. So that was certainly the area that's our sweet spot, and that's where we saw significant growth. You know, that being said, we also saw ramping up in off-site, but for sure, on-site sponsored is
Speaker Change: where most of the budgets are going and certainly were going during the holiday season. And, you know, we don't comment on specific clients, so I'm not going to give specifics on clients, but we have a blended take rate. And the upside was from two things. One was the
Speaker Change: This is spectacular growth, I would say, across the client base with new clients ramping up.
Speaker Change: And then second, those tiered fees for beating annual thresholds. And as I said, in Americans, we were at 46% media.
Speaker Change: That was good news for us. That will bleed into 2025. We do see a resilient take rate overall.
Speaker Change: looked at some of the comments we took at the retail media event where we talked about a resilient take rate. Our continued assumption is that we have continued strong media spend above market and in particular in America's as well given that's our largest market and that we have
Retail media take rates above the mid-teens.
Thanks, Sarah. And if I could perhaps ask just one
Unrelated question related to Microsoft, just curious how much
Speaker Change: That was contemplated, the contribution there in your either first quarter or annual guide. Thanks.
Speaker Change: Yeah, in terms of overall contribution with Average Summiter, it's baked into the plan for 2025. It's progressing well, and we do see that some retailers will start to launch in the first half, I would say for Q1, likely less or no impact, but ramping up going into the second half.
Great, thanks very much.
Thank you.
Speaker Change: Thank you. Another question comes from Mr. Richard Kramer, Alpharette. Please go ahead, sir.
Thanks very much.
Thanks for being very professionally fortified and not just promotional.
Speaker Change: No sorry Richard we can't hear you so we'll bring you back in.
Speaker Change: Can we maybe go to the next question and then we'll bring Richard back in?
Okay.
Speaker Change: So, our next question comes from Mr. Tom White of the A. Davidson. Please go ahead, sir.
Tom White: Great, thanks. One quick one for Sarah and then a quick one for Megan. I guess just on the guidance, you mentioned potential kind of upside opportunities. I guess after Microsoft and kind of the ramp it up.
You know, sort of the pace of that roll-off.
Tom White: Can you maybe just enumerate maybe one or two things that would be...
Speaker Change: you know, potential meaningful upside drivers in 25. And then, Megan, again, congrats on the retirement. You made comments in the prepared remarks about agencies increasingly viewing Criteo as sort of an enterprise.
Ray Clayton, Sarah Glickman, Melanie Dambre
Speaker Change: to maybe just quickly elaborate on that, what you meant there. Thank you.
Speaker Change: Oh yeah, and Tami, in terms of, well first of all, I would say, you know, Michael's coming in like in the next week.
Speaker Change: and so we do see potential. He's certainly looking for us to have another spectacular year. What's built into our guidance is, I would say,
continued traction across the board.
Speaker Change: seeing the new capabilities on our product road map going into the second half and where we see potential upside.
Speaker Change: would-be places like Commerce Go. We're in beta testing now, and it's been a terrific upstart to move that across the base.
Speaker Change: of our client base. We do see some potential upside on that, but obviously we're not at that stage yet. And we do have a lot of
Speaker Change: five going into 2026. And obviously, there's a lot of focus on velocity and ensuring that those updates come in as quickly as they can, but they take time to build right.
Speaker Change: a view of CREO, which gives them three paths for them to get into the commerce media space and to retail media.
Sarah just mentioned Go as being a very promising
Speaker Change: very automated view of that world that competes with Advantage Plus.
and Performance Max, which are increasingly getting taken up.
by agencies.
Speaker Change: And then, of course, we have Commerce Grid, which is our SSP offering that will service the DSP of choice.
Speaker Change: If it isn't Commerce Max and the agency, all of which is to say that we can be seen as an enterprise level partner and are being seen that way with agencies in many ways like Google, but incredibly focused on commerce.
Thank you for watching.
That answers the question. I like it.
Hi.
Thank you. We now have...
OK.
Speaker Change: We now have Richard Kramer from Auret Research. Let's go ahead, sir.
Can you hear me now?
Yes. Yes.
Speaker Change: Okay, sorry about that. Equipment failure. Megan, thank you for being refreshingly forthright and not just promotional in your communication over the years. I guess my question for you is given the comments on the agencies and the two-year contracts
Speaker Change: When you leave now, what sort of portion of a 2025 budget or forecast is now broadly covered?
Speaker Change: for the for the start of the year and sort of what sort of visibility do you have in the business relative to a few years ago and I have a follow-up for Todd, you know, Megan mentioned the meta with respect to partnerships and and recently your code was seen in ads TXT files at Pinterest and
Speaker Change: Can you speak to sort of what specific competitive edge you would get, whether it's in performance or margins, of getting access to much wider pools of inventory and all these social inventory alongside the retailer or website inventory you've got in retail media? Thanks.
Sarah Glickman: Thanks, Richard. Let me just start with this one. And then because it's about financial planning, I think I'm going to pass it across to Sarah. But we have a pretty rigorous process in terms of how we get to our plan every year. It's a top-down, bottom-up process. We look client by client. We look at client contracts that run across the year and those that need renewing through the year. We look at opportunities. We look at
Thank you very much.
Sarah Glickman: The ROI that we attribute to investments made in the prior year or years.
Sarah Glickman: or anything that is an investment that is being made that will roll out in the current year.
Sarah Glickman: We're a business like any other business that does their financial planning for the year and we try to get as much insight into those numbers as we possibly can and of course weigh up sort of the risks and opportunities on the way through. That's me at a sort of...
Sarah Glickman: CEO highlight, we'll throw it to Sarah for a bit more color.
Yeah, well...
Speaker Change: I think you've actually said it, a lot of the agreements are signs. Obviously then we have to focus on the spend coming in. What we did see in Q4.
Speaker Change: was that we continue to see Sven coming into retail media and reading other...
Speaker Change: Sarah Glickman, Melanie Dambre, Sarah Glickman, Melanie Dambre, Sarah Glickman, Melanie Dambre,
Speaker Change: It is based client-by-client, with growth rates kind of associated year-on-year.
Speaker Change: We also know expectations for our clients and what they want, so it is a detailed plan. We have, I would say, baked into that.
Speaker Change: All the known clients, an expectation of new clients coming in, ramp up of new capability.
and the next.
Maybe some, I would say.
Speaker Change: Some degree of caution knowing that every single quarter, and every single year, we just have business and business happens and there are some puts and takes within that, and that
Speaker Change: also gets factored in. So we feel good about, very confident about the overall guidance for
Speaker Change: for Criteo. In terms of retail media, we had a spectacular year this year, including Q4, so it's certainly, I would say, a tougher budget for retail media, with a lot of things that need to get right in terms of new capabilities, the Microsoft partnership, etc.
you know, could be potential upside to that as well.
Speaker Change: Richard, nice to hear from you. On the question about meta and social in general
I just want to go back to the fact that
Speaker Change: It continues to be our objective to help retail and direct selling clients to meet
consumers, customers, their customers, where they are.
Speaker Change: and where they're most likely to discover new products, consider them, and buy them through the buyer journey. So that continues to be the mantra.
Speaker Change: The promise that we're making product-wise is not just to do that, but importantly to be able to hold performance outcomes constant across those channels.
Speaker Change: in a way that makes it much easier for a buyer to get what they want, which is an acquired customer that has a higher lifetime value to get their product discovered for the first time. And so what we're doing is making sure that we're not just reaching new channels.
Speaker Change: But we are making sure that they perform at a constant rate relative to one another, or we reallocate dynamically budgets across them. So that's the competitive advantage that we have.
Speaker Change: It's not just a channel play, it's an outcomes play across channels, and that's very unique to our company.
Okay, thanks, Todd.
Thanks, Megan. You bet. Thank you.
Speaker Change: Thank you. Our final question will be coming from Mr. Brian Tietz of BMO Capital Markets. Please go ahead.
internal strategic initiatives? Can you provide additional insights there?
Speaker Change: and also I think you had 30 retailers leveraging retail media off-site campaigns. Any sense on the spend you see from these clients versus those not using off-site and what you need to do to drive more clients to these off-site campaigns? Thank you.
It really relates to the traction on all those initiatives.
Speaker Change: and obviously with Michael coming in we are laser focused working with him to ensure that we execute on those. So the upside is that we you know we want to have another great year of growth of another three years of double-digit growth.
Speaker Change: And we will be highly focused on ensuring that those initiatives all come to market and successfully launch as traction in terms of adoption as well.
Speaker Change: I would just add to that, Brian, I mentioned before, you know, we're covering the entire buyer journey with our capabilities off-site.
Speaker Change: is a channel for retailers, which can be cheap reach. Otherwise, there are partners that buy it.
Speaker Change: aren't going to be that interested in it over time, so...
Speaker Change: that they're providing their brand partners with something that isn't cheap reach, that's an effective way to either find new buyers for a product that they're stocking.
Speaker Change: or driving traffic that is considering those products off-site and being able to attach those KPIs very clearly to a purchasing event or a set of purchasing events so that incrementality is achieved.
Speaker Change: And that is incredibly important. In terms of growing the channel, that's going to be about how each retailer sits in their maturity and how their packaging.
Speaker Change: their wares, their data, their audiences, and their inventory for brands that are buying with their networks. So we look at it more holistically than we look at it as simply off-site versus on-site. This is very much a dynamic that we're built to serve all, not one.
Great, thank you. Thank you, again.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.