Criteo SA (CRTO) Q3 2024 Earnings Call Highlights: Strong Retail Media Growth and AI-Driven ...

GuruFocus News
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In This Article:

  • Revenue: $459 million for Q3 2024.

  • Contribution ex-TAC: $266 million, with a 9% growth at constant currency.

  • Retail Media Revenue: $61 million, with contribution ex-TAC growth of 23% at constant currency.

  • Performance Media Revenue: $398 million, with contribution ex-TAC growth of 5% at constant currency.

  • Adjusted EBITDA: $82 million, with a margin of 31%.

  • Net Income: $6 million for Q3 2024.

  • Adjusted Diluted EPS: $0.96, up 35% year over year.

  • Operating Cash Flow: $58 million.

  • Free Cash Flow: $39 million.

  • Total Liquidity: $711 million at the end of September.

  • Share Buyback: $157 million repurchased in the first nine months of 2024, with $55 million in Q3.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Criteo SA (NASDAQ:CRTO) reported strong Q3 results with robust top-line growth, achieving a 9% increase in contribution ex-TAC at constant currency.

  • Retail media segment showed significant growth, with a 23% increase in contribution ex-TAC, driven by strong performance in the US, Germany, and the UK.

  • The company successfully doubled its brand count and activated media spend over the past two years, reaching $1.5 billion on a trailing 12-month basis.

  • Criteo SA (NASDAQ:CRTO) continues to expand its global footprint, securing new retail partnerships with major retailers like JCPenney, Office Depot, and Metro AG.

  • The company is leveraging AI-driven performance enhancements, which contributed to a double-digit million range increase in contribution ex-TAC within performance media.

Negative Points

  • Criteo SA (NASDAQ:CRTO) faces challenges with lower adtech services and supply, primarily due to reduced spend from a large adtech client.

  • The company is experiencing some crowding out on supply due to political advertising, affecting retailer spending decisions.

  • There is a noted softness in consumer discretionary categories, with some larger enterprise clients in the US reducing their marketing budgets.

  • The transition of Criteo's largest retailer client to a direct sales model is expected to impact take rates in the future.

  • Criteo SA (NASDAQ:CRTO) is dealing with the impact of foreign currency headwinds, which affected Q3 results by $1 million.

Q & A Highlights

Q: Are there any incremental operating expenses related to the Microsoft progression as you set up to address that demand? Also, what can we expect for retail media take rates following the transition of your largest client to in-house demand? A: (Megan Clarken, CEO) We don't anticipate significant operating expenses as we move clients across from Microsoft. The platform is already in place for this transition. (Sarah Glickman, CFO) Retail media is performing well, with a 29% increase in activated media spend. We expect the transition of our largest client to in-house demand to complete by Q1 2025. While we aren't providing specific guidance for 2025, we anticipate some take rate adjustments as we scale.

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