Criteo S.A. (CRTO) on Q1 2021 Results - Earnings Call Transcript

Operator: Good morning and welcome to Criteo's First Quarter 2021 Earnings Call. All participants will be in listen-only mode. . After the prepared remarks, there will be an opportunity to ask questions. . Please note this event is being recorded. I would now like to turn the conference over to Edouard Lassalle, SVP, Market Relations and Capital Markets. Please go ahead. Edouard Lassalle: Thank you Cap. Good morning everyone and welcome to Criteo's fiscal 2021 earnings call. We hope you’re all keeping safe and well. Joining me on the call today CEO Megan Clarken; and CFO Sarah Glickman are going to share some prepared remarks. After these remarks, Todd Parsons; the Chief Product Officer and Geoffroy Martin, General Manager of our Growth Portfolio will join us for the Q&A Session. Megan Clarken: Thanks, Ed, and good morning, everyone. And thank you all for joining us today. I hope everybody is doing well and staying safe. On our end, I have to say we feel good today. We had a strong start to 2021 and have already achieved a number of solid things and year of return to growth for Criteo. In particular, we’ve seen good momentum across our three priorities of growth, execution and first party data. In Q1, we’ve already returned to growth and good trends in commerce and on-line shopping continues to sustain the growth of our clients business and our own. Our leadership is steadily in place now; the teams are aligned and focused on steady fruitful execution to ads recent market development highlight the need for the industry to grow its focus on first-party data validating the strategic importance of our owned first party media network. In short, our market opportunity is big, our strategic priorities are clear and our execution is strong. All of this supports our commerce media platform vision that I’ll talk you through on our past two earnings call. Today, I’m looking at 2021 so far. I’m feeling very good about the momentum around that vision coming to life. Together with Sarah, we’ll discuss three topics on our call today. First, the value of our comments media platform, what it brings to the market. Second, how our steady and thoughtful delivery across our three priorities of growth, execution and first party data is driving momentum in our business. And third, what drove out over performance against guidance in Q1, and what this means for Q2 and our 2021 growth momentum. Sarah Glickman: Thanks, Megan. And yes, it's exciting to see our momentum unfold. Good morning everyone. I'll discuss the operating and financial drivers of our Q1 performance and I'll share our financial outlook for Q2 in 2021. Let me start with headline numbers. Revenue grew 7% in Q1 or 4% at constant currency to $541 million. We beat guidance for revenue ex-TAC and adjusted EBITDA due to our over performance across retargeting and our new solution. On a non-GAAP basis, revenue ex-TAC was $213 million, up 4% or half a percent at constant currency and $13 million above our expectation. Adjusted EBITDA of $76 million up 21% in constant currency drove our 36% margin. This resulted in adjusted diluted EPS of $0.67, and free cash flow of $64 million representing 84% of adjusted EBITDA. Even with Q1 seasonal uplift in cash collections this was the highest level for 21 quarters. We estimate that the COVID impact incremental to early 2020 was a negative $18 million, or about nine points of year-over-year growth. Excluding this estimated incremental COVID impact, our revenue ex-TAC grew close to 9%. Incremental identity and privacy impacts drove a $5 million reduction in revenue ex-TAC and our revenue ex-TAC margin was 39% of revenue down 150 basis points year-on-year in line with expectations due to the evolving product mix of our business and our go-to-market strategies. Our performance was strong across Criteo’s entire business. Revenue ex-TAC growth was over four points above our guidance and improved about seven points compared to the rate in Q4. We continue to operate Criteo as a single operating segment. To provide additional transparency, we have disaggregated revenue and revenue ex-TAC to show both marketing solutions and retail media. Marketing Solutions revenue ex-TAC declined 5% compared to Q1 2020 largely related to an estimated $18 million impact from COVID. Close to 90% of this impact was in travel. Excluding this estimated incremental impact marketing solutions revenue ex-TAC was up 4% driven by better performance in retargeting across all regions and audience targeting growth of 14%. Growth in omni channel product accelerated to over 150% due to continued strong demand in retail. In Q1, retail media grew 122% on a revenue ex-TAC basis, driven by strong momentum across existing clients, and the on-boarding of new retailers and brands. And overall, our new solutions across Criteo including retail media grew 60% to 21% of total revenue ex-TAC. For our existing client business, same client revenue ex-TAC growth of 3% improved four points relative to Q4. In marketing solutions, our retail business went up 9% this quarter. Both metrics highlight the healthy momentum underlying our core business continuing into Q2 2021 and our new solutions traction. Moving to our regional momentum, revenue ex-TAC in the Americas grew 6% or 8% at constant currency, improving 13 points of growth compared to Q4 driven by retail retargeting, audience targeting and strong momentum of retail media with large retailers and brands. In Europe, EMEA revenue ex-TAC grew 5% on a reported basis, but declined 2% in constant currency driven by continued weakness in travel offset by retail new business and strong traction in retail media, in particular in our preferred sales offering. Revenue ex-TAC in AsiaPac declined 2% or 5% at constant currency, improving by over 12 points compared to Q4. This was driven by a still depressed travel vertical and an improving classifieds business still down year-on-year offset by the return to growth of our retail business, in particular in Japan and Korea. We added over 120 net new clients in Q1 as commercial momentum built on across all solutions. Over 75% of these new live clients related to related to retargeting with about 25% up sold to new solutions campaigns as well. Our client metric which is a lagging indicator, counting all clients that have been live with us over the preceding 12 months in Q1 reflected the annualized impact of client shown that peaked in Q2 2020 when COVID started to impact the global economy. We continue to invest in growth while wisely managing the expense base. We are seeing returns from our investments in our commerce media platform, including expansion of our retail media sales team, and product and R&D investments in our first party media network and related infrastructure, contextual advertising, video, CTV and commerce insights. Our G&A costs increased, as we have also scaled up the back office capabilities and tools to support new products. Our growth investments are largely funded through productivity and cost savings, enabling top line leverage as we commercialize new products and capabilities. In Q1, non-GAAP expenses were $137 million down 8% at constant currency. Non-GAAP OpEx reduced by $8 million, or 8% at constant currency declining minus 13%, before the impact of our growing stock price on social charges. On that same basis, we reduced employee cost by $7 million, or 12%, at constant currency after investing in R&D, products and retail media. We continue to work with strategic partners to accelerate innovation and expand our capabilities, particularly in contextual advertising, retail media and the build out of our first party media network. These partnerships are reflected in the evolution of our R&D OpEx line. As you can see in our non-GAAP reconciliation, we incurred just shy of $12 million of pre-tax restructuring and transformation costs largely related to real estate and severance costs. We anticipate expenses of $20 million to $25 million in pretax restructuring costs in 2021 split between real estate portfolio reductions and employee severance. Moving down our P&L, our D&A expenses reduced 9% and share based compensation expense declined 7%. This combined with our business performance and good cost management drove a 44% increase in income from operations and a 43% increase in net income, reflecting strap financial expenses and a 30% GAAP effective tax rate. Our weighted average diluted share count was $64 million up 3% as a result of our increasing stock price over the period. Diluted EPS was $0.35 up 40% and adjusted diluted EPS was $0.67 up 29%. Our strong cash generation and cash position continue to provide ample flexibility for execution. Our free cash flow grew 41% to $64 million in Q1 2021 reflecting strong cash collection offset by payout of the 2020 bonus and some restructuring payments. In Q1, we purchased approximately $5 million worth of shares as part of our new $100 million share buyback program. Our balance sheet continues to be very strong as we close Q1 with $566 million in cash and marketable securities. We look to maintain flexibility in our capital allocation to pursue organic and potentially inorganic investments and have an active M&A pipeline focused on our growth areas. As of March 31, we had total financial liquidity of around a billion dollars, providing strong flexibility for investments, as well as enabling the execution of our $100 million dollar share repurchase over time. In the quarter, we repurchased 150,000 shares and average cost of $32.87. I'll now provide our guidance and business outlook for Q2 2021, which reflects our expectations as of today, May 5. This guidance reflects our views of secular trend sustaining in e-commerce expected to for expectations for more retail reopening coupled with muted global economic growth and slower than expected recovery of the travel vertical. We continue to monitor the impact of iOS 14 changes over the coming weeks and months. As we head into Q2, we continue to see good traction in our commerce media platform with continued strength in retail, strong momentum in retail media and solid growth across our new solutions. We do not anticipate any significant rebound in the travel vertical given extended lock downs. We do expect growth and retargeting in Q2, partly driven by the favorable comp in retail and classified from the trough of the COVID impact in Q2 last year. As we had a very strong content Q2 2020 that was helped by COVID, we expect our retail media business to grow in the high 30s. Taking all of this into consideration, we're guiding for revenue ex-TAC in Q2 of approximately $280 million, or about 14% growth at constant currency. This includes $11 million of incremental identity and privacy impacts relative to the 2020 run rate. On the profitability side, we expect Q2 adjusted EBITDA of approximately $16 million and anticipate expenses to increase low single digit year-over-year of constant currency after increased investments in our growth areas. For fiscal 2021, we maintain our guidance of mid-single digit growth in revenue ex-TAC at constant currency, and an adjusted EBITDA margin above 30% of revenue ex- TAC. We refined our assumption on incremental identity and privacy impacts to $55 million in 2021 relative to the 2020 run rate, mostly as a result of the later than expected release of Apple's ATT in iOS 14. Based on a great start to 2021, I'm happy with the way we're executing on fostering profitable growth and operational excellence. In closing, I want to thank our customers and our Criteo’s for the steady momentum our business is enjoying powered by disciplined execution and strong lasting commerce trends. We are laser focused on our transformation, and our plans to offer the world's leading commerce media platform. We work to drive sustainable and profitable growth and create long term value for our shareholders. As a female CFO, I'm also very proud to work for a company that ensures gender pay parity. We are looking forward to hosting you all on our June 3 investor day. On this day, we will share our views and our opportunities and more insights on our strategy and provide you an opportunity to meet our team. We will not be sharing a formal financial outlook. We are committed to continue to share our updates with you on our transformation, new solutions, and on crime mitigation as our strategy and product launches evolved going into 2022. We'll be pleased to see you all online there. And with that, I'll now open up to your questions. Operator: Thank you.. And the first question will come from Tim Nollen with Macquarie. Please go ahead. Tim Nollen: Thanks very much. I've got a lot of questions, but I'll keep it to one or two. It looks like your retargeting business, if my basic math is right, was still down in Q1. But you're calling for it to turn positive in Q2. It looks like that is partly on the relatively easy comparison year-over-year. But could you just talk about the trends and retargeting as the year progresses? And when Google Chrome third-party cookies are eliminated and Google focuses on its FLoC system. Does this open up a much bigger opportunity for your retargeting business going into 2022, am I thinking about that the right way? Megan Clarken: Yes, good to hear. Good to hear from you. Let me just direct the traffic here a little bit. I'm going to try to direct the first part of the question in terms of sort of 2021 rule of the retailing business to Sarah, just in terms of trends we're seeing and the market segments come back. But then I want to jump quickly to Todd, I want to utilize the fact that we have Todd and Jeff on the phone. So I want to jump to him pretty quickly to talk about the impact of, of Chrome on the retargeting business. I think that that's an appropriate one for him. Or do you want to just kick this off with..? Sarah Glickman: Yes, yes, absolutely. I mean, your thoughts are right, we were doing very well in retargeting. We're definitely very pleased with Q1. And we see that traction continuing into Q2. And we obviously inspect, expect some impact, actually, from iOS 14, kind of coming into Q2, all good on retail, definitely, on that wave and seem really terrific traction across all regions, and across our customers. So excited to continue that momentum. But I'll hand over to Todd, who can talk more on the other topic. Todd Parsons: Yes, thanks a lot, Sarah. Tim, how are you doing? And I think this is a pretty easy one. The use of any cohorts through Google really presents a great opportunity for us to expand advertising solutions in general, for our client base. You've heard us talk a lot about our product strategy being to future proof the business. And that's a combination approach, where what we're doing, we're will do with Google as we go through testing, to, to get cohorts into our product mix is just one of three things that we're doing to expand our capabilities while we future proof the business. So FLoC is just under way in testing. It's delayed in Europe. FLEDGE looks like it's pushed to the end of 2021. That's the Google solution which most closely approximates retargeting. And we're excited to test both of them. And we're in the queue on FLoC now. And of course, we're very hungry to test FLEDGE. In either case, we'll be building our portfolios of solutions towards taking everything that Google throws at us, as well as developing our first party media network, which will preserve one-to-one targeting and open up other opportunities for us to use our own cohorts. You heard Megan talk about our new contextual solution. In many senses, that is a cohort solution. That's a buying cohort solution applied in a privacy safe way onto the open Internet by URL. So we're already doing cohort marketing in some ways. It's critical, just not cohorts as they relate to Google's proposals. But we're very much in line with from a product perspective to take advantage of those the moment that they are testable. Tim Nollen: Thanks, slipping another question about retail media, please. It looks like you've got very strong growth, a decent amount of which must be coming from new customers. Could you just talk about brand new customers coming on as retail media, customers versus existing? And it's possible to share a number of percentage or number of retailers that are using existing retailers that are using the service? Megan Clarken: Let me direct to Geoff Martin, Geoff Martin, you want to take that? Geoffroy Martin: Yes. Thank you and great production team. Thank you so much. So as Megan has just discussed in, in our prepared statements, we announced a very big deal with Carrefour as you know, in Q1, and we signed six new retailers. Now what's really interesting was our business is we are continuing to gain market share. As a matter of fact, we estimate that the overall retail media market is growing at about 20% CAGR worldwide, excluding Amazon excluding China. And as you heard, we grew at 222% in Q1. So we clearly are gaining market share. And the way we're doing that is by signing new retailers, but also by increasing their share of wallet for existing retailer. And just to share a little bit of data. We already worked with over 50% of the top 25 U.S. retailers that have monetization on site and over 50% of the top 20 EMEA retailers. So when you look at the growth that we are generating it's a combination of again increasing their share of wallet for the existing retailers that we have, signing new retailers and we sign your retailers on a quarterly basis. And also expanding towards new geographies where historically we haven't been present yet, for example, in APAC, and finally addressing a new client types like marketplaces. So that's why we are very excited about the growth prospects of Retail Media. And that's why we are expecting Retail Media to grow around 50% this year. Tim Nollen: Okay, thanks very much. Nice to see the turnaround taking shape. Congrats. Thank you. Geoffroy Martin: Thank you. Megan Clarken: Thanks, Tim. Operator: The next question will come from Dan Salmon with the BMO Capital Markets. Please go ahead. Daniel Salmon: Hi, good morning, everybody. Maybe the first one for Megan and Sarah. You mentioned Japan and Korea as sort of leading the retail response. I'm wondering how much of the recovery in retail that you saw, wondering how much of that may be due to better COVID responses? Because when I look at the impact, from COVID versus privacy headwinds on this quarter, it would suggest that, the privacy headwinds, even being twice as big in the second quarter, it's still really that the COVID comps is the most significant headwind to your top line. Is that still the right way to look at this? And then just second, maybe I'll just have one more time if I can squeeze in for you. Just maybe take us one level, deeper on the contextual solution. We know that first party data from the retailers is a big important part of it. But why is that different from traditional contextual solutions and certain types of lookalike modeling? If you could spend more time on that? Thanks. Megan Clarken: Yes, so I'll start on, on AsiaPac or just on COVID in general. Travel for us is a challenge. And we are seeing, some coming back, but it's obviously a very low base. And that has not come back as quickly as we expected. So Japan is in significant lockdown, and that's impacting, really travel as well as classifieds. So that's for AsiaPac classifieds is a big business. For us in the Americas, travel is a smaller part of our business. Europe, and AsiaPac is a larger part of our business. And they've had more significant lock downs. So we anticipate, we're expecting that travel kind of sluggishness, frankly, to continue throughout the year, we'd love it to come back. But we see that probably being more towards the end of Q4, and 2022. The other comment I'll make on travel is we're seeing a lot of investment, not surprisingly, from travel bureaus, federal government, state government, as well as I would say some free advertising from others. So for us retargeting is, it's going to become after all of that likely towards the end of last year into 2020 to everything else retails doing well. Obviously, opening up the, the, the high streets again, it's something that we're very first -- just starting again in Europe, and then in AsiaPac as well. And Todd? Todd Parsons: And I can I can jump in on the second one, Dan. Great question. The -- our approach is actually very unique. What it draws on is our very large store of, of offline transactional data and product data across our network of advertisers. So the way to think about it is that our shopper graph, which is a combination of those two things, is a very rich place to create a buying cohort that is anonymously, a group of transactions around a group of products and then to apply that or map that back to media in our network. What that does is it gives us kind of the reverse of what contextual advertising is, is known for mostly today, which is scanning a URL or a piece of content on a URL, and providing or extracting the meaning of that object, and then putting it into a category which is targeted by an advertiser. In the traditional approach, advertisers have to bet that the way that the content is being interpreted is a good place for them to advertise to reach an audience that's interested in whatever the product is. Because we're doing it the opposite way, we're looking at people who buy the Adidas sneaker, as Megan said earlier, across the things that they read, what that does is it not only helps us use a completely unique approach at contextual. But it also helps us find consumers in places that are less likely to be identified by traditional content classification, and made available for targeting. So it's very exciting. It's a new approach. We will be doing this sort of thing with our shopper graph more and more. This is just the first. And I think I just want to emphasize, we are live but we're live in four markets, in the U.S. here in the U.S., in the U.K., France and Germany. And it is the early going, but it's if I had to be honest, it's hard to not be quite excited about what we're seeing thus far. And we think this is going to be a very disruptive innovation for the market. Daniel Salmon: Awesome. Thanks, Todd. And thanks, Sarah. Operator: And the next question is from Doug Anmuth with JPMorgan. Please go ahead. Doug Anmuth: Great, thanks for taking the questions. I wanted to ask about guidance to start just given the 1Q outperformance and then the 2Q guide, looks like for the full year unchanged at mid-single digit growth. And I think that's his privacy headwinds are actually improving relative to three months ago. So just curious if that's all the delay in travel recovery that you mentioned, or if there's something else we should think about. And then just second, related to the Apple iOS 14 changes. Just curious if given your the large network of first party ID and commerce data, just if you're seeing any benefits here in the early days, as advertisers look to other data sources. Thank you. Megan Clarken: Hi, it's great to hear from you. So on financial guidance Q1 was solid, we were executing across the board on our transformation, and Q2 outlook looks very good. So we're really hoping that Q2 kind of ceded all of us. However, H2 becomes a little tougher. And that is, as you said, the privacy identity impacts. So we've assumed $55 million over the next three quarters. And as you recall, we had 16 million for the year. Q2 assumes about $11 million of incremental identity. So we're doing really, really well. We're executing well, certainly in retail and e-commerce. And unfortunately, some of that goodness is kind of sucked up with the privacy impact. On travel, we had, we've assumed a relatively muted kind of recovery, unfortunately, not as significant or as fast as we would like. And I think we've, and we talked a lot about that in last in the last quarter. So I don't want it to overtake all the goodness. But right now, we're just not seeing that come back quickly enough to go to kind of ensure that we can, lock and hold higher returns for the year. Regarding to mid-single digit growth as opposed to low-to-mid single digit growth. And that's really where we're focused is to get to mobile, to exceed expectations, but certainly trending more towards the midpoint at this point, which we're very happy about. And now I'll hand over to Todd, on your other question. Todd Parsons: Yes, I think where you were headed is, have we seen a change in our ability overall to target audiences. I would just say, it's a little early to say because obviously, consumer behavior has to catch up with the ATT, the seven-day window, and we have to, we have to actually get a read on their response rates versus the disappearance of IDs that are not permitted. So far, it's safe to say that the consumer response is a little better than the market has predicted which is positive. But we're not getting ahead of ourselves, to talk about what we see in terms of impact to audience targeting overall until enough time has passed that we can take a new baseline. So more from us on that later, meanwhile, absolutely not sitting still. And waiting to see the contextual solution that I described, for instance, is useful for web and mobile companion properties, as well as for web only. So we're taking an approach of doing some testing there. Obviously there other things we can do with cohorts. And you heard Megan talk about our some of our direct SDK wins, to just get a better direct supply path to the application market despite what was happening with AT&T, ATT rather, it's hard not to say AT&T, by the way, which is crazy. I feel bad for the company. So that's the picture. It's it actually looks pretty good. And we feel like we've got a full slate of options to be running with. It's just a matter of time now. Doug Anmuth: And just when you say consumer response is a little bit better than what the market predicted, you just mean, or very early opt-in rates, or is there something else? Todd Parsons: That's right. That's right. And, I haven't seen I've seen anecdotal data on that important to say we're not quoting any data. But the early return seemed to be in certain markets, slightly higher opt-in rates than were expected. And again, that that is punditry. I'm not sure that anyone has a good read on this and, and would expect, us to get some decent data, a month or two out from now. Doug Anmuth: Got it. That's helpful. Thank you. Todd Parsons: You're welcome. Operator: And the final question today will come from Matt Thornton with Truist Securities. Please go ahead. Matthew Thornton: Good morning, everybody. Thanks for taking the question. Maybe two, if I could. You're coming back to Google. It seems that they're exiting the one-to-one retargeting market, at least away from their owned and operated properties. And so my first question is, does that open up an opportunity for Criteo? And if so, if there's any way to size or dimension, that, and then just secondly, not to beat a dead horse, but maybe Sarah, when we think about the full year, it seems to me that the messaging here is look, one key was better. And yes, ATT is pushed out. So that’s incrementally positive, and it sounds like the only incremental negative we should come away with is travel just isn't kind of coming back maybe as fast as we had hoped. I just want to make sure that I got the messaging right there. Any color will be helpful. Thanks, everyone. Todd Parsons: I can take the first one? That's a great question. And I'm glad you asked it, because we're very excited about the moves that Google is making. We think that there's probably no better time to, for a company with a lot of access to first party data to be in ad tech, to be building a business on the open internet. You have some tectonic shifts working in our favor. And certainly Google, looking more inward on the identity front is one of them. So we're very excited about it. I would say no, no sizing on the on the opportunity to or incremental just yet. But it's safe to say if you look at the way Google reports revenue that is large. Sarah Glickman: Yes, and I can address the second part. I think your reading is right. So we are we feel good across the board on retargeting retail, classifies and travels, kind of creeping up, but nowhere close to where we've lightened to be certainly way below 2019 levels still, and especially travel. And privacy is a bigger impact for the next three quarters. Although what I would say overall is that we feel really good about across the board retargeting is going well, all our new solutions are going well. They're all in the right space, as Todd said, and we're still trending for 50% growth, year-on-year on our new solutions that’s our focus and our target. So I would say we are tracking in the right direction to tougher with privacy impacts. But then, as new product launches, those numbers are small. So we were very excited about contextual whereby I said about our video, but we they're small and they're growing. And so it's hard to reflect, that giant of retargeting, and it's incredibly resilient. We're very happy about it. We continue to reinvest and focus on our clients and help them through their own transformation as they think about the poster, post cookie world as well. So all moving in the right direction, but it's definitely a marathon, not a sprint. Edouard Lassalle: Well, thank you, Sarah, Megan, and team. This now concludes the call for today. We'd like to thank everyone for joining and the IR team is available for any additional follow ups as usual. We wish you all a good day. Thanks. Megan Clarken: Thank you. Operator: The conference has now concluded thank you for attending today's presentation. You may now disconnect.
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Criteo S.A. (NASDAQ:CRTO) Thrives in Competitive Digital Marketing Sector

  • Criteo S.A. (NASDAQ:CRTO) showcases resilience with a monthly gain of approximately 9.19% despite a slight dip in the past 10 days.
  • The company's target price of $48.25 reflects strong confidence from analysts and investors, supported by a growth potential of 172.89% and a perfect Piotroski score of 9.
  • Criteo's success is attributed to its innovative technology-driven advertising solutions, positioning it well in the rapidly growing digital marketing industry.

Criteo S.A. (NASDAQ:CRTO) is a global technology company specializing in digital marketing and advertising. It provides a platform for companies to engage and convert online audiences more effectively. This sector is highly competitive, with major players like Google and Facebook dominating the market. However, Criteo's unique approach and technology have carved out a niche for itself, allowing it to thrive despite the stiff competition.

The company's recent performance, with a monthly gain of approximately 9.19%, showcases its resilience and potential for growth. Although there was a slight dip of about 2.89% in the past 10 days, the overall trend remains positive. This is a testament to Criteo's strong market position and its ability to navigate the challenges within the digital advertising space.

The target price of $48.25 for CRTO reflects the confidence analysts and investors have in the company's future. This optimism is backed by Criteo's ability to achieve a local minimum recently, indicating that its stock price could be at a turning point for a significant rebound. Coupled with its impressive growth potential of 172.89% and a perfect Piotroski score of 9, Criteo stands out as a financially healthy company with robust profitability, leverage, liquidity, and operating efficiency.

Criteo's focus on technology-driven advertising solutions is a key factor in its success. The digital marketing industry is growing rapidly, and companies that offer innovative and effective solutions are well-positioned to benefit. Criteo's high Piotroski score further underscores its financial stability and operational efficiency, making it an attractive investment option for those looking to capitalize on the growth of the digital advertising sector.

Tougher Times For Criteo, Estimates Reduced

Analysts at Berenberg Bank provided their views on Criteo S.A. (NASDAQ:CRTO), reducing their price target to $58.50 from $66 given current tough times for the company, while their buy rating was maintained.

The analysts reduced their revenue estimates due to the company’s withdrawal from the Russian market, which accounts for less than 2% of contribution excluding traffic acquisition costs (CexTAC), and the evidence of softer e-commerce spend, which the analysts believe will impact e-commerce advertising.

The analysts now forecast constant FX growth in fiscal 2022 of 8.8%, below the guidance of 10-12% and their previous forecast of 11.7%. The analysts mentioned that the company remains solidly profitable with robust growth potential even after those challenges.

Criteo Is Undervalued, Berenberg Bank Review

Analysts at Berenberg Bank provided their views on Criteo S.A. (NASDAQ:CRTO), mentioning that the company is well-positioned to weather the deprecation of third-party identifiers, including that which was announced by Google last week, given its evolving business mix and extensive first-party integrations.

According to the analysts, valuation completely fails to reflect this, and they reiterate their Buy rating and a price target of $66 (current stock price is $31.06).

While guidance for 2022 non-GAAP operating expense growth of 16% was higher than anticipated, this should support further top-line acceleration in 2023, according to analysts. Even with this sizeable reinvestment in the business, the analysts believe the company will deliver margins of more than 32%. Given the market will give the company far more credit for top-line expansion than for profitability, the analysts think investing for growth is the right thing to do.