Criteo 101
Investor Presentation March 2018
2 •
This presentation contains “forward-looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, projections, competitive position, industry environment, potential growth opportunities, potential market opportunities and the effects of competition.
Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation. You should read the Company’s most recent Annual Report on Form 10-K filed on March 1, 2018, including the Risk Factors set forth therein and the exhibits thereto, completely and with the understanding that our actual future resultsmay be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
This presentation includes certain non-GAAP financial measures as defined by SEC rules. As required by Regulation G, we have provided a reconciliation of those measures to the most directly comparable GAAP measures, which is available in the Appendix slides.
Safe harbor statement
3 •
Stock information and key financials
Ticker: CRTO
Stock Exchange: NASDAQ Global Market
CUSIP: 226718104
Shares outstanding: 66.1M
Stock Ownership*:
* On a fully-diluted basis, as of Dec 31, 2017, based on 73.7M fully diluted shares. ** At constant currency
• 2017 Financials
• Revenue: $2,297M, +27% at cc**
• Revenue ex-TAC: $941M, +29% at cc
• Adjusted EBITDA: $310M, +35% at cc
• Adj. EBITDA margin: 33% of Revenue ex-TAC
Free float, 84.7%
Founders, NEOs,
Management & Employees,
13.1%
Idinvest & Yahoo! Japan, 2.2%
4 •
A global company with scale
User identifiers matched in the
Criteo Shopper Graph
Clients
Countries
Sales transactions analyzed in 2017
Ads served in 2017
Criteos in R&D, tech & business intelligence
Employees
Offices worldwide
5 •
Management team
Jean-Baptiste
Rudelle
Executive Chairman
and Co-Founder, 48
K-Mobile, Lucent,
Roland Berger
Eric Eichmann
Chief Executive
Officer, 50
Living Social,
Rosetta Stone,
McKinsey & Co.
Dan Teodosiu
Chief Technology
Officer, 51
Google, Microsoft,
Hewlett-Packard
Mollie Spilman
Chief Operating
Officer, 50
Millenial Media,
Yahoo!,
Advertising.com,
Time Warner
Benoit Fouilland
Chief Financial
Officer, 53
SAP,
Business Objects
Jonathan
Opdyke
Chief Strategy
Officer, 41
HookLogic, Xerox,
Beyond Interactive
Tom Aurelio
Executive Vice
President, Human
Resources, 52
Priceline, GE,
Symantec,
CheerNetworks
Patrick Wyatt
Senior Vice
President Product
Management, 35
Yahoo!, Estin & Co.
6 •
Build the highest performing and open Commerce Marketing
Ecosystem
Connect shoppers to the things they
need and love
Deliver performance at scale to
participating retailers and brands
Our vision
7 •
Commerce marketing is deeply rooted in our DNA
Technology Performance
Scale Global Presence
8 •
We are an enabler and a pioneer
We brought
performance-based
personalized
marketing
to display in 2008
We have since pioneered the industry in many ways…2008First CPC model in display
Real-time
Creative
OptimizationAOV Optimizer
Privacy by Design
Exchange
Universal
Match
Apple-compliant
solutionTravel Segments in Engine
Conversion Rate
Optimizer
4.5B products imported
from merchants everyday
TO
P!
Daily RTB: 55bn bid
requests,1.2bn wins
Product Category level
CPC bidding
600 T
B of Data analyzed
everyday
Largest Hadoop
cluster in Europe
Dynamic product banners
Engine Optimized Segments
Pa
ss
ba
ck
Sizeless
creatives
On
eta
gApp Deep linking
Unique User
Value Prediction
Mobile Ad Formats
App advertising
Native Ads
Adaptive
Revenue
Optimizer
Kin
eti
c
Desig
n
Dynamic
Ads
Dir
ec
t
Bid
de
r
Identity Graph
Interest Map
9 •
Measurable performance is what we care about
2,800 employees focus on client sales and profits as key metrics of success
CPC
model
Transparent
performance
information in
24/7 client
interface
Constant
optimization
of campaigns
Continuous
tracking
of sales
Established
post-click
attribution
Maximize
Client Sales
Client Service TeamsR&D and Product Teams
10 •
We have built a large network with powerful effects
1.2B+individual shoppers
matched
18,000commerce and
brand clients
Thousandsof publishers
Machine-learning
technology
11 •
Three key assets support our Commerce Marketing Ecosystem
Commerce
Data
& Shopper
Graph
Consumer
Reach
17,000+ Retailers
& Commerce ~1,000Brands
1,000’sDirect publishers
6xShopper
Engagement*
$600B+
Annual online sales
1.2B+
Individual shoppers matched
in our Shopper Graph
Brand
Funding
$29B
Annual post-click sales
Mass
Personalization
Technology
* Our average click-through rate, or the ratio of clicks generated by our
advertisements over the number of advertising impressions we
purchased ("CTR"), was over 0.84% in 2017, which represents a factor
of over six times the average click-through rate on Standard Media of
0.14%, as measured by the DoubleClick display benchmark tool for
March-April 2017.
12 •
We are a global company
Campaigns in countries
offices in countries
nationalities
Boston2012
Barcelona2014
Tokyo 2011
Singapore 2013
São Paulo 2011
Shanghai 2016
Palo Alto2009
New York 2011
Chicago2012
London2008
Madrid 2014
Paris2005
Stockholm 2010
Milan 2012
Munich 2010
Amsterdam2011
Beijing 2013
Seoul 2010
Sydney 2011
Dubai2015
Moscow 2014
San Francisco2014
Osaka 2014
Los Angeles2015
Miami2015
Istanbul2015
Toronto2015
New Delhi2016
Grenoble2014
Ann Arbor2016
Market and Trends
14 •
Web and mobile have changed shopping behavior
of shoppers
showroom
and webroom
shoppers visit 2+
retailer sites when
shopping online
of commerce
transactions
involve mobile
15 •
Success factors have changed for retailers – and brands
Shopper Data
• Mass scale
• Granularity
• Real-time accessibility
Activation of Data
• Predictive technology
• Real-time dynamic optimization
• Reach at scale
• Great real estate
• Merchandising
YESTERDAY TODAY
16 •
Data-driven marketing is critical for retailers – and brands
Technology / AI
Media
Brands
Others
Others
Others
Granular shopper information at massive scale
Partial, fragmented, unstructured
view of the shopper
Data Others
Offline
Online
17 •
Commerce Marketing is quickly emerging as the next big marketing category
Centers on inspiring
people to buy things
Measured by
performance –
directly driving
sales and profits
Not limited to digital
18 •
Commerce marketing is our core business
Criteo’s original technology was a product recommendation engine for retail
This engine formed the basis of Criteo Dynamic Retargeting
Primarily applied to online commerce: retail, travel and classifieds
Expanding to include data cooperative across retailers to build an omni-retailer solution
Extending to include offline data for a full omni-channel solution
We are the leader in Commerce Marketing.
Commerce Marketing focuses on inspiring people to buy things and is measured by performance, directly driving sales and profits for marketers.
The Criteo Commerce Marketing Ecosystem
21 •
The building blocks of the Criteo Commerce Marketing Ecosystem
Privacy by Design
Product Recommendation Predictive Bidding Kinetic DesignCriteo Engine
Identity Graph Interest Map Measurement NetworkCriteo
Shopper GraphCommerce Data
Product
Portfolio
Criteo
Customer
Acquisition BETA
Criteo
Dynamic
Retargeting
Criteo
Audience
Match BETA
Criteo
Sponsored
Products
Publisher
Network
Direct Integration Indirect Integration
Client
Platform24/7 Client Management Center
Media Retailers Real-Time Bidding Platforms
Privacy by Design
Criteo Shopper Graph
23 •
Criteo Shopper Graph: Massive shopping data fuels our Commerce Marketing ecosystem
Three trusted data collectives
form the Criteo Shopper Graph
Carefully designed using our guiding principles
Two-way exchange of data
Highest data security and privacy
Clear and permission-based usage
Value gained exceeds contribution
24 •
Identity Graph: matching of cross device, same device, and online/offline
Criteo’s advantages
• Over 13,000 participating clients
• 3.7B+ identifiers matched and growing
• Global coverage
• +10% average uplift
Open, transparent, secure, fair
• Encrypted and double-hashed personal
identifiable information (PII)
• Access at no additional cost
Participation
• Opt-in by sending hashed identifiers
via OneTag or App Events SDK
25 •
Interest Map: shopper interest across products
Criteo’s advantages
• Access to 4.5B+ products
• Large consumer reach worldwide
• Understand performance of
product attributes
Open, transparent, secure, fair
• Data isolated unless opt-in
• All data anonymized
• No free riders
• Contribution capped at 15% of pool
• Access at no additional cost
Participation
• Opt-in to share anonymized data
• Opt-out to use client data only
26 •
Measurement Network: conversion and sales across retailers
Criteo’s advantages
• SKU-level sales attribution for
brands across retailers
• Deterministic measurement
• Nearly 100 participating retailers
Open, transparent, secure, fair
• All retailer data anonymized
Participation
• When clients work with us, data within
and across retailers is aggregated
Criteo Engine
28 •
Our Engine solves highly complex problems in real time
Creates
Product
Recommendation
Personalized creative
Unique user value
predictionClient 2
Client 3
Client 4
Client 5
For each user
Internal advertiser
auction
Publisher/platform bid
Custom ad serving
Less than 100ms to perform the entire process
>40,000 ads served/sec600,000+ RTB bids/sec
Client 1
Creates
Product
Recommendation
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
predictionCreates
Product
Recommendation
Personalized creative
Unique user value
prediction
29 •
Product Recommendation accurately recommends the best offer
✓ Campaign goal
✓ Visitor’s site navigation
✓ Recency and frequency of activity
✓ Product type, price, and category
✓ Most viewed products on Uniqlo’s site
✓ And much more...
The Criteo Engine recommends
products based on:
Products
we show John
John browses
“Bomber Jacket”
on Uniqlo’s site
30 •
Predictive Bidding determines the right ad opportunities
7:45 AM 8:00 AM 9:00 AM 12:30 PM 6:00 PM 9:00 PM 11:30 PM
The right bid for the right placement at the right time
User context Publisher interactionProduct behavior
31 •
Kinetic Design delivers perfectly branded ads, optimized for every user
Publisher Network
33 •
Publisher Network
Media
Direct Integration
Retailers Real-time Bidding Platforms
Indirect Integration
Client Platform
35 •
Client Management Center
• Real-time monitoring and
optimization of marketing efforts
• Insights on performance and
budget
• Granular reporting and attribution
across all products in the client’s
product catalog
Product Portfolio
37 •
Benefits
• Drives maximum ROI with a performance-based acquisition model
• Increases conversions of relevant new customers
• Generates significant new revenue
What it does
• Determines ideal new customer profile
• Identifies new customers based on defined threshold
• Predicts best places and products to convert
Used by leading retailers
Availability:
• Q4 2017 – fashion clients in 4 key markets
• Q1 2018 – all retail clients in 10 key markets
Criteo Customer Acquisition BETA
38 •
How does Criteo Customer Acquisition work?
Shoppers with the
highest scores are
targeted with
personalized ads
featuring the given
retailer’s products
to drive sales
Each prospective
customer is assigned
a unique score across
all participating
retailers based on the
ideal customers, that
show the likelihood to
convert for a given
retailer
New prospective
customers within
the Criteo
Shopper Graph
get isolated
Participating retailers
share aggregated
shopping and browsing
events with the Interest
Map, which covers
4.5B products and
browsing habits of
1.2B+ monthly
shoppers, to qualify
new customers
7
1
6
5
39 •
• Connects across web, mobile, social, and video with relevance
• Drives traffic from store-to-web1 and web-to-store1
• Optimizes campaigns to goals with continuous machine-learning
• Increases mobile app install1 and engagement
Used by leading retailers
Criteo Dynamic Retargeting
1 In testing
40 •
Benefits
• Drives sales by re-engaging existing shoppers
• Brings qualified traffic to a retailer’s site
What it does
• Delivers personalized ads to drive engaged traffic to a retailer’s
online store
Used by leading retailers
Availability:
• All markets except for Japan
Criteo Audience Match BETA
41 •
How does Criteo Audience Match work?
CRM data, e.g. from
customer in-store
loyalty programs, is
“onboarded” into the
Identity Graph
During onboarding,
the CRM data is
matched with users
already in the
Identity Graph
Online campaigns with
specific objectives re-
engage those CRM
customers that were
already found online
42 •
Audience Match supports diverse campaign objectives
Top Sellers Offline to Online Loyalty
Upsell New product offers Cross-Sell Upgrade
Seasonal
Lapsed
shoppers
Offline
Buyers
Loyalty
Card
Holders
Audiences that
may soon
churn
Bundle
Offer
Best
Candidates for
Buying
Targeted
Cross-Sell
Audiences
likely to
upgrade
Seasonal
Buyers
43 •
• Brand manufacturers sponsor native ads across web and app
on their retailers’ online stores
• Shoppers are retained in the retailer store to buy
• Drives sales for brand manufacturers and retailers
Participating brands
Criteo Sponsored Products
44 •
How does Criteo Sponsored Products work?
John searches for
“coffee makers” on a
retailer’s website
John’s search triggers
sponsored ads on
retailer site
John’s click on
sponsored ad leads
to product page
Measurable sales on
retailer site
Business Model
All our products are performance based.
We deliver measurable sales and
profits for commerce and brand clients.
47 •
Dynamic Retargeting revenue model
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = CPM x impressions
Revenue ex TAC = Revenues – TAC
Revenue ex-TAC margin: Approx. 40%
48 •
Predicting the right bid for the highest value client
Client 4
We take CPC bids
from clients
Clients
$0.30 x 0.95% = $2.85
We convert those bids into
pCPM (predicted CPM)
CPC x CTR = pCPM
(predicted CPM)Publishers
$0.50 x 0.75% = $3.75
$0.40 x 0.61% = $2.44
$0.80 x 0.45% = $3.60
$2.00
Clearing Price
(CPM)
Highest bidder
Bid = CPC pCTR pCR pAOV
Client 1
Client 2
Client 3
We buy
inventory from
publishers in
real time
CPM = Cost per Thousand impressions, CTR = Click-through rate, CR = Conversion rate, AOV = Average Order Value
49 •
Customer Acquisition revenue model
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = CPM x impressions
Revenue ex TAC = Revenues – TAC
Revenue ex-TAC margin: Approx. 40%
50 •
Audience Match revenue model
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = CPM x impressions
Revenue ex TAC = Revenues – TAC
Revenue ex-TAC margin: Approx. 40%
51 •
Revenue = Clicks x CPC
Traffic Acquisition Cost (TAC) = Revenue share with Retailer
Revenue ex TAC = Revenue – TAC
Revenue ex-TAC margin = 26%-28%
Sponsored Products revenue model
52 •
Our business model has unique attributes
Differentiated in Marketing
Attractive Direct
Sticky Elastic Demand
84%Direct relationships
with clients2
910Net client additions
per quarter1
~90%Client retention rate3
77%Of Revenue ex-TAC
from uncapped budgets4
1 On average over the last four quarters through Q4 20172 Last twelve months to Q4 2017; Excluding Criteo Sponsored Products3 On average over the last 25 quarters through Q4 2017; All products included4 On average over the last four quarters through Q4 2017. Excluding Criteo Sponsored Products. Represents uncapped budgets of our clients, which are either contractually uncapped or so large that the budget constraint does not restrict ad buys
53 •
Our existing clients consistently increase their spend with us
Excluding Criteo Sponsored Products.
This client cohort analysis tracks the quarterly spend of clients since inception of their relationship with Criteo.
Average revenue per client cohort (quarterly)
Number of
quarters$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Q1-13 Q2-13
Q3-13 Q4-13
Q1-14 Q2-14
Q3-14 Q4-14
Q1-15 Q2-15
Q3-15 Q4-15
Q1-16 Q2-16
Q3-16 Q4-16
Q1-17 Q2-17
Q3-17 Q4-17
Client cohorts
54 •
As a result, a large portion of our business is recurring
2013 2014 2015 2016 2017
Existing clients New clients
88%
89%
90%
90%
92%
Revenue per client type
Includes Criteo Dynamic Retargeting, Criteo Customer AcquisitionBETA, Criteo Audience MatchBETA and Criteo Sponsored Products.
Existing clients in a given year are clients that started working with Criteo prior to that given year.
New clients in a given year are clients that started working with Criteo within that given year.
Clients
56 •
Direct relationships with many premium commerce companies and brand manufacturers
* 18,118 clients at the end of Q4 2017
over 18,000 clients*
Commerce: Retail, Travel and Classifieds
57 •
A tiered go to market approach
• Field sales & account management
• High value, low volume
• Longer sales cycles
• White glove service
• Local in-market sales teams
• Inside sales & account management
• High volume, lower value
• Shorter sales cycles
• High degree of automation
• Regional hubs and satellite offices
Top-tier comScore sites
(typically top-50 or top-100)
Min. ~40k UV/month
58 •
A large opportunity to win new clients
25%Midmarket
penetration50%Tier 1
penetration
~60,000 addressable clients worldwide
in Retail, Travel and Classifieds
(excluding CSP)
Publisher Inventory
60 •
Direct partnerships with high-quality publishers
PREFERRED ACCESS TO PREMIUM MEDIA INVENTORY
ALL MAJOR PUBLIC EXCHANGES, GLOBAL AND LOCAL
PREFERRED ACCESS TO RETAILER INVENTORY
61 •
Three tiered approach to media buying
Direct Partnership
Private Auction
Open Auction
RTB Ad Exchanges
Custom integration
62 •
Our two-tiered publisher organization
63 •
The publisher environment is constantly evolving
Transition to Mobile Social Native
Multiple Devices Header BiddingAd Blocking
Changing consumer behavior Evolving technology
Programmatic
Our drives more value for publishers
In App
64 •
We have always delivered user-friendly ads
Ad blocking offers an opportunity for players with:
• The right business model
• The right technology stack
• The right expertise in user privacy
• Premium demand
Our Position
• Promote acceptable ad programs
• Invest in native
• Support an open tracking standard
• Define standards for retargeting
65 •
Header bidding changes the advertising environment
More bidders should mean higher yields
Less dependent on a single monetization platform
Allows programmatic buyers to bid for premium inventory
Impact on Publishers Impact on Programmatic Buyers
More inventory available for auction
More complex bidding environment can lead to higher costs andless efficiency
66 •
Header bidding creates opportunities for smart players
Short-term, temporary changes in the publisher market place
More sophisticated buyers like Criteo will get a technology premium
Time
BEFORE HB GROWTH OF HB BUYERS ADJUST TO HB
Unsophisticated buyers
Sophisticated buyers
Technology
premium
Inve
nto
ry c
os
t
67 •
• Criteo Direct Bidder (CDB) allows Criteo to bid on publisher inventory directly through the ad
server without the need to funnel demand through Supply Side Platforms (SSPs) or exchanges.
• Benefits for the publisher:
• all of the Criteo bid goes to the publisher; none is taken by the SSP for fees
(typically 10%-20%)
• user matching between the Publisher and Criteo is much more timely and complete than
matching reliant on a third party
• +20-40% spend with publishers on the same inventory that was previously accessed
through RTB
• Launched in Q2 2017, already connected to 1,500 publishers at the of Q4 2017
Criteo Direct Bidder: Direct access to Criteo’s unique demand
Competitive Landscape
69 •
Our self-reinforcing competitive moats are difficult to replicate
70 •
Our powerful Shopper Graph includes:
• The Criteo Identity Graph, which connects user identities across devices and environments
• The Criteo Interest Map, which provides aggregated shopper intent and purchasing data across retailers in our ecosystem
• And, the Criteo Measurement Network, which measures sales attribution for brands across our many retail partners
Openness, transparency, security and fairness are the cornerstones of our commerce marketing ecosystem, where every participant gets more than what they contribute.
Criteo Shopper Graph benefits all participants
71 •
Competitive positioning in Commerce Marketing
CLOSED
OPEN
WORKFLOW AUTOMATION PREDICTIVE PERFORMANCE
Note: based solely on Criteo’s qualitative assessment
72 •
DSP
Retargeting
Mobile Advertising
SEM Platforms
Social Advertising
Ad Servers
Email Marketing
Marketing Automation
Social Media Marketing
Web Content Management
Data Management
Platform
Analytics
App Measurement
Data Providers
Tag Management
Feed Management
Digital Commerce
Platform
Adtech: Paid MediaCriteo wins 90% of head-to-head tests
Martech: Owned and Earned MediaCriteo complements these vendors
Data and Operations Infrastructure Criteo integrates with these technologies
Criteo in the Adtech/Martech Landscape
73 •
10%
90%
Win rate in head-to-head tests* (%)
We win over 90% of head-to-head tests based on performance
* Based on 42 head-to-head tests (38 won vs. 4 lost) tracked by Criteo on a global basis across Tier-1 and midmarket advertisers over Jan 2017-Dec 2017
Reason for not winning tests
2 – Agency managed spend
2 – Performance/creative
reasons
42 tests
Solid track record of execution
75 •
7,8328,564
9,29010,198
10,96211,874
12,882
14,468
15,420
16,47217,299
18,118
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
0
50
100
150
200
250
300
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
World-class retention and fast revenue growth
* Annual average of quarterly client retention rates, defined as the percentage of live clients during the previous quarter that continued to be live during the current quarter
Client retention rate* (%) Clients Revenue ex-TAC ($ millions)
76 •
Very profitable and highly predictable business
Revenue ex-TAC ($ millions)
0
20
40
60
80
100
120
140
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Adjusted EBITDA ($ millions)
0
50
100
150
200
250
300
Q115
Q215
Q315
Q415
Q116
Q216
Q316
Q416
Q117
Q217
Q317
Q417
Actuals Guidance
Financials
78 •
Solid financial track record since IPO
147
238
403
534
730
941
2012 2013 2014 2015 2016 2017
1 We define Revenue ex-TAC as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period. Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. Please see the Appendices for a reconciliation of Revenue ex-TAC to Revenue, the most directly comparable GAAP measure. 2 We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. Please see the Appendices for a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure.
Revenue ex-TAC1 ($M) Adjusted EBITDA2 ($M)
+45%
CAGR
High
growth
Expanding
profitability
2242
105
143
225
310
2012 2013 2014 2015 2016 2017
+70%
CAGR
79 •
225
310
2016 2017
730
941
2016 2017
Fast, profitable growth and strong cash flow
ADJUSTED EBITDA ($M) FREE CASH FLOW ($M)
+29%* +35%* +80%
76
137
2016 2017
REVENUE EX-TAC ($M)
80 •
Strong financial leverage
As % of Revenue ex-TAC FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Revenue ex-TAC 100% 100% 100% 100% 100%
Other cost of Revenue* 7.9% 6.6% 6.1% 6.4% 6.9%
Gross margin 92.1% 93.4% 93.9% 93.6% 93.1%
R&D* 14.9% 12.5% 13.4% 14.2% 14.7%
S&O* 43.6% 39.9% 39.8% 35.3% 34.8%
G&A* 16.0% 14.8% 13.8% 13.2% 10.7%
Adjusted EBITDA 17.5% 26.2% 26.9% 30.8% 32.9%
Revenue ex-TAC margin** 40.3% 40.8% 40.4% 40.6% 41.0%
* Cost of revenue and operating expenses are expressed on a Non-GAAP basis, which excludes the impact of equity awards compensation expense, pension service costs, depreciation and amortization, acquisition-related costs, restructuring and deferred price consideration.** As a % of revenue
81 •
Technology innovation
Broader Supply
Upselling incremental
products and channels
Operating excellence and
productivity
Strong drivers for further operating leverage
spending budgetsat limited incremental costs
Powered by a combination of
82 •
Robust operating cash flow enables smart investment
INVESTDEVELOP & GROW
CASHSCALE
PROFITS
SMART
INVESTING
83 •
Our financial structure offers significant flexibility
* Based on a $2B+ market capitalization, pursuant to the 2017 AGM authorization to issue up to 15,6m shares** For M&A and equity grants to employees
Strong balance
sheet
1,211
1,531
Dec. 2016 Dec. 2017
Total assets (in $M) Financial liabilities
(in $M)
Very low
debt
Dec. 2016 Dec. 2017
86
4
Cash & cash
equivalents (in $M)
Significant
cash pile
270
414
Dec. 2016 Dec. 2017
>25% of assets
$414Mcash
As of December 31, 2017
€350M committed financing
$500M equity raise capacity*
Share buy-back authorization**
84 •
Capital allocation: Reinvestment and M&A to drive growth
•
•
–
–
–
•
•
•
Organic
growth
M&A
* Average for fiscal years 2013, 2014, 2015, 2016 and 2017
Growth Strategy
86 •
• Evolve go-to-market strategy for Tier 1 and midmarket
• Further scale midmarket operations worldwide
• Drive international expansion of
Criteo Sponsored Products
Grow the ecosystem Increase the value for clients and partners
• Enhance core technology
• Leverage our powerful Shopper Graph
• Upsell new products
• Broaden supply of quality inventory
Our growth strategy is based on two strong pillars
87 •
We invest in growing areas in Commerce Marketing
Criteo Shopper Graph, built on data pooling among ecosystem participants, is the foundation of all new product investments
• Look alikes*
• App Install*Flexible audience-targeting platform
Omnichannel marketing
• In-App
• VideoIncremental inventory
• CRM onboarding*
• Store-to-web retargeting*
Marketing
objectives
Shopping
environments
Media
* Prospective
88 •
Technology and new supply drive growth from existing clients
Technology Innovation
New Supply
Revenue ex-TAC uplift (%)
Conversion
Optimization+20% uplift
Dynamic
Creative
Optimization+10% uplift
+8% upliftRevenue
Optimization
+6% upliftRTB
integration
improvement
+36% uplift in Japan
+5% uplift Worldwide
+10% upliftNative
+3% uplift
Selected significant examples over time…
Note: the uplift in Revenue ex-TAC from technology innovation corresponds to the increase in Revenue ex-TAC for Criteo on a representative sample of clients, where clients use the corresponding new Engine
feature on 50% of their user pool and do not use the corresponding new Engine feature on the other 50% of their user pool, pursuant to a proven 50/50 A/B test methodology. The uplift in Revenue ex-TAC from new
sources of inventory supply and new channels corresponds to the increase in Revenue ex-TAC for Criteo on a representative sample of clients, comparing the Revenue ex-TAC generated from those clients before
and after the introduction of such new source of inventory supply or new channel.
89 •
Offering data-driven solutions across the entire shopper journey
• Criteo Customer Acquisition BETA
• Criteo Audience Match BETA
• New audience targeting offerings
• Criteo Sponsored Products
• Criteo Dynamic Retargeting
90 •
Large market
opportunity
Clear strategy Competitive moats Proven
track-record
Attractive
financial profile
Compelling investment thesis
Commerce Marketing
is quickly emerging as
the next big
marketing category
Build the highest
performing and open
commerce marketing
ecosystem
Technology
Scale and
network effects
Openness
Strong client growth
with 90% retention
Exceeded guidance
17 quarters in a row
Fast growth
Increasing
profitability
Strong cash flow
VP, Head of Investor Relations32, rue Blanche
75009 Paris+33 1 7621 2166
Director, Investor Relations387 Park Ave South, 12th Floor
New York, NY 10016+1 917 837 8617
Friederike EdelmannEdouard Lassalle
Investor Relations Contacts: [email protected]
Appendix
93 •
($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4’17
Revenue 401,253 407,201 423,867 566,825 516,667 542,022 563,973 674,031
Less: Traffic acquisition costs 238,755 240,969 247,310 341,877 306,693 322,200 329,576 397,087
Revenue ex-TAC 162,498 166,232 176,557 224,948 209,974 219,822 234,397 276,944
Revenue ex-TAC reconciliation
($ in thousands) 2016 2017
Revenue 1,799,146 2,296,692
Less: Traffic acquisition costs 1,068,911 1,355,556
Revenue ex-TAC 730,235 941,136
94 •
Adjusted EBITDA reconciliation
($ in thousands) Q1’16 Q2’16 Q3’16 Q4’16 Q1’17 Q2’17 Q3'17 Q4'17 2016 2017
Net income 18,527 13,339 14,724 40,740 14,518 7,505 22,269 52,368 87,329 96,659
Adjustments:
Financial (income) expense 1,317 94 570 (1,435) 2,333 2,094 2,886 2,221 546 9,534
Provision for income taxes 7,944 4,450 7,574 13,161 4,201 3,665 7,858 15,927 33,129 31,651
Equity awards
compensation expense8,370 7,695 13,965 13,229 14,940 14,918 22,028 20,464 43,259 72,351
Pension service costs 129 131 132 133 290 299 320 321 524 1,231
Depreciation and amortization expense 12,516 13,300 14,771 16,190 20,167 22,306 23,755 24,570 56,779 90,796
Acquisition-related costs - 148 1,793 980 6 - - - 2,921 6
Acquisition-related deferred price
consideration40 44 3 (3) - - - - 85 -
Restructuring - - - - - 3,299 - 40,057 - 7,356
Total net adjustments 30,316 25,862 38,808 42,255 41,936 46,581 56,847 67,560 137,243 212,925
Adjusted EBITDA 48,843 39,201 53,532 82,995 56,454 54,086 79,116 119,928 224,572 309,584
95 •
Free cash flow reconciliation
($ in thousands) Q4 2016 Q4 2017 2016 2017
CASH FROM OPERATING ACTIVITIES 71,658 79,002 153,470 245,458
Acquisition of intangible assets, property,
plant and equipment(30,163) (47,367) (85,133) (121,642)
Change in accounts payable related to
intangible assets, property, plant and
equipment
7,182 21,891 7,752 13,131
FREE CASH FLOW 48,677 53,526 76,089 136,947