Group 1 - The individual investor focuses on undercovered companies, particularly in technology, software, electronics, and energy transition sectors [1] - The investor has over 50 companies on their watchlist and has been investing personal capital for over 7 years globally [1] - The investor holds a Master's degree in Electrical Engineering and works as an automotive battery R&D engineer in Sweden [1] Group 2 - The investor aims to identify asymmetric investment opportunities to achieve market-beating returns through diligent research of small to mid-cap companies [1]

Industry Overview - The digital advertising market is expected to grow at a compound annual growth rate (CAGR) of 15.4% from 2025 to 2030, driven by mobile penetration, social media proliferation, and programmatic advertising expansion [2] - Video advertising is projected to remain the dominant format as brands increasingly leverage visual storytelling [2] The Trade Desk (TTD) - TTD reported revenues of $616 million in Q1 2025, a 25% year-over-year increase, exceeding management's guidance of at least $575 million [4] - Adjusted EBITDA for TTD was $208 million, reflecting a 34% margin compared to $162 million and a 33% margin in the previous year [4] - Customer retention rate was over 95% for the reported quarter [4] - TTD's net cash from operating activities was $291.4 million, with free cash flow at $230 million [5] - Adjusted earnings per share increased by 27% year-over-year to 33 cents [5] - The Kokai platform is utilized by two-thirds of clients, achieving lower cost per conversion by 24% and lower cost per acquisition by 20% [5] - TTD's revenue is heavily reliant on North America, with 88% of revenues coming from this region, limiting international market expansion [7] - Total operating costs surged by 21.4% year-over-year to $561.6 million, which may impact profitability if revenue growth does not keep pace [8] Criteo (CRTO) - Criteo's AI-driven Performance Media business and capabilities in Retail Media are strong growth drivers [9] - The Commerce Media Platform includes both demand-side and supply-side solutions, allowing Criteo to capture value across the ad tech value chain [9] - Criteo's media spend was $4.3 billion over the last 12 months, with $919 million in Q1 2025 [10] - Retail Media on-platform revenues grew by 17% year-over-year, supported by partnerships with 70% of the top 30 U.S. retailers [10] - Criteo onboarded 300 new brands in Q1, bringing the total to over 3,800 for Retail Media [11] - The company launched a new AI-powered automation toolset, Commerce GO!, designed to streamline campaign launches [12] - Criteo differentiates itself by offering direct retailer access and a transparent platform built around first-party data [13] Share Performance and Valuation - Year-to-date, CRTO has declined by 33.6%, while TTD has seen a decline of 37.1% amid macroeconomic uncertainties [14] - Valuation metrics indicate TTD is overvalued with a Value Score of F, while CRTO has a Value Score of A [16] - TTD's forward 12-month price/earnings ratio is 38.32X, significantly higher than CRTO's 5.97X [17] Analyst Estimates - Analysts have revised CRTO's earnings estimates downward for the current quarter, indicating a trend of negative revisions [18] - TTD has experienced relatively lower downward revisions in earnings estimates compared to CRTO [20] Investment Recommendation - Criteo is positioned as the stronger investment option due to its better valuation, focus on partnerships, and expanding retail media presence [22]

Core Viewpoint - Criteo (CRTO) has experienced a significant decline in its stock price, losing 29.2% year-to-date, which is notably worse than the broader market indices and its industry peers [1][2]. Company Performance - The underperformance of Criteo's stock is attributed to tariffs and inflation affecting the industry, but the company is positioned for long-term growth despite macroeconomic uncertainties [2]. - In Q1 2025, Criteo's Retail Media on-platform revenues increased by 21% year-over-year, driven by heightened demand from advertisers and retailers [3]. - Off-platform monetization also saw growth, supported by a 60% increase in supply partners, indicating successful partnerships with retailers like Michaels, Dollar Tree, and Meijer [3]. Strategic Focus - Criteo is transitioning from its legacy retargeting business to focus on high-growth areas such as Retail Media and Commerce Audiences, with over 250 brands onboarded to its expanded platform [4]. - The company is enhancing its offerings with new features like dynamic sponsored products and video ads, which have strengthened its product suite [9]. Competitive Landscape - Criteo competes with major tech companies like Amazon, Google, and The Trade Desk, which have also seen declines in their stock prices [5]. - Criteo differentiates itself by providing retailer-direct access and a transparent, demand-driven platform that aligns with first-party data needs, leveraging its broad retail network and proprietary technology [6]. Financial Outlook - The Zacks Consensus Estimate for Criteo's 2025 earnings is $3.46 per share, reflecting an upward revision of 8.46% over the past 30 days, with a projected year-over-year increase of 16.98% [7]. - Revenue estimates are pegged at $1.15 billion, indicating a year-over-year growth of 2.41% [7]. - Criteo has beaten earnings estimates in three of the last four quarters, with an average surprise of 45.42% [8]. Investment Potential - Criteo's focus on high-growth areas and its recent expansion of the advertiser base by 11% year-over-year suggest strong market traction [9]. - The company currently holds a Zacks Rank 2 (Buy) and a Growth Score of A, indicating a favorable investment opportunity [10].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Criteo (CRTO) as a strong value stock based on its financial metrics and Zacks Rank [2][3][7] Financial Metrics - Criteo (CRTO) has a Price-to-Book (P/B) ratio of 1.45, which is significantly lower than the industry average of 3.83, indicating potential undervaluation [4] - The Price-to-Sales (P/S) ratio for CRTO is 0.86, compared to the industry's average P/S of 1.96, further suggesting that the stock may be undervalued [5] - CRTO's Price-to-Cash Flow (P/CF) ratio stands at 7.41, well below the industry average of 20.68, reinforcing the notion of its attractive valuation [6] Investment Outlook - The combination of CRTO's strong financial metrics and a Zacks Rank of 2 (Buy) positions it as an impressive value stock with a favorable earnings outlook [3][7]

Industry Overview - The Internet-Software & Services industry is closely tied to the economy, with estimates declining due to tariffs, inflation, and interest rate uncertainties [1][7] - Companies are focusing on cost-saving measures, reducing operating expenses to maintain profitability despite revenue challenges [1][7] - Capital investments are being limited, with only a few companies making significant investments [1] Key Industry Themes - Companies like Criteo (CRTO) and RingCentral (RNG) are performing well by leveraging AI for revenue growth and client retention through subscription models [2][18] - The industry is characterized by a diverse range of players, leading to varied performance outcomes [2] - The Zacks Industry Rank for the Internet-Software & Services sector is 203, placing it in the bottom 17% of nearly 250 classified industries, indicating limited growth prospects [6][8] Economic Impact - The level of technology adoption by businesses is crucial for growth, with some companies advancing in AI while others lag behind [7] - Economic slowdowns lead to reduced expenditures on software and services, impacting industry performance [7] - Geopolitical tensions and tariff changes contribute to market volatility and uncertainty, complicating the operating environment [7] Financial Performance - The industry has shown strong stock market performance, returning 20.5% over the past year, outperforming the broader sector and S&P 500 [11] - The industry is currently trading at a forward 12-month P/E ratio of 24.96X, which is a 15.2% premium to the S&P 500 [14] Company Highlights Criteo S.A. (CRTO) - Criteo's AI-driven platform connects advertisers with retailers, helping to drive commerce despite macroeconomic challenges [18][20] - The company has maintained a client retention rate close to 90% and reported an 18% growth in Retail Media contributions [21][22] - Despite a projected decline in earnings due to the loss of a major customer, Criteo's existing customer spending has increased significantly [21][23] RingCentral Inc. (RNG) - RingCentral's AI-powered solutions have led to an average recurring revenue (ARR) exceeding $2.5 billion [26] - The company has successfully integrated its services into the Salesforce CRM ecosystem and secured significant customer wins [26] - RingCentral's shares have decreased by 26.5% over the past year, with analysts projecting revenue growth of 4.6% in 2025 [27]

Summary of Criteo Conference Call Company Overview - **Company**: Criteo - **Industry**: E-commerce, Digital Marketing, Media Monetization - **CEO**: Michael Komosinski, who joined earlier this year, previously held leadership roles at Dentsu and Merkel [2][3] Key Points and Arguments Competitive Advantages - Criteo is an independent ad tech player, providing value on both supply and demand sides of retail media [9] - The company has an unmatched supply footprint due to its early market entry with the Commerce Yield monetization platform [10] - Criteo's strategy focuses on reaccelerating growth, improving durability, and enhancing performance media execution [12] Growth Strategy - The company aims to identify white space in product segments and develop products rapidly to achieve consistent results [13] - Near-term opportunities include expanding product offerings in performance media and retail media, such as on-site video and native advertising [14][15] - Long-term goals involve advancements in technology for more efficient retail supply purchasing [15] Market Trends - The advertising industry is moving towards AI-driven automated marketing platforms, with Criteo's Commerce Go tool driving significant campaign volume growth [23][24] - The company reported a 45% quarter-on-quarter growth in its Commerce Audience segment [19] - Social media integrations, particularly with Meta, have shown a 40% sequential growth in 1Q [21] Financial Performance - Criteo maintains a 25% adjusted EBITDA margin guide, with a commitment to growth investments despite a lower revenue base [43] - The company is focused on organic growth and opportunistic M&A to accelerate its roadmap [46] Challenges and Risks - There are signs of softer macro trends affecting client spending, particularly in discretionary categories [41] - The company has reduced scope with its largest client, but believes this situation is unique and not likely to spread [38][40] Future Outlook - Criteo sees a $50 billion serviceable available market (SAM) by 2027 in retail media [29] - The company is optimistic about the integration with Microsoft advertising and expects to make announcements regarding this in the near future [33][34] Additional Important Content - The CEO emphasized the importance of execution and reliability in delivering consistent results to investors [12] - Criteo's focus on AI and data assets positions it well for future developments in the agentic shopping experience [27][28] - The company continues to repurchase shares as part of its capital allocation strategy, balancing growth investments with shareholder returns [46][47]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $451 million, with contribution ex TAC increasing to $264 million, reflecting a year-over-year headwind from foreign currencies of $6 million [30] - Adjusted EBITDA for Q1 2025 was $92 million, up 30% year-over-year, driven by operational leverage from top-line growth and cost discipline [34] - Net income for Q1 2025 was $40 million, an increase from $9 million in the previous year, resulting in diluted earnings per share of $0.66 compared to $0.12 last year [35][36] Business Line Data and Key Metrics Changes - Retail media revenue was $59 million, with contribution ex TAC growing 18% at constant currency, driven by strength in on-site and off-site campaigns [31] - Performance media revenue was $392 million, with contribution ex TAC increasing by 4% at constant currency, led by the Commerce Growth Solution [32] - The company activated $335 million in media spend in retail media, up 21% year-over-year, with significant growth in U.S. agency spend [18][19] Market Data and Key Metrics Changes - Double-digit growth in media spend was observed in Asia Pacific, while low single-digit growth occurred in Europe and the Middle East, with lower budgets in the U.S. [33] - Travel was the fastest-growing vertical, up 44%, while retail and fashion saw declines, with fashion down 6% [34] Company Strategy and Development Direction - The company aims to reaccelerate growth and improve durability, fortifying its leadership position in retail media and reenergizing its performance media business [11][12] - Criteo is shifting from a managed service model to a more scalable self-service platform, investing in new formats like outcome-based native display and CTV [17][28] - The company plans to maintain adjusted EBITDA margins in the 33% to 34% range while generating industry-leading cash flows [28][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the performance media segment, especially following Google's decision regarding third-party cookies [8][38] - The company anticipates contribution ex TAC to grow low single digits year-over-year at constant currency for 2025, with underlying growth expected to be around 20% excluding two specific clients [39][40] - Management acknowledged near-term challenges but emphasized the resilience of the business and the potential for continued growth and profitability [44] Other Important Information - The company has a strong financial position with $810 million in total liquidity and no long-term debt, allowing for disciplined capital allocation [36] - A share buyback program was initiated, with $56 million deployed for share repurchases in Q1 2025 [37] Q&A Session Summary Question: Impact of retail media client changes - Management noted that the largest retail media client will continue to use their technology but will curtail managed services, resulting in a significant impact on growth rates for retail media [49][51] Question: Macro trends in April - Management observed a soft macro environment in April, with mixed performance across categories, but emphasized resilience in their performance business [55] Question: Spending patterns across income demographics - Management indicated that spending patterns are being monitored, with some discretionary categories seeing less spend across income bands [61] Question: Revenue impact from large client downtick - Management clarified that the impact from the largest retail media client will be significant but is expected to lap within a year, with a focus on maintaining growth across the broader client base [63] Question: CTV and video strategy - Management expressed interest in CTV as a growing segment and is in the early stages of assessing how it fits into their overall strategy [95][96]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $451 million, with contribution ex TAC increasing to $264 million, reflecting a year-over-year headwind from foreign currencies of $6 million [28] - Adjusted EBITDA was $92 million, up 30% year-over-year, driven by operational leverage from top-line growth and cost discipline [31] - Net income for Q1 2025 was $40 million, a significant increase compared to $9 million last year, with diluted earnings per share of $0.66 compared to $0.12 last year [32][33] Business Line Data and Key Metrics Changes - Retail media revenue was $59 million, with contribution ex TAC growing 18% at constant currency, driven by strength in on-site and off-site campaigns [29] - Performance media revenue was $392 million, with contribution ex TAC increasing by 4% at constant currency, led by the Commerce Growth Solution [30] - Retail media activated $335 million in media spend, up 21% year-over-year, with significant growth in U.S. agency spend [17][18] Market Data and Key Metrics Changes - Double-digit growth in media spend was observed in Asia Pacific, while low single-digit growth occurred in Europe and the Middle East, with lower budgets in the U.S. [31] - Travel was the fastest-growing vertical, up 44%, while retail and fashion saw declines of 6% [31] Company Strategy and Development Direction - The company aims to reaccelerate growth and improve durability, fortifying its leadership position in retail media and reenergizing its performance media business [9][10] - A shift from a managed service model to a more scalable self-service platform is underway, with investments in new formats like outcome-based native display and CTV [15][26] - The company plans to maintain a disciplined approach to growth through a build, partner, and buy framework, focusing on maximizing shareholder value [14][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the performance media segment, especially following Google's decision regarding third-party cookies [6][35] - The company anticipates a challenging macro environment impacting retail media growth, projecting low to mid-single-digit growth at constant currency for 2025 [36] - Despite near-term challenges, management remains optimistic about the underlying strength of the commerce media platform and expects continued growth and profitability [41][42] Other Important Information - The company has a strong financial position with $810 million in total liquidity and no long-term debt, allowing for disciplined capital allocation [33] - A share buyback program was initiated, with $56 million deployed for share repurchases in Q1 2025 [34] Q&A Session Summary Question: Impact of largest retail partner's changes - Management noted that the largest retail media client will continue to use their technology but will curtail managed services, impacting growth rates for retail media [46][48] Question: Macro trends in April - Management observed a soft macro environment in April, with mixed performance across categories, but emphasized resilience in their performance business [52][53] Question: Spending patterns across income demographics - Management indicated that discretionary categories are seeing less spend across income bands, with a focus on monitoring trends as retailers announce results [57][59] Question: Retail media client revenue impact - The impact from the largest retail media client is significant but is expected to lap within a year, with ongoing growth from other clients [61][62] Question: Self-service tools sophistication - Management acknowledged that Criteo is on a journey to enhance self-service capabilities, with excitement around the rollout of Commerce Go [98]

Financial Performance - Criteo's Q1 2025 Contribution ex-TAC reached $264 million, a 7% year-over-year increase[18] - The adjusted EBITDA margin was 35%, exceeding the company's guidance[18] - Revenue was $451 million[33] - Net income was $40 million[33] - Non-GAAP Diluted EPS was $1.10, a 38% increase[33] - Free cash flow was $45 million, a 367% increase[33] Segment Performance - Retail Media media spend increased by 21% year-over-year, reaching $335 million[21, 36] - Retail Media Contribution ex-TAC increased by 18% year-over-year, reaching $59 million[36] - Performance Media Contribution ex-TAC increased by 4% year-over-year, reaching $206 million[19, 36] Retail Media Leadership - Criteo partners with over 200 retailers, including 70% of the top 30 U S retailers and 50% of the top 30 EMEA retailers[21]

Financial Performance - Q1 2025 revenue was $451 million, a 0.3% increase year-over-year, with gross profit at $237 million, up 9%[3] - Net income for Q1 2025 reached $40 million, a significant increase of 367% compared to $9 million in Q1 2024, resulting in diluted EPS of $0.66[3][8] - Contribution ex-TAC for Q1 2025 was $264 million, reflecting a 4% year-over-year increase, or 7% at constant currency[6][7] - Adjusted EBITDA for Q1 2025 was $92 million, representing a 30% increase year-over-year, with an adjusted EBITDA margin of 35%[9][10] - Free Cash Flow (FCF) increased to $45 million in Q1 2025, compared to $1 million in Q1 2024, with a trailing 12-month FCF of $226 million[12][25] - Revenue for Q1 2025 was $451.4 million, a slight increase from $450.1 million in Q1 2024, representing a growth of 0.3%[38] - Gross profit for Q1 2025 increased to $237.0 million, up from $217.2 million in Q1 2024, reflecting a growth of 9.1%[38] - Net income for Q1 2025 was $40.0 million, compared to $8.6 million in Q1 2024, marking a significant increase of 366.5%[38] - Adjusted EBITDA rose to $92,148,000, reflecting a 30% increase from $70,679,000 in the previous year[49] Operating Expenses and Efficiency - Operating expenses decreased by 9% year-over-year to $189 million, driven by effective resource allocation[10] - Operating expenses decreased to $188.8 million in Q1 2025 from $206.9 million in Q1 2024, a reduction of 8.7%[38] - Total operating expenses decreased by 9% to $188,809,000 from $206,869,000 year-over-year[51] Cash Flow and Liquidity - Cash provided by operating activities for Q1 2025 was $62.3 million, compared to $14.0 million in Q1 2024, indicating a substantial increase[40] - Cash from operating activities increased to $62,341,000, a 345% year-over-year change from $14,017,000[41] - Free cash flow reached $45,250,000, compared to $793,000 in the previous year, indicating significant growth[41] - As of March 31, 2025, the company had total financial liquidity of approximately $810 million, including cash, marketable securities, and a revolving credit facility[13] - Cash and cash equivalents at the end of Q1 2025 were $286.2 million, down from $341.9 million at the end of Q1 2024, a decrease of 16.3%[40] - The net cash position decreased by 16% year-over-year to $286,171 million, with a 2% decline quarter-over-quarter[61] Shareholder Returns - The company repurchased $56 million in shares during Q1 2025[4][12] Future Outlook - For fiscal year 2025, the company expects low-single-digit growth in Contribution ex-TAC at constant currency, with guidance for adjusted EBITDA between $60 million and $66 million[20][21] - The company anticipates continued growth opportunities despite macroeconomic challenges, including inflation and fluctuating interest rates[29] Assets and Liabilities - Total assets as of March 31, 2025, were $2.13 billion, down from $2.27 billion as of December 31, 2024, a decrease of 6.1%[36] - Total liabilities decreased to $1.03 billion as of March 31, 2025, from $1.19 billion as of December 31, 2024, a reduction of 13.0%[36] Client and Revenue Segmentation - Retail Media Contribution ex-TAC grew 18% year-over-year at constant currency, with a same-retailer retention rate of 120%[4] - Retail Media revenue grew by 17% to $59,498,000, while Performance Media revenue decreased by 2% to $391,936,000[46] - The number of clients decreased by 4% year-over-year to 17,084, down from 17,269 in Q4 2024[61] - Contribution ex-TAC decreased by 1% year-over-year to $264,372 million, with a 21% decline quarter-over-quarter[61]