Criteo S.A.(CRTO) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for 2022 was $2 billion, with Contribution ex-TAC growing by 10$928 million, despite $60 million in incremental signal loss impacts [56][74] - Adjusted EBITDA margin was 29$200 million and adjusted EPS of $2.76, including five months of contribution from Iponweb [57][74] - Q4 revenue was$564 million, with Contribution ex-TAC at $283 million, reflecting a year-over-year headwind from weaker foreign currencies of$21 million [64][74] Business Segment Data and Key Metrics Changes - In Retail Media, revenue was $202 million, with Contribution ex-TAC growing 33$161 million, driven primarily by the U.S., UK, and Germany [63][74] - Marketing Solutions revenue was $1.8 billion, with Contribution ex-TAC at$715 million, as Commerce Audiences grew by 26% at constant currency, offsetting lower Retargeting [63][74] - Retail Media, Commerce Audiences, and Iponweb combined represented 47% of Contribution ex-TAC in Q4, up from 41% in Q3 and 32% in Q4 last year [65] Market Data and Key Metrics Changes - Conversations with CMOs indicate delays in ad budgeting processes due to uncertainties regarding inflation and interest rates, but marketers are not blindly cutting budgets [59][74] - Retail spend was soft across all regions, particularly in fashion and department stores, while travel remained strong [68][74] - The company expects Contribution ex-TAC growth of approximately 30% for Retail Media in 2023, anticipating further share gains [75] Company Strategy and Development Direction - The company aims to accelerate its position in Commerce Media, focusing on Retail Media as a non-cyclical growth area [52][54] - The strategy includes doubling the size of the Retail Media team and enhancing go-to-market efforts with retailers [113] - The company is focused on integrating Iponweb and leveraging its capabilities to enhance product offerings and drive growth [50][74] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment has changed significantly, but the company's strategy remains intact, with a focus on profitable growth and aligning cost structures [60][74] - The company anticipates stronger organic growth later in the year as new capabilities ramp up and seasonal trends in Retail Media take effect [17][74] - Despite lower visibility on near-term trends, the long-term opportunity for the company remains intact, with a strong focus on execution [54][74] Other Important Information - The company ended the year with non-targeted solutions representing close to half of its business in Q4, compared to 32% a year ago [38] - The company has about $835 million in total liquidity, providing significant financial flexibility for growth and capital allocation strategies [72] - The Board of Directors authorized an extension of the share repurchase program from$280 million to $480 million, demonstrating confidence in the business strategy [73] Q&A Session Summary Question: Can you provide an update on Commerce Max and key gating factors? - The company is focused on unifying planning and spending across its network, addressing fragmentation in Retail Media [14][93] Question: How do you see 2023 as a year of sales execution? - The company views 2023 as a year of acceleration, focusing on monetizing retailer inventory and enhancing targeting capabilities [91][113] Question: Can you discuss the impact of AI on Criteo's ad stack? - The company is leveraging AI capabilities to enhance predictions and performance, utilizing unique access to commerce data [100][101] Question: What are the expectations for Retail Media growth? - The company expects Retail Media to continue showing robust growth, with a target of approximately 30% growth in Contribution ex-TAC for 2023 [75][81]