Criteo's Transformation into a Commerce Media Powerhouse and Launch of New Platforms
2023-08-04
Criteo, a digital advertising company, held its second-quarter 2023 earnings call to discuss its strong performance, resilience, and transformation into a commerce media powerhouse. The meeting also highlighted the launch of two new platforms, Commerce Max and Commerce Grid.
During the call, Criteo emphasized its unique access to a trillion dollars of transactions and $3 billion per day related to shoppers and their activities. This vast amount of commerce data provides the company with a significant advantage in understanding consumer behavior and preferences within the context of commerce.
A deep-dive analysis into this topic could explore how Criteo leverages its access to commerce data to create targeted and effective advertising campaigns. This analysis could also examine the potential benefits for advertisers in terms of reaching the right audience at the right time and driving performance. Additionally, it could delve into the potential impact on the company's margins, as the CFO mentioned that this access to commerce data could be "hugely accretive" to their margins.
Despite temporary government measures in France affecting traffic and online transactions in Q2, Criteo remains optimistic about the market outlook. The company expects a 25 to 30% growth rate for the year and has seen signs of improvement in the retail sector, particularly in fashion, during July. Criteo also expressed confidence in its brand discussions and customer relationships.
Criteo's key drivers of the business include AI capabilities, model development, co-pilot strategies, enhancing customer experience, and retailer partnerships. The company has a dedicated AI lab and is actively leveraging AI technology to stay competitive in the market. They are also focusing on generative AI in all aspects of their development and exploring the use of AI in media planning.
Looking ahead, Criteo plans to launch Commerce Grid and Commerce Max, which aim to provide convenience and choice for advertisers. Commerce Grid allows advertisers to sell more commerce media through the company's retailers, while Commerce Max is set to launch on September 12th. The company expects campaign spend to increase as marketers gain more experience with the platform.
Criteo's outlook for the quarter and year is cautiously optimistic. They anticipate high single-digit to low double-digit contribution ex-TAC growth at constant currency in 2023, including low single-digit organic growth and the full-year impact from the acquisition of IPONWEB. The company also expects 25% to 30% contribution ex-TAC growth for retail media and commerce audiences, with an adjusted EBITDA margin of approximately 28% for 2023.
In terms of strategic initiatives, Criteo has made significant progress in its AI capabilities. They have been operating an AI lab for five years and are now focusing on generative AI in their development efforts. The company has also implemented model development in production and is using co-pilots for various operating functions. They have exciting developments in progress to enhance the customer experience, including using gen AI for media planning and expanding their sponsored product business.
Criteo's capital spending plans involve approximately $90 million on capital expenditures, primarily for the renewal of data centers.
The participants in the earnings call included Melanie Dambre (Vice President, Investor Relations), Megan Clarken (Chief Executive Officer), Sarah Glickman (Chief Financial Officer), and Todd Parsons (Chief Product Officer for the Q&A session). Their presence highlights the importance of the call and their involvement in discussing the company's financial performance and strategic initiatives.
Overall, Criteo's second-quarter earnings call showcased its strong performance, transformation into a commerce media powerhouse, and the launch of new platforms. With its unique access to commerce data and focus on AI capabilities, the company remains well-positioned for continued growth and success in the digital advertising industry.