Criteo’s contribution after advertising traffic costs falls
Criteo processed more advertising spending but reported lower revenue, profit and contribution after traffic costs in the third quarter. Changes involving two retail media clients affected the results. The company reduced operating expenses, while cash generation also declined. Management expects contribution to fall for the full year and has issued separate fourth-quarter targets.
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Per-share earnings fall
Criteo, the advertising technology group, reported adjusted earnings per share of 0.43 dollars in the third quarter, down from 1.31 dollars a year earlier. The results cover the period ended 30 September. The company’s services process advertising spending for clients, while its own revenue and contribution measure capture different amounts within that activity. Contribution excludes the cost of acquiring advertising traffic. It fell 17 per cent from 288 million dollars to 240 million dollars. Media spending processed by the business increased 9 per cent at constant exchange rates to approximately 1.2 billion dollars.[1], [2]
Retail client changes affect contribution
Reported revenue fell 11 per cent to 416 million dollars. Gross profit declined 19 per cent to 208 million dollars, and gross margin moved from 55 per cent to 50 per cent. Retail media revenue was down 23 per cent. Changes in scope involving two clients had an approximately 20 million dollar effect; excluding those changes, the corresponding contribution measure increased 10 per cent. Performance media revenue declined 9 per cent and its contribution fell 15 per cent.[1]
Operating expenses decreased 9 per cent to 187 million dollars, and adjusted operating expenses fell from 158 million dollars to 153 million dollars. Adjusted earnings before interest, tax, depreciation and amortisation decreased 39 per cent to 65 million dollars. The margin on contribution declined from 36 per cent to 27 per cent. Net income fell from 40 million dollars to 6 million dollars.[1]
Cash generation and guidance narrow
Operating cash flow fell from 90 million dollars to 57 million dollars, while free cash flow decreased from 67 million dollars to 21 million dollars. Total liquidity was 788 million dollars: cash of 275 million dollars, securities of 51 million dollars and revolving credit capacity of 462 million dollars. Management forecasts a 10–12 per cent annual decline in contribution at constant currency and adjusted earnings before interest, tax, depreciation and amortisation equal to approximately 30 per cent of that contribution. Fourth-quarter contribution guidance is 292–298 million dollars, with adjusted earnings before interest, tax, depreciation and amortisation of 105–111 million dollars.[1]
