Good day and welcome to the Criteo’s Q4 Full Year Earnings Presentation Conference Call. Today' conference is being recorded. At this time, I would like to turn the conference over to Mr. Edouard Lassalle, Head of IR. Please go ahead.

Thank you, Sandra. Good morning and good afternoon to all of you and welcome to Criteo’s Financial Results for the Fourth Quarter and Fiscal Year ended December 31, 2014. Joining us on the call today are JB Rudelle, Chairman and CEO, Benoit Fouilland, Chief Financial Officer, and Eric Eichmann, President and Chief Operating Officer. Eric will participate in the Q&A session of our call. Please note that the earnings release issued before the opening of the US market today, along with a live broadcast of the earnings call are both available on our Investor Relations website at ir.criteo.com. A replay of the call will also be available later on our Investor Relations website. Before we begin discussing our earnings, I'd like to remind you that some of our discussions today will contain forward-looking statements. These may include projected financial results, our operating metrics, business strategies, anticipated future products and services, anticipated investment and expansion plans, anticipated market demand or opportunities and other forward-looking statements. As always these statements are subject to risks, uncertainties and assumptions. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. Also I’d like to remind you that during the course of this call we will discuss non-IFRS measures of our performance. Definition of such metrics and the reconciliations to the most directly comparable IFRS financial measures are provided in the earnings press release and accompanying financial tables issued earlier today. Unless otherwise stated all gross comparisons made in the course of this call are against the same period in the prior year. With this in mind, let me now turn the call over to JB Rudelle, Criteo’s Chairman and Chief Executive Officer. JB, the line is all yours.

Thank you, Edouard. I am very pleased to present our fourth quarter and full year 2014 results to all of you today. We closed another great quarter and a record year of profitable high growth. We exceeded the high-end of our guidance, for both revenue ex-TAC and adjusted EBITDA. In the fourth quarter, we grew revenue ex-TAC by 73% at constant currency to €96million, and adjusted EBITDA by 120% to €32million. For the full year of 2014, our revenue, ex-TAC grew by 72% at constant currency to €304 million, while adjusted EBITDA increased 154% to over €79 million. As we'd like to say, at Criteo, performance is everything. This powerful idea is at the very core of our DNA. Our most important only objective is to generate more incremental sales for our clients through innovation and technology. As we drive more sales for our clients, it also makes our own business more successful. In 2014, we increased the total amount of post-click sales we generate for our clients by 77%, as you can see we have grown the revenue of our clients even faster than our own revenue. Our clear focus on performance combined with discipline execution enable us to grow faster in 2014 than in 2013 and further accelerate our year-over-year growth in Q4. Overall, 2014 has been a truly great year for us, confirming the power of our business model. During the year, we had added over 2,000 clients to a total of more than 7,000. Despite this important client growth, we had maintained client retention rates above 90%. We also continue to generate over 75% of our business from uncapped budgets. We significantly improved our core prediction technology. We have broadened our product portfolio in particular with our complete mobile solution at full scale. Now over 80%…

Thank you, JB. I’m also delighted to report another very strong quarter and fiscal year today. I will walk you through our financial performance in detail, as well as our guidance for the first quarter and fiscal year 2015. I would then open up the call to your questions. We delivered record profitable growth in the quarter on the fiscal year and exceeded our expectation for both revenue ex-TAC on adjusted EBITDA. In particular, we are very pleased with our accelerating growth, which was not only faster in fiscal year 2014 than in 2013, but also further accelerated in Q4. Let me start with our revenue. In Q4, we grew total revenue by 71% or 69% at constant currency to €233 million. For fiscal year 2014, we grew total revenue by 68% or 70% at constant currency to €745 million. As we are repeated ever since our IPO, we consider revenue ex-TAC as the key financial measure to evaluate and monitor our business performance. In Q4, our global revenue ex-TAC grew 76% or 73% at constant currency to €96 million, compared with €55 million in the fourth quarter 2013. Our revenue ex-TAC margin in the quarter was 41.4% improving 1 percentage point compared with Q4 2013. For fiscal 2014, our global revenue ex-TAC increased 70% or 72% at constant currency to €304 million, compared with €179 million in fiscal year 2013. As a reminder, our year-over-year growth in 2013 was 66% at constant currency. In fiscal 2014, our revenue ex-TAC margin improved 50 basis points to 40.8% and remained points well within our long-term target trend of 39% to 41%. In Q4, revenue ex-TAC growth in the Americas continue to accelerate to 121% or 114% at constant currency to €33 million. In EMEA, revenue ex-TAC growth in the quarter accelerated…

Thank you. [Operator Instructions] We are now taking our first question from Ross Sandler from Deutsche Bank. Please go ahead. Your line is open.

Great. Thanks guys. And congrats on another big quarter. I guess just three quick questions. First, Americas; second, sales productivity; and then the third, the new Facebook stuff that was announced yesterday. So the Americas growth on an ex-FX basis looks very, very strong. I guess JB, you've been walking, can you just parse out the enterprise growth compared to middle markets and where you think that share gain is coming from? And then second on sales productivity, this looks like it's continuing to improve in the right direction as you move into some of these new international markets that you called out in 2015. How should we think about sales productivity? And then on the Facebook dynamic product ads announced yesterday, how big do you think this could be as a contributor in 2015? Thanks.

Okay. So let me take the first one, with respect to the Americas, yes, we are very pleased with the growth and we are very pleased because the growth was across the board. I mean, both from tier 1 on the MMS. So we've been delivering growth in excess of 100% in both segments. So its an across the board phenomenon. And we had also very strong benefits from the peak season where we've seen a very dynamic activity there. With respect to sales productivity, yes, you're right, I mean, we've seen a nice increase in the overall sales productivity, which is a combination of increase sales to existing clients that are directly contributing to increase sales productivity and two fronts and the other side investment into new geographies and into the growth of the market. So this is inline with our plan overall and that can be seen very clearly in the percentage of sales and operation cost when you look at this decrease in this percentage year-over-year is inline with our expectation. I think that for next year we have a strong investment program in place. But we should see again some incremental gain in sales productivity overall in 2015.

So regarding Facebook, we obviously are very excited with this deal and now we let Eric Eichmann, our COO to give you a bit more color, he is been definitely involved in the deal. Eric?

Great. Thank you, JB. Thank you, Ross for the question. So, as you know from the announcement that was made by Facebook, they are now offering dynamic product ads basically allowing customers to target folks on Facebook with ads that are built on a real-time basis with product recommendation. So this obviously talks to the core of what we do. We've been saying for a while that we've been working with Facebook very closely. We're happy that we can now finally officially say that we are serving ads with Facebook on their mobile application which as you know, is a big part of time spent by users. A couple of things that we also announced on our press release is we, among many advertisers that we tested, we tested Menlook and Promod to e-commerce, e-retailers and what we saw were great results where we drove 6.2% of their overall mobile sales and that of course won to about 25% of what all of their sales on mobile. So – and this is with an early product with Facebook, so our expectation is obviously that we will continue to improve the product and as we do that we'll start deploying this across all advertisers on our networks.

Thank you.

Great. Thanks, guys.

We will now take our next question from Brian Fitz from Jefferies. Please go ahead. Your line is open.

Thanks for the questions. Your competitors are under pressure while you guys continue to see tower riding growth. Can you discuss at a high level, really the biggest factors that are driving this from your client’s perspective? And regarding the roll out of version 3 of the Criteo Engine, should we expect the same cadence to roll out as previous platform updates? Thanks.

Thank you. JB, speaking. So, regarding competition first. Our clients on a very regular basis compare us with other competitors, which is fair and pretty normal in the course of business. And as we say you know, as I said in the beginning of the call, our performance is everything. So if you have the better performance, then the client is just going to pick you up. And so as on pretty systematic fashion we tend to get better result in those head-to-head tests. The clients, they choose us. And so, when we're out of performance where its very easy for our client to make the difference between player A and player B and if you have the best performing in the company you tend to win most of the market. That’s probably where the key reason why you're seeing much bigger momentum for us than – and some other players. Regarding the engine, as we said, we are already rolling out the new version, the new, new version by optimizing not only on conversion, but also on the size of the basket. As we did the previous one, its going to take several quarters to be a rollout across a whole time base, because as you know, we have now a very large client base and we have to do this client by clients. But we believe it's going to be a significant driver for our 2015 growth.

Thank you.

We will now – from Goldman Sachs, we will take our next question from Debs Schwartz. Please go ahead. Your line is open.

Great. Thanks, and congrats on the quarter. Two questions. The first one additionally on the Facebook deal. Are there any limitations on the inventory that you have access to and should we think of it similarly to other publisher deals that you have or there are things that make it different? And then similarly when you think about the access to inventory that you have are signing additional publisher deals, a big part of the strategy in 2015, are you kind of comfortable at where you are? Thanks.

Deb, thank you very much. This is Eric Eichmann. So, as with FBX with Facebook, when we started with them there were several parameters that sort of were changed over time to increase performance. We expect the same with mobile apps or dynamic product apps with Facebook. The – ultimately what works best obviously is something that allows full transparency and full bidding and full creative on Facebook and our expectation is that we will continue to improve in that direction.

Absolutely. And regarding your broader question, regarding inventory. So its indeed a bit part of our strategy and we keep on pushing to get more direct publishers. What people have to be aware is that, in the grand schema, there is a very large portion of the inventory which is not on the exchanges, where if you want to have access to this inventory you need to have direct deals with publishers, especially the premium inventory, the best stuff, which is obviously an inventory we are very excited to have access to on behalf of our clients. So we will indeed keep on pushing and investing more to expand our reach across publishers and access as many inventory as possible and when we can with preferred access.

Great. Thank you.

We will now take question from Douglas Anmuth from JPMorgan. Please go ahead. Your line is open.

Great. Thanks for taking my question. Guys, can you quantify the financial lift that you're seeing from the enhanced Criteo Engine perhaps just in talking about the impact on the spend per advertiser and then any early feedback that you have here on the basket size enhancement? And then also JB, you mentioned moving into other platforms as well as curious to get an update on where you guys are on email and then also what other platforms you could be looking at potentially, and then also if you have any update on your efforts in China? Thanks.

So, regarding engine, it depends on the type of clients, as now whether we are capable to measure and optimize targeting based on the size of the baskets, for client that has a very broad set of baskets, very large range, you have a bigger impact that follow on where all baskets are pretty much of the same size. So it depends I would say on the type of verticals, that when we have clients with very diversify catalog of products from low end products to really high end, this is where you see the highest impact of the new engine. Regarding your second question, yes, we are – we are excited that email is another very important key performance channel for our clients and as though we're trying to serve as many channels as possible. This was a very strategic move that we made. In 2015, we're going to keep pushing this. We are obviously looking to expand to as many channels as possible and we are looking at several others that might make sense for us. What we want to be sure is when we enter a new channel, we enter with something really new, disruptive and significantly better than the existing solutions. Our intention is not build me-too products compared to existing offers. So its time we decide to go into a channel. We do it at a time we feel ready that we have something really new and really creative like for our clients, this is what our clients are expecting, that us bringing much more performance – much better performance than existing solution. And we will be obviously happy to update you later in the year of any initiatives in new directions. Regarding China, Eric you want to give us an update of where we are?

Yes. I'll talk about, that’s good question. So, we established our office in China late in 2013 and we've had great progress in China, I think one of the challenges when you enter a new market where there are many new players both in the publisher and advertiser side, as you need you need build the two sides and we're happy we're now connected to three RTB networks and are growing or publisher relationships and now have made also good end [ph] roads into or advertiser side. So we're seeing it grow well and our expectation is that we would see acceleration of that growth in 2015.

Great. Thank you.

We now move on to a question from Charles Bedouelle from Exane. Please go ahead. Your line is open.

Good morning. Thanks for the time. Congrats for the fantastic results. Two questions, if I may. The first one is, can you give us a bit more details on the roll out of your cross-device measurement and how much of the 1 billion, maybe 1 billion plus customers you're reaching could be a part of that in the near or medium term? And the second question I guess is on the margin, I mean, you've made a tremendous progress on the margin side, does that change at all your long-term margin perspective? Thanks.

Thank you very much. So, regarding your first question, on cross-device this is a new product that we announced at the end of last year. It’s still at the early stage of the rollout and as we say it’s going to be one of the key focuses of 2015. Obviously our intension is to have the biggest possible reach, you never get 200% reach by definition, when you do crossed device matching that you try to get as close as possible to that. And when you think about it, it’s really scale issue, the more you see users, the more you identify users between different screens, different devices, the better ability we have to maximize our reach. So, as you pointed out, the fact that we already covering more than 1 billion users, unique users on a monthly basis globally put us in a very small categories of where you have only a handful of player that are capable to do this. And we believe this is going to further distinguish us from our smaller competitors, this ability to do cross-device at really big scale and we will be – obviously we're delighted to address you guys during the year on our progress in this area. Regarding margin, Benoit, you want to?

Yes. So, I assume that you were referring to the very nice increase in EBITDA margin for the year, and clearly this is a result of our very strong performance in revenue ex-TAC and a very large portion of that has flown through the EBITDA margin, yet we are still on the same I would say on the same path from the mid term perspective that you've seen in 2015 we have a large investment program and we see a massive opportunity in front of us. So, we will continue to manage the company, on an investments mode, of course, with the objective of continuing to deliver incremental gains but you should not assume that what you've seen in 2014 is going to repeat itself in 2015 given the very sizable investment plan that we have in front of us.

Thank you guys.

From Arete Research, we will take our next question from Rocco Strauss. Please go ahead. Your line is open.

Yes, hi. Thanks for taking my questions. Two questions I think. One on take rates, one on CapEx. And one on take rates, I think we take rates being up 150 basis points sequentially or 100 basis point year-over-year. And I guess the question I have is, how sustainable you think is that? And secondly, what's the cost actually of the increase? Is that clients paying more so you see like higher CPCs or is it like you trending more to lower quality inventory? And also you've given the outlook of like 437 million at midpoint for ex-TAC sales, is that base on the take rate we have seen in the fourth quarter? And yes, I will let you answer that first and then ask my second question on CapEx.

From an rev ex-TAC margin in fact, yes, its true that we've seen a slight increase in rev ex-TAC margin, but doesn’t change at all our philosophy and our view on the mid term range of the 39 to 41. I mean, we are already [ph] at the top of the range. I think what you've seen in Q4 is a result of the strong activity particularly during the peak season where what we observed that people are being increasing their CPC even more during the peak season that’s what we are observing in prior years that we should not draw conclusion with respect change in the overall dynamic of the margin over time.

Okay. Thank you. And the second one on CapEx, I mean, it looks like that CapEx as percentage of sales is coming down year-over-year. How should we think about that forward? And, what actually what have to do is like 290 million in cash that you have kind of collected now?

Well, on the CapEx side, I mean, thanks for asking the question because I think there is an important point to make on CapEx. Yes, its true we were just below the 5% which has been the traditional mark, 5% of revenue is what we've been spending in CapEx. Now in 2015 we have significant investments to be made, first in our data centers we are going to invest in significant redundancy capacity in the data center we are going to invest in China with respect to data center and that is going to push this percentage both the 5% that we financially shown. On the top of that we have also investments significant investment to be made in facilities we have two flagship offices in London and in New York that we have just signed. So all of that combined primarily driven by the data center we expect to be at 6% of revenues in CapEx in 2015. That is going to be probably a slightly exceptional year, so 5% to 6% long-term is still something that is reasonable to keep in your model.

Thank you.

I think we have time left for last question and then we're going to wrap up the call.

Thank you. And we will now take our next question from John Egbert from Stifel. Please go ahead. Your line is open.

Thanks for taking the question. So you described mobile as being at full scale of 80% of clients testing on the cross-device solution in December. I'm just wondering for clients that have tried this solution and that 80%, is there anything you can share on the proportion of their budget spend going toward mobile? And with your native mobile Facebook campaigns in the fourth quarter, is there anything you can share about performance of those campaigns relative to similar desktop campaigns? Thank you.

Thank you for the question. So the way we market our solution, current they don’t have specific budget for its screen, it would be very hard to manage this way, because more and more you had a continuum of screens, small, medium, bit ones, smartphone, fablets, tablets, laptop, desktop. What they want is to maximize engagement and correlation of their end customers across all channels. So, the way we work with them is with one global budget and with new mutually agreed ROI target, this is how – this is why we don’t report specifically spending that type of screen. What really matters is our – are client ready for this multi screen solution, revenues is 80% or then are, and are really investing heavily in this. We still have reflection of our clients because you know we have very large client base which are not fully mobile ready, either they don’t have an app or they don’t even have sometime a mobile specific website and we are strongly encouraging them to invest in this direction as mobile, it absolutely clear in their strategy. Regarding performance, and we've been addressing this point several times in previous quarters, what we've seen is very consistent performance across all our screens, typically as we said, as we shared previously the smallest screen you have typically slightly higher click-through rate and slightly lower post-click conversion rates and the two metrics tend to nicely balance each other. So overall we have a very consistent economics across all screens and all devices.

Thanks.

Thank you very much.

I think with this we're going to close this session. And thanks again for everyone for joining today.

That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.