Good morning, and welcome to Criteo S.A.'s fourth quarter and fiscal year 2024 earnings call. All participants will be in listen-only mode. Should you need assistance, please press the star key followed by zero. After the prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then one. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Melanie Dambre, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Criteo S.A.'s fourth quarter and fiscal year 2024 earnings call. Joining us on the call today are Chief Executive Officer Megan Clarken and Chief Financial Officer Sarah Glickman, who are going to share some prepared remarks. Todd Parsons, our Chief Product Officer, will join us for the Q&A session. As usual, you will find our investor presentation on our investor relations website now, as well as our prepared remarks and transcript after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements, which reflect Criteo S.A.'s judgment, assumptions, and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo S.A. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10-K and 10-Q filed with the SEC. We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year. With that, let me now hand it over to Megan.

Thanks, Melanie, and good morning, everyone. Thank you for joining us today. As we enter 2025, I am thrilled that Michael Komosinski will be stepping in as our new CEO. I am confident that he is the right leader to take the reins and continue to execute against Criteo S.A.'s vision and the exciting journey ahead. With over twenty years of ad tech expertise and a proven track record of driving accelerated growth and AI-driven innovation all at scale, Michael brings a sharp focus on execution and agility. To keep building on the momentum we have created, he will officially join us on February fifteenth. For my part, I remain deeply passionate about this company and its future, and I will be available to ensure a seamless transition. Looking back at the past five years, I am incredibly proud of what we have accomplished together. From a single product retargeting solution, which was in decline, to a multifunctional platform addressing ad techniques in the fastest growing sector of advertising commerce media, our momentum is evident. As we continue to deliver strong results with 2024 being our best year to date, we have become the platform of choice for the buying and selling of commerce media with promising prospects for the future. We have come a long way from that point solution business. It has been an incredible journey, and as I pass the baton, I do so with excitement for what I know that Criteo S.A. can achieve. Let me start off by sharing our top-level results for 2024. Our high safety ratio and strong execution have translated into double-digit growth for the third consecutive year while also expanding our adjusted EBITDA margin for the second consecutive year. These record results reflect the outstanding work of our teams who are…

Thank you, Megan, and good morning, everyone. We delivered record results in 2024 with double-digit growth, significant margin expansion, and strong cash flow generation. Starting with our financial highlights for 2024, revenue was $1.9 billion, and contribution ex-TAC grew by 11% at constant currency, reaching over $1.1 billion. In retail media, revenue was $258 million, and contribution ex-TAC was $254 million, up 25% year-over-year at constant currency as we continue to expand with our retailers, brands, and agency partners. In performance media, revenue was $1.7 billion, and contribution ex-TAC was $868 million, up 8% at constant currency. This includes 32% growth in commerce audiences due to clients' continued strong adoption of our AI-powered targeting solution and a 2% increase in retargeting over last year. We delivered a strong adjusted EBITDA margin of 35%, 500 basis points year-over-year, driven by operating leverage enabled by top-line growth and greater operational productivity while we continue to invest in our future growth. We delivered free cash flow of about $182 million, up 65% year-over-year. This represents 47% of adjusted EBITDA. Our adjusted net income increased 40% year-over-year to $268 million, and adjusted EPS was up 44% to $4.57 in 2024. Turning to our fourth-quarter performance, revenue was $553 million, and contribution ex-TAC was $334 million. This includes a year-over-year headwind from foreign currencies of $5 million, mainly reflecting the weakening of the euro against the US dollar. At constant currency, Q4 contribution ex-TAC grew by 7%, primarily driven by a 23% growth in retail media. Performance media was up 3% year-over-year, with commerce audience targeting up 15% year-over-year and 75% on a two-year stack basis, partially offset by lower retargeting and ad tech services and supply down 2% and 4%, respectively. After a slower start to the quarter, retargeting went back to growth in…

As you know, we successfully completed the transition

of our largest client to a direct sell model in 2024, and our 2025 guidance reflects the remaining impact until we fully lap the gradual transition in the later part of the year. We expect continued strong momentum across our client base and look forward to ramping up our partnerships with Microsoft Advertising retailers. We expect contribution ex-TAC to grow low single digits for Performance Media as we anticipate continued traction in our suite of solutions to drive performance for advertisers throughout the buyer journey from product discovery to purchase. Despite lapping significant AI-driven performance enhancements from 2024, we are excited about our platform innovation and look forward to ramping up Commerce Go over the course of the year while continuing to see benefits from our AI-driven optimization focused on expanding client budgets, and gaining share and scale by driving superior outcomes. We continue to review our disclosures to ensure they align with how we operate our business, our go-to-market strategy, and as we enter the next chapter in our transformation. We no longer plan our business around the deprecation of third-party cookies. This, along with over 80% of client budgets now leveraging multiple solutions throughout the buyer journey, means that we will no longer isolate the retail tactic when discussing our financial performance going forward. We are disciplined in strategically allocating our resources to higher growth areas while enabling productivity and cost efficiencies. In 2025, we are investing in high ROI initiatives that are incremental to our commerce media platform, enabling both scale of media spend and optimization of our operating model. Overall, we anticipate an adjusted EBITDA margin of approximately 33% to 34% for 2025. This reflects disciplined cost management while investing for the future growth of our commerce media platform, including scaling retail media capabilities and continued…

Yes. Thank you, ladies and gentlemen. We will now begin the question and answer session. To ask a question, please press the star then one. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause to assemble our roster. The first question comes from Ygal Arounian of Citi. Please go ahead.

Hey. Good morning, Tim.

Sorry. I want to double-check. Michael is on the call, right? For Q&A? No. No, he is not.

Oh, he is not. Okay.

Alright. Well, then I cannot ask the first question. He is not with us. Yeah.

Fifth, three fifteen. Okay.

Alright. Great. So, well, Megan, congrats on the accomplishments here at Criteo S.A. Good luck on your retirement and next steps from here. We will miss you here. And so as you exit, just a bigger picture retail media question. Just maybe what the surprises were in Q4 on the strength, and then as we think about next year, you know, gross media spend take rates, and the biggest drivers of retail media. How should we be thinking about all that? I know you hit on it in the prepared comments, but just expand on that a little bit more.

Yeah. Let me do this in a couple of ways. I will open it up pretty big picture and actually, I will pass it across to Todd to talk about the sorts of things he is hearing in the market space around retail media. Because it is hot, as you know, and then any color financially, I will pass it to Sarah. We are in the right place at the right time. And before the call, I was saying to the team how far ahead of the market I believe we are given how long we have been doing this, how hard it is, the progress we have made, the client base that we have, the size of those clients, so that feels very secure to us given the work that we are doing with them. The competitive drop-off, meaning the lack of competitors that we have seen in the marketplace compared to when we started this. And what is lost on a lot of people is how hard it is to get there. So when I talk about the five-year, four-year story here, that is how far ahead we are. And so for companies wanting to move into the space, they have to catch up. And you know, we were delighted to be asked by Microsoft last year to, you know, basically partner with them for their retail media play because they wanted to focus on other things. So you know, I feel terrific. Michael feels terrific. The entire company is leaning into this opportunity, as are our clients. And we are hearing more and more in the marketplace about the opportunity that is retail media. And not just what it is today, but what it will be tomorrow as it really sort of embraces what it has to offer with scale. And the last thing I will say, because I will give this to Todd, is I talked a lot in the opening remarks about the holistic view of advertising with retailers being a big part of that, and Criteo S.A.'s ability to provide precision performance, ROI, attribution. All of these things are things that do not come easy, but we have them, we provide them. And once again, being ahead of the market, a market that is asking for those things is just a fantastic important position to be in.

Yeah. I can add to that, Ygal. Nice to hear from you. I think there are only a couple of points to make in addition. One, we are tracking very well with our agency and large brand spend relationships. As I think everyone knows, our relationships with the holding companies and agencies are relatively new. And they are beginning to bear fruit as we gain share and momentum with each of those partnerships. In the course of managing those partnerships, we have several different product solutions which give demand paths for gross media spend to increase over time. Obviously, we have CommerceMax, which is growing. We also have begun to gain traction with our commerce grid solution, which serves the agencies other choices and DSPs. So a combination of our product mix and our relationships is really putting a bloom on gross media spend overall. And we are set up for handsome growth as the years unfold ahead of us. As Megan said, then I can just take the financial questions. So first of all, for retail media Q4, we had an exceptional quarter. So very proud of that. Obviously, driven by significant media spend coming into our network, including about a 46% increase year on year in the Americas. For the five to six, we, you know, we grew across our largest retailers. We saw the number of brands advertising going up 20% year over year. One of the key reasons why we were higher than our expectation was because we triggered some higher fees for achieving annual volume thresholds that happened late in the quarter. And that will also slightly benefit Q1 2025 comps as well. So just exceptional performance by the team, and as we go into 2025, we are in fantastic positioning. We have strong growth from the $250 million base from 2024. As we talked about in the retail media day, we know we are looking at retail media as a rule of business. So we are doing all the things right. We are investing in fueling the future. We have just continued to sign global cold call deals. We continue to see spend coming in from other categories into this space. And in terms of the guidance, 20% to 22% for 2025. And we represent lapping a pretty spectacular year as well as for some of the known changes we made this year with the largest retailer as well. Oh, very, very excited where we are, where we are going, and we see this fueling our growth for the foreseeable future.

Great. Triple answer to that question. I feel a little bit bad asking the follow-up, but just maybe just real brief on the margin profile and outlook. Was there also any specific one-time things in Q4 given how big of a beat that was relative to expectations? And as we think about next year, even with the one-point drag you pointed out, you know, you are well ahead of the margins you set out at the 2022 Investor Day. You know, how do you think about the margin opportunity, growth, and investments? Thanks.

Yeah. In terms of the Q4 adjusted EBITDA, which was also a fantastic result, about $3 million of that came from the top-line outperformance and operational leverage. About $5 million of that is from the weaker euro. So, you know, we actually have a significant technology base in Europe, and so we benefited from the FX. And also just lower people costs. We had a pretty high ask in terms of incremental investments, particularly in R&D, and just with Q4 and people, you know, holding until, I guess, till bonus season and incoming. They are coming more in Q1 versus Q4. So some of that is timing. And also, we had spectacular traction in our collections processes. You know, this has just been a build. Yeah. Over year over year. So just lower DSO for lowest ever actually for our performance media businesses. That also resulted in lower bad debt expense. That was about $4 million. And then I think you were asking me, you also asked about 2025.

Yeah. Just how you think about kind of margins, but I am taking up a lot of time. I have to make it quick and move on to others. Thank you.

Okay. Great.

Thank you. Our next question comes from Mark Kelley of Stifel. Please go ahead.

Great. Thank you very much. And Megan, congrats. Looking forward to hearing what you are going to do in retirement. It has been a pleasure working with you. Two quick questions. One, I would love to hear your thoughts on Amazon retail ad service. And just, you know, I guess, the puts and takes. You know, they would like to maybe try to compete with you a bit more. And then second, on the bid switch, you know, headwinds in Q4, it sounds like you took some actions to kind of, you know, fix whatever the issue was. Is that something we can expect to go forward, or does that large ad tech partner maybe revert back to older behaviors that were a little bit more favorable? Thank you.

Thanks, Mark. Let me just, firstly, thanks for your comments, and I will surely call you and tell you what I am set up to in a different time. Great question. So, and they are both, I am going to hand them off to both. But let me start with sort of the Amazon one, and I will take it from a high level, and then Todd will get into that. On the bid switch side, we have taken some actions. The business is certainly performing better. It has a better 2025 profile. But I will toss it across to Sarah to give you some color on that. On Amazon, you know, this is a, they, I think they have three clients. It is a very small client base onto their new service. It is a very long-tailed play. You know, way long-tailed play. It does not focus on our client base in retail media. In retail media, we are more at the top of town. The 225 clients that we have are focused on very specific things. And for the most part, what we hear from our clients is a reluctance to partner with Amazon to provide the service because they compete against Amazon. And, you know, there is a notion that if there is another offer available, it certainly pays to spread the service around. So not just not have all eggs in one basket, which is certainly something that our clients, not just on the retail side of the brain side, are aware of. And so this one is, you know, all of these things are always worth looking out for, but it really does touch a different part of the market than where we service. And we are going to continue to do what we do at the higher end of the market base that we have. Todd, do you want to add some color?

I can add a couple of things to that, Mark. Nice to hear from you. First of all, just to emphasize what Megan said, our product suite is, you know, built with neutrality and interoperability between, you know, the entire landscape of retail media in mind, and that is directly opposed to Amazon's positioning. So it is challenging for them, as Megan said, to, you know, get into the market, especially with data sharing concerns that exist for small retailers and large retailers alike. But our neutral position is very important. On top of that, from a product perspective, we take a modular approach in serving retailers of those 225 that are focused today, which can be easily ported to the long tail. So the coverage of our product meant, which goes well beyond Amazon's focus on sponsored products here with this offering, is important to point out because we are covering the full page with video and display and sponsored products for our retailers. As I said, that is a portable solution. And of course, we cover off-site as well. So the scope of our solution, the fact that we are neutral, and the fact that we can take that to different parts of the market as it matures and grows as an opportunity is our option. And that is a very good place to be in today relative to what you are seeing from Amazon.

I can just take home the ad tech services. Yeah. I mean, the biggest challenge for 2024 was, you know, technologies that take place. Trading moved basically in-house, if you will. But we have taken a lot of mitigation actions here, and we do have, we have made customers, you know, with all customers in those states that are accelerating. Moving into new platforms and formats. We are doing programmatic trading for CTV. So there have been a number of actions in this business, but ultimately, we will lap those large ad tech players in 2025. So the right actions on the top line, but also importantly on the bottom line. So yeah, overall, we look at our entire business as a rule of law. We look at how do we ensure we have the right resources and investments going into the right place. And we continue to see strong operational leverage across all our businesses from the top line to the bottom line.

Very helpful. Thank you very much.

Thank you. Another question comes from Mr. Mark Zgutowicz. Please go ahead, sir.

Thank you. Good morning, Megan and Sarah. Really nice upside on the retail media takeaway, at least relative to our expectations. And I was just curious, how much of that benefit or upside that you saw in the fourth quarter was sort of lapping that large client transition that I think you may be lapping here now? And then how meaningful were off-site volumes in terms of driving that take rate relative to on-site efficiencies that you continue to see? Thanks.

Yeah. I mean, first of all, for the most part, we saw significant growth in on-site sponsors. So that was certainly the area that is our sweet spot, and that is where we saw significant growth. For sure, on-site sponsored is that being said, we also saw ramping up in our site, but where most of the budgets are going and certainly were going during the holiday season. And, you know, we do not comment on specific clients, so I am not going to give specifics on clients, but we have a blended take rate. And the outside was from two things. One was the business spectacular growth, I would say, across the client base with new clients ramping up. And then second, those tiered fees for breeding annual thresholds in, as I said, in the Americas, we were at a 46% media run rate increase year on year. So that was good news for us. That will bleed into 2025. We do see a resilient take rate overall. And I would also look to some of the comments we took at the retail media event where we talked about resilient take rate. Our continued assumption is that we have continued strong media spend above market and in particular in the Americas as well, given that is our largest market. And that we have retail media take rates above the mid-teens.

Thanks, Sarah. And if I could perhaps ask just one unrelated question related to Microsoft. Just curious how much that was contemplated, the contribution there, in your either first quarter or annual guide. Thanks.

Yeah. In terms of overall contribution, we have some of those baked into the plan for 2025. It is progressing well, and, you know, we do see that some retailers will start to launch in the first half. I would say for Q1, you know, likely, alright, pretty natural, no impact, but ramping up going into the second half.

Great. Thanks very much.

Thank you. Another question comes from Mr. Richard Kramer of Arete Research. Please go ahead, sir.

Thanks. Thanks for being refreshingly forthright, not just promotional on...

So, Richard, we cannot hear you. I am sorry. Can we maybe move to the next question and then we will bring Richard back in? Can you hear...

Yeah. Yeah. Now we can hear you.

No. Sorry, Richard. We cannot hear you. So we will bring you back in. Can we maybe go to the next question, and then we will bring Richard back in?

So our next question comes from Tom White of D.A. Davidson. Please go ahead, sir.

Great. Thanks. One quick one for Sarah and then a quick one for Megan. I guess just on the guidance, you mentioned potential kind of, you know, upside opportunities. I guess after Microsoft and kind of the ramp of that, you know, sort of the pace of that roll-off, could you maybe just enumerate maybe one or two things that would be, you know, potential meaningful upside drivers in 2025? And then Megan, again, congrats on the retirement. You made comments in the prepared remarks about agencies increasingly viewing Criteo S.A. as sort of an enterprise play. Could you maybe just quickly elaborate on that, what you meant there? Thank you.

Oh, yeah. And, Tom, in terms of, well, first of all, I would say, you know, Michael is coming in, like, in the next week. And so we do see potential. He is certainly looking for us to have another spectacular year. What is built into our guidance is, I would say, continued traction across the board, seeing the new capabilities on our product roadmap going into the second half. And where we see potential upside would be places like Commerce Go. Yeah. We are in beta testing now, and it has been a terrific upstart, and just to move that across the base of our client base, we do see some potential upside on that, but, obviously, we are not at that stage yet. And we do have a lot of new capability coming into our product roadmap that will be more towards the end of 2025 going into 2026. And, obviously, there is a lot of focus on the loss, ensuring that those updates come in as quickly as they can, but they take time to build, right? And Todd, I know, wanted to add some commentary as well.

Yeah. I think that maybe just reemphasize what I said earlier in response to Ygal's question, which is, you know, agencies have now a view of Criteo S.A., which gives them free pass for them to get into the commerce media space and their into retail media. Sarah just mentioned Go as being a very promising, very automated view of that world that competes with Advantage Plus and Performance Max, which are increasingly getting taken up by agencies. In addition, we do have a commerce-focused DSP, which gives a trading function in an agency the ability to plan, buy, and measure their retail media budgets across retailers. And then, of course, we have Commerce Grid, which is our SSP offering that will service the DSP of choice if it is not Commerce Max in the agency, all of which is to say that we can be seen as an enterprise-level partner and are being seen that way with agencies. In many ways like Google, but incredibly focused on commerce all day every day.

Thank you. We now...

Okay.

We now have Richard Kramer from Arete Research. Please go ahead, sir.

Can you hear me now?

Yes. Yes.

Oh, okay. Sorry about that. Equipment failure. Megan, thank you for being refreshingly forthright, not just promotional, in your communication over the years. I guess my question for you is, given the comments on the agencies and the two-year contracts, when you leave now, what sort of portion of a 2025 budget or forecast is now broadly covered for the start of the year, and sort of what sort of visibility do you have in the business relative to a few years ago? And I have a follow-up for Todd. You know, Megan mentioned Meta with respect to partnerships. And recently, your code was seen in ads TXT files at Pinterest. Can you speak to sort of what specific competitive edge you would get, whether it is in performance or margins, of getting access to much wider pools of inventory and all these social inventory alongside the retailer or website inventory you have got in retail media? Thanks.

Thanks, Richard. Let me just start with this one, and then because it is about financial planning, I will pass it across to Sarah. But we have a pretty rigorous process in terms of how we get through our plan every year. It is a top-down, bottom-up process. We look client by client, we look at client contracts that run across the year and those that need renewing through the year. We look at opportunities. We look at the ROI that we attribute to investments made in the prior year or years or anything that is an investment that will be made that will roll out in the current year. We are a business like any other business that does their financial planning for a year. And we try to get as much insight into those numbers as we possibly can. And, of course, weigh out sort of the risks and opportunities on the way through. That is me in a sort of, that is you have a high-level view on. Throwing to Sarah for a bit more color.

Yeah. Well, I mean, I think you have actually said it. A lot of the agreements are signed. Obviously, then we have to focus on the spend coming in. What we did see in Q4 was that we continue to see spend coming in retail media and reading other players' earnings even in the last day. Plan itself, you know, that is clearly where the money is going, and that is where we are. In terms of the, it is based client by client with growth rate kind of associated kind of year on year. We also know expectations, you know, for our clients and what growth they want. So it is a detailed plan. We have, I would say, baked into that all the known clients and expectation of new clients coming in, ramp up of new capability, and, you know, fairly some, I would say, some degree of caution knowing that every single quarter and every single year, we just have business and business happens, and there are some puts and takes within that, and that also gets factored in. So we feel good about, very confident about the overall guidance for Criteo S.A. in terms of retail media. We had a spectacular year this year, including Q4. So it is certainly, you know, I would say a tougher budget for retail media, a lot of things that need to get right in terms of new capabilities in Microsoft partnership, etcetera, that, you know, could be potential upside to that as well.

Richard, nice to hear from you. On the question about Meta and social in general, I just want to go back to the fact that it continues to be our objective to help retail and direct selling clients to meet consumers, customers, their customers, where they are. And where they are most likely to discover new products, consider them, and buy them through the buyer journey. So that continues to be the mantra. The promise that we are making product-wise is not just to do that, but importantly to be able to hold for performance outcomes constant across those channels in a way that makes it much easier for a buyer to get what they want. Which is an acquired customer that has a higher lifetime value to get their product discovered for the first time. And so what we are doing is making sure that we are not just reaching new channels, but we are making sure that they perform at a constant rate relative to one another or we reallocate dynamically budgets across them. So that is the competitive advantage that we have. It is not just a channel play. It is an outcomes play across channels, and that is very unique to our company.

Okay. Thanks, Todd.

Thanks, Megan.

You bet.

Thank you. Our final question will be coming from Mr. Brian Pitz of BMO Capital Markets. Please go ahead.

Thank you, and I echo the congratulations to Megan on retirement. Sarah, in the prepared remarks, I believe you mentioned possible guidance upside depending on some internal strategic initiatives. Can you provide additional insights there? And also, I think you have thirty retailers leveraging retail media off-site campaigns. Any sense on the spend you see from these clients versus those not using off-site and what you need to do to drive more clients to these off-site campaigns? Thank you.

I mean, the strategic initiatives actually relate to everything that we are doing for 2025. So it is a four that was a board, and we have very deliberately put investments in place to drive new areas of growth. I think Todd spoke about some of those, but we feel we are in a unique position with our large board client base on performance media as well as retail media. And there are investments across the base for that. So it really relates to traction on all those initiatives. And, obviously, with Michael coming in, you know, we are laser-focused working with him to ensure that we execute on those. So the upside is that we want to have another great year of growth, another three years of double-digit growth, and we will be highly focused on ensuring that those initiatives all come to market as successfully launched as traction in terms of adoption as well.

Yeah. I just added that, Brian. I mentioned before, you know, we are covering the entire buyer journey with our capabilities. Off-site is a channel for retailers, which can be cheap reach. Otherwise, there are partners that buy it. Aren't going to be that interested in it over time. So for us, driving dollars to off-site is really about helping a retailer be sure that they are providing their brand partners with something that isn't cheap reach. That is an effective way to either find new buyers for a product that they are stocking or driving traffic that is considering those products off-site and being able to attach those KPIs very clearly to a purchasing event or a set of purchasing events so that incrementality is achieved, and that is incredibly important. In terms of growing the channel, that is going to be about how each retailer sits in their maturity and how they are packaging their wares, their data, their audiences, and their inventory for brands buying with their networks. So we look at it more holistically. Then we look at it as simply off-site versus on-site. This is very much a dynamic that we are built to serve all, not one.

Great. Thank you. Thank you, ma'am.

Thank you, Megan. This now concludes our call for today. Thanks, everyone, for joining. The Investor Relations team is available for any other questions. Have a nice day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.