Criteo decided to show off its retail media revenue.
During its earnings call Thursday morning, the company separated its retail media business for the first time.
The retail media division, which consists primarily of what Criteo calls Commerce Max, a listing network across retailers and online sellers, generated $50.2 million in revenue in the first quarter. This was up from $37.4 million in the same period last year.
Meanwhile, Criteo's Performance Media division, which handles its traditional retargeting business, reported first-quarter sales of $399.2 million, down slightly from $407 million in the same period last year.
Criteo's stock price rose about 10% after the earnings announcement.
conclusion
It's no surprise that investors agree with Criteo's last quarter performance.
From a capital value perspective, Criteo's balance sheet has improved.
For example, Criteo's first quarter total revenue improved slightly year-over-year, from $445 million to $450 million. But from a profitability perspective, Criteo has made a net profit of $9 million so far this year, up from a loss of $12 million in Q1 2023.
Part of the improvement in profitability is due to headcount reductions, including layoffs in April.
But there's another reason investors are happy. Criteo's traffic acquisition cost (TAC) decreased from $224.4 million a year ago to $196.2 million in the first quarter. TAC is the amount Criteo pays retailers, search engines, and other places where it needs to buy traffic.
subscribe
AdExchanger Daily
Get our editor's roundup delivered to your inbox every weekday.
And since retargeting is a part of the business that requires significant TAC spend, Criteo's TAC will continue to decline as retail media overtakes retargeting.
Google's plan to phase out third-party cookies for Chrome will also be a boost for Criteo, CEO Megan Kraken told investors. The company predicts a loss of about $35 million this year as Chrome becomes a far worse place to run third-party retargeting campaigns.
wait a minute. Didn't Google just postpone the deprecation until next year?
Mr. Kraken said Criteo's potential losses go beyond simply being postponed to meet the retirement deadline. However, she added that with more time to strengthen the post-cookie identity product, losses related to deprecations will decrease.
It's a bit of a bitter pill. But investors like the fact that Criteo has continued to buy back lots of stock this year, increasing the value of its remaining shares on the market even if the company's market capitalization remains the same. Kraken said Criteo spent $62 million on stock buybacks in the first quarter and plans to spend at least $150 million on stock buybacks throughout 2024.
retail story
Now, let's get back to Criteo's retail numbers.
Why is the company so keen to share them now, and why is it leaning so heavily into its retail media business when in fact its revenue share is still heavily skewed toward performance media and retargeting? It's clear that there is.
First, retail media is a place of growth.
Criteo's total ad revenue growth rate is 3%, which is lower than its overall advertising growth rate and may suggest that Criteo is losing market share. However, the retail media sector grew 33%, which far outpaces the market, Kraken said.
“We have major market reach with more than 200 retailers and 2,700 brands,” she said. “Our large retailer network puts us well ahead of our competitors.”
Criteo also recorded strong growth from distributors in the first quarter
Kraken attributed the boost to changes in how brands spend their retail media budgets. Rather than spending trade marketing funds directly with retailers on in-store marketing such as in-store displays, shelf placement, and coupons, brands use agency media buyers to direct their budgets to run national campaigns related to in-store and online purchases. provided to you.
“That's the magic of retail media,” Kraken says. “Focusing on that over the next few years will get us to where we want to be. That's the ultimate complement to shopping on Amazon.”
