Jean-Baptiste Rudelle had made no secret of this last April, when the founder of Criteo had returned to operational controls: the year 2018 would be difficult for the specialist in online advertising targeting. And she was. After years of growth of 30% or more, the exercise just closed Criteo pale.

The group's turnover for the first time stagnated in 2018, to 2.3 billion dollars. And the other indicators recorded the same sudden braking. While Adjusted Ebitda shows a modest increase of 4%, net profit is down 1% to 96 million euros.

The Apple tackle

The origin of the deceleration dates back to autumn 2017 and Apple's decision to largely expurgate its browser, Safari, "cookies". These cookies are essential to retargeting, the heart of Criteo's business model. Clearly, they allow him to track a user and offer him again, on other sites, a product for which he has shown interest.

At the time, Criteo had had to drastically lower its revenue forecast for 2018 by 22%, plunging the stock into turmoil. In one month, the Criteo share had lost half of its value. Strongly shaken since, it reached a low point last November, after Facebook removed Criteo from its list of preferred partners, barring access to tests of new features on the social network. Since then, it has recovered but remains below the $ 30 mark, very far from the $ 55 touched in May 2017.

Diversification in progress

However, Criteo has absorbed the shock better than expected. Fourth quarter results, in particular, positively surprised observers, with revenues almost stable compared to 2017, against an announced fall of 4 to 6%.

The group is also benefiting from its diversification. It has invested heavily in recent years to reduce its dependence on "retargeting" and become a major player in advertising in mobile applications, but also support for brands who want to know their customers better, bring them to the store. .

Criteo has regularly released his checkbook to accelerate this transition. The purchase of Hooklogic in 2016 for $ 250 million was a turning point. This year again, the acquisition of Manage or Storetrail confirmed Criteo's aims. With some success: these "new solutions" weighed 13% of revenues in the last quarter – up 54% year-on-year.

A sword of Damocles continues to weigh on the "retargeting": the possibility that Google, which dominates the market of browsers with Chrome, embellish the step to Apple on the restriction of cookies. Firefox, the third thief although far behind, has committed. But Criteo does not believe that Google, also very dependent on the digital advertising market, will risk it.

Same for the risks related to the GDPR. The new European regulation on personal data has weighed less on Criteo than expected (about 2% of revenue excluding traffic acquisition costs). The wind of the ball is past, wants to believe the little prodigy of advertising. Better, the RGPD would even have helped clean up the market.

Criteo is therefore confident about his restart. The group expects its revenues (excluding traffic acquisition costs) to increase between 3 and 6% in 2019.

Sébastien Dumoulin


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