CRTO numbers

Below are the numbers that I got by taking their reported adjusted net income and dividing by the number of diluted shares (ex-treasury stock shares). Note, Q1 2015 is my guess.

	Adj EPS (in Euros)				
	Q1	Q2	Q3	Q4	Total
2013	0.044	-0.085	0.117	0.127	0.203
2014	0.119	0.088	0.267	0.367	0.841
2015	0.25						

Now if I convert to USD using today’s exchange rate of 1.08735, I get:

	Adj EPS (in USD)				
	Q1	Q2	Q3	Q4	Total
2013	0.048	-0.092	0.127	0.138	0.221
2014	0.129	0.096	0.290	0.399	0.914
2015	0.272				

The company provides guidance in adjusted EBITDA which is different that adjusted net income. I think it takes a number of assumptions about their costs for each quarter. Below are the adjusted EBITDA and adjusted net income numbers in millions of Euros (not per share numbers):

Q end	  Adj. EBITDA	Adj NI		
3/31/13	  4.6	        2.2
6/30/13	  0.7	        -4.4
9/30/13	  11.6	        6.1
12/31/13  15	        7
3/31/14	  14.5	        7.6
6/30/14	  13.2	        5.5
9/30/14	  19.8	        16.7
12/31/14  32	        23
3/31/15	  19.5 (guidance)	

Midpoint adj EBITDA guidance for FY15 is 111.5M Euros. I’m trying to figure out how adj EBITDA translates into adj Net Income.


1 Like

Note, Q1 2015 is my guess.

Chris, a year ago they dropped from 4th quarter 2013 to first quarter 2014 from 12.7 cents to 11.9 cents… so I think your expectation that this year they’ll drop from 37 cents to 25 is waaaay underestimating! (especially with more business in US dollars besides)


1 Like

Chris, a year ago they dropped from 4th quarter 2013 to first quarter 2014 from 12.7 cents to 11.9 cents… so I think your expectation that this year they’ll drop from 37 cents to 25 is waaaay underestimating! (especially with more business in US dollars besides)

Maybe you’re right. I tried to estimate using their guidances of 19.5M EUR adj EBITDA. It is possible that they may blow away their own guidance, but I just tried to use their number. I haven’t gone through to try to calculate/project adj NI from adj EBITDA, but here are the previous numbers:

Q end	  EBITDA        NI	Rev	Ex-TAC	EPS
3/31/14	  14.5	        7.6	152.5	62.7	0.119
6/30/14	  13.2	        5.5	165.3	67	0.088
9/30/14	  19.8	        16.7	194.4	77.6	0.267
12/31/14  32	        23	232.8	96.3	0.367
3/31/15	  19.5			97.5	

So you can see that the midpoint of their guidance of the adj EBITDA is 19.5. Looking back to Q3 2014 they have adjusted EBITDA of 19.8 and this translated to an adjusted EPS of 0.265 Euros. That’s how I came up with my estimate of 0.25 EUR.


When calculating EPS why do you use their adjusted net income as opposed to their net income or adjusted EBITDA?

I see both Saul and anirban both used adjusted net income as well. I imagine there are pros and cons for using any of these figures? Or more likely I’m missing something very obvious here.

CRTO’s EBITDA removes their cost of revenue and R&D, which appears to have roughly doubled from 2013 to 2014. I guess it’s a bit unfair to not include these values, which affect the bottom line by quite a bit, and so go for the adjusted net income. Am I on the right lines here?

Hi Chris,

In the Q4 conference call, they did call out that we shouldn’t expect to see EBTIDA margin expansion in 2015, at least not to the same degree in 2014, because they intend to invest heavily in R&D and sales & marketing. However, their ex-TAC revenue guidance of €96M and €99M implies zero revenue growth in Q1 versus Q4, while they have traditionally done anywhere between 15 to 25% ex-TAC revenue growth sequentially. I think their guidance is a bit of a low-ball, especially with all their US traffic growth.

Market watch shows the current quarter’s estimate at 0.19 (I guess in Euros?), with the range being 0.07 and 0.24:…

Also see

With this one, the key is to look at client adds, publisher adds, and the average ex-TAC per client. As long as these numbers keep moving up, we know that CRTO is gaining market share. The other important thing to track is any changes in how privacy laws that might adversely affect CRTO’s business model.


1 Like

A few comments…

** CRTO is benefitting from sales growth and margin expansion – a powerful combination. The margin expansion isn’t sustainable but while it lasts we’ll see earnings grow much faster than sales.

** About 16% of net income in FY2014 was due to positive “Financial Income” – mostly the timing of exchange differences and hedges on the retained 2013 IPO proceeds. That’s a one-time event, so should be factored in if looking at comparisons based on ratios of Adjusted EBITDA to net income. (EBITDA doesn’t include Financial Income).

** Q3 sales and adjusted EBITDA results were much better than guidance, and Q4 and FY2014 sales and adjusted EBITDA results were better than guidance. Their guidance, at least so far, has been conservative.

** GAAP Earnings and Adjusted Earnings and EBITDA and Adjusted EBITDA – all those animals by whatever name – are all based on accruals and can be manipulated more easily than cash flow. So I look at cash flow. CRTO is generating increasingly positive free cash flow, is becoming self-funding (unlike many companies at this stage), and appears to be getting excellent return on invested capital.

** Even though this looks like a business with good economics, it’s not an industry that I understand, so reluctantly have to pass. I’ll be rooting for you longs.