# 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.

``````
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:

``````
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):

``````
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.

Chris

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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)

Saul

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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.

Chris

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:
http://www.marketwatch.com/investing/stock/crto/analystestim…

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.

Anirban

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