CRTO is growing earnings at over 300%. Saul, their Q4 press release says 2014 Adjusted EBITDA was 79 million euros and for 2015 management is guiding to between 108 million and 115 million. Even at the top range, that’s less than 50% growth…Am I screwing that up? Or do you think they’re horribly sandbagging? 50% is a long ways from 300%.

Neil, CRTO is also a fairly recent MF Stock Advisor recommendation so you might get more information from the recommendation and the board.

Also, I hope anirban might be so kind as to post the links to his wonderful three part series on CRTO.


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I reposted my CRTO notes.

Part 1 - provides a general introduction to the ad tech world (at a very high level).

Part 2 - provides a general introduction to the CRTO business, based on its annual report.

Part 3 - Q3 2014 earnings and conference call notes.

Part 4 - Q4 2014 earnings and conference call notes.



Thanks so much anirban. Great descriptions.


Your 3 posts on CRTO are unbelievable in their thorough detailed analysis. We all owe you a huge debt of gratitude!

I, for one, am persuaded. Their performance has been nothing short of spectacular. CRTO is now an above average position for me thanks to your analysis. I am up 11%. I eagerly await May 5 when their next earnings report comes out.

Thank you.



Hi Saul,


I have added a bit more to my CRTO position, and I have written couple puts as well to capitalise on the potential upside.

Let’s see how this goes … I 'm thinking they will surprise given their history of low balling guidance.


I 'm thinking they will surprise given their history of low balling guidance.

me too!


Great write up. You made learning about CRTO easy and fun. I really appreciated you breaking the subject into four digestible pieces, and your clear writing, and of course your analysis skills. Thanks for sharing!

I read through four recent analyst conferences and culled the following tidbits.

On the competition:

So we have typically two types of competitors. You have on one side the incumbents, the ones who were in the market before Criteo. Strictly those guys are selling on a CPM (cost per impression model), and we are disrupting them by going into this pure CPC (post-click attribution model). And we have been replacing a lot of them, especially at Tier 1 accounts here in the US. And this is just the beginning and more and more clients are going to shift from one model to another one. So this is the first bucket.

The second bucket is our direct what we call the Criteo close, people trying to do exactly what we do. These are typically new companies coming into the market because, interestingly, when you have been doing CPM for a long time it is super hard to move to a CPC model. Basically, you have to rebuild your whole platform, which is very hard which typically incumbents are very reluctant to do so. So we have those new players coming in and trying to replicate the Criteo model. Very hard for them to get at scale, especially now where we are, and we see the gap between us and them growing over time. We are winning all the tests we do with our clients, head-to-head tests against those guys.

About Google:

Google is a huge company and obviously they have many initiatives in many areas, so they do have a product which is directly competing with us. When we do a head-to-head test with them, TLA, we have a very big edge. We have much more data, shopping data than them into our system. We have a much bigger reach on the publisher side, so we have some key structural advantages.

At the end of the day, Google is much more a partner than a competitor because most of our relationship with them is driven by the ad exchange where we are a very, very big buyer. And in a way we share a lot with Google. We have the same DNA about – with a strong belief that technology is driving everything and that if you invest a lot in technology good things are going to happen.

About Facebook:

What is really important for us is to be able to effectively reach those clients where they are and clients are spending more and more time, obviously, in social. That’s one of the reasons why it is important for us to be well connected with an in-apps inventory, on Facebook in particular.

Facebook is a very native environment so we have developed that integration on the Facebook Exchange. And we have been growing our spend on the Facebook Exchange to a point where it has been in 2014 around 12% of our revenue ex-TAC has been generated from impressions that we buy on the Facebook Exchange.

The new initiative for the product ads would be additive to that and is probably the more important in terms of newsfeed. So what we’ve announced through this partnership with Facebook, that we have tested with very good results in Q4, is that now we are in a position to deliver advertising in application while you are on Facebook. It’s going to take some time in Q1 and Q2 to scale that solution. We are used to that because we’ve worked with Facebook in the past and we feel confident that second part of the year we should be able to have this solution well scaled, which should enable us to become a significant player there as well.

About their competitive advantage:

We have access to really special shopping data at a massive scale. We like to say we have more shopping data than all of eBay and Amazon combined. And this is absolutely critical to do what we are very good at is to predict the user’s shopping intent.

On the exchanges they only see a very small fraction of the overall display inventory. So if you want to have access to really the good stuff, you need to go and make those direct deals with publishers. This is why our publishers team is so critical to our business. So it’s roughly 75% of our revenue ex-TAC generated without any agency in the mix. On the rest, the bulk of which is from Asia is directly connected with the clients, but with the agency that is remunerated on the top by the clients.

About the market opportunity:

So, if we look at the overall addressable market for those channels today net, so net of TACs, or revenue ex-TAC, is $9 billion. So, if you look at our size today, we’re probably – by those metrics, looking at this broad universe, we’ve got probably 5% of the overall broad universe that we are penetrating today. Now, this market is growing very fast and there are additional channels that we can add to the current channels. So, if we look at the 2018 view, what is $9 billion today is probably $18 billion to $20 billion in 2018. But that would obviously include entering into new channels.

First the large accounts, what we call the tier one accounts, which are the top 100 in the US. We will look at the top 200 because of the size of the market, but in general top 100 potential clients in our core verticals of travel – of the retail, travel, and classified in each market. And we probably have today a 50% penetration in number of accounts worldwide, around 50%, which leaves massive room for increased penetration for tier one. So you’ve got sizable businesses that would have always more than 50,000 unique monthly visitors on their sites. These are really sizable businesses; businesses that people would know about.

If we look at midmarket, we entered in midmarket more recently. Midmarket – maybe let me remind what midmarket is, because midmarket – what we call midmarket is what comes just below the large accounts. Today we believe that we are probably in the market that we address today in midmarket, and we are not in all geographies, around 15% penetration. So there is a massive opportunity to increase that penetration and if you look at the contribution of midmarket to revenue today, it is around 20% of our net revenues that is coming from midmarket. So I would imagine this figure of 20% is going to grow significantly over time as we increase our penetration. Can midmarket be as high as 40% of our revenue at some point? Yes, probably given the reservoir of demand that we have in front of us.

We have also an ability through email, and that’s the reason why we made this acquisition last year, to very effectively reach out to users through email. Because we have targeted email. On quality opt-in email you can get very eye-opening rate, in 30% opening rate, and then with pretty good click through rate, also in the 30%, from the open email.

Modeling the business long-term:

[Gross Margin] We guided around 40%, I mean, 39% to 41%, what we gave in our long term model. And we are very much within that range. And around 40%, we are close enough to the optimal margin, we believe, to maximize the volume.

We are currently at 10.7% EBITDA margin – adjusted EBITDA margin in 2014, starting from 6% just at the time of the IPO towards our long-term model of 15% to 17%. On significant free cash flow generation, we have been translating, converting two third of our adjusted EBITDA in 2014 into free cash flow.

Key drivers:

We have two critical drivers. The first one is to expand our client base. The second one is to expand value we deliver to our clients. So if you look at the first one, which has been traditionally the main driver of growth, 60% of the growth in 2014 came from the increase in the client base. We have significant geo-expansion opportunities in front of us. The company is very global today, but there are few geographies that we have not touched yet or there are geographies as we just answered recently, but there are also geography like the US for us where we have a very significant penetration, increase in front of us. And our overall penetration in the US is below 50% in the Tier 1 segment, leading the verticals where we operate today. So there is significant growth potential even in countries like the US.

So we are going to enter new countries in 2015. We are going to enter Turkey; we are going to enter Middle East, in Dubai; we are going to enter Canada; and we are going also to increase our presence in Southeast Asia. And we’ve got the mid-market – strong level of growth in the mid-market as well where we have a pretty low penetration and very significant growth.

On the other hand, there is massive opportunity as well as we’ve demonstrated in 2014 to increase the value that we provide to our existing clients, and we do that through constant announcement and continuous improvement of our technology through the new release of the engine that we did last year. Now, there is a new version that we are implementing this year, but also adding new challenges, with adding email recently is also providing a significant opportunity. And we’ve got features like cross-device that are going also to provide additional opportunity for growth within existing base.

Above gathered and edited from the following:

3/9/2015 – Deutsche Bank Media, Internet and Telecom Conference
3/4/2015 – Morgan Stanley Technology, Media & Telecom Conference
3/3/2015 – Pacific Crest Emerging Technology Summit
2/10/2015 – Stifel, Nicolaus Technology, Internet & Media Conference

Benoit Fouilland, CFO
JB Rudelle, co-founder and CEO



Anirban - So at times I feel pretty stupid. You said you reposted your notes, Parts 1 - 4. How exactly do I access them? Where are they reposted?

Sorry if this is a ridiculously obvious question, I just don’t know where to look.

Thanks, br

I’ve invested quite heavily in this company, though I’m still a bit foggy about what exactly they do, and how exactly they do it.

It appears that they are tied to search. Search on Google, Search on Facebook, Search on Ebay, etc. I think it was in Ears’ notes where the CEO said they are more partners than competitors of Google. This was attributed to a shopping behavior database that exceeds Google and Ebay combined.

Did I miss it, or overlook it, was Amazon mentioned?

And when we look at the geographies they’ve not entered, what relationship might they have with Ali Baba, Baidu, Yandex and others. Can this be viewed as untapped opportunity, or is more like an enormous competitive threat?

DOH! nevermind . . .


Ears, after doing that incredible collection of positive excerpts on CRTO, you say “No position in CRTO”. You must be a hard man to convince, even by yourself.


after doing that incredible collection of positive excerpts on CRTO, you say “No position in CRTO”. You must be a hard man to convince, even by yourself.

Hi Saul,

All those positive things were said by the people with the most incentive to say them, so there’s that.

But really it’s investing style…I’m looking for better odds than currently being offered to compensate for my unfamiliarity with the horses and track.


But really it’s investing style…I’m looking for better odds than currently being offered to compensate for my unfamiliarity with the horses and track

You are a welcome addition to this board. Could you give us a couple of companies, that represent your investing style, that are in your portfolio.



Could you give us a couple of companies, that represent your investing style, that are in your portfolio.

Hi Andy,

Thanks for the greeting. I’m primarily invested in funds and a few fixed income things. I keep a small amount set aside for investing in individual stocks, which right now is in cash, not by design but by circumstance. Enghouse Systems (TSX:ESL, US:EGHSF) and MTY Food Group (TSX:MTY US:MTYFF) are examples of businesses I invested in over the last few years, but no longer own.



Thanks Ears,
Keep your insights coming. They are very illuminating.


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