Criteo flaunts its retail wares as sell-off speculation mounts

Buoyant stock price

Gross profit — $247 million for the quarter, and $795 million for the 12-month period — was largely flat with a respective 1% and 2% increase with C-suite executives at Criteo crediting a “challenging economic environment” during the period.

A closer look at the numbers reveals that “marketing solutions revenue decreased 19%” during the quarter while retail media revenue decreased 21%,” claimed the company in a statement.  

Albeit, retail media contribution ex-TAC increased 19%, or 23% at constant currency, largely because of new client integrations and growing network effects of the platform.

Looking forward, the company forecasted revenues of $210 million-to-$216 million for the opening quarter of 2023, or 5%-to-7% annual growth, with fiscal guidance for 2023 in the range of “high single-digit to low double-digit growth” in contribution ex-TAC. 

Despite the depressed earnings numbers, Criteo’s stock price remained high compared to 24 hours earlier when a Feb. 7 report from Reuters maintained that it has appointed investment bank Evercore to explore a potential sale.

Even though Criteo’s C-suite expressly ruled out the prospect of discussing the latest reports of mergers and acquisitions, executives laid bare its assets that may prove attractive to potential suitors on its subsequent earnings call. 

Who and why?

Although this hasn’t prevented industry observers from pondering the prospect of Criteo as a potential M&A target with both private equity and fellow independent ad tech players among the names thrown in the mix. 

PE players have swooped for ad tech in the past two years with Vista Equity Partners’ $1.4 billion purchase of TripleLift and Bridgepoint’s investment in MiQ. Although given that Criteo’s market capitalization is currently north of $2 billion, any such buyout would be at the upper end of the scale.     

Speaking earlier that week at AdExchanger’s Industry Preview, Arete Research’s Rocco Strauss speculated that the industry’s largest independent demand-side platform The Trade Desk or Shopify may be in the running.

Principally, Criteo’s retail media footprint — ”an integrated self-service platform for all ad formats and demand sources now,” per CEO Megan Clarken — now consists of 175 retailers, and 1,800 brands would be the main attraction. 

Speaking on Criteo’s Feb. 8 call with equities analysts, Clarken added, “Criteo is the commerce media platform for the open internet and the obvious choice to complement Amazon for brands looking to advertise to consumers at the digital point of sale across multiple retail media networks.”

Clarken further went on to note how it has taken its engineering team, a cohort of employees that has been enhanced now Criteo has integrated IPONWEB to accelerate the rollout of its Commerce Max DSP. 

“We have one of the largest concentrations of R&D [research and development] talents in the ad tech industry aside from the walled garden and we’re continuously focused on ensuring proper resource and investment allocation to our priority growth areas,” she added.

For some, it’s Criteo’s retail media footprint, not to mention its engineering capabilities could easily jumpstart any (potential) burgeoning ambition to get into the media business from Shopify. 

Indie ad tech consolidation?

Meanwhile, any ad tech consolidation play would likely be motivated by The Trade Desk’s desire for an end-to-end solution, or mini-walled garden, and potentially insulate the DSP from shortfalls in forecasted CTV spend. 

After all, some predict that even though The Trade Desk has relationships with tier-one TV such as Disney, others believe that CTV outliers may look to emulate Roku which has gone about constructing a walled garden of its own following its purchase of the DataXu DSP in 2019.      

According to some, Criteo’s purchase of IPONWEB — see Digiday’s earlier interview with Criteo CRO Brian Gleason for his views on its “platform-play” — could similarly accelerate any such ambitions. 

The Trade Desk’s strong positioning as a tool for upper-funnel advertisers could also be complemented by Criteo’s legacy as arguably one of the go-to players for lower-funnel, or,  performance campaigns.

As one source told Digiday, “The Trade Desk needs a play in retail [media] and [The Trade Desk CEO] Jeff Green needs another story than CTV.”