Criteo Raises Fiscal 2014 Guidance

Criteo reported solid first quarter 2014 revenue, excluding traffic acquisition costs (TAC), of €62.7 million (accelerating to 68.2% year-over-year growth from 55.3% last quarter), above the consensus estimate of €55.9 million. Adjusted EBITDA of €14.5 million were above the consensus estimate of €12.1 million. Criteo also reported strong contribution from its mobile ad platform, which represented 15% of revenue (excluding TAC) in March 2014, up from 10% in December and 2.5% in September.

Management issued mixed second-quarter guidance, with revenue (excluding TAC) guidance above Street expectations but adjusted EBITDA guidance below expectations. Full year 2014 revenue (excluding TAC) guidance was increased, while EBITDA guidance was reiterated, primarily because of a €4.0 million negative EBITDA contribution from the acquisitions of Tedemis and AdQuantic.

First-quarter revenue (excluding TAC) and EBITDA exceed expectations. Criteo reported first-quarter revenue (excluding TAC) and EBITDA that exceeded consensus expectations. Revenue (excluding TAC) of €62.7 million was above the consensus estimate of €55.9 million and management’s previous guidance range (€55.0 million to €57.0 million). EBITDA of €14.5 million were above the consensus estimate of €12.1 million and above management’s previous €10.5 million to €12.5 million guidance range. First-quarter revenue (excluding TAC) margin better than our model.

Revenue (excluding TAC) margin registered 41.1% for the quarter, up from 40.4% last quarter and better than our model (40.0%). Recall that management has indicated its primary focus is increasing revenue (excluding TAC) on an absolute basis and it is willing to do so at the near-term expense of the revenue (excluding TAC) margin. Second quarter and full year 2014 guidance:

Management forecasts second quarter 2014 revenue (excluding TAC) of €61.5 million to €63.5 million, with the midpoint (€62.5 million) registering above the consensus estimate of €57.3 million. Management expects adjusted EBITDA of €6.5 million to €8.5 million in the second quarter, with the midpoint (€7.5 million) coming in below the consensus estimate of €9.2 million.

Full year 2014 revenue (excluding TAC) guidance was increased to a range of €265.0 million to €271.0 million (previous range was €246.0 million to €251.0 million), with the revised midpoint (€268.0 million) above the consensus expectation of €246.7 million. Criteo continues to expect 2014 EBITDA to be between €47.0 million and €51.0 million, with the midpoint (€49.0 million) roughly in line with the consensus expectation of €49.3 million.