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Ad tech company Criteo just had a killer quarter


Criteo president and COO Eric EichmannCriteo

  • French ad tech company Criteo took everyone by surprise
    when it crushed its 2017 fourth quarter earnings on
    Wednesday.
  • The firm, which specializes in zapping ads to people on
    the web after they’ve been searching or shopping for specific
    items, seemed to be in deep trouble only weeks ago.

  • Apple had just made it much harder to use cookies to target
    people using its Safari browser
    . And European regulators
    were promising to make it harder to use data for digital
    advertising overall.
  • But Criteo, for its part, said that it was ready to
    tackle GDPR.

French ad tech company Criteo set off fire alarms in the ad tech
world late last year when it
announced lower revenue guidance for 2018
and its stock
price plummeted
.

So naturally, everyone was surprised when Criteo crushed its 2017
fourth quarter earnings on Wednesday. In fact, it’s stock price
jumped
nearly 30% on the news.

And even more surprisingly, executives told Business Insider they
are bullish on the company’s prospects in the coming year.

Criteo has been considered the rare ad tech player that had
successfully gone public. Yet the firm, which specializes in
zapping ads to people on the web after they’ve been searching or
shopping for specific items, suddenly seemed to be in deep
trouble only weeks ago.


Apple had just made it much harder to use cookies to target
people using its Safari browser
. And European regulators were
promising to make it harder to use data for digital advertising
overall.

Then company on Wednesday posted stellar results for 2017,
reporting a year-on-year revenue increase of 28%. Total global
revenue for the quarter totalled a record $674 million, a 19%
increase on the $567 million the firm raked in during the same
period last year. 

“Our business is seeing strong momentum, in particular in the
US,” said Eric Eichmann, Criteo’s CEO. “This good traction,
combined with the growing adoption of our new products, positions
us well for 2018 and beyond.”

Still, while Criteo may have had a record quarter, the ad tech
company may face
increasing headwinds ahead. 

The rollout of  the “General Data Protection Regulation” or

GDPR
in the European Union as well as recent changes to ad
tracking in Apple’s web browser, in particular, could deliver
significant blows to the company.

Starting in May, GDPR will require tech companies to get
affirmative consent from any information they gather on users,
and many ad tech experts think European companies like Criteo
could become casualties.

Meanwhile,
Apple’s “Intelligent Tracking Prevention” feature has
significantly limited ad tracking in Safari
, limiting
third-party access to “cookies” on users’ devices that
advertisers use to target and measure their ads.

Unfortunately for Criteo, the company has built its business on
the back of “retargeting,” or using technology to serve ads to
people who have already visited a website to remind them to
return to that site. And retargeting relies heavily on
cookies tracking users as they hop from one website to another on
the internet. Combined, GDPR and ITP could yield significant
blows to the company, denting its future revenue.

But Criteo, for its part, said that it was ready to tackle GDPR.
In fact, while the rollout of ITP had affected its
third quarter revenue
, it seems to have had little effect on
the fourth quarter. Instead improved technology, client wins and
better access to inventory helped its strong fourth quarter
performance, said Eichmann

Criteo isn’t worried abut GDPR, because it has viewed “cookie
coverage” as a key area for years, per Eichmann. The company has
basically tried to get as many sources of data on web users and
their surfing habits as possible, so one browser making a change
wouldn’t damage its business severe rly.

Eichmann said that a lot of the data that Criteo obtained from
consumers was anonymized anyway, and not sensitive personal data,
so Criteo did not expect GDPR to have a negative impact on
its revenue.

“We are not very concerned about GDPR,” Eichmann told Business
Insider. “We don’t see it having any real impact on our
business.”

On the issue of Apple’s moves, he said that even though Safari
may have implemented greater restrictions, Criteo’s footprint was
far bigger.

“We identify and track 100% users on desktop, mobile, Chrome and
other browsers,” he said.

At the same time, analysts and industry insiders continue to
remain cautious regarding Criteo’s future. Dan Salmon, an
analyst at BMO Capital, for instance, downgraded Criteo’s stock
to “market perform” in January because of GDPR.

“If GDPR implementation is materially negative, the stock will
likely be headed to the teens,” he said to clients.


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