Criteo’s share price continues to rise this week following media reports that it has appointed advisers to explore a possible sale with The Trade Desk, or even named Shopify as potential suitors.
And all this despite the France-based ad tech company on Wednesday revealing a 14% decline in revenue in the fourth quarter ($564 million), a period that ended the 12 months to the 31st. December when annual revenue also fell 11% to $2.25 billion.
Dynamic stock price
Gross profit – $247 million for the quarter and $795 million for the 12-month period – was largely flat with increases of 1% and 2% respectively, with Criteo executives attributing a “difficult economic environment” to the during the period.
A closer look at the numbers reveals that “Marketing Solutions revenue declined 19%” in the quarter, while Retail Media revenue declined 21%,” the company said in A declaration.
However, retail media contribution excluding TAC increased by 19%, or 23% at constant currency, mainly due to new client onboardings and growing network effects of the platform.
Looking ahead, the company has projected first-quarter revenue of $210 million to $216 million, or 5% to 7% annually, with 2023 budget guidance ranging between “high single-digit growth and low double-digit growth. » as an ex-TAC contribution.
Despite declining revenues, Criteo share price remained elevated from 24 hours earlier when a February 7 report from Reuters claimed to have appointed investment bank Evercore to explore a potential sale.
Even though Criteo’s C-suite has expressly ruled out the prospect of discussing the latest M&A reports, the executives have unveiled its strengths that could prove attractive to potential suitors in its upcoming earnings call.
Who and why?
While that hasn’t stopped industry watchers from pondering Criteo’s prospect as a potential M&A target with both private equity and other independent ad tech players among the names thrown around. in the mix.
The EP players have moved into ad tech over the past two years with the purchase of TripleLift by Vista Equity Partners for $1.4 billion and Bridgepoint’s investment in MiQ. Although Criteo’s market capitalization currently sits north of $2 billion, such a takeover would be at the higher end of the scale.
Speaking earlier this week at AdExchanger Industry SnapshotRocco Strauss of Arete Research speculated that the largest independent demand-side platform in the industry, The Trade Desk or Shopify, could be in the running.
The Trade Desk needs a retail media game and Jeff Green needs a story other than CTV
Primarily, Criteo’s retail media footprint – “one integrated, self-service platform for all ad formats and all 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 equity analysts, Clarken added, “Criteo is the business media platform for the open internet and the clear choice to complement Amazon for brands looking to make digital point-of-sale consumer advertising across multiple retail media networks. .”
Clarken went on to explain how he took on his engineering team, a cohort of employees that has been bolstered now that Criteo has integrated IPONWEB to accelerate the deployment of its Commerce Max DSP.
“We have one of the largest concentrations of R&D [research and development] talent in the ad tech industry outside of the walled garden and we continuously strive to ensure appropriate allocation of resources and investments to our priority growth areas,” she added.
For some, it’s Criteo’s retail media footprint, not to mention its engineering capabilities, that could easily jump-start any (potential) budding ambitions to get into the media business from Shopify.
Consolidation of independent advertising technologies?
Meanwhile, any ad-tech consolidation play would likely be driven by The Trade Desk’s desire for an end-to-end solution, or a mini walled garden, and could potentially insulate DSP from CTV spend shortfalls. planned.
After all, some predict that while The Trade Desk has a relationship with top TVs such as Disney, others believe CTV’s outliers might seek to emulate Roku which has embarked on the construction of a walled garden in its own right following its purchase of the DataXu DSP in 2019.
According to some, the takeover of IPONWEB by Criteo — see Digiday is earlier interview with Criteo CRO Brian Gleason for his take on his “platformer” – could similarly accelerate such ambitions.
The Trade Desk’s strong positioning as a tool for top-of-funnel advertisers could also be complemented by Criteo’s legacy as a arguably one of THE the go-to players for low funnel or performance campaigns.
As a source told Digiday, “The Trade Desk needs a retail game [media] And [The Trade Desk CEO] Jeff Green needs a story other than CTV.