Why Criteo SA Shares Dropped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Criteo SA (NASDAQ: CRTO  ) fell more than 10% early Tuesday after the performance display specialist released first-quarter results.

So what: Quarterly revenue increased 60.8% to $212.49 million, which translated to adjusted net income that more than tripled to $10.59 million. Revenue excluding traffic acquisition costs -- which management states is a "key measure" they use to evaluate operating performance and provide useful period-to-period comparisons for their core business -- grew 68.2% to $87.37 million.

Criteo also said it expects that second-quarter revenue -- excluding traffic acquisition costs -- should arrive in a range between $85.69 million and $88.48 million, the midpoint of which represents relatively flat sequential growth.

Now what: In the end, though, we're talking about a barely profitable $1.6 billion company with a history of stubbornly high short interest, and I still think investors need assurance that Criteo's past torrid rates of top- and bottom-line growth are sustainable over the long term. For now, that's why I'm perfectly happy remaining on the sidelines.

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  • Report this Comment On May 07, 2014, at 12:59 PM, 1FDRLIBERAL wrote:

    Steve,You failed to mention that they guided significantly up for the FY in both revenue and earnings.

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