What happened
Shares of Criteo S.A. (CRTO +2.70%) were down 26.5% as of 2:00 p.m. EST Thursday after the ad-retargeting specialist tempered expectations for the coming year due to the impact of Apple's (AAPL 0.85%) Intelligent Tracking Prevention (ITP) functionality.
More specifically, Criteo notes that in the latest version of Apple's mobile operating system iOS 11.2, the tech behemoth disabled a solution that Criteo and other ad-tech companies use to reach Safari browser users. As such, Criteo says its previous prediction -- provided in early November and calling for a net negative impact from ITP of 9% to 13% to its 2018 revenue excluding traffic acquisition costs (ex-TAC) -- is no longer valid.
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So what
Criteo also insisted it remains "confident" with its fourth-quarter guidance, which calls for revenue ex-TAC to be between $260 million and $263 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of between $106 million and $109 million. And in the meantime, the company is working on developing an alternative solution for the long term that aligns "the interests of Apple users, publishers, and advertisers."
However, Criteo notes that those efforts are still in the early stages. And if it can't mitigate the effects of ITP going forward, it could have a negative 22% net impact to its revenue ex-TAC in 2018 relative to its pre-ITP projections.
Now what
Criteo further promised it would provide formal revenue ex-TAC and adjusted EBITDA guidance for 2018 when it next reports earnings in mid-February. And that guidance will include the latest assumptions based on the "projected effectiveness" of its alternative solution. But in the meantime, this news certainly isn't encouraging. And it's no surprise to see Criteo shares plunging in response.
