Criteo (CRTO -0.95%) released better-than-expected first-quarter 2019 results on Tuesday morning, with strong client additions and retention driven by the continued advancement of its multiproduct platform. But the ad-retargeting leader also tempered its expectations for the rest of the year, leaving its shares down as much as 13% today in response.

Let's take a closer look at Criteo's start to the year and why the company is urging patience going forward.

Stock market charts on a colorful display indicating losses.


Criteo results: The raw numbers


Q1 2019

Q1 2018

Year-Over-Year Growth

Revenue (ex-TAC)

$235.7 million

$240.4 million


Net income available to shareholders

$19.1 million

$19.8 million


Net income per diluted share




Data source: Criteo. Ex-TAC: excluding traffic acquisition.costs.

What happened with Criteo this quarter?

  • Revenue ex-TAC grew 2% at constant currency and was above Criteo's guidance provided in February for between $233 million and $235 million.
  • Adjusted EBITDA declined 12% year over year (down 6% at constant currency), to $69 million, also above guidance for between $59 million and $61 million.
  • Excluding costs like stock-based compensation and restructuring expenses, Criteo's (non-GAAP) earnings fell 2%, to $40 million, and remained flat on a per-share basis at $0.60.
  • Criteo's number of clients grew 5% year over year, to 19,373, with a client-retention rate remaining close to 90%.
  • Revenue ex-TAC from mobile apps increased 32% year over year.
  • Criteo's header-bidding tech now connects to more than 3,700 publishers (up from 3,500 last quarter) and 135 app developers.

What management had to say

"While making progress on several priorities, we recognize 2019 is another transition year," stated Criteo CEO JB Rudelle. "We are working hard to accelerate our transformation."

"We maintain our Adjusted EBITDA margin outlook for 2019," added CFO Benoit Fouilland. "This highlights our commitment to profitability."

Looking forward

Criteo didn't specifically address recent concerns that Google may be considering new restrictions on its handling of third-party ads. However, it warned that, because of "identified execution issues" for the implementation of new capabilities related to its ongoing multiproduct transformation, the company expects its efforts will take longer to bear the desired fruit.

In the meantime, Criteo anticipates second-quarter revenue ex-TAC of between $221 million and $224 million -- below the $227 million most investors were expecting -- assuming constant-currency revenue is flat to negative 2%. As such, Criteo is now targeting full-year 2019 revenue ex-TAC growth of between 0% and 2% at constant currency, down from its previous goal for between 3% and 6% growth. Still, as Fouilland noted, Criteo reiterated its outlook for 2019 adjusted EBITDA margin of roughly 30% of revenue ex-TAC.

Nonetheless, facing the prospect of another "transition year," it's hard to blame the market for its concern over this freshly reduced guidance. And until Criteo can demonstrate more tangible progress toward its longer-term goals, I suspect the stock will remain under pressure.