What happened

Shares of Criteo (NASDAQ:CRTO) declined 10.6% in October, according to data from S&P Global Market Intelligence, after the ad-retargeting specialist lowered its full-year outlook and replaced its CEO. After drifting higher for most of last month ahead of its quarterly report, Criteo shares plunged more than 14% on Oct. 30 alone -- the first trading day after its announcement hit the wires.

So what

But that's not to say Criteo's third-quarter results were necessarily bad. Revenue fell 1% year over year (and remained flat at constant currency) to $221 million, which was near the high end of guidance provided in July. And its adjusted net income of $0.54 per share handily beat analysts' consensus for earnings of $0.49 per share.

Stock market chart with a red down arrow going through it.


To be fair on the CEO matter, founder and current CEO JB Rudelle will remain as chairman of the board even after his replacement, former Nielsen executive Megan Clarken, takes the helm on Nov. 25. 

Rudelle, for his part, noted Criteo has "reached key milestones in [its] transformative journey" toward a multiproduct model, adding: With a clear direction and augmented leadership, I'm confident Criteo will succeed as the leading tech platform for the open Internet."

In the meantime, however, Criteo management also expressed concerns over uncertainty heading into the holiday season, particularly given softening business trends with certain large customers in the mobile app vertical.

Now what

With that in mind, Criteo now expects revenue for the full fiscal year will be approximately flat at constant currency, or near the low end of its old target for a range of flat to up 2%.

Of course, the wording of Criteo's concerns for the fourth quarter seems to leave some room for the company to overdeliver if those softening business trends abate. But until we see more tangible signs that Criteo's caution might be unmerited, I think the market was right to bid shares down last month.

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