Criteo (CRTO 3.79%) released fourth-quarter 2019 results early Tuesday. The ad-retargeting technology company boasted moderated revenue declines and high customer retention rates, and it continued progress toward its multiproduct model. But with Google's recent decision to phase out third-party cookies in its Chrome browser still fresh on investors' minds, Criteo followed with disappointing guidance for the coming year. Shares of the already battered tech stock dropped nearly 7% in response.

Let's dig deeper to see how Criteo ended 2019, starting with its headline numbers:


Q4 2019

Q4 2018


Revenue (ex-TAC)

$266.3 million

$271.9 million


Net income available to shareholders

$42 million

$38 million


Net income per diluted share




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

Criteo's revenue ex-TAC would have fallen by a more modest 1% if not for the impact of foreign currency exchange. By that measure, the metric arrived well above guidance provided in October for a constant-currency decline of 5% to 3%, to a range of $255 million to $261 million. 

Adjusted EBITDA grew 5% to $109 million, also above guidance for between $99 million and $105 million. And after backing out items like stock-based compensation and acquisition expenses, adjusted non-GAAP net income grew 23% to $70 million, or $1.08 per share, well ahead of analysts' consensus estimates for adjusted earnings of $0.91 per share.

Yellow stock arrow chart indicating losses with a grey background.


In its press release this morning, Criteo credited its relative outperformance to a "strong holiday season across regions" and a narrower-than-expected decline in business with existing clients. Criteo also saw continued momentum with new clients in the midmarket segment.

Meanwhile, Criteo added 280 net new clients this quarter -- ending the quarter at 20,247 -- while maintaining client retention of roughly 90% for all products. Roughly 23% of Criteo's live clients purchased more than one Criteo product, up from 13% a year ago. 

In addition, Criteo revealed its newest products, namely all solutions outside of its core retargeting offerings, saw revenue ex-TAC climb 44% year over year to represent 16% of its total.

"I am thrilled to lead Criteo into its next chapter," stated Criteo's recently appointed CEO, Megan Clarken. "We have unbelievable assets and compelling opportunities. I'm confident in our strategic priorities and determined to deliver on them."

On that light forward guidance

For the first quarter of 2020, Criteo expects revenue ex-TAC of between $209 million and $212 million, marking a year-over-year decline of 10% to 9% -- far below Wall Street's estimates for a roughly 2.4% decline. That should translate to adjusted EBITDA of between $55 million and $58 million.

During the subsequent conference call, Criteo CFO Benoit Fouilland blamed this "cautious" Q1 outlook on a combination of a tough comparison to the same year-ago period given the loss of a large U.S. client in last year's first quarter, a "soft start after the strong holiday season" given "budget softness" from certain clients, and weakness from large customer business in the United States.

Worse yet, for the full-year 2020 Criteo anticipates revenue ex-TAC will fall by roughly 10% at constant currency (from $947 million in 2019), or to roughly $852 million. 2020 adjusted EBITDA margin should also arrive at roughly 30% of revenue ex-TAC, down from 32% in 2019. Here again, most analysts were modeling a slight increase in 2020 revenue ex-TAC, to roughly $948 million.

In this case, Fouilland admitted Criteo is taking a "realistic view on the business" given expectations for new "ad-targeting restrictions and stricter implementation of privacy regulation" in the coming year. 

All things considered, Criteo might well be able to effectively navigate this difficult industry landscape to succeed over the long term. But it's clear the company has plenty of work to do before it recaptures sustained, profitable growth, and its share price is being driven down in kind.