Shares of advertising-technology company Criteo (CRTO 0.04%) rose sharply on Wednesday after the company reported financial results for the first quarter of 2021. The company beat expectations in Q1 and is guiding for better second-quarter results than Wall Street anticipated. These pleasant surprises explain the market's positive reaction today.
Criteo reported Q1 revenue of $541 million, an increase of 7% from last year. But take the percentage increase with a grain of salt. In the early days of the COVID-19 pandemic, advertisers slashed their budgets. Because of this, Criteo's revenue was down in the first quarter of 2020, providing an easy year-over-year comparison. Indeed, Q1 2021 revenue is still lower than in the comparable quarter from 2019. However, the company had previously guided for a drop in Q1 revenue, so a 7% increase was a pleasant surprise.
There's at least a couple of things to like when it comes to Criteo's Q1. First, the company may have struggled with growth for years now, but at least it's been consistently profitable. Q1 was no different, as Criteo reported net income of $23 million, which was up 43% year over year. Additionally, a lot of changes are taking place in the advertising world, and Criteo has been busy developing new solutions. Revenue from these new solutions was up 60% from last year, suggesting these offerings are resonating with customers.
Adjusting for things like traffic costs and currency fluctuations, Criteo is guiding for 14% revenue growth in the upcoming Q2. This growth exceeded analysts' expectations, contributing to the stock's pop today.
Shareholders should circle June 3 on their calendars. That's when Criteo will hold a virtual investor day to share management's long-term vision for the company. And since buy-and-hold investing is a great strategy for buying stocks, long-term-minded investors will definitely want to hear what management has to say.