Shares of Criteo (CRTO -0.63%) rose as much as 25.4% on Thursday morning before falling back to a still-impressive 17.7% gain as of 2:30 p.m. ET. The Paris-based digital advertising expert reported strong fourth-quarter results on Wednesday evening,
Criteo's Q4 by the numbers
Criteo's revenue (after deducting traffic acquisition costs, or ex-TAC) rose 12% year over year to $316 million, while unadjusted earnings more than quadrupled from $0.25 to $1.02 per diluted share. Adjusted bottom-line profits jumped 81%, landing at $1.52 per diluted share.
Your average analyst would have settled for earnings near $1.23 per share on revenue in the vicinity of $300 million.
The company also set ex-TAC revenue guidance for the next quarter at approximately $245 million, comfortably ahead of analysts' consensus estimate of $232 million.
Where is Criteo going next?
On the earnings call, CEO Megan Clarken highlighted Criteo's innovative use of artificial intelligence (AI) tools to optimize its clients' ad campaigns.
"Our better-than-expected performance in 2023 further affirms our strategic direction, while setting the stage for continued growth in 2024," Clarken said. "Importantly, we continue to integrate cutting-edge AI into our platform with a focus on improving performance and user experience for our clients and optimizing our service delivery process. The use of impactful and engaging creatives is expected to become increasingly important to capture an audience's attention."
Clarken and her team took pains not to declare the end of the digital advertising market's long downturn, which started with the inflation crisis in 2021. Still, Criteo seems ready to pounce on the opportunities in a healthier end market, whenever it may arrive. In particular, the company has hitched its long-term user tracking technology to Alphabet's Google Privacy Sandbox, arguing that this broad initiative with close support from the largest ad publisher on the planet will be an effective replacement when third-party tracking cookies go away later this year.
So Criteo is still in a wait-and-see position, looking for brighter days ahead when ad buyers get ahold of beefier budgets again. Until then, the stock looks quite affordable at 1.4 times trailing ex-TAC sales. If you're looking for a low-priced play on the next cyclical upswing in the digital advertising sector, Criteo deserves a second look today.
