Criteo Finishes 2015 Strong, Targets More Growth Ahead

Shares of Criteo SA (ADR) (CRTO 1.35%) jumped more than 28% after the advertising-retargeting specialist released impressive fourth-quarter 2015 results Wednesday morning. And after capping a great year, Criteo offered investors an encouraging look at what lies ahead.

Let's take a closer look at Criteo achieved in Q4.

Criteo results: The raw numbers

ex-TAC = Excluding traffic-acquisition costs; YOY = year over year. Data source: Criteo S.A.

What happened with Criteo this quarter?

• Revenue ex-TAC climbed 43% year over year on a constant currency basis.
• Adjusted EBITDA rose 53% (or 49% at constant currency) to 49 million euros.
• Criteo's latest guidance called for lower revenue ex-TAC of 134 million euros to $139 million euros, and adjusted EBITDA of 39 million euros to 46 million euros.
• Free cash flow climbed 45% to 43 million euros.
• Added more than 900 net clients in Q4, and maintained client retention at more than 90%.
• Fourth-quarter 2014 clients generated 20% more revenue ex-TAC at constant currency in Q4 2015, speaking to Criteo's ability to expand revenue within its existing customer base.
• 47% of revenue ex-TAC generated from mobile ads in the month of December 2015.
• Over 3,000 clients live on Facebook mobile via Criteo's integration with dynamic product ads as of Dec. 31, 2015.
• 25% of fourth-quarter revenue ex-TAC came from users matched on at least two devices, demonstrating the fruits of ongoing deployment of cross-device solutions.
• On a geographic basis:
• Americas region revenue ex-TAC rose 78% year over year (61% at constant currency) to 60 million euros, or 41% of Criteo's total.
• Europe, Middle East, and Africa revenue ex-TAC climbed 23% (22% at constant currency) to 57 million euros, or 43% of the total.
• Asia-Pacific revenue ex-TAC grew 76% (62% at constant currency) to 30 million euros, or 20% of Criteo's total.

What management had to say 
Criteo CEO Eric Eichmann stated:

2015 was another terrific year for us. We crossed the 10,000 client and 1 billion revenue euro marks while continuing to invest significantly in innovation. I am thrilled to take the helm at such an exciting time and look forward to our 2016 initiatives.

"I am very pleased with our growing profitability and strong free cash flow generation in 2015," elaborated CFO Benoit Fouilland. "Our unique financial model continues to be a key differentiator in our space."

Looking forward 
For the current quarter Criteo expects revenue ex-TAC of 139 million euros to 144 million euros (or $153 million to $158 million), with adjusted EBITDA of 33 million euros to 41 million euros (or $36 million to $41 million). And though we don't lend much credence to Wall Street's quarterly expectations, analysts' consensus called for revenue near the low end of Criteo's guidance range.

Finally, for the full year, Criteo anticipates revenue ex-TAC growth of between 30% and 34% at constant currency. Here again, analysts' consensus predicted revenue ex-TAC growth on a reported basis of 30% -- and keep in mind given the geographic sources of Criteo's revenue, reported growth is generally higher on a percentage basis than constant-currency growth.

In the end, Criteo's healthy new customer additions and high customer retention rates show its advertising solutions are well received, and the company continues to translate that success into one impressive quarterly financial performance after another. Given Criteo's propensity for under-promising and over-delivering, and with shares still down more than 15% year to date as of this writing, it's no surprise Criteo stock is skyrocketing today.