Criteo S.A.

Good morning and welcome to Criteo's first quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After the prepared remarks, there will be an opportunity to ask questions. To ask a question, you may press star then one. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Melanie D'Ambre, Director, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to CREDIT's first quarter 2022 earnings call. Joining us on the call are Chief Executive Officer Megan Clarkin, Chief Product Officer Todd Parsons, and Chief Financial Officer Sarah Glickman. As usual, you will find our investor presentation on our IR website now, as well as our prepared remarks and transcripts after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect Credo's judgments, assumptions, and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Credo's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent forms, 10-K and 10-Q, filed with the SEC. We will also discuss non-GAAP measures of our performance. The definitions and recommendations to the most directly comparable GAAP metrics are included in our earnings release published today. And unless otherwise stated, all growth comparisons made during the year before are against the same period in the prior year. With that, let me now hand it over to Megan.

Thanks, Melanie, and good morning, everyone. Thank you all for joining us today. We're off to a solid start this year, and we've never been so energized about the opportunity ever. Let me jump straight in with an update on our proposed acquisition of IPON Web Business. We have conducted a review of IPON Web Business continuity plans and the progress of its planned relocation of its Russian-based engineering resources, and we're encouraged that IPON Web is taking appropriate steps and has seen minimum disruption to their business. We're in close discussions with the IconWeb team to restructure the proposed transaction, and we look forward to providing additional updates. In the meantime, we're working with IconWeb through our existing commercial arrangements to continue to execute on our most media platform vision and employment. I want to zoom out a bit and make sure that we remind everyone of the opportunity that exists around commerce media. What is the most attractive secular growth trend in our industry today? The next wave of advertising is upon us and like its predecessors in display, search and social, it's expected to be huge. It is, of course, commerce media. Pio has been talking about commerce media for some time. And commerce media is an opportunity that comes when you connect consumers, marketers, and media owners to drive commerce outcomes. It starts with retail media. Retail media is enabling retailers to create personalized advertising experiences on their owned digital assets or digital in-store content, effectively making them media owners. We call this on-site advertising. They're using their own first-party data to inform the experience and close with measurement to demonstrate outcomes. This is effectively the extension of offline shopper marketing to online. This movement is opening a new and high-margin revenue stream for retailers. The retail media opportunity goes further. The retailer extends its advertising reach off-site and across the open internet. effectively looking for more opportunities to attract and retain targeted consumers beyond its own content walls. We call this off-site advertising. This opens up retailers to a new revenue stream while attracting brands to boost their visibility on the digital shelf and further attract and retain commerce audiences. It also attracts new dollars to media owners across the open internet as the ads flow off-site. Commerce media expands retail media to non-retail media owners. It is the broader ability to monetize for commerce everywhere, anywhere, where consumers spend their time. It enables advertisers to attract, convert, and retain consumers by engaging audiences on mere owners' properties across the open internet, and it connects ad spend directly to common outcomes. This powerful combination of commerce data and deep machine learning to form commerce audiences is the foundation of successful commerce media strategies. For commerce media, and specifically for retailers focused on retail media, Creative Video has been providing the platform that enables retail media for five years. We are the tech enabler for large retailers, including Lowe's, Best Buy, and Target. who are leading the way in this rapidly growing space. We're encouraged by the value that large retailers are seeing in this new advertising frontier, as we've heard over and over again in their earnings commentary. It stands to reason, given that commerce media is currently estimated to reach a $180 to $200 billion pan over the next four years, the rise of commerce media come about as a result of the quest to monetize valuable first-party customer data, which retailers and other media owners have struggled to fully utilize for many years. Unlocking that data value has surfaced a valuable advertising opportunity within their online stores and a data hook between offline and online marketing tactics. Criteo's commerce media platform is front and center in this. Let's take a look at a recent client partnership that we've formed which unlocks the opportunity. The game-changing commerce media platform agreement that we recently signed with Flipkart. India's homegrown e-commerce marketplace is a great example. Using our platform, brands will have access to best-in-class advertising solutions with Criteo's commerce media technology, including our off-site capabilities, and Flipkart's audience sales. As part of this partnership, the launch of product performance ads will enable advertisers to deliver full-fledged marketing goals on the open internet by delivering our technology and Flipkart's audience signals for highly relevant reach and higher overall campaign efficiency. This represents a truly exciting partnership for both of us. Similarly, we've renewed our focus on our partnership with Shopify, which enables merchants of all sizes to take advantage of our platform and expand its global reach to target users across all channels and devices. And there's a lot more to come there. Here are the primary reasons why clients are choosing Criteo for their commerce and retail media needs and why we expect to continue to win their business. First, what makes our commerce media platform unique is bringing together on-site advertising with off-site advertising across multiple formats. What's important to our marketers and retailer clients is the ability to engage consumers effectively throughout their shopping journey. Our goal is to have one tech and one data source to never lose sight of the consumer as they engage with content. We believe our commerce media platform will realize that single view across the buy and sell side. that creates consistency and eliminates one of the biggest issues for clients of platform fatigue and tech tax, which is byproduct of multiple platform loads. Second, operating both demand and supply side solutions at scale creates a powerful network effect that benefits brands, agencies, retailers, publishers, and also Criteo. Today, we work with about 22,000 commerce clients thousands of publishers and activate close to three billion dollars in annual media spend throughout our platform in retail media alone we support more than 100 retailers another 1500 brands we see increased supply attract more demand to our platform and vice versa our 16 years of proprietary commerce focused ai leveraging our huge commerce data set from approximately 725 million daily active users and unique access to over $1 trillion of e-commerce sales is a differentiator. We continue to expand our reach with daily active users growing 6% compared to last quarter. The US alone, a large single market and the biggest advertising market in the world, our daily active user reach is over 50% of the US population. So the chances of us finding overlap consumers for retailers on-site and off-site is huge. Adding to that our ability to find and attract new consumers through our reach and combination of AI and data, this drives commerce outcomes and maximizes return on ad spend for our clients. This unlocks revenue for our clients. Nobody has the same text, stack, and breadth of commerce data on the open intent. In a world of diminishing operating system signals, Data, reach, scale, and AI is critical. Let's now turn to our first quarter performance. We delivered constant currency growth of 6%, our fifth consecutive quarter of contribution exact growth, demonstrating continued business momentum. This was driven by strength in retail media, growing close to 50%, audience targeting growing over 40%, and to a lesser extent, the bounce back of travel. This will then offset the slower macro environment and suspension of our operations in Russia. Once again, our focus on growth and execution is the end result, and Sarah will take you through this in more detail shortly. We remain confident in our commerce media platform strategy, the execution of our plan and our growth momentum. The media has been activated by our commerce media platform, a good indicator of the scale that we continue to build across our business. It's increased 12% to $645 million this quarter. We're thrilled to welcome Ryan Gleeson as our Chief Revenue Officer. And he's hit the ground running. And his top priority is to realize the full potential of our commerce media opportunity and execute our go-to-market strategy to drive sustainable growth As a media agency veteran, his client-first mindset and proven track record of scaling businesses is instrumental as we embark on our next phase of growth. Brian has come in at exactly the right time as we continue to sign deals with large marketplaces and flagship retailers including Flipkart and Michaels. He also joins us just as we launch exciting new clients including Nordstrom and Farfetch on our platform. and expanded further adoption with eBay. Brian's agency heritage brings even more firepower to our agency channel work, which is really firing on all cylinders. With over $200 million in activated media spend, or about 32% of our overall business coming through agencies in the first quarter, compared to 30% a year ago. As the retail media partner of choice on the open internet, we offer for agency incentives and first-to-market opportunities within our retail media ecosystem and platform globally. And we're seeing strong traction with our agency partners. These partnerships facilitate seamless integration and higher volume of media spend. Our global partnership with GroupM is delivering at pace. We've recently signed a global arrangement agreement with Essential and its world-class e-commerce agencies. and a U.S. deal with another large agency holding company. We expect more on this front in the future. Our business is no longer a point solution business like most others in Antec. We are a platform business. More specifically, a commerce media platform business focused on retail media at our core. We think about servicing our clients' needs every day as they relate to acquiring and retaining customers, And we use the breadth of our tech excellence to do that with efficiency. Our ability to attract and retain customers for our clients does not have to rely on third party operating system signals. However, we will use them when they exist and assist our clients as they move away from them. Essentially embracing more privacy enabled, controllable and reliable signals. You might note that those signals have become high functioning infrastructure that's The entire internet has been developed for measurement, context, user experience, and more for a good part of 25 years. For the operating system to remove and expect the world to function just so is not fair. We commend UK's CMA for their efforts to manage this. In turn, we'll help our clients navigate any change using our data, our AI, our reach, and the cool and innovative work that's coming out of our product and R&D organizations. And Todd will tell you more about this in a minute. Finally, I'd like to take the opportunity to thank all of our credios for their hard work and relentless dedication to our clients. We're actively adding talent to fast-growing areas of our business and pleased to be an employer of choice in our industry. This is a reflection of our values and commitment to put people first. Just recently, we signed the Lead Network CEO Pledge to strengthen our strong commitment to sustain pay equity globally and to advance career paths in technology for women. Sustainability is at the core of everything that we do, and we continue to enhance our ESG disclosures. We are committed to the United Nations Sustainable Development Goals, and we've adopted the Sustainable Accounting Standards Board Reporting Framework in our recently published published corporate social responsibility report. With that, I'm pleased to hand it across now to Tom.