Criteo S.A.

Good morning, and welcome to Criteo's second quarter 2022 earnings conference 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 Dombre, Director of Industrial Relations. Please go ahead.

Good morning, everyone, and welcome to Criteo's second quarter 2022 earnings call. Joining us on the call today, Chief Executive Officer Megan Clarkin and Chief Financial Officer Sarah Glickman are going to share some prepared remarks. Both persons, our Chief Product Officer will join us for the Q&A session. As usual, you will find our investor presentation on our investor relations 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 CUDO's judgments, assumptions, and energies only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting CUDO'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. Definitions and reconciliations to the most historically comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year. With that, let me now hand it over to Megan. Well, thanks, Melanie, and good morning, everyone. Thank you all for joining us.

Today marks an important milestone for our transformation journey as we continue to work towards the realisation of our commerce media platform vision. I'm very pleased to announce that we've successfully restructured and completed our acquisition of iPonWeb, which we believe will accelerate our plans to shape the future of commerce media on the open internet. Over the last few months, we've diligently evaluated the impact of the geopolitical environment on IPONweb and reviewed its business continuity plans to ensure the short-term and long-term stability of its business. We're very encouraged that IPONweb has seen minimal disruption to its top-line performance while actively transitioning resources outside of Russia. Our close collaboration during these challenging times shows the strong fits between our companies and reinforces our confidence in what we can accomplish together. Importantly, we successfully renegotiated the deal to reduce the acquisition price with an earn-out for demonstrated performance, and we restructured the transaction to exclude iPhone Web's Russian subsidiary. This is a very exciting time for our company and we're thrilled to welcome Dr. Boris Muzakansky and the iPON Web team to Criteo. Dr. Boris joins us as Chief Architect and will work closely with the rest of our leadership team toward a successful integration and will contribute to the product, technical and business architecture of Criteo going forward. I'd like to remind you how the strategic acquisition is expected to accelerate our performance play, putting us further into a market-leading position as the intersection of retail media and performance marketing on the open Internet becomes the next wave of digital advertising. Clearly, we are no longer a point solution business like most others in ad tech. iPoneWeb brings leading capabilities on both the demand and the supply sides of ad tech, which will complement our existing technology. Specifically, its flexible self-service demand side platform, or DSP BidCore, expands our offering into a full funnel DSP, important to attract large enterprise marketers and agencies. Add to this their supply-side platform, or SSP, the media grid, which should further expand our premium direct publisher footprint and bring sophisticated capabilities to increase publisher revenue opportunities. It should also enhance our first-party data activation potential, a key element of our acceleration away from third-party cookies. Having both the DSP and the SSP capabilities in our commerce media platform offers clients complete transparency and neutrality knowing that Crifio doesn't own any media or a retail business that can bias all tech alternatives. Connecting the sell side and the buy side also reduces workflows and tech tax and increases the totality of the data. Secondly, the acquisition of iPon Web should enhance our scale and the distribution of our commerce media platform, adding to Criteo's reach a further billion dollars in annual media ad spend through Bidswitch, its media trading marketplace. The more scale and media spend that we can drive through our pipes, the better the outcomes we can deliver with the network effects of attracting more advertising demands to our platform. Lastly, iPon Web has acted as a trusted architect of the entire ad tech ecosystem over the past two decades, and its customization capabilities will be instrumental in to address the needs of our growing base of enterprise and agency clients who may require bespoke deployments as they look to in-house solutions using Criteo's tech excellence and expertise. This would effectively enable us to power the growing world gardens concentrated around retail media. As long-standing partners with iPonWeb, We anticipate a seamless integration and we're in lockstep to capitalize on the growth opportunity ahead of us. As many of you know, our industry is anticipating a huge change with the rise of commerce media, which a McKinsey study recently indicated could create a paradigm shift in digital advertising not seen since the rise of programmatic. There is a disproportionate amount of advertising spend going to the large utility platforms of search and social because that's where advertisers know that they can reach consumers. But the reality is 73% of consumers start their shopping journey on the open internet, including retailers' digital stores. Amazon and Walmart have tapped into this, creating their own hugely successful digital media properties to attract high-margin advertising dollars. This has paved the way for the wave of retailers that we see following suit, and we're right at the heart of this movement, helping them to leverage their first-party data and realise this potential. We're the trusted tech partner for over 150 global retailers, giving us access to unique premium media inventory at scale and privileged access to retailer catalog, consented identity and commerce data that our AI can use to deliver an unprecedented array of capabilities. We're only getting started. The latest client to enter our retail media client base is not a traditional retailer. It's in fact Deliveroo. Delivery recently announced the launch of its advertising platform powered by Credio. Our strong agency relationships, media API partners, and ability to scale quickly with our technology and sales team support were amongst the deciding factors in Delivery's decision to partner with Credio. Complementing our presence in omni-channel retail and marketplaces, this entry into delivery service is an exciting milestone. reinforcing the significant opportunities that lie ahead. It also highlights how operating both demand and supply-side solutions at scale creates powerful network effects and allows us to win. What we do in commerce media is not just about retailers entering the media mix. It's about all existing media companies becoming even stronger in their ability to value their commerce audiences using their own first party data. A critical part of our strategy is to deliver the best commerce audiences at scale across various channels and innovative formats including social and video. We continue to expand our direct integrations with media owners to reach consumers where they are spending their time, and we're pleased to have added about 50 new premium publishers since the beginning of the year. This includes new relationships with Disney, Les Echos, and experimental campaigns on TikTok.