Criteo S.A.

Good morning and welcome to Critio's second quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please press the star key followed by zero. After the prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then 1. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Melanie Dembry, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to CREDO's second quarter 2023 earnings score. Joining us on the call today, Chief Executive Officer Megan Clarkin and Chief Financial Officer Sarah Glickman are going to share some prepared remarks. Todd Parsons, our Chief Product Officer, will join us for the Q&A session. 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 reflects CUDO's judgment, assumptions, and analysis on the end 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 forwarded 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 directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this course are against the same period in the prior year. With that, let's now hand it over to Megan.

Thanks, Melanie, and good morning, everyone. Thank you all for joining us today. I'm pleased to report that we delivered a strong performance in the second quarter, driven by our team's outstanding execution despite ongoing macroeconomic volatility. We have demonstrated resilience in the current environment, and despite the market factors, we are where we said we'd be, in the pole position and in the center of the commerce media ecosystem. We believe that we're uniquely equipped to provide the market-leading tech to our clients, prospects, and partners who are looking to capitalize in one of the fastest growing areas of digital advertising, commerce media. Our transformation to a commerce media powerhouse continues to unfold, and our commerce media platform vision is coming to life. One year after the acquisition of iPhoneWeb, we've successfully completed the integration of our teams, and we're leveraging the iPhoneWeb assets to accelerate our strategy. This includes the imminent launch of our demand-side platform called Commerce Max and the launch of our supply-side platform called Commerce Grid. These capabilities bookend our stack and the differentiation that they bring unlocks the full potential of our commerce media platform and positions Criteo to become an end-to-end platform of choice for commerce media. Starting with Commerce Max, We look forward to the general availability of our Commerce DSP next month. Stay tuned for more details on the official launch on September 12th. Our beta testing has progressed well with various retailers and brands across multiple geographies. As we expected, results of our beta testing show increasingly strong results in terms of conversion rates on integrated on-site and off-site campaigns. This proves the value to our clients of the advantage that the end-to-end platform delivers. We're very encouraged by our growing pipeline of retailers and brands that have already signed up to use Commerce Max, and we expect the ramp up to be gradual over the coming quarters. Brands and agencies are excited to finally have a single access point to buy premium retail media inventory on-site and open internet inventory off-site while also taking advantage of differentiated features like closed-loop measurement and product-level sales data and leveraging unique audiences built on real shopping behaviors to drive performance. Retailers are also excited to leverage Commerce Max to best monetize their onsite inventory and their valuable first-party data to increase their revenue and bring more shoppers to their sites. Moving on to Commerce Grid, We're pleased with the successful launch of our Commerce SSP. Omnicom was our launch partner, and we have since expanded access to other agency holdcos in the US and EMEA. We've combined our Predio Direct supply with IconWeb's capabilities to create a unique value proposition for the market. For the first time, Commerce Grid brings our Commerce audience data, like shopper intent signals, and audience segments which publishers can package with their inventory. For retailers, Commerce Grid brings additional monetization opportunities. It allows retailers to curate their first-party audiences and make them available for access through all DSPs. Importantly, Commerce Grid expands access to third-party demand. so that agencies and brands can reach commerce audiences through any DSP. Commerce Grid is both complementary and supplemental to Commerce Max, making our commerce media platform interoperable to drive incremental demands, mainly from agencies that have already committed spend to other DSPs. For agencies, that can be the first step to participate in retail media. and they will leverage Commerce Max to access sponsored listings on-site and real-time campaign optimization for both on-site and off-site with closed-link reporting. Ultimately, it all contributes to attracting more demand to our platform and increasing advertising revenues for media owners. This is the power of the Commerce Media platform, allowing data flows and client access across one platform. Turning to our second quarter performance, we're pleased with our growing momentum as we continue to shift towards a broader solution portfolio centered on the fast-growing commerce media opportunity. Our new solutions now represent around half of our top line, and we expect this will become the larger part of our mix going forward as we lay it out at our investor day. Our Q2 performance also demonstrates our strong focus on execution, as we continue to do what we said we will do. Starting with retail media, we bring out seven years of experience to a growing number of retailers, now 210 retailers, 2,400 brands, and our agency partners globally. We're pleased to see that our retail media growth has accelerated in our third quarter to date, as we're ramping up newly signed partnerships. We're proud to win the trust of an increasing number of retailers across all regions. We're also expanding our footprint with online marketplaces, including most recently Debenhams and Sprinter, who chose Criteo for their superior technology and monetization opportunities. We're making great strides into adjacent commerce verticals, as exemplified by our Uber partnerships. Through our platform capabilities, CPG brands can now promote their brands and products via sponsored ads on the Uber Eats app in multiple countries. We're pleased with the continued ramp-up of this exciting partnership, and we have ambitions to launch additional formats and markets in the coming months. More broadly, we are scaling our existing retail relationships, and this quarter launched new inventory with seven top US and EMEA clients to help them expand their monetization opportunities. Our access to unique and premium retail media inventory at scale has been instrumental in attracting more demand. We added nearly 100 new brands in Q2 and retail media spend driven by agencies grew over 50% in the US this quarter. Our agency partners are increasingly leaning into Criteo as we're independent meaning we don't own media, we're not a retailer, and we're not part of any agency. We are independent. They also value the tools we bring to maximize performance for their brands. This includes our unique AI-powered digital shelf analytics, providing visibility into their share of shelf, share of category, and more product-level insights as part of our DSP. Only Criteo applies AI to digital retail shelf analytics, and we were granted a US patent on systems and methods, including the integration of AI for digital shelf display earlier this year. It's still very early days, but we're already seeing top brands harness the power of these insights to strategically design campaigns to win or defend market share. Looking now at marketing solutions, we delivered strong growth in commerce audiences As we continue to diversify our business by combining large-scale commerce data and breakthrough AI technology to power relevant advertising in environments deprived of third-party signals, commerce audiences represented close to half of our contribution extract with new clients in Q2, up from only a third of our new business a year ago. This reflects our ability to unlock targeting opportunities in signal-limited environments that others cannot address. Leveraging our large-scale commerce data and AI-powered audience modeling tech to find in-market shoppers. Commerce audiences are the most valuable audiences to brands and an integral part of our commerce media strategy. These capabilities also create the foundation of our success in retail media off-site as we help retailers extend their advertising reach beyond their own walls across the open internet. Importantly, we've made great strides in cross-selling our solutions with about 100 more clients now using more than one Criteo solution compared to last quarter. Clients like Curry's are embracing the power of our commerce media platform and now leveraging our suite of always-on customer acquisition and retention solutions in addition to our retail media capabilities. Retargeting benefited from our latest release of AI-driven performance enhancements to optimize campaigns and unlock additional budgets in a still uncertain macroeconomic environment. In addition, we continued to scale our first-party media network to retarget consumers with first-party data matching in cookie-less environments. We saw a sequential increase in hash email bidding this quarter, and results are encouraging. A top US publisher partner saw an immediate list of close to 140% in CPMs for Safari browser traffic, which contributed to a year-on-year increase of 70% in media spend after enabling hash emails as a targeting signal for its authenticated logged-in users. This demonstrates that our publishers can have confidence around continuity for when third-party cookies are deprecated on Chrome and Android. As part of our multi-pronged addressability strategy, we also remain one of the largest scale partners in the privacy sandbox. Google's recent announcement of scale testing with 1% of Chrome users for the web before the planned deprecation of third-party cookies is a positive development in line with our recommendation to get real-world results. It is also expected to represent an integral part of the UK CMA's assessment. We believe that Criteo leaning into a close collaboration with Chrome to develop specific use cases will enable us to deliver superior performance. Last quarter, we shared our thoughts on the potential of generative AI to reshape advertising, and I'd like to provide an update on what that means for Criteo. Unlike others in the industry, we have privileged access to the largest commerce data set on the open internet. We leverage twice as much e-commerce sales as Amazon, with more than $1 trillion every year, or close to $3 billion in daily transactions to fuel commerce-driven AI models. Thanks to our Criteo AI labs experience expertise, our models incorporate deep learning at scale, and combined with our consented commerce data, deliver breakthrough performance across the entire buyer journey. We are integrating generative AI into our platform with a focus on three specific areas. Improving performance, enhancing the user experience for our clients and their customers shopping online with applications such as chatbot interactions for product recommendations, and optimizing our service delivery process through co-pilots to drive efficiency. Our clients are at the center of everything we do, and client retention remains high at close to 90%. The meaningful year-over-year improvement in our average customer satisfaction score is a testament to the hard work of our teams. We are focused on bringing value to our clients through service and performance with a client centricity lens to everything that we do. Our CSAT score this year was the highest it's been for three years. Criteo is working across the industry to establish standards for retail media that we expect will help encourage further adoption and drive long-term growth for the ecosystem. One example of particular importance to me is measurement. Measurement is an imperative for advertisers to make data-driven decisions, demonstrate value, and ultimately achieve better results. Brands also need to compare results across marketing channels to create benchmarks. Recognizing this need We're leading the way with a first-of-its-kind partnership with Integral Ad Science to bring industry-standard viewability and invalid traffic measurements on any on-site ad format across our network of retailer partners. It's expected to unlock new budgets from advertisers that adhere to strict media buying standards. To conclude, our focus on execution is front and center in every level of our organization. We believe we've built a highly scalable commerce media platform, and we're confident in our future. We're focused on profitable growth, and we have multiple initiatives underway to generate operating leverage over time, all with a focus on driving shareholder value. With that, I'll turn it over, the call over to Sarah, who'll provide more details on our financial results and our outlook. Sarah.