Criteo SA (CRTO) is a company based in France, specializing in digital performance marketing. Their solution comprises the Criteo Engine, the company’s data assets, inventory access, and advertiser and publisher platforms.
The Criteo Engine incorporates various machine-learning algorithms, such as prediction, recommendation, bidding, and creative algorithms.
Through the Criteo Engine, the company delivers advertisements across various marketing channels and formats, including display advertising banners, native advertising banners, and marketing messages sent to opt-in e-mail addresses.
With a presence in about 90 countries, Criteo operates through a network of over 30 international offices spanning Europe, the Americas, and the Asia-Pacific region.
As of the latest update, Criteo’s stock market value stands at $1.84 billion, translating to $33.39 per share.
Petrus Advisers: The Activist Investor
Activist Commentary: Petrus Advisers, an activist investor based in Europe and established in 2009, prioritizes cultivating a thorough, fundamental comprehension of the public companies it invests in.
He has a percentage ownership of 5.60% This understanding is complemented by active engagement, both publicly and discreetly. The firm’s strategy revolves around concentrating solely on European markets where it can invest with a deep understanding akin to local investors, particularly within industries where it holds expertise.
An Insight On What’s Happening
On February 22, Petrus Advisers directed a letter to Criteo’s Chair of the Board, Rachel Picard, and CEO, Megan Clarken, outlining specific actions they believe the company should undertake:
1. Investor Day: Petrus urged Criteo to organize an investor day promptly to elucidate the company’s retail media strategy and introduce a new mid-term plan.
2. Accelerated Share Buyback: They advocated for expediting the existing share buyback through a significant self-tender offer of up to $150 million.
3. Strategic Review: Petrus called for the initiation of a thorough strategic review no later than the fourth quarter of 2024.
4. Board Refreshment: They recommended refreshing the company’s board by appointing independent candidates proposed by Petrus.
Behind The Scenes
Criteo SA, a company based in France, is a global leader in advertising technology with a primary listing on the Nasdaq. Their Criteo ad platform uses artificial intelligence and commerce data to connect brands, retailers, and customers.
The company is divided into three segments: marketing solutions, retail media, and Iponweb. In 2023, 83% of their $1.95 billion revenue came from the marketing solutions segment. Criteo has a strong presence in the market and access to top technical talent in France.
They have consistently generated profits and increased gross profit margins from 33% to 44% over the past four fiscal years. However, their revenue has decreased from $2.3 billion to $1.95 billion since 2018, and their stock price has fallen from $44 to $33 in 2021.
This is due to the announcement by Google in late 2023 that they will be phasing out the use of cookies by 2024, which has caused uncertainty for Criteo’s largest segment, the marketing solutions segment. Despite this, Criteo is confident in their abilities to use AI algorithms to replace 60-70% of the lost revenue.
Their retail media segment is also a rapidly growing business, providing software as a service for e-commerce companies. During their 2022 investor day, Criteo presented a 2025 net revenue target of $1.4 billion and a plan to triple their retail media business.
However, in 2023, they announced that they may not be able to achieve this goal within the given timeframe, causing a 12% drop in their stock. The company later reported positive results, with a 10% increase in total net revenue and a 29% increase in retail media growth, leading to a rise in their stock.
The volatility in their stock can be attributed to a lack of clear communication from the management team. To address this, Petrus has proposed the addition of experienced directors to the board and a comprehensive strategic review in Q4 of 2024.
Petrus has a history of working with companies to create shareholder value, and they believe that Criteo’s biggest issue is communication, not operations. They have called for four key actions: refreshing the board, holding an investor day, accelerating share buyback, and initiating a strategic review.
Petrus, along with other major shareholders, owns 68.48% of the company’s stock and is likely to support a shareholder on the board. While Petrus believes in the company and its CEO, they have also acknowledged the possibility of a sale, as reports suggest that there has been interest from potential buyers.
However, management has dismissed these reports as speculation, raising questions about their commitment to exploring strategic alternatives.
