EuroBusiness Media (EBM): Performance marketing technology company Criteo has just announced its first quarter results. I'm joined by Criteo CFO Benoit Fouilland. Benoit, thanks for being with us.
Another strong quarter for Criteo. Tell us more about it.
Benoit Fouilland: Indeed we had another great quarter. We delivered rapid profitable growth and healthy cash flow. All of this while investing across the business. This is a combination that makes our model attractive and differentiated. We exceeded our guidance for the 14th consecutive quarter. Revenue ex-TAC grew 30%. Adjusted EBITDA grew 18% and free cash flow more than doubled growing 136%.
EBM: So what were the main drivers of your success?
Benoit Fouilland: We had 3 key drivers: innovation, access to inventory, and client addition. We delivered on our innovation roadmap driving 15% growth of same-client revenue ex-TAC. In the engine, we made enhancements to Kinetic Design - our creative layer - driving revenue ex-TAC uplift of 3-5 % and we rolled out a new engine feature that allows clients to bid on the cost of sales target driving an average 5 % uplift in sales for the clients who adopted it. Also our User Graph gained more power with now 67% of revenue ex-TAC generated from matched users. We continued to build the graph through CRM and third party data and a new probabilistic technology. Our clients are getting increasing value from this graph. For example we launched a service for clients to use our graph in their own attribution tools.
EBM: Tell us more about the other two drivers you mentioned?
Benoit Fouilland: So we expanded and improved our access to inventory. We completed the testing of our header bidding technology, now connected to over 100 publishers and driving positive results for clients, publishers and for us. Native inventory continues to show good traction, now representing over one quarter of our business. And in video we are pleased with the early results of our alpha testing with several large clients. And we added over 950 net new clients while maintaining 90% client retention rate across the business. Midmarket now represent 32% of revenue ex-TAC and it remains a huge opportunity for us.
EBM: You recently launched two new products, tell us how they're doing?
Benoit Fouilland: So with Criteo Sponsored Products we are working on the technology integration with the Criteo Engine. We signed several large publishers including Walgreens in the U.S. and we expanded the product in Europe signing new brands like Samsung and Electrolux. And with Criteo Predictive Search, we are still assessing the potential market for our product. U.S. retailers continue to show interest in our product and we see good client satisfaction. So we launched in France at the end of Q1 and started signing large clients.
EBM: What are your priorities for the year ahead?
Benoit Fouilland: So for 2017 we remain focused on a clear set of priorities. First, innovate on the core product and expand our core business worldwide. Second, scale Criteo Sponsored Product across markets and integrate it with the Criteo technology. Third, deploy Criteo Predictive Search in the U.S., in France and in additional key markets. Fourth, build and leverage our pooled assets like our User Graph, our Universal Catalog, and sales attribution for brands across retailer partners. All of that in order to benefit our ecosystem. And fifth, develop, test, launch compelling new products such as prospecting, app installs, offline CRM data onboarding and video.
EBM: So all in all another great quarter for you…
Benoit Fouilland: Yes. I'm pleased with our strong performance in Q1 delivering sustained profitable growth and cash flow. We execute on our plans and we see exciting avenues of growth for 2017 and beyond.
EBM: Benoit Fouilland, Criteo's CFO, thanks for being with us.
Benoit Fouilland: Thank you.
