Criteo SA (CRTO) 2013 Q3 法說會逐字稿

Good day and welcome to the Criteo Q3 Results Conference Call. Today's conference is being recorded. For your information, press and representatives of the media will be on a listen-only basis. At this time I would like to turn the conference over to Mr. Edouard Lassalle. Please go ahead, sir.

Thank you, Sara. Good morning and good afternoon to all of you on the call and welcome to Criteo's financial results call for the third quarter entered September 30, 2013.

Some of our discussions will contain forward-looking statements which may include projected financial results or operating metrics, business strategies, anticipated future products and services, anticipated investment and expansion, anticipated market demand opportunities and other forward-looking statements. These statements are subject to risk, uncertainties and assumptions. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements.

And report results should not be considered as an indication of future performance. Further information regarding the factors that could affect the Company's financial results is included in the filings the Company makes with the Securities and Exchange Commission from time to time, including the section entitled risk factors in the Company's prospectus filed with the SEC on October 30, 2013.

Also I would like to remind you that during the course of this conference call we will discuss non-IFRS measures of our performance. Reconciliation to the most directly comparable IFRS financial measures are provided in the tables in the press release.

Now let me turn the call over to JB Rudelle, Criteo's Chief Executive Officer.

Thank you, Edouard. I am very pleased to share our third quarter results with you today, our first reporting quarter as a public company. We are happy to be here and look forward to a long and productive relationship with our shareholders and to the analyst community. Thanks for joining us on the call today.

This third quarter was strong, as we expected, with results at the high end of the preliminary results range reflected in our free-writing prospectus filed with the SEC during our IPO Road Show. Today I'll discuss the third quarter's results and operating highlights in more details, and our progress across our multiple growth objectives. And then I'll turn the call over to Benoit, our CFO, who will discuss the financial results in greater detail.

For the third quarter we exceeded the symbolic EUR100 million revenue milestone marker, delivering over EUR100 million worth of clicks to help our ecommerce clients to drive more business. This is reflected in our revenue which grew 58% year-over-year to EUR113.8 million, or 72% at constant currencies.

Revenue ex-TAC grew 60% to EUR46.8 million over the same period, or 73% at constant currencies, primarily driven by our continued, rapid, global expansion. Adjusted EBITDA grew 164% to EUR11.6 million from the third quarter of 2012. Benoit will discuss the financial results in much more detail and share our guidance for the year.

Our business is driven by engaging and converting customers on behalf of our clients. This quarter we had over 4,600 clients, representing a 62% growth year-over-year. During the quarter we saw growth across all segments and all geographies as we continued to demonstrate the strength and disruption of our solution.

At the same time we continued to increase our direct publisher relationship and we're working with a record number of over 6,300 of them at the end of Q3. Our publisher marketplace or PuMP -- that's for midsized publisher continue also to be very successful and a very compelling, a valuable position.

In terms of premium publisher relationships, our strategic partnership with Yahoo! Japan continued to ramp significantly during the quarter. The scope of our strategic partnership with them keeps broadening, and deepening and continued to deliver very solid results this quarter. Impressions from Yahoo! Japan grew 51% sequentially over the previous quarter and contributed to more than 40% of Japan's revenue ex-TAC. We increased also inventory from the homepage and all premium sections including the coveted news section. I must say we are very satisfied with those results.

In addition to Yahoo! Japan we made further progress with a number of other publishers, including another important one, Facebook. We've been working with Facebook for a year now and we're live on an increasing number of markets worldwide in this third quarter.

During the second quarter we signed a cross-browser agreement that allows us to target Facebook ads across devices based upon Facebook user ID, and are already seeing very positive results from this. Facebook inventory is important to our e-commerce clients given the number of Facebook users and their reach worldwide.

This increased inventory we access also give us better coverage, which further increases the efficiency of our engine and ultimately drives better performance for our clients. We are excited about this partnership, the way it's progressing and by the potential to further deepen our relationship with them in the future.

We are pleased with the progress we made across our existing business and key partnerships during the quarter overall. We also showed important progress across our growth objectives. Let me start with geo expansion. We continue to see tremendous market potential in our core business across all of our regions, including APAC, Americas and EMEA.

In Asia-Pacific in particular we continue to deliver a very strong triple-digit growth, increasing revenue by 147% to EUR24 million year-over-year, and revenue ex-TAC by 119% to EUR10 million. This was driven primarily by Japan and Southeast Asia. In Japan we increased access to premium inventory and launched our midmarket offering in the quarter both on the client and the publisher side. Also of note we started rolling out text link format for advertising on homepages and on smartphones.

Asia-Pacific is an important mobile market given the large number of mobile users there and the larger maturity of the market. So mobile is an important focus for us in this region. As I will discuss later we continue to make very good progress on our mobile front in Asia-Pacific.

During the quarter we also set up new subsidiaries in China and Singapore, and have been hiring to increase our local business in the coming quarters. Overall we are very excited about our remarkable progress in such a short period of time in Asia-Pacific. And we believe the region should continue to be a significant driver of our future growth.

We also made good progress in the Americas. Revenue grew 62% from the same quarter last year to EUR13 million, where revenue ex-TAC was 60% to EUR12 million. And in the US we launched a significant number of new campaigns in the quarter including brand new clients, existing clients upgraded to mid-funnel campaigns, and clients who had previously started by testing us outside the US and now working with us in the US.

We also won some important new clients which we have just begun to integrate, including more major US department stores and online retailers, a major online car dealer, and one of the largest credit card providers worldwide. We entered the US market more recently, as you know, we see going public here having a very positive impact on our visibility, our branding and our ability to grow our presence in this market.

In combination with our current investment, we expect this increased visibility to give us stronger results in the coming quarters. Beyond our significant client wins in the Americas, we now have more than two thirds of all US clients live on Facebook Exchange.

In the US, the rollout of the Criteo One Tag solution with our clients gathered good momentum in the quarter. Just as a reminder, Criteo One Tag is an innovative technical solution that helps us we believe to accelerate our approach with our clients and engage them across all devices, including in particular on mobile.

In EMEA, our revenue increased 36% year-over-year to EUR16 million, and our revenue ex-TAC increased 45% to EUR25 million, the result of adding new verticals beyond our core retail and travel business, and expanding significantly our midmarket client base. In Western Europe we posted a strong double-digit growth in all major markets. In Eastern Europe we continued to deliver very solid growth, notably in Russia where we're currently working on setting up a fully-owned subsidiary.

In the quarter we also were live in new markets in the EMEA regions, notably in the Middle East. We believe the fast pace of our geographic expansion is a testimony of how highly replicable our model is.

Now with regards to our mobile growth strategy, we are very excited of our acquisition of Ad-X in early July, as you know. We believe our purchase of Ad-X rapidly accelerates our effort in mobile, especially across in-app mobile advertising, an important area of focus for us.

Ad-X has created some of the earliest technology to optimize performance advertising in mobile. Specifically, the Ad-X tracking solution is one of the leaders for in-app analytics, real-time event data and download tracking. The acquisition of Ad-X has been a wonderful complement to our existing solution.

In terms of mobile's Web campaigns, we continued to make very good progress in the third quarter, especially in Japan, as I mentioned, where our number of live accounts on mobile increased by more than 70% compared to the previous quarter. At the end of third quarter more than 40% of our Japanese clients were mobile integrated.

And mobile inventory in Asia is also growing fast. The contribution of our mobile solution to Japan revenue ex-TAC is growing fast and strong, reaching around 10% in the quarter. For some of our most advanced clients, mobile contributed to almost 30% of revenue ex-TAC. We are very excited by with those results.

In closing, I'd like to reinforce the five key reasons why we think we are positioned really to be strong and win in this market. First, through deep technical integration with our clients we access very large volumes of highly granular and actionable shopping intent data, at an aggregate massive scale.

Second, our predictive technology is highly efficient, automated and scalable. Third, our search-like CPC marketplace creates a truly disruptive model in display. Fourth, our ability to work directly both with clients and publishers illustrates how disruptive our approach is and creates a level of stickiness which is a strong differentiation in the industry, and last the combination of superior ROI and volumes we deliver to our clients at scale drives our high client retention rate.

Finally, before leaving the floor to Benoit, I want to say we recently closed a very successful IPO. We are thrilled at the positive reception of our story in the capital markets and the support of so many investors.

As a global leader in performance display we look forward to operating as a public company. And it feels good to be here. As I said, our technology and our innovative model continued to drive the network effects of our business and increase the number of clients and direct publishers on our platform around the world.

We have an enormous market opportunity and we've only just begun to ramp up new products and new partnerships. We are executing well on our growth strategies and look forward to updating you on our progress and activities in the quarters to come.

With that, let me turn the call over to Benoit, our CFO.

Thank you, JB. I'm also very satisfied by the positive reception of our story by the investment community during our recent IPO. And I'm equally pleased to be now operating as a public company.

I'm excited about Criteo's business and our market opportunities. Our third quarter reflects great momentum and I'm pleased with our results. I will walk you through our financial performance in detail and then open the call to your questions.

Let's start with our third quarter highlights. Revenue increased 58%, or 72% at constant currencies, to EUR130.8 million compared with EUR72.1 million in the third quarter 2012. Revenue ex-TAC grew 60% or 73% at constant currencies to EUR46.8 million in the third quarter compared with EUR29.3 million in the third quarter of 2012.

Revenue ex-TAC margin slightly increased to 41.1%. Adjusted EBITDA increased by 164% to EUR11.6 million in the third quarter 2013 compared with EUR4.4 million in the third quarter last year, despite significant investments made over the period.

Starting with revenue, total revenue increased 58%, or 72% at constant currencies, to EUR113.8 million in the third quarter 2013. This solid revenue increase reflects our continued focus on expanding across all geographies and vertical markets as we leverage our scale.

Revenue in the Americas grew by 62%, or 76% at constant currencies, to EUR30.5 million. In EMEA, revenue increased by 36%, or 39% at constant currencies, to EUR59.7 million. Revenue in Asia-Pacific increased 147% year-over-year, or 214% at constant currencies to EUR23.6 million.

While revenue is a useful indicator of our actual client spend, we consider revenue excluding traffic acquisition costs paid to our publishers, or revenue ex-TAC as a key measure to evaluate and monitor our business activity. We will provide quarterly and full-year guidance based on this metric, as well as Adjusted EBITDA.

Revenue ex-TAC grew 60%, or 73% at constant currencies, to EUR46.8 million in the third quarter, primarily driven by our continued rapid geographic expansion. In the Americas revenue ex-TAC grew by 60% to EUR11.9 million over the comparable quarter in 2012. We continued to sign large clients in U.S. during the quarter. We have also seen good revenue traction in Latin America where we continue to grow at a double-digit rate in Brazil, and made significant penetration progress in other Latin American markets.

Revenue ex-TAC in EMEA increased 45% to EUR25.4 million over the same period last year. In this region we have a mix of more mature markets on newer emerging markets. And we've been successful in growing our existing business while at the same time making good progress expanding beyond the retail and further verticals.

Revenue ex-TAC in Asia-Pacific increased by 119% in the quarter to EUR9.6 million. We continue to strengthen our relationship with Yahoo! Japan with increased access to premium inventory. In addition, as JB mentioned earlier, we launched our PuMP solution for small or mid-sized publisher in Japan and have made significant progress in mobile.

Let's move to adjusted EBITDA. Adjusted EBITDA increased by 164% year-over-year to EUR11.6 million in the third quarter. Adjusted EBITDA was EUR4.4 million in the third quarter last year.

Hosting and data costs increased by 28% to EUR2.7 million compared with the third quarter 2012, excluding depreciation and amortization. This reflects our strong continued commitment to strengthen our physical infrastructure by investing in hosting capacity to support current and future growth.

Operating expenses increased by 52% to EUR26.4 million compared with the same period last year. Excluding the impact of stock-based compensation, pension costs, depreciation and acquisition-related deferred price consideration, which I would refer to as non-IFRS basis, our operating expenses were at EUR32.5 million in the third quarter, an increase of 43% compared to the third quarter of 2012. Increase in the operating expenses over the period was mostly related to research and development as we accelerated our investment to further develop our technology platform and support future growth.

R&D employee headcount has increased 73% to 189 at the end of the third quarter. On a non-IFRS basis, R&D expenses increased by 94% to EUR6.8 million in the third quarter 2013 compared with EUR3.5 million in the third quarter last year.

Headcount in sales and operations increased 28% to 452 employees at the end of September 2013. On a non-IFRS basis, Sales and operations expenses increased by 40% to EUR19.2 million in the third quarter 2013 to sustain our rapid sales growth in all regions. As a percentage of revenue, our sales and operation expenses decreased by 2.2 percentage points over the period to 16.9% of revenues in the third quarter 2013.

Operating headcount in our general and administrative function also increased by 34% to 115 employees at the end of September 2013. This is primarily the result of the ramp up of our financial, legal and HR organizations to support growth and prepare the Company to become a public company.

On a non-IFRS basis, G&A expenses increased by 17% to EUR6.5 million in the third quarter 2013 compared with EUR5.6 million in the same period last year.

Moving on to cash, cash flow generated by operating activities increased by EUR6.9 million to EUR3.7 million in the third quarter compared with a negative EUR3.1 million in the third quarter of last year. Over the period our CapEx increased 144% year-on-year to EUR5.7 million in the third quarter this year.

Total cash, cash equivalents and short-term investments were at EUR 39.8 million as of September 30, 2013, representing a decrease of EUR8.1 million compared with the position on June 30, 2013, primarily the result of our combined capital expenditure and the investment in Ad-X in the quarter, which together represents a cash outflow of EUR11 million. And of course after the close of the third quarter 2013, we received net proceeds of $269 million from the closing of our Initial Public Offering on the NASDAQ Global Select Market.

I'll wrap up with our thoughts regarding our guidance. I remind you that the following forward-looking statements reflect our expectations as of today, November 14, 2013. For the fourth quarter, revenue ex-TAC is expected to be between EUR50 million and EUR52 million.

Also for the fourth quarter, adjusted EBITDA is expected to be between EUR10 million or EUR12 million. For the fiscal year 2013, revenue ex-TAC is expected to be between EUR174.2 million and EUR176.2 million. Also for the fiscal year 2013, adjusted EBITDA is expected to between EUR26.8 million and EUR28.8 million.

This guidance assumes the following foreign currency exchange rates, a euro/dollar exchange rate of 1.328, a euro/Japanese yen exchange rate of 133.32, and a euro/British pound exchange rate of 0.844. This guidance also assumes no business acquisition during the quarter ending December 31, 2013.

In closing, I'm excited about operating as a public company and I'm very pleased with the strength of our business and growth prospect. We have a very large market opportunity ahead of us and we are only just beginning. I look forward to building long-term trust with our public investors and to sharing our growth story every quarter as we continue to realize our potential.

With that, I'll turn the call back to the operator now to take your questions.

Thank you. (Operator Instructions). We will now take our first question from Doug Anmuth of JPMorgan. Please go ahead.

Great, thanks, just wanted to give you guys a couple questions. First, just can you talk a little bit more about the Yahoo! Japan relationship and just how that's broadened over the last year or so, and provide a little more color on the kind of inventory in particular now that you're getting now how that's changed more recently?

And then, secondly, you made a comment about targeting through Facebook across devices, if you could elaborate there as well, in particular discuss what you're doing in mobile, if anything on that front. Thanks.

Sure, sure, sure. Thanks very much. This is JB. So on Yahoo! Japan this is a deal that has been growing over time, very classical I would say of the Japanese way where the trust between the two partners is, and the strength of the relationship is growing over time as we discover each other.

In the beginning when we started to work with them we were doing 400 million to 500 million impressions a month. And after nine months this has moved to more than two billion impressions a month, and keep on accelerating, and because they realize step by step that we are bringing truly incremental value to the business, new demand from budget that they couldn't get on their own and that was incremental.

And so step by step they have been getting more and more confident that there was no cannibalization with their sales. And they've been opening more and more premium inventory. So we started with the regular inventory and step by step we do more putting different section, and up to a key on page here of key sections of Yahoo! Japan.

And in a way this seems straight in line with the strategy we have with a lot of publishers, the key ones that over time as we build the trusted relationships we grow the inventory, especially in the premium inventory. We go after with them.

With Facebook so that's a very interesting example of, as you point out, how to do cross device tracking and cross device attribution. The fact we are able to recognize someone between two different computers and to recognize that it's the same user and to be able to target, to send targeted ads has a 20% impact on how much volume we can buy from them. So it's really a win-win. It's a win-win deal where they give us this extra data you have in data. And in exchange we buy more volume and at better price from our Facebook.

And this is also something we are starting to allow with a number of key publishers. It's really it's another illustration of good collaboration between us, and key publishers and building value across and more deep in publishing.

Great. Thanks, JB.

Thank you. We will now take the next question from Ross Sandler, Deutsche Bank. Please go ahead.

Thanks, guys, two questions. JB, it looks like the Americas region is still growing strong, over 60%, very healthy, but a bit of a deceleration and your comp was tougher in the third quarter. So can you just talk about where you think you are in terms of penetration across ecommerce and travel in the US? And can you talk about the growth that you're seeing at some of your new customers versus same-store growth from existing customers in the US?

And then a follow-up to the previous question on the publisher side, what percent of impressions today are under exclusive deals, either the first look exclusives or outright exclusive like Yahoo! Japan? And is the new Facebook agreement for log-in information exclusive? Thanks.

Sure. On our new accounts in the U.S. we are very excited because it's not only already our biggest market, even if would have entered in US a few years after Europe, but it's a market where we see a very good growth. And if we look at our revenue growth over the first nine months of 2013, it's one hundred, one point -- 101% growth or 112% at constant currencies.

And what's very exciting is that we see a lot of new budget coming in the US, new clients, not only I would say in a pure retail and travel verticals, which are as you know historically where we started the focus when we entered the US, but as I mentioned before, we signed a very large deal in the financial industry with one of the largest credit card provider and a major deal in the automotive with a major online car dealer. So this is very exciting because we see the potential clear in the US and broadening over time.

The second question regarding our preferred partnership, so we had two type of preferred partnerships, just to clarify. First one, we have exclusive partnership with some publishers. And we have what we call first look where we have the ability to look each impression before anyone else and make the decision in real time to buy or not to buy, so overall across our whole countries this is around 50/50.

50% is on the public exchanges and 50% of our revenue is with preferred, US partnerships. The next depend on countries. In new countries where we just partnered there is a bigger part of the public exchanges because this is where we start when we get to a new country. As we increase liquidity and demand in a given country we start to scale the direct publisher deals.

And this has been very successful in all countries we now we've been entering. This is why now overall we have a very good mix of 50/50. So we in way we are 50% of our reach which goes beyond all the public exchanges, but and won't have access to on. And we consider the public exchange to be kind of economic in the market that they don't have access to. And it's a true big, big game changer to elect that to all those preferred deals whenever they are to be accretive all of the first look on this premium publisher inventory.

The other question was on Facebook. This is not an exclusive deal with have with (inaudible). It's -- we don't pretend we're the only company having this. It was more an illustration of the win-win or the deal with a publisher that if you can convince them to integrate deeper and share more data, then we can buy more units and at a better price.

Thank you. We will now take the next question from Brian Pitz of Jefferies. Please go ahead.

Great, thanks. You mentioned the Yahoo! Japan partnership accounted for more than 40% of Japan's revenue ex-TAC. As the relationship deepens over time, can you give us a sense for how much of Japan's revenue will be driven by Yahoo! Japan?

And separately, just a little more detail on the R&D increase, a little more color on specific investments if you can in R&D, and it looks like these costs may have come in a little bit higher than you were originally expecting, if you could just give us a little more color on that. Thanks so much.

And sure, sure, sure. So we are very excited with the publisher of Yahoo! Japan, but we don't want to be too dependent on Yahoo! Japan in Japan. So we are also very focused on making sure we are going with other sources of inventory.

And this is one of the reasons why we made a big push this quarter to add in particular a midmarket team in Japan to go after the [toss] of the market, the midsized publishers where we're aware that 56 dedicated, incisive set staffs to go after the publishers because we want to make sure that we have a healthy mix of a different source of inventory, and we really think is a long-term partnership and we believe a very strong one. We still want to maximize the outreach.

And beyond that we always have a strong incentive to work with direct publishers to maximize our reach as most of our budget, our open budget each time we plug a new publisher it is directly additionally implement for us then.

Regarding the R&D, well the (inaudible) in the increase where did -- where do you mean that in R&D, to that extent this increased year-on-year. There are a couple of areas. Obviously mobile is one of the big areas of focus, our significant part of the investment went and before the acquisition of Ad-X, but also obviously with the acquisition of Ad-X, but also we have continued to increase our efforts on our efforts here on our engine, our clients and since improvement of the engine is so critical to our ongoing success.

So these are the, I would say, the most (inaudible) or real. I'm not sure that I completely get your comments with respect to expenses coming higher than expected. In fact, we were on that from another of the spending point, a strong point we were overall at the Company coming rather slightly under what we had anticipated from standing standpoint. On the specifically with respect to R&D I think we were in line with our expectation.

I think it's important that you look at the -- at just the normal IFRS basis for the OpEx because there is the impact of stock-based compensation since there were some significant stock-based compensation expense during the period. When you look at year-over-year of which the (inaudible) parts went to the R&D. That might impact you and that is it.

And just to add and more I would say long-term color, this is something we had a last question during the road show. And we've been very clear that we were going to keep on investing in the long term in R&D. And we will not reduce our efforts in R&D. We think technology is the key driver and of a long-term sustainability for us in share in the market. And this is something we maintain consistent in our policy, a strong R&D effort.

Great, thanks.

Okay.

Thank you. We will now take the next question from Jordan Rohan of Stifel Nicolaus. Please go ahead.

Hi. This is [Alex Chager] on for Jordan. Thanks for taking the time. There appears to be a preference for direct deals. And obviously it seems to be working well for you. How do you think about that going forward? Is there a reason to believe that the percentage of your direct inventory will increase even with the massive growth in programmatic in the market generally?

So the way it works, and it's pretty much the same picture in each and every country, and we've done this now more than 20 times with all the few countries we've been opening, so it's getting pretty standard. When we get to when you can trade the first thing we do is we connect to all the major exchanges, a Google, Facebook, AppNexus, PubMatic. And this gives, I would say, immediate reach and the ability to start a version in a given market.

But our whole strategy is really to increase more demand on our platform. We create what we call liquidity. Liquidity means that for each impression we see, we have more and more clients competing within an internal auction for this very impression. It means that for each impression we have a higher like view that it fits one of our clients going to be willing to pay the higher price.

So overall we can increase their average CPM that we can pay. And by doing this we can start to have direct conversation with publishers where we can go after not only the remnant inventory which is on the exchange, but the premium inventory, the good stuff where you have the best click-through rates and conversion rates.

The best CPM doesn't sit on the exchange and the publishers have a very good reason why they don't want to put their premium inventory on the exchanges. And this is where we are negotiating the direct deals. So it requires a quickly coincide in new country, but as we grow countries where we see our ability to do the more direct deals getting better and better.

Thank you. And then any progress on moving up the funnel?

We are today the way we [inaudible] is we have the full funnel solution. We cover all performance need. And really the strategy is to go after the whole display budget of our clients. And we are increasingly successful into that.

In the early days people were seeing -- a lot of clients were seeing opportunities as they were targeting solutions. Then we moved through to discovery, which is relative to have sell clients into new products that the user had in browser position. And we are moving now into new areas dominant in funnel, and really with the ability to cover the full display performance by that of our clients. And really this is a strategy we believe for our clients.

There is strong rationale to use only one provider for the whole display budget, so at least -- so to avoid them to compete against themselves, because they use different partners that are using, leveraging the data. They will end up competing against themselves on exchanges, which is highly inefficient.

So the mature, sophisticated clients they get it very well. And this is a general trend that we see, especially in the US where the majority of the market is higher than in Europe.

Thank you.

Thank you. (Operator Instructions). We will now take the next question from Ralph Schackart of William Blair. Please go ahead, sir.

Good afternoon. Can you remind us what markets you're live with mobile today, how the performance of the mobile ads have been versus the core Web market, and just give us a sense of the economics of a mobile transaction the same as your core Web business?

Absolutely, absolutely, very good, and a very good question. From a technical standpoint we are live in all markets on mobile. We are dependent on the level of maturity of the mobile ecosystem.

Whenever it's on the client side where they need to have a mobile website, the mobile strategy on the publisher side for access to the inventory. So some markets are more mature than others. And to simply on kind of three buckets, you had the impact which is the most advanced, US following. And Europe for EMEA I would say are 12 months, 12, 18 months behind in terms of mobile inventory to the rest of the market.

In terms of key metrics, there are two key metrics for us that we are looking at is the click-through rate and the post-click conversion rates. These are really the two metrics which makes the efficiency of our engine. So what's interesting in mobile, this is an emerging channel. We see that the click-through rate is slightly higher than on desktop. To be clear, for 100 clicks on desktop you have -- you will have 120 clicks on mobile, which is very, very typical from a new channel lock for another emerging category here.

And we see this across different countries also depending on the natural to the country. US is more mature for instance than Southern Europe for in this manner. In terms of conversion rate, and this is also very consistent, the conversion rate first click on mobile is slightly lower than on desktop in the range of 70%, 80% of what you see on desktop. And this is also normal. And when you combine those two factors together, at the end of the day you want to see a [inaudible] conversion rate. The two nicely balance against each other and we end up with a pretty much similar economics on mobile that we had on desktop.

This is why we see -- we are so excited by mobile because really the mobile is replicating exactly the same way. And as I mentioned before, with some of our most advanced clients the one that had been Internet from raising mobile earlier than their peers, we do now almost 30% of our Internet on mobile.

Great, and maybe a follow-up if I could. Ad-X integration seems to be going really well. And just given the recent balance sheet strengthening and strong mobile growth, are you seeing more M&A opportunities in mobile, and maybe just kind of broadly speaking can you give us a sense how does mobile get prioritized strategically going forward?

Well mobile is a very strong priority, as Benoit mentioned. And in terms of R&D we have a dedicated group. And this is something actually which is very, very high. And a lot of resources are focused on that.

Well and next I think integration is working very well. As a matter of fact, the technical team of Ad-X that was based in London has been relocated to Paris to be in the same location, and the -- and then the core R&D team of the rest of the Company.

And this has worked very, very well. And as a matter of fact we started the -- of the pre and pre discussion we had before the acquisition making sure we could merge the two R&D teams together nicely. And it had a very smooth customer integration. And this works very, very well. And it is definitely one of the most important agenda points in the R&D ramp up.

Great. Thank you very much, great.

Thank you. We have no further questions.

Thank you very much, everyone, for your time today.

Thank you very much.

Thank you.

We'll see you soon.

Thanks. Bye-bye.

That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.