Criteo SA (CRTO) 2017 Q1 法說會逐字稿

Good morning, everyone and welcome to the Criteo Q1 2017 Earnings Conference Call. (Operator Instructions) Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Edouard Lassalle, VP of Investor Relations. Sir, please go ahead.

大家早安，歡迎參加 Criteo 2017 年第一季財報電話會議。（操作員說明）也請注意，今天的活動正在錄製中。現在，我想將電話會議轉交給投資者關係副總裁愛德華‧拉薩爾 (Edouard Lassalle) 先生。先生，請繼續。

Thank you. Good morning, everyone, and welcome to Criteo's Q1 2017 Earnings Call. With us today are Eric Eichmann, CEO; and Benoit Fouilland, CFO. During this call, management will make forward-looking statements. These may include projected financial results or operating metrics, business strategies, anticipated future products and services, anticipated investment and expansion plans, anticipated market demand or opportunities and other forward-looking statements. These statements are subject to various risks, 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. We do not undertake any obligation to update any forward-looking statements contained herein, except as required by law. In addition, reported results should not be considered as an indication of future performance. Also, we will discuss non-GAAP measures of our performance today. Definitions of these metrics and the reconciliations to the most directly comparable GAAP financial measures were provided in our earnings release issued earlier today. Last, unless otherwise stated, all growth comparisons made in the course of this call are against the same period in the prior year. With that, let me now turn the call over to Eric Eichmann, Criteo's Chief Executive Officer.

謝謝。大家早安，歡迎參加 Criteo 2017 年第一季財報電話會議。今天與我們在一起的有首席執行官埃里克·艾希曼 (Eric Eichmann)；和財務長伯努瓦‧富蘭 (Benoit Fouilland)。在本次電話會議中，管理階層將做出前瞻性聲明。這些可能包括預期的財務表現或營運指標、業務策略、預期的未來產品和服務、預期的投資和擴張計劃、預期的市場需求或機會以及其他前瞻性陳述。這些陳述受到各種風險、不確定性和假設的影響。某些事件的實際結果和時間可能與此類前瞻性陳述預測或暗示的結果或時間有重大差異。除法律要求外，我們不承擔更新本文所含任何前瞻性聲明的義務。此外，報告的結果不應被視為未來績效的指標。此外，我們今天還將討論非 GAAP 績效指標。我們今天稍早發布的收益報告中提供了這些指標的定義以及與最直接可比較的 GAAP 財務指標的調整。最後，除非另有說明，本次電話會議中進行的所有成長比較均與去年同期進行。現在，讓我將電話轉給 Criteo 執行長 Eric Eichmann。

Thank you, Edouard and good morning, everyone. I am pleased to report another strong quarter of profitable growth, the result of continued successful execution. Before we go through the quarterly performance, let me talk about how we help marketers win in a fast evolving and increasingly complex environment. Marketers need relevant marketing that drive sales in a measurable way and provide seamless experiences to consumers. Three trends are driving their demand: first, the fact that growth of data-rich ad buying is providing more opportunities to drive accountable, personalized advertising at scale; second, the increasing disjointed shopping experiences across devices and environments, both online and offline, creates strong demand for seamless and integrated marketing; and third, the continued digitization of offline activities, largely driven by mobile devices, opens new opportunities for performance marketing. In order to take advantage of these trends, marketers need a trusted partner with state-of-the-art technology able to harness data at scale to enable them to drive more sales and profits. Criteo's performance marketing platform, powered by proven machine learning, a massive pool of granular shopper data and a network of tens of thousands of retailers, brands and publishers, helps our clients maximize sales and profits across the shopping journey. The Criteo performance marketing platform bring significant value to our partner ecosystem. With Criteo Dynamic Retargeting, marketers profitably target and convert shoppers at scale across online channels. With Criteo's Sponsored Products, retailers gain additional revenue by monetizing their site inventory, while brands grow sales with comprehensive attribution measurement across retail partners. With Criteo Predictive Search today and other products in our pipeline, we help retailers drive higher sales and maximize ROI. And all of these products are fueled by the most powerful user graph focused on shoppers. Turning now to the Q1 results. For 14 consecutive quarters as a publicly-listed company, we have exceeded Revenue ex-TAC and Adjusted EBITDA guidance. At constant currency, we grew Revenue ex-TAC 30% to $210 million and Adjusted EBITDA 18% to $56 million. In Q1, the growth in same-client Revenue ex-TAC remained strong at over 15% at constant currency, a direct result of better technology and improved supply -- and an improved supply network. More than 75% of our business is driven by uncapped budgets, helping to drive this growth. We performed well across the business. We continued to deliver on our innovation roadmap. We expanded and improved our access to inventory. We added many new clients across all regions. And we made good progress with our new products, Criteo Sponsored Products and Criteo Predictive Search. Let me start with innovation. I want to highlight two areas: the Engine and the user graph. Within the Engine as part of Kinetic Design, we rolled out enhancements on created layouts to 75% of addressable demand, driving a 3% to 5% uplift in Revenue ex-TAC. We also continued to roll out Adaptive Revenue Optimizer, a feature allowing clients to bid directly on a cost-of-sales target instead of a cost per click. Clients adopting Adaptive Revenue Optimizer are seeing an average 5% uplift in sales. And we continue to have a very healthy portfolio of innovations. In Q1 alone, we added 30 new variables to the Engine and A/B tested over 170 ideas to improve our technology across the board. Second, our powerful user graph asset keeps on growing in scale and efficiency with Revenue ex-TAC generated from matched users accounting for 67% of our total, an increase of 7 points from the prior quarter. We continue to make good progress in building the user graph. 76% of clients now share CRM data with us and we leverage third-party data to augment this dataset. In addition, we launched a probabilistic match approach to complement our deterministic technology. Our clients are seeing increasing value from our user graph. All cross-device metrics, including sales, cost of sales, conversion rate and cost-per-order, are now available to all clients in the Criteo dashboard, allowing them to measure the cross-device impact of their campaigns. In Q1, we launched the Criteo User Graph as a service, and more than 120 clients globally already access our cross-device graph to inform their own attribution tools. The user graph also enables new marketing scenarios. One such scenario is the onboarding of offline CRM identities to run online campaigns. A second scenario is the use of CRM data to inform, optimize and measure the performance of retargeting campaigns. We are currently testing these two scenarios with alpha clients. A third scenario is the tracking of offline sales made by cross-device shoppers matched by our graph. Shifting to the supply side of the business. We completed the beta testing of our next generation header bidding technology, directly connecting to publishers' ad servers. Using this technology, we are now connected to over a 100 publishers and some of our largest U.S. and European partners with positive results. Our header bidding technology allows us to reach an incremental 15% of users and drives, on a publisher basis, additional value of up to 40% for our clients. We are now ready to launch and deploy the Criteo header bidding technology more broadly. Native inventory continues to enjoy good traction across our business and represents more than a quarter of total Revenue ex-TAC. Our flexible integration and dynamic creative capabilities are key differentiators in securing native inventory. And in video, we are pleased with the early results of our alpha partnerships with several large clients in the U.S. and Europe. We are working on unlocking quality inventory to understand the overall potential that video could represent for our clients. Moving to the demand side of our business. We added over 950 net clients across all regions, a growth of 25% in client additions compared to Q1 last year. We closed the quarter with over 15,000 commerce and brand clients, while maintaining a 90% client retention across the business. Among new clients were several dozen consumer brands including Peet's Coffee & Tea, Blue Diamond Growers, Bel Brands USA, Noosa Yogurt, Heritage Baby Products and Mifold, the grab-and-go booster seat. As every quarter, clients of all sizes decided to work with Criteo. Midmarket continues to grow quickly at 60% globally and represent 32% of Revenue ex-TAC. Our automated platform for new client onboarding is now close to complete in most markets. The payment functionality will soon become available, in addition to tagging, product feed and creative modules which have been live for a few quarters. Turning now to our new products. In search, we are assessing the full market potential for Criteo Predictive Search. U.S. retailers are showing interest in our product and existing clients show good satisfaction levels. At the end of Q1, we launched Criteo Predictive Search in France and signed several existing large e-commerce clients for Google Shopping campaigns. With Criteo Sponsored Products, we continue to work on the integration with the Criteo technology and are in line with our plans. We signed several new large retail publishers including Walgreens and Office Depot in the U.S. and Notebooksbilliger in Germany. And we expanded Criteo Sponsored Products in some European markets signing new brands like Samsung and Electrolux. Moving to regional performance. We executed well across all three regions. The Americas showed good momentum with Revenue ex-TAC growing 38% at constant currency. Q1 was the largest first quarter for new client business in 2 years with more larger clients signed including Neiman Marcus, Intuit, TurboTax, QuickBooks and Sweetwater. At the end of March, we strengthened our leadership team with the appointment of Greg Archibald as EVP for Americas who brings over 20 years of experience in omnichannel, digital and mobile. EMEA maintained its solid growth across all markets with Revenue ex-TAC growing 25% at constant currency. All our main Western European countries continued their double digit growth with strong performance across client categories. Client additions remain a significant driver in particular in the midmarket, where our Barcelona hub now counts 250 employees. We also signed large new clients including Emirates. Existing client growth is trending well in midmarket and large retail and travel clients. Lastly, in APAC, Revenue ex-TAC remained strong at 28% at constant currency despite a challenging comparable basis last year. Japan and Korea continue to perform well across the large client and midmarket categories. And we delivered solid performance across Southeast Asian markets, especially in Vietnam and Taiwan. In our business with in-app advertisers was again particularly strong across APAC markets growing a 175% year-over-year and more than 35% compared to Q4. Looking ahead to the rest of 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 Products across existing and new markets and integrated with the Criteo technology. Third, deploy and continue to assess full market potential for Criteo Predictive Search in the U.S. and France and launch it in a few additional key markets. And fourth, build and leverage a powerful set of pooled assets. The user graph, our Universal Catalog and sales attribution for brands across a retail partner network to benefit our overall ecosystem. And finally, develop, test and launch compelling new products such as customer prospecting, app install, offline CRM data onboarding and video. In closing, I'm pleased with our strong execution in Q1. The year has started well and I'm confident 2017 will be another successful year for Criteo. I look forward to updating you as we continue to leverage our world-class technology and large scale to enable new solutions for commerce and brands, and strengthen our position in performance marketing. With that, I will now have Benoit, our CFO, walk you through our financial results in detail.

謝謝愛德華，大家早安。我很高興地報告另一個強勁的季度獲利成長，這是持續成功執行的結果。在我們介紹季度業績之前，讓我先談談我們如何幫助行銷人員在快速發展且日益複雜的環境中獲勝。行銷人員需要相關行銷以可衡量的方式推動銷售並為消費者提供無縫體驗。三個趨勢正在推動他們的需求：首先，數據豐富的廣告購買的成長為大規模推動負責任的個人化廣告提供了更多機會；其次，線上和線下跨裝置和環境的購物體驗日益脫節，對無縫和整合行銷產生了強烈需求；第三，主要由行動裝置推動的離線活動持續數位化，為效果行銷帶來了新的機會。為了利用這些趨勢，行銷人員需要一個值得信賴的合作夥伴，擁有最先進的技術，能夠大規模利用數據，從而推動更多的銷售和利潤。Criteo 的績效行銷平台由經過驗證的機器學習、大量精細的購物者數據以及由數以萬計的零售商、品牌和出版商組成的網絡提供支持，可幫助我們的客戶在整個購物過程中實現銷售額和利潤最大化。Criteo 效果行銷平台為我們的合作夥伴生態系統帶來了巨大的價值。透過 Criteo 動態重新導向，行銷人員可以跨線上管道大規模定位和轉換購物者，從而實現盈利。借助 Criteo 的商品推廣，零售商可以透過網站庫存貨幣化獲得額外收入，而品牌則可以透過零售合作夥伴的全面歸因衡量來增加銷售額。借助今天的 Criteo 預測搜尋和我們管道中的其他產品，我們可以幫助零售商提高銷售額並最大限度地提高投資回報率。所有這些產品都是由專注於購物者的最強大的用戶圖所推動的。現在轉向第一季的結果。作為一家上市公司，我們已連續 14 個季度超過了 TAC 之外的收入和調整後 EBITDA 指引。以固定匯率計算，我們的扣除 TAC 收入成長了 30%，達到 2.1 億美元，調整後 EBITDA 成長了 18%，達到 5,600 萬美元。第一季度，以固定匯率計算，除 TAC 外的同一客戶收入成長依然強勁，超過 15%，這是技術進步、供應改善以及供應網絡改善的直接結果。我們超過 75% 的業務由無上限預算驅動，有助於推動這一成長。我們在整個業務領域表現良好。我們繼續實現我們的創新路線圖。我們擴大並改善了庫存管道。我們在所有地區增加了許多新客戶。我們的新產品、Criteo 贊助產品和 Criteo 預測搜尋取得了良好進展。讓我從創新開始。我想強調兩個區域：引擎和使用者圖。在引擎內，作為 Kinetic Design 的一部分，我們對創建的佈局進行了增強，以滿足可滿足需求的 75%，推動 TAC 之外的收入增長 3% 至 5%。我們還繼續推出自適應收入優化器，該功能允許客戶直接針對銷售成本目標而不是每次點擊成本進行出價。採用自適應收入優化器的客戶發現銷售額平均成長了 5%。我們繼續擁有非常健康的創新組合。僅在第一季度，我們就為引擎添加了 30 個新變量，並對 170 多個想法進行了 A/B 測試，以全面改進我們的技術。其次，我們強大的用戶圖譜資產規模和效率持續成長，配對用戶產生的TAC收入佔總營收的67%，比上季成長7個百分點。我們在建立用戶圖方面繼續取得良好進展。76% 的客戶現在與我們共享 CRM 數據，我們利用第三方數據來擴充該數據集。此外，我們也推出了機率匹配方法來補充我們的確定性技術。我們的客戶從我們的用戶圖表中看到了越來越大的價值。現在，Criteo 儀表板中的所有客戶都可以使用所有跨裝置指標，包括銷售額、銷售成本、轉換率和每訂單成本，使他們能夠衡量其行銷活動的跨裝置影響。在第一季度，我們推出了 Criteo 用戶圖譜服務，全球已有 120 多個客戶訪問我們的跨裝置圖譜，為他們自己的歸因工具提供資訊。用戶圖也支援新的行銷場景。其中一個場景是使用離線 CRM 身分來執行線上活動。第二個場景是使用 CRM 資料來通知、優化和衡量重新導向行銷活動的績效。我們目前正在使用 alpha 客戶端測試這兩個場景。第三種情況是追蹤與我們的圖表相符的跨裝置購物者的線下銷售。業務向供給面轉移。我們完成了下一代標頭競價技術的 Beta 測試，直接連接到發布商的廣告伺服器。利用這項技術，我們現在與 100 多家出版商以及一些最大的美國和歐洲合作夥伴建立了聯繫，並取得了積極的成果。我們的標頭出價技術使我們能夠增加 15% 的用戶，並在發布商的基礎上為我們的客戶帶來高達 40% 的附加價值。我們現在已準備好更廣泛地啟動和部署 Criteo 標頭競價技術。原生庫存繼續在我們的業務中享有良好的吸引力，佔 TAC 之外的總收入的四分之一以上。我們靈活的整合和動態的創意能力是確保本地庫存的關鍵優勢。在影片方面，我們對與美國和歐洲的幾家大客戶建立阿爾法合作夥伴關係的早期結果感到滿意。我們正在努力釋放優質庫存，以了解影片可以為我們的客戶帶來的整體潛力。轉向我們業務的需求方。我們在所有地區增加了超過 950 個淨客戶，與去年第一季相比，客戶增加量增加了 25%。本季結束時，我們擁有超過 15,000 名商業和品牌客戶，同時整個業務的客戶保留率保持在 90%。新客戶中有數十個消費品牌，包括 Peet's Coffee & Tea、Blue Diamond Growers、Bel Brands USA、Noosa Yogurt、Heritage Baby Products 和 Mifold（即拿即走的加高座椅）。每個季度，各種規模的客戶都決定與 Criteo 合作。中階市場持續以全球 60% 的速度快速成長，佔不計 TAC 收入的 32%。我們的新客戶入職自動化平台現已在大多數市場接近完成。除了已經上線幾季的標籤、產品提要和創意模組之外，支付功能也將很快推出。現在轉向我們的新產品。在搜尋領域，我們正在評估 Criteo 預測搜尋的全部市場潛力。美國零售商對我們的產品表現出興趣，現有客戶也表現出良好的滿意度。第一季末，我們在法國推出了 Criteo Predictive Search，並為 Google 購物活動簽署了幾個現有的大型電子商務客戶。透過 Criteo 贊助產品，我們繼續致力於與 Criteo 技術的集成，並符合我們的計劃。我們與多家新的大型零售出版商簽約，包括美國的 Walgreens 和 Office Depot 以及德國的 Notebooksbilliger。我們在一些歐洲市場擴大了 Criteo 贊助產品，簽署了三星和伊萊克斯等新品牌。轉向區域績效。我們在所有三個地區都表現良好。美洲地區表現出良好的勢頭，以固定匯率計算，扣除 TAC 的收入增長了 38%。第一季是兩年來新客戶業務量最大的第一季度，並簽約了更多大客戶，包括 Neiman Marcus、Intuit、TurboTax、QuickBooks 和 Sweetwater。3 月底，我們任命 Greg Archibald 為美洲區執行副總裁，加強了我們的領導團隊，他在全通路、數位和行動領域擁有 20 多年的經驗。歐洲、中東和非洲地區所有市場均保持穩健成長，以固定匯率計算，扣除 TAC 的營收成長 25%。我們所有主要西歐國家均持續維持兩位數成長，各客戶類別表現強勁。客戶增加仍然是一個重要的推動因素，尤其是在中端市場，我們的巴塞隆納中心目前有 250 名員工。我們也簽署了包括阿聯酋航空在內的大型新客戶。中端市場以及大型零售和旅遊客戶的現有客戶成長趨勢良好。最後，在亞太地區，儘管去年的可比較基礎充滿挑戰，但以固定匯率計算，扣除 TAC 的收入仍保持在 28% 的強勁水平。日本和韓國在大客戶和中端市場類別中繼續表現良好。我們在東南亞市場（尤其是越南和台灣）取得了穩健的表現。我們與應用程式內廣告商的業務在亞太地區市場再次表現強勁，年增 175%，與第四季相比成長超過 35%。展望 2017 年剩餘時間，我們仍專注於一系列明確的優先事項。一是核心產品創新，核心業務向全球拓展。其次，在現有市場和新市場中擴展 Criteo 贊助產品，並與 Criteo 技術整合。第三，部署並持續評估 Criteo Predictive Search 在美國和法國的全部市場潛力，並在其他幾個關鍵市場推出。第四，建立並利用一組強大的集合資產。用戶圖、我們的通用目錄和零售合作夥伴網路中品牌的銷售歸因將使我們的整個生態系統受益。最後，開發、測試和推出引人注目的新產品，例如客戶挖掘、應用程式安裝、離線 CRM 資料引導和影片。最後，我對我們第一季的強勁執行力感到滿意。今年開局良好，我相信 2017 年將是 Criteo 又一個成功的一年。我期待向您通報最新情況，因為我們將繼續利用我們世界一流的技術和規模，為商業和品牌提供新的解決方案，並加強我們在效果行銷方面的地位。接下來，我將請我們的財務長 Benoit 向您詳細介紹我們的財務表現。

Thank you, Eric and good morning everyone. I'm also pleased with our success in Q1. We delivered rapid profitable growth and healthy cash flow while investing across the business, a combination that makes our model attractive and differentiated. I will walk you through the quarterly performance and share our guidance for Q2 and 2017. Q1 revenue was $517 million, up 30% at constant currency. Revenue ex-TAC, the key metric we use to monitor our business performance, grew 30% at constant currency to $210 million. This was driven by the continued growth in same-client Revenue ex-TAC and the addition of new clients across regions, categories and products. Revenue ex-TAC margin was 41%, in line with our expectations. Compared with guidance assumptions, changes in forex had a $1.5 million positive impact on Revenue ex-TAC, mostly driven by the Japanese yen. However, compared with the prior year period, changes in forex represented a headwind of 90 basis points to Revenue ex-TAC growth. Shifting to expenses, other cost of revenue comprised of hosting and data cost grew 48% to $27 million, mainly driven by increased hosting capacity across data centers and to a lesser extent third-party data to complement our user graph. Operating expenses increased 39% to $162 million including $18 million related to the full quarter impact of Criteo Sponsored Products. Headcount-related expenses represented 75% of GAAP OpEx. We added over 80 net new employees in Q1 and closed the quarter with more than 2,500 employees, a 31% increase compared with Q1 2016. Non-GAAP operating expenses, which excludes depreciation and amortization, equity awards, compensation expense, pension service costs and acquisition-related cost and deferred price consideration, grew 33% to $137 million. Excluding exception of expenses of approximately $2 million primarily related to corporate development projects, non-GAAP OpEx grew less than 31%.On a non-GAAP basis by function: R&D expenses grew 43% to $33 million in line with our plans, largely driven by the 36% increase in headcount to over 600 employees. Sales & Operation expenses grew 33% to $79 million, well in line with our operating plans, also largely driven by the 30% increase in headcount to 1,550 employees, including about 100 employees focused on Criteo Sponsored Products. The addition of Criteo Sponsored Product accounted for approximately a quarter of the growth in Sales and Operation expenses. Quota-carrying headcount grew 34% to more than 720, with over 60% of the growth coming from midmarket. Finally, G&A expenses increased 20% to $26 million, while headcount grew 26% to 430 employees. Excluding exceptional G&A expenses, non-GAAP G&A OpEx only grew 11%. Moving to profitability, Adjusted EBITDA grew 18% at constant currency to $56 million, primarily driven by our strong Revenue ex-TAC performance across all regions. In line with expectations, Criteo Sponsored Products had a negative contribution to Adjusted EBITDA, due to the low business seasonality in Q1 and the first full quarter of expenses. Excluding the impact of Criteo Sponsored Products and exceptional expenses, Adjusted EBITDA margin was 31% of Revenue ex-TAC, an increase of 120 basis points compared to Q1 2016. Q1 profitability is well in line with our plans for 2017. Financial expense increases by $1 million to $2 million. This was primarily driven by hedging cost and interest expense in relation to the HookLogic acquisition. Net income decreased 22% to $15 million. Income from operation was negatively impacted by a 78% increase in stock-based compensation, largely driven by a one-time equity grant in connection with HookLogic acquisition, and our increase in stock price over the period. We are currently reviewing equity compensation practices to more frequently account for changes in market price. Net income was also impacted by a 61% increase in depreciation and amortization, primarily due to a $3.9 million intangible depreciation expense relating to the HookLogic purchase price accounting. Excluding the impact of non-cash accounting effects related to the HookLogic acquisition, net income increased 15% to $21 million. The effective tax rate for the quarter was 22% based on an estimated effective tax rate of 29% for the full fiscal year 2017. Adjusted EPS on a diluted basis increased 6% to $0.46. Cash flow from operation grew 134% to $44 million, driven by our strong operating performance and profitability in the quarter, as well as a positive contribution from changes in working capital. This represented a 78% conversion of Adjusted EBITDA into cash flow from operations. CapEx increased 133% to $28 million, driven by investment in data center equipment, IT equipment and software licenses in line with our plans. Free cash flow increased 136% to $16 million driven by the strong increase in cash flow from operations. Finally, cash and cash equivalents increased $34 million to $304 million at the end of March. I will now provide our guidance for Q2 and fiscal year 2017. The following forward-looking statements reflect our expectation as of today, May 3, 2017. We expect Q2 2017 Revenue ex-TAC to be between $209 million and $213 million. This would imply constant currency growth of 29% to 32%. We assume year-over-year changes in forex to our negative impact of approximately 370 basis point on our Q2 reported growth. And we expect Q2 2017 Adjusted EBITDA to be between $44 million and $48 million. From a business seasonality standpoint, Q2 is typically the lowest quarter in the year for core business. In addition, we expect a sequential increase in expenses of approximately $12 million, driven primarily by the continued growth in headcount and Criteo's Annual Global Employee Summit in the quarter. For fiscal 2017, we now expect Revenue ex-TAC to grow between 28% and 31% at constant currency. We assume changes in forex to have a negative impact of 220 basis points on our reported growth for the full year. And we expect fiscal 2017 Adjusted EBITDA margin as a percentage of Revenue ex-TAC to improve by 0 to 50 basis points compared with 30.8% in fiscal 2016. Finally, from a cash flow stand point, we expect our CapEx program for 2017 to be between 5% and 5.5% of revenue, and our cash tax rate to be between 27% and 29%. As usual, the forex assumption underlying our guidance for both period are included in the earning release that we published earlier today. In closing, I'm pleased with our strong performance in Q1, delivering sustained profitable growth and strong cash flow generation. We continue to execute on our plans and we see exciting avenues of growth for 2017 and beyond. With that, let me turn the call back to the operator to take your questions.

謝謝你，艾瑞克，大家早安。我也對我們第一季的成功感到高興。我們在對整個業務進行投資的同時，實現了快速的獲利成長和健康的現金流，這一組合使我們的模式具有吸引力和差異化。我將向您介紹季度業績並分享我們對第二季和 2017 年的指導。第一季營收為 5.17 億美元，以固定匯率計算成長 30%。不計 TAC 的營收（我們用來監控業務績效的關鍵指標）以固定匯率計算成長了 30%，達到 2.1 億美元。這是由於同一客戶收入（TAC 除外）的持續成長以及跨地區、類別和產品的新客戶的增加所推動的。扣除 TAC 後的營收利潤率為 41%，符合我們的預期。與指導假設相比，外匯變動對扣除 TAC 的收入產生了 150 萬美元的正面影響，這主要是由日圓推動的。然而，與去年同期相比，外匯變動對扣除 TAC 的營收成長造成了 90 個基點的阻力。轉向費用，由託管和數據成本組成的其他收入成本增長了48%，達到2700 萬美元，這主要是由於跨數據中心的託管容量增加以及在較小程度上補充我們的用戶圖的第三方數據推動的。營運支出成長 39%，達到 1.62 億美元，其中包括與 Criteo 贊助產品的整個季度影響相關的 1800 萬美元。員工人數相關費用佔 GAAP 營運支出的 75%。我們在第一季淨增加了 80 多名新員工，本季末員工數量超過 2,500 名，與 2016 年第一季相比增加了 31%。非公認會計準則營運費用（不包括折舊和攤提、股權獎勵、薪資費用、退休金服務成本以及收購相關成本和遞延價格對價）增加了 33%，達到 1.37 億美元。不包括主要與企業開發專案相關的約200 萬美元費用，非GAAP 營運支出成長不到31%。 依職能劃分的非GAAP 基礎：研發費用成長43%，達到3,300 萬美元，符合我們的計算劃，這主要是由於員工人數增加 36%，達到 600 多名。銷售和營運費用增加了33%，達到7,900 萬美元，完全符合我們的營運計劃，這在很大程度上是由於員工人數增加了30%，達到1,550 名員工，其中包括大約100 名專注於Criteo 贊助產品的員工。Criteo 贊助產品的增加約佔銷售和營運費用成長的四分之一。配額員工人數增加了 34%，達到 720 多人，其中超過 60% 的成長來自中階市場。最後，一般管理費用增加了 20%，達到 2,600 萬美元，而員工人數增加了 26%，達到 430 名。不計特殊的一般管理費用，非公認會計準則一般管理費用營運支出僅增加 11%。轉向獲利能力，以固定匯率計算，調整後 EBITDA 成長 18%，達到 5,600 萬美元，這主要得益於我們在所有地區的強勁收入（扣除 TAC）表現。與預期一致，由於第一季業務季節性較低以及第一個完整季度的費用，Criteo 贊助產品對調整後 EBITDA 的貢獻為負。排除 Criteo 贊助產品和特殊費用的影響，調整後的 EBITDA 利潤率為不計 TAC 收入的 31%，與 2016 年第一季相比增加了 120 個基點。第一季的獲利能力與我們 2017 年的計畫非常一致。財務費用增加 100 萬美元至 200 萬美元。這主要是由與 HookLogic 收購相關的對沖成本和利息支出所推動的。淨利潤下降 22% 至 1500 萬美元。營運收入受到股票薪酬成長 78% 的負面影響，這主要是由於與 HookLogic 收購相關的一次性股權授予以及我們在此期間股價上漲所致。我們目前正在審查股權補償做法，以更頻繁地考慮市場價格的變化。淨利潤也受到折舊和攤銷增加 61% 的影響，這主要是由於與 HookLogic 購買價格會計相關的 390 萬美元無形折舊費用。剔除 HookLogic 收購相關的非現金會計影響，淨利成長 15%，達到 2,100 萬美元。基於 2017 年全年 29% 的預計有效稅率，本季的有效稅率為 22%。調整後攤薄每股收益成長 6%，達到 0.46 美元。由於本季強勁的營運業績和獲利能力以及營運資本變化的積極貢獻，營運現金流成長了 134% 至 4,400 萬美元。這意味著調整後 EBITDA 的 78% 轉化為營運現金流。資本支出成長 133%，達到 2,800 萬美元，這得益於我們計劃對資料中心設備、IT 設備和軟體許可證的投資。受營運現金流強勁成長的推動，自由現金流成長 136%，達到 1,600 萬美元。最後，截至 3 月底，現金和現金等價物增加了 3,400 萬美元，達到 3.04 億美元。我現在將提供 2017 年第二季和財政年度的指導。以下前瞻性陳述反映了我們截至今天（2017 年 5 月 3 日）的預期。我們預計 2017 年第二季扣除 TAC 的營收將在 2.09 億美元至 2.13 億美元之間。這意味著貨幣持續成長 29% 至 32%。我們假設外匯的年比變動對我們第二季報告的成長產生約 370 個基點的負面影響。我們預計 2017 年第二季調整後 EBITDA 將在 4,400 萬美元至 4,800 萬美元之間。從業務季節性的角度來看，第二季通常是一年中核心業務最低的季度。此外，我們預計費用將環比增加約 1200 萬美元，這主要是由於員工人數的持續增長和本季度 Criteo 年度全球員工高峰會的推動。對於 2017 財年，我們現在預計以固定匯率計算，扣除 TAC 的營收將成長 28% 至 31%。我們假設外匯變化會對我們報告的全年成長產生 220 個基點的負面影響。我們預計 2017 財年調整後 EBITDA 利潤率佔不計 TAC 收入的百分比將比 2016 財年的 30.8% 提高 0 至 50 個基點。最後，從現金流量的角度來看，我們預計 2017 年的資本支出計畫將佔營收的 5% 至 5.5%，現金稅率將在 27% 至 29% 之間。像往常一樣，我們對這兩個時期的指導所依據的外匯假設包含在我們今天早些時候發布的收益報告中。最後，我對我們第一季的強勁表現感到滿意，實現了持續的獲利成長和強勁的現金流產生。我們將繼續執行我們的計劃，我們看到 2017 年及以後令人興奮的成長途徑。接下來，讓我將電話轉回給接線員回答您的問題。

(Operator Instructions) Our first question today comes from Mark Kelley from Citigroup.

（操作員說明）今天我們的第一個問題來自花旗集團的馬克凱利（Mark Kelley）。

The first one for CSP, can you just remind us how TAC margin should progress throughout the year? We know how revenue kind of plays out, but the margin side would be helpful. And then on the video product, can you give us any details on what kind of conversion or click-throughs you're seeing in the initial test? I know it's early days but any color, that would be helpful.

第一個關於 CSP 的問題，您能否提醒我們 TAC 利潤率全年應如何發展？我們知道收入如何發揮，但利潤方面會有所幫助。然後在影片產品方面，您能否向我們提供有關您在初始測試中看到的轉換或點擊類型的詳細資訊？我知道現在還為時過早，但任何顏色都會有幫助。

Thank you, Mark. Let me take the video one and I'll pass on the TAC margin to Benoit. On the video, it's early for us. Obviously video, as you all know, is a big format online, and for us one of the key challenges was to create a video that was personalized and we've been able to do that. And so we're in the early stages. We look at this from a Rev ex-TAC perspective and where we are today is that we're seeing good results on limited volume. And that is good, but is no necessarily an indication of something that will turn out to be the same when we increase the volumes, and so that's the next stage for us. And we again -- we're seeing good enough on limited volume, good enough Rev ex-TAC which means the combination of click-through and conversion is competitive. So that's for video, and then…

謝謝你，馬克。讓我拍一段視頻，然後我會將 TAC 利潤轉給 Benoit。從影片來看，我們現在還早。顯然，眾所周知，視頻是一種在線大格式，對我們來說，關鍵挑戰之一是創建個性化視頻，而我們已經能夠做到這一點。所以我們還處於早期階段。我們從 Rev ex-TAC 的角度來看這個問題，我們今天的處境是，我們在有限的數量上看到了良好的結果。這很好，但不一定表示當我們增加產量時，結果會是一樣的，所以這就是我們的下一階段。我們再次看到，在有限的數量上，Rev ex-TAC 足夠好，這意味著點擊率和轉換率的組合具有競爭力。這就是視頻，然後…

For safety margin, yes, the margin that was generated in Q1 was at 27% and what we expect for the year is in the mid-20s as we indicated in the earlier -- in the last earning call.

對於安全邊際，是的，第一季產生的邊際率為 27%，我們對今年的預期是 20 多歲，正如我們在之前的上次財報電話會議中指出的那樣。

And one quick housekeeping one, if I could. The Criteo Summit, how much was that or will that be a drag on EBITDA for this quarter?

如果可以的話，還有一次快速的家事服務。Criteo 高峰會對本季 EBITDA 的影響有多大？是否會產生影響？

So as you know, I mean this summit is an event which is an important event every year where we gather all the employees. This is the only occasion during the year where we have a large meeting of employees. And we are going to have a cost which is exactly equivalent to the cost per head that we had last year. So if you account for the growth, it's a cost which would be around $7 million to $8 million, including all travel.

如您所知，我的意思是這次高峰會是我們每年聚集所有員工的重要活動。這是我們一年中唯一一次舉行大型員工會議。我們的成本將與去年的人均成本完全相同。因此，如果考慮到成長，成本約為 700 萬至 800 萬美元，其中包括所有差旅費用。

Our next question comes from Lloyd Walmsley from Deutsche Bank.

我們的下一個問題來自德意志銀行的勞埃德·沃爾姆斯利。

Two if I can. First just on Predictive Search, can you give us an update on where you are in terms of developing a standard testing protocol with Google and what you think that can do in terms of helping win new business when you get that in place? And then you guys -- wondering if you can give us just some color on video from both a product perspective and a go-to-market perspective? Is it something that you think is relatively easy like bolt-on on top of the user graph in terms of just driving performance there that you can scale? And then from a sales perspective, are you primarily serving the same kind of e-commerce customer base? Or are you trying to tackle new customer types with your video product as well?

如果可以的話，兩個。首先，關於預測搜索，您能否向我們介紹一下您在與 Google 合作開發標準測試協議方面的最新進展，以及您認為該協議到位後可以在幫助贏得新業務方面發揮什麼作用？然後你們想知道是否可以從產品角度和進入市場的角度為我們的影片提供一些色彩？您是否認為這是相對容易的事情，就像在用戶圖表頂部附加的那樣，就驅動效能而言，您可以擴展？然後從銷售的角度來看，你們主要服務的是同類型的電商客戶群嗎？或者您也嘗試透過視訊產品來應對新的客戶類型？

Great, thank you, Lloyd. Great question. So, on Criteo Predictive Search, let me maybe just give you a little background on the A/B testing protocol. To date, what we've done is a deal split on top of Google to try and see what the lift is. And one of the challenges with that is that it could create biases over time. And so we just launched a deal split that sort of changes the deals every day and so that, we think that will provide us a good baseline. Ideally what we would like, of course, is that Google provides protocols that are more solid, that are based on technology, that is put in place by Google. We're continuing to have conversations with them. The conversations are very positive. I think Google is willing to move forward. It's always a question of prioritization on their end. So we don't have a sort of an answer on when this will be developed, but we do have an indication that this is something that they're sort of willing to move forward with. So, that's on the search side. On video, maybe let me just explain a little bit what the video product is. So the video product is for our core retargeting business and what we do is we build videos on the fly that are specific to a particular user, based on their history. And then we run those videos in a sort of in video inventory. And the same metrics apply for our advertisers which is the people click on the video and then they convert and bought the product. So it is a pure bolt-on. The two parts that we need to do once we have a product that performed is: one, secure the inventory from a volume perspective. That's different than our current sort of, if you will, sort of supply and that is just normal work that we would do when it comes to inventory supply. And the second thing is obviously we need the advertisers that we work with to say that they are okay using video inventory. We've found that that's not a big issue. Obviously advertisers want to see how the videos looks like, but in general they're going to judge this on performance. So it is a bolt-on. It's for the same clients that we operate with today. And the big question as I said earlier is more about can we scale, because you have different effects when you have volume increased, but the early test look quite promising so.

太好了，謝謝你，勞埃德。很好的問題。因此，在 Criteo Predictive Search 中，我可能會向您介紹一些有關 A/B 測試協議的背景知識。到目前為止，我們所做的就是在 Google 之上進行一項交易拆分，以嘗試看看能帶來什麼提升。這樣做的挑戰之一是，隨著時間的推移，它可能會產生偏見。因此，我們剛剛啟動了交易拆分，每天都會改變交易，因此，我們認為這將為我們提供良好的基準。當然，理想情況下，我們希望谷歌提供更可靠的協議，這些協議是基於谷歌制定的技術。我們正在繼續與他們對話。對話非常積極。我認為谷歌願意繼續前進。這始終是他們的優先順序問題。因此，我們沒有關於何時開發此專案的答案，但我們確實有跡象表明他們願意繼續前進。所以，這是在搜尋方面。關於視頻，也許讓我簡單解釋一下視頻產品是什麼。因此，視訊產品適用於我們的核心重定向業務，我們所做的就是根據特定用戶的歷史記錄動態建立特定於他們的視訊。然後我們在視頻庫存中運行這些視頻。同樣的指標也適用於我們的廣告商，即人們點擊視頻，然後他們轉換併購買產品。所以它是純粹的螺栓固定式。一旦我們有了一款產品，我們需要做的兩個部分是：第一，從數量角度確保庫存。這與我們目前的供應不同，如果你願意的話，這只是我們在庫存供應方面所做的正常工作。第二件事顯然是我們需要與我們合作的廣告商說他們可以使用影片廣告資源。我們發現這並不是一個大問題。顯然，廣告商希望看到影片的外觀，但一般來說他們會根據效果來判斷。所以它是一個螺栓固定的。它是為我們今天合作的同一客戶服務的。正如我之前所說，最大的問題更多的是我們能否擴大規模，因為當數量增加時，會產生不同的效果，但早期的測試看起來很有希望。

Our next question comes from Charles Bedouelle from Exane.

我們的下一個問題來自 Exane 的 Charles Bedouelle。

So I actually had a sort of question on video. You said you kind of create the video on the fly. I mean can you explain us how that work and what has changed maybe versus the past? And maybe also what are the limitations? And the other question I will have is on the search product. I mean you gave us an idea of the ramp up through '17. It would be useful if you could give us maybe a ramp up as the quarters progress this year and also what the impact is on margin, so that we can also assess the kind of core in the line trends for the business.

所以我實際上對視頻有一個疑問。你說你是即時創建影片的。我的意思是你能向我們解釋一下它是如何運作的以及與過去相比可能發生了什麼變化嗎？也許還有什麼限制？我要問的另一個問題是關於搜尋產品的。我的意思是你讓我們了解了 17 年的發展。如果您能告訴我們隨著今年季度的進展以及對利潤率的影響，這將很有用，以便我們還可以評估業務趨勢的核心類型。

All right. Thank you, Charles. Great question. So, on video, maybe let me just go deeper on the product because unless you see it, it's probably not as easy to understand. But basically, we're recommending products for users, and we're building, say, if you have 5 products that I would recommend to you, Charles, based on your history, we're going to build a video that will sort of feature those 5 products. We'll have a music that's actually built through technology and we'll hopefully sort of get enough of your interest that you'll click and then buy. And so that's the challenge, we'll sort of build a video in a short period of time that we do that and have it perform, of course. So, that's the video product. On search, like we've said, I think this year for us is a year where we're assessing the market. We don't expect a significant impact on the Rev ex-TAC and I think the sense is that if we have a good A/B testing protocol and we continue to have the uplift that we've seen originally, then we should have a product that grows over time. But this year I would say in part is the year where we're testing a number of things. We're charging, as you know, a share of revenue when we meet with clients and that share of revenue, generally we're trying to get to a 10% to 20% of cost being spent by those customers. And that, of course, is a very disruptive way upcoming into the market and that's why we're sort of testing the market and seeing what the reception of that is. In general, what we've seen now with 70 clients that we work with today is the reception is good, the strong interest, the retention is high and the satisfaction is quite good with those clients.

好的。謝謝你，查爾斯。很好的問題。因此，在影片中，也許讓我更深入地了解該產品，因為除非您看到它，否則它可能不太容易理解。但基本上，我們正​​在為用戶推薦產品，我們正在構建，比如說，如果你有 5 種產品我會推薦給你，查爾斯，根據你的歷史記錄，我們將構建一個視頻展示這 5 款產品。我們將擁有真正透過科技建構的音樂，我們希望能引起您足夠的興趣，讓您點擊然後購買。這就是挑戰，當然，我們將在短時間內製作一個影片並讓它執行。這就是視訊產品。在搜尋方面，正如我們所說，我認為今年對我們來說是評估市場的一年。我們預計不會對 Rev ex-TAC 產生重大影響，我認為，如果我們有一個良好的 A/B 測試協議，並且我們繼續保持最初看到的提升，那麼我們應該有一個隨著時間的推移而增長的產品。但我想說，今年在某種程度上是我們測試許多東西的一年。如您所知，當我們與客戶會面時，我們會收取一定比例的收入，通常我們會努力將這些收入的比例降至這些客戶所花費成本的 10% 到 20%。當然，這是一種非常顛覆性的進入市場的方式，這就是為什麼我們要測試市場並看看其反應如何。總的來說，我們現在與 70 位客戶合作的情況是，這些客戶的接待良好，興趣濃厚，保留率很高，滿意度也很高。

Our next question comes from Brian Fitzgerald from Jefferies.

我們的下一個問題來自 Jefferies 的 Brian Fitzgerald。

Couple of question. Looking at the business outlook 2Q EBITDA, looks like it was a bit lower than the street expected but you maintain the full year EBITDA outlook. You obviously just posted EBITDA well ahead of outlook. Question now we should interrupt that, is normal seasonality starting to come to roost a little bit more as the business model matures while you continue to invest for growth? Are you finding that as you invest in new products like Predictive Search and Sponsored Products and video, are those requiring more early upfront investment than maybe previous investment?

有幾個問題。看看第二季 EBITDA 的業務前景，看起來略低於市場預期，但您維持全年 EBITDA 前景。顯然，您剛發布的 EBITDA 早於展望。現在我們應該打斷這個問題，隨著商業模式的成熟，同時你繼續投資成長，正常的季節性是否開始變得更加嚴重？您是否發現，當您投資預測搜尋、贊助產品和影片等新產品時，這些產品是否需要比先前的投資更多的早期前期投資？

Yes, yes. So, thanks for the question. So in fact, we are in line with our plan on the Q2 EBITDA. I think the key piece that needs to be factored in the seasonality, which is new this year, is obviously the Criteo Sponsored Product impact. It's a business which is highly seasonal as we discussed during the last earning release. On the Q2, just to give you a sense, Q2 was representing around 20%, just above 20% of the Revenue ex-TAC for the full year, for last year, for Criteo Sponsored Products. So that give you a sense of the seasonality why Q4 was representing close to 45%. So there is an impact of seasonality, that needs to be factored. Secondly, as I say, we have a sequential increase in expenses associated with the Global Employee Summit that we have every year, but associated as well with the continued growth of headcount that we are forcing for Q2. So in fact, we are in line with our plan but the seasonality is slightly skewed compared to what it was in prior years.

是的是的。所以，謝謝你的提問。所以事實上，我們對第二季 EBITDA 的計畫是符合的。我認為今年新增的季節性因素中需要考慮的關鍵部分顯然是 Criteo 贊助產品的影響。正如我們在上次財報發布中討論的那樣，這是一項季節性很強的業務。在第二季度，只是為了讓您了解一下，第二季度的 Criteo 贊助產品收入約佔 20%，略高於去年全年（不計 TAC）收入的 20%。這樣您就可以了解為什麼第四季佔比接近 45% 的季節性。因此，需要考慮季節性的影響。其次，正如我所說，我們每年舉行的全球員工高峰會相關的費用都在連續增加，但也與我們在第二季度強制實施的員工人數持續增長有關。因此，事實上，我們符合我們的計劃，但季節性與前幾年相比略有偏差。

Our next question comes from Heath Terry from Goldman Sachs.

我們的下一個問題來自高盛的希思·特里。

I was just wondering if you could give us a bit of an update. I know you've talk to about 6% in the past, but where was Facebook in terms of its importance to your business, your -- either from a revenue or inventory perspective? And then just if you could give us a sense of sort of how some of the new more targeted products like DPAs that you are participating in are helping drive some of the growth that you're seeing in the business, what the profile of a customer that's choosing you to help them with DPAs on Facebook looks like?

我只是想知道您能否提供我們一些最新情況。我知道您過去曾與大約 6% 的人交談過，但從收入或庫存的角度來看，Facebook 對您的業務、您的重要性如何？然後，如果您能讓我們了解您正在參與的一些更有針對性的新產品（例如 DPA）如何幫助推動您在業務中看到的一些增長，那麼客戶的概況如何選擇您來幫助他們處理Facebook 上的DPA 是什麼樣子？

Okay. Thank you, Heath. That's a great question. So, as we mentioned last quarter, Facebook was about 6% of our Rev ex-TAC in the last quarter in Q1, so that was Q4, in Q1 it was 7%, so it's increased a bit. We continue to work with Facebook. Facebook is a key partner for us and we very much appreciate sort of being able to reach and buy their inventory. I think we participate very actively with DPA and many of our clients, more than half of them, sort of buy on Facebook through us. The areas where we're not sort of participating as much is dynamic ads for travel which are areas that or which are ads that Facebook is intending to go direct to people like booking in Expedia and those types of clients. But otherwise, we're quite excited and we continue to see Facebook as a key part of our ecosystem.

好的。謝謝你，希斯。這是一個很好的問題。因此，正如我們上個季度提到的，第一季最後一個季度 Facebook 約占我們 Rev ex-TAC 的 6%，所以那是第四季度，第一季是 7%，所以有所增加。我們繼續與 Facebook 合作。Facebook 是我們的重要合作夥伴，我們非常感謝能夠接觸並購買他們的庫存。我認為我們非常積極地參與 DPA，我們的許多客戶（其中一半以上）都透過我們在 Facebook 上購買。我們不太參與的領域是旅遊動態廣告，Facebook 打算直接向人們（例如在 Expedia 上預訂）和這類客戶投放廣告。但除此之外，我們非常興奮，我們繼續將 Facebook 視為我們生態系統的關鍵部分。

Our next question comes from Sarah Simon from Berenberg.

我們的下一個問題來自貝倫貝格的莎拉·西蒙。

Two questions, please. First on was just on China. You'd said on the last call that you would -- you had a sort of key sets of criteria that you're measuring yourself in terms of progress. I just wonder if you can give us any update on that. And then the second was just a sort of broader question. Did you see any impact from -- it's obviously video related more than your business which is not primarily video at the moment, whether there was any change in terms of marketers' activity with you following the YouTube ads appearing in the wrong place and the Facebook measurement issues?

請教兩個問題。首先是關於中國。你在上次電話會議上說過，你會——你有一套關鍵的標準，你用這些標準來衡量自己的進步。我只是想知道你能否給我們任何最新情況。第二個只是一個更廣泛的問題。您是否看到了任何影響——顯然與您的業務相關的視頻比您的業務更重要，目前主要不是視頻，在YouTube 廣告出現在錯誤的位置和Facebook 上後，營銷人員與您的活動是否有任何變化測量問題？

Great. Thank you, Sarah. Those are great questions. So, on China, first maybe just to give you a quick recap of what we've done in China. So for us, it was important to look at the Chinese market. We needed to put certain things in place to be able to test that market and the things that we needed to put in place were one sort of having a data center in China, which we've had now for about 3 quarters. We also needed to connect to the supply in China. Those are different partnerships than versus the ones that we have in other parts of the world and require custom integration. And China being a very sort of in-app centric market, we also needed to sort of connect to in-app inventory and that was not an ecosystem or a marketplace that wasn't developed. And so I think, we've made good progress in that. We're having I think a bit more difficulty in China and this might prove to be structural is that we're having a hard time integrating our solution fully with advertisers, in that advertisers are more skeptical about having us see the sales that are generated from our campaigns. And so that for us is difficult in the sense that if we don't know whether we are driving our sale or not, it makes it hard for our technology to perform. So we're still in the process of seeing if that is a structural issue, if it is something that can be resolved. And so I think that's for the domestic business in China, which is sort of working with domestic advertisers to drive domestic sales. We do have and we continue to be very excited about the export business in China where we are working with large e-commerce companies in China to expand their business overseas and that continues to grow and uses of course our full global network. So that's on China. On the issue of the video impact, obviously with the YouTube and brands being more sensitive about where their ads are placed and what content is placed, we had request and questions from advertisers, but it really didn't affect us. We already have quite strict guidelines around where we have our content. We don't place ads on YouTube. There are no third parties that can place ads on YouTube, so YouTube was not part of our inventory mix and from that perspective it didn't affect us. But the overall halo that that created about brands being more sensitive was one issue that came to us, but we feel that we're in a good position to address those issues and have good processes in place to do it. So in short, it really didn't affect us, except for obviously having to talk to the advertiser and making sure that they understood what we did.

偉大的。謝謝你，莎拉。這些都是很好的問題。因此，關於中國，首先可能只是讓您快速回顧我們在中國所做的事情。所以對我們來說，關注中國市場很重要。我們需要採取一些措施來測試這個市場，而我們需要採取的措施之一是在中國建立一個資料中心，我們已經擁有這個資料中心大約三個季度了。我們還需要連接到中國的供應。這些合作夥伴關係與我們在世界其他地區的合作夥伴關係不同，需要客製化整合。中國是一個以應用程式內為中心的市場，我們還需要與應用程式內庫存建立某種聯繫，而這並不是一個尚未開發的生態系統或市場。所以我認為，我們在這方面取得了良好的進展。我認為我們在中國遇到了更多的困難，這可能是結構性的，因為我們很難將我們的解決方案與廣告商完全整合，因為廣告商對讓我們看到所產生的銷售額更加懷疑態度來自我們的活動。因此，這對我們來說很困難，因為如果我們不知道我們是否在推動銷售，那麼我們的技術就很難發揮作用。因此，我們仍在研究這是否是一個結構性問題，是否可以解決。所以我認為這適用於中國的國內業務，即與國內廣告商合作來推動國內銷售。我們確實並且繼續對中國的出口業務感到非常興奮，我們正在與中國的大型電子商務公司合作，將他們的業務擴展到海外，並且這一業務不斷增長，當然也利用了我們完整的全球網絡。這就是關於中國的。關於影片影響的問題，顯然，YouTube 和品牌對於廣告的投放位置和內容更加敏感，我們收到了廣告商的請求和疑問，但這確實沒有影響我們。我們已經對內容的存放位置制定了相當嚴格的準則。我們不會在 YouTube 上投放廣告。沒有第三方可以在 YouTube 上投放廣告，因此 YouTube 不屬於我們的廣告資源組合，從這個角度來看，它對我們沒有影響。但是，品牌更敏感所帶來的整體光環是我們遇到的問題，但我們認為我們有能力解決這些問題，並且擁有良好的流程來解決這些問題。簡而言之，這確實沒有影響我們，除了顯然必須與廣告商交談並確保他們理解我們所做的事情之外。

Our next question comes from Doug Anmuth from JP Morgan.

我們的下一個問題來自摩根大通的道格·安穆斯。

I just wanted to follow up on products. I think you mentioned that Sponsored Products is generally on track. So does that mean that you're still expecting a mid-single digit percent of revenues impact this year? And then also, can you talk about any progress that you're seeing just in your conversations with your retailer ad inventory partners in terms of moving them over to become advertisers? And I have a follow up as well.

我只是想跟進產品。我想您提到過商品推廣總體上正在步入正軌。那麼，這是否意味著您仍預期今年的收入影響將達到中個位數百分比？另外，您能否談談您在與零售商廣告庫存合作夥伴的對話中看到的將他們轉變為廣告商方面取得的任何進展？我也有後續行動。

Yes, so -- you mean -- thank you, Doug. And the second question was sort of people that are retail partners for inventory becoming advertisers for our core retargeting business?

是的，所以——你的意思是——謝謝你，道格。第二個問題是，哪些人是庫存零售合作夥伴，成為我們核心重新導向業務的廣告主？

Correct.

正確的。

So what's interesting and we're at the beginning of us sort of understanding the full benefits of having a solution that cuts across and brings many benefits to retailers. And we are having a couple of conversations that were helped by the CSP business, the Sponsored Product business, to drive people to become retargeting business or businesses for us or our clients. And in that perspective, we are seeing some progress. Nothing to sort of talk about right now, but I think in terms of the Sponsored Products, we're seeing good progress on the retail side. We continue to sign clients. We mentioned a couple of clients in our earnings call that were clients that we signed like Walgreens and Office Depot in the U.S. So we continue to search very large retail clients, so we're excited about that.

有趣的是，我們才剛開始了解擁有一個能為零售商帶來許多好處的解決方案的全部好處。在 CSP 業務、贊助產品業務的幫助下，我們正在進行一些對話，以推動人們成為我們或客戶的重定向業務或業務。從這個角度來看，我們看到了一些進展。現在沒什麼好說的，但我認為就贊助產品而言，我們在零售方面看到了良好的進展。我們繼續簽客戶。我們在財報電話會議中提到了一些我們簽約的客戶，例如美國的 Walgreens 和 Office Depot。因此，我們繼續尋找非常大的零售客戶，因此我們對此感到興奮。

And with respect to the perspective for the full year, we are still in line with what we had indicated before which was a mid-single digit uplift to Revenue ex-TAC for the year. So, we are in line with what we said before.

就全年前景而言，我們仍然與先前表示的一致，即今年扣除 TAC 的收入出現中個位數成長。所以，我們與之前所說的一致。

And if I could just follow up on header bidding? I know in the past, I think you said at your Analyst Day I believe a low single digit impact. I'm just wondering now that you're working with 100 plus publishers and rolling out more, it seems like you're having some early success. Do you feel like you can get back some of that revenue and turn it more into a positive for you?

如果我可以跟進標題競價？我知道過去，我想您在分析師日說過，我相信影響較小。我只是想知道，現在您正在與 100 多家發行商合作並推出更多發行商，看來您已經取得了一些早期的成功。您是否覺得您可以收回部分收入並將其轉化為對您來說更多的正面影響？

Yes. So thank you Doug for that question. As we said last year at the investor meeting, we thought that in the short term and that was in Q2 last year, we had seen some headwinds, but that in the long term it would turn to be a positive. And we're seeing that with our new header bidding technology. As I mentioned, we're accessing 15% additional users and we're seeing -- when we tested with publishers, we're seeing an uplift with those publishers of up to 40%. And so we're quite bullish about our ability to have header bidding be it technology that helps and drives our business, so that becomes a tailwind and potentially a significant one for us. And so I think the work now that we've tested the technology, we had 100 publishers in alpha test and we've seen some of the promising results is to deploy this technology more broadly in the different markets and that's where we are sort of are starting to do now in Q2. But I would say, yes, we're starting to shift very much to being a tailwind versus a headwind.

是的。謝謝道格提出這個問題。正如我們去年在投資者會議上所說，我們認為在短期內，即去年第二季度，我們看到了一些阻力，但從長期來看，這將變成積極的。我們透過新的標頭競價技術看到了這一點。正如我所提到的，我們正在訪問 15% 的額外用戶，我們看到，當我們與發布商進行測試時，我們發現這些發布商的用戶數量增加了高達 40%。因此，我們非常看好我們進行標題競價的能力，無論是幫助和推動我們業務的技術，這都會成為一股順風，並且可能對我們來說是一個重要的推動力。所以我認為現在我們已經測試了這項技術，我們有100 家發行商正在進行alpha 測試，我們已經看到了一些有希望的結果，我們的工作就是在不同的市場更廣泛地部署這項技術，這就是我們所處的位置現在在第二季開始做。但我想說，是的，我們正開始從順風轉變為逆風。

Our next question comes from Matthew Thornton from SunTrust.

我們的下一個問題來自 SunTrust 的 Matthew Thornton。

I guess may be 2 if I could. Starting with just kind of general timeline here, I was little surprised you call on video this early. I thought that was much more of a, kind of a 2018 your product. But when we think about video app installs prospecting all pretty good incremental [tams], I think these are all in alpha testing if I'm correct. There are probably again more 2018 kind of drivers. I just want to make sure that my heads on straight there. And then secondly, I guess, just bigger picture on competition. I'm wondering if you can give us a little update there and may be doing a between the advertisers side versus the inventory side, I guess again what you're seeing in terms of changing competition for advertisers as well as just the fight for inventory, any update there? And then just one housekeeping if I could, I think you reaffirmed the HookLogic outlook for the full year. I think on search, you had previously talked about less than 2% full year revenue in a high single digit $1 million drag on EBITDA, just want to confirm if those are still aloft, still consistent?

如果可以的話我想可能是2。從這裡的一般時間表開始，我對你這麼早就通過視訊通話感到驚訝。我認為這更像是 2018 年的產品。但是，當我們考慮視訊應用程式安裝勘探所有相當好的增量 [tams] 時，我認為如果我是對的，這些都在 alpha 測試中。2018 年可能還會有更多的司機。我只是想確保我的頭腦清醒。其次，我想，只是關於競爭的更大的圖景。我想知道您是否可以給我們提供一些最新信息，並且可能會在廣告商方面與庫存方面之間進行一些操作，我再次猜測您在廣告商競爭的變化以及庫存之爭方面所看到的情況，有更新嗎？如果可以的話，我認為您重申了 HookLogic 全年的前景。我想在搜尋方面，您之前曾談到全年收入不到 2%，高達 100 萬美元，對 EBITDA 造成拖累，只是想確認這些是否仍然很高，是否仍然一致？

Thank you, Matthew. Those are great question. I'll let Benoit take the questions on search and HookLogic in a second. But let me talk first about the new products. You are right, the lot of the new products we're talking about there, they're in development and testing this year and if successful, they would have an impact starting in 2018. Video is something that we tested. I think I would just want to make sure that people understand that at this point we've tested it on low volumes and its performing, but going from low volumes to high volumes sometimes sort of leads to performances that are not as exciting and so it's still -- we're going through that stage now. We're going to test higher volumes. It could have an impact in the second half of 2017, if it works, but that's still an if. But obviously, video is a significant format. So if it does work it could, it could be good for us, but it's still a question mark for us. In terms of competition, I think a couple of things on the advertiser end. What we're seeing is that there is not much change expect for, I would say, a bit of a positive change in Twitter sort of announced in their earnings call that they were sort of taken down or sort of winding down TellApart, which was a strong competitor for us here in the U.S. and so that's good news for us and obviously opens the possibility for us to work with those advertisers that were working with them. And other than that, I would say that it hasn't changed dramatically. We continue to compete with the same folks and based on the retention rates that we have and the progress that we're making in terms of signing new clients, I think if nothing else we're making good progress. On the inventory side, obviously, it's an area that's changing quite a bit and SSBs some of them have been surprised by the rise of header bidding. We see header bidding as a very positive thing for us that would give us more visibility and more sort of availability of inventory and access to more inventory at potentially better prices. So that's very positive. I would say larger players are also becoming active in getting access to inventory. We don't see that as a threat, but Facebook with [fan] is also sort of integrating with header bidders. Amazon is also being a bit more aggressive in trying to get direct access to inventory. And so I would say that those are dramatic changes, but certainly, I mean, the supply landscape has changed overtime. If you took the supply landscape 10 years ago was very, very different and it's going through another transformation and we think we are in a very good place to take advantage of it, the biggest item of course, being header bidding driving a lot of the change. And then sort of we're searching HookLogic…

謝謝你，馬修。這些都是很好的問題。我稍後將讓 Benoit 回答有關搜尋和 HookLogic 的問題。但讓我先談談新產品。你是對的，我們正在討論的許多新產品今年都在開發和測試中，如果成功，它們將從 2018 年開始產生影響。影片是我們測試過的東西。我想我只是想確保人們明白，目前我們已經在低容量和性能上對其進行了測試，但從低容量到高容量有時會導致性能不那麼令人興奮，所以它是儘管如此——我們現在正在經歷這個階段。我們將測試更高的容量。如果有效的話，它可能會在 2017 年下半年產生影響，但這仍然是一個假設。但顯然，影片是一種重要的格式。因此，如果它確實有效，那可能對我們有好處，但對我們來說仍然是一個問號。就競爭而言，我認為廣告商方面有幾件事。我們看到的是，預計不會有太大變化，我想說的是，Twitter 會在財報電話會議上宣布，他們會被撤下或關閉 TellApart，但會出現一些積極的變化。在美國，這對我們來說是一個強大的競爭對手，所以這對我們來說是個好消息，顯然為我們提供了與那些與他們合作的廣告商合作的可能性。除此之外，我想說它並沒有發生巨大的變化。我們繼續與同樣的人競爭，根據我們的保留率和我們在簽約新客戶方面取得的進展，我認為如果沒有其他事情，我們正在取得良好的進展。在庫存方面，顯然，這是一個發生很大變化的領域，其中一些 SSB 對標頭競標的上升感到驚訝。我們認為標頭競價對我們來說是一件非常積極的事情，它將為我們提供更多的可見性和更多種類的庫存可用性，並以可能更優惠的價格獲得更多庫存。所以這是非常積極的。我想說的是，較大的參與者也積極取得庫存。我們不認為這是一種威脅，但 Facebook 和 [fan] 也在某種程度上與標頭投標者整合。亞馬遜在嘗試直接獲取庫存方面也更加積極。所以我想說，這些都是巨大的變化，但當然，我的意思是，供應格局隨著時間的推移而發生了變化。如果你認為 10 年前的供應模式非常非常不同，它正在經歷另一次轉變，我們認為我們處於一個非常好的位置來利用它，當然，最大的項目是頭部競價推動了很多改變。然後我們正在搜尋 HookLogic…

So HookLogic, I just confirm the uplift of -- if we're looking at the uplift of mid-single digit of Rev ex-TAC for the full year. As previously indicated, with respect to search, we had indicated that this would be a very small contribution to Rev ex-TAC, so 1% to 2% contribution to Rev ex-TAC to global Rev ex-TAC for the year. And with respect to the impact with EBITDA, the impact with EBITDA is unchanged compared to what we had indicated before.

因此，HookLogic，如果我們關注全年的 Rev ex-TAC 中個位數的成長，我只是確認了成長。如前所述，關於搜索，我們已表示這對 Rev ex-TAC 的貢獻非常小，因此對今年全球 Rev ex-TAC 的 Rev ex-TAC 的貢獻為 1% 到 2%。至於對 EBITDA 的影響，與我們先前指出的相比，對 EBITDA 的影響並沒有改變。

Our next question comes from Rocco Strauss from Arete Research.

我們的下一個問題來自 Arete Research 的 Rocco Strauss。

With Google getting more active in its own remarketing effort and you'll take that (inaudible) extremely stable levels, do you anticipate more competitive pressure over the course of the year? And maybe a follow up to that, could you give us some sense on how to look at your TAC rates going forward with HookLogic having its seasonal weakest quarter in first quarter and such that's slowly ramping? How should we anticipate TAC rates to develop throughout the year? And another one quickly on ARPU which seems to be down 10%, could you give us a sense here on how much of that is driven by midmarket, international clients outside the U.S. and EMEA, maybe lower margin products such as HookLogic and yes, how that we should anticipate to develop that going on from here?

隨著Google在自己的再行銷工作中變得更加積極，並且您將採取（聽不清楚）極其穩定的水平，您預計今年會面臨更大的競爭壓力嗎？也許接下來，您能否告訴我們如何看待您的 TAC 費率，因為 HookLogic 在第一季經歷了季節性最弱季度，並且正在緩慢上升？我們應該如何預測全年 TAC 費率的變化？另一項ARPU 似乎下降了10%，您能否讓我們了解一下，其中有多少是由美國和歐洲、中東和非洲以外的中端市場、國際客戶推動的，也許是HookLogic 等利潤率較低的產品，是的，是如何推動的我們應該期待從這裡開始發展這種情況嗎？

Sorry, can you repeat the last question, Rocco? We didn't get it. Sorry.

抱歉，羅科，你能重複最後一個問題嗎？我們沒明白。對不起。

The last question, ARPU is down kind of 10% year-over-year. So I expect for kind of -- yes.

最後一個問題，ARPU 年比下降了 10%。所以我預計——是的。

Okay. Great, Rocco. We have heard Apple, sorry. We were wondering what Apple has to do with us. We like the comparison but. So on the Google remarketing, I would say that Google is a partner, but they're also competitor and they have had high intensity throughout the years. I would say it started even 5 years ago and they continue to improve their product. We do quite well in the environment. We have high retention rates and I think the area where we have probably more pressure with Google is in travel where there are very large clients and so we compete in that area. But I would say the intensity hasn't changed one way or the other, it continues to be the same. And it's obviously a competitor that we look at quite closely. And so, I would say no change on that one. On TAC rates and ARPU, I'll let Benoit answer it, yes.

好的。太棒了，羅科。抱歉，我們聽過蘋果公司。我們想知道蘋果與我們有什麼關係。我們喜歡這種比較，但是。因此，在Google再行銷方面，我想說Google是合作夥伴，但他們也是競爭對手，而且多年來他們的強度很高。我想說這甚至從 5 年前就開始了，而且他們還在繼續改進他們的產品。我們在環境方面做得很好。我們的保留率很高，我認為我們對谷歌可能面臨更大壓力的領域是旅遊業，那裡有非常大的客戶，所以我們在這個領域進行競爭。但我想說的是，強度並沒有以任何方式改變，它仍然是一樣的。顯然，它是我們密切關注的競爭對手。因此，我想說這一點沒有改變。關於 TAC 費率和 ARPU，我會讓 Benoit 來回答，是的。

So on the TAC rate, we would expect the TAC rate to stay off -- the Revenue ex-TAC margin to be more exact stay within 40% to 41% range. Maybe given the high seasonality of HookLogic or Criteo Sponsored Product in Q4, you can assume that will be rather at the lower end of that range in Q4 as a result of the seasonality. With respect to the Revenue ex-TAC per client, so if you look at the statistic of the Revenue ex-TAC per client -- the live client, it's down by a single digit, mid-single digits. In total on that is expected. We've talked about it for quite a long time. This is the impact of the mix of the growing share of midmarket. Now if you look at the dynamics in each one of the 2 different segments of clients, we still have pretty edgy dynamics in those 2 segments taken separately. So, you should expect to see this mix effect continue overtime.

因此，就 TAC 利率而言，我們預計 TAC 利率將保持在較低水平——更準確地說，TAC 之外的收入利潤率將保持在 40% 至 41% 的範圍內。也許考慮到第四季度 HookLogic 或 Criteo 贊助產品的季節性很強，您可以假設由於季節性，第四季度的價格將處於該範圍的下限。就每位客戶的 ex-TAC 收入而言，如果您查看每個客戶（即即時客戶）的 ex-TAC 收入統計數據，您會發現它下降了個位數，中等個位數。總的來說這是預期的。我們已經討論很久了。這是中端市場佔有率不斷增長的組合所帶來的影響。現在，如果你看看這兩個不同客戶群中每一者的動態，你會發現，在這兩個細分市場中，我們仍然有相當尖銳的動態。因此，您應該期望看到這種混合效應持續下去。

Our next question comes from Thomas Champion from Cowen.

我們的下一個問題來自考恩的托馬斯·錢皮恩（Thomas Champion）。

You call that $18 million in expenses related to Sponsored Products in the release. Is that the right run rate to think of through the year or there is some efficiencies that you can create there as you go forward? And I guess I'm just curious given the different TAC rates in the business if you could disclose the contribution this quarter from Sponsored Products and search? I mean I think you've commented for the full year but just curious what the contribution is for the quarter? And final question is if I may, just curious if you could comment on what you're seeing from Amazon broadly and what the cooperation potential there especially through Sponsored Products?

您將這 1800 萬美元稱為與發布中的商品推廣相關的費用。這是全年考慮的正確運行率嗎？或者您可以在未來的發展中創造一些效率？我想我只是好奇考慮到該業務中不同的 TAC 費率，您能否透露本季贊助產品和搜尋的貢獻？我的意思是，我認為您已經對全年做出了評論，但只是好奇本季的貢獻是什麼？最後一個問題是，我是否可以，只是好奇您是否可以對您從亞馬遜看到的廣泛情況發表評論，以及那裡的合作潛力，特別是透過商品推廣？

Okay. So that's a lot of question there. So on the $18 million, let me clarify the $18 million expenses that we've talked about where in the context of the explanation of the net income. So this is a GAAP expenses and there is a significant portion of those expenses that are non-cash and that are related to the amortization of intangible on one hand as a result of the purchase accounting of the HookLogic acquisition. On the stock based composition, because we made as part of the acquisition rather large grant of equity awards to the founder and employees of HookLogic, so you should not assume that this would be a run rate for the year. And looking at the contribution of Sponsored Product as well as search for the year, what we indicated before is we are not intending to break down that contribution on a quarterly basis. We gave you indication for the full year that as I just said before are still valid, but we are not intending to give a quarterly breakdown of these expenses. With respect to Sponsored Product, I invite you again to be careful about the seasonality profile because why the activity of Sponsored Product for the year as we indicated is going to be just slightly negative from an EBITDA contribution for the year as indicated before, you should expect the significant negative impact over the first quarter of the year on the significant positive impact as we had last year as well for Q4 with respect to Sponsored Product.

好的。所以這有很多問題。因此，關於 1800 萬美元，讓我澄清一下我們在解釋淨利潤時所討論的 1800 萬美元支出。因此，這是一項 GAAP 支出，其中很大一部分是非現金支出，一方面與 HookLogic 收購的購買會計處理導致的無形資產攤銷有關。關於股票組成，因為作為收購的一部分，我們向 HookLogic 的創始人和員工授予了相當大的股權獎勵，所以你不應該假設這將是今年的運行率。看看贊助產品和搜尋量​​的貢獻，我們之前表示我們不打算按季度細分該貢獻。我們向您提供了全年的指示，正如我之前所說的那樣仍然有效，但我們不打算提供這些費用的季度細目。關於贊助產品，我再次邀請您注意季節性概況，因為為什麼我們指出的當年贊助產品的活動與之前指出的當年 EBITDA 貢獻相比會略有負值，您應該預計今年第一季對贊助產品的顯著正面影響將產生重大負面影響，就像我們去年以及第四季一樣。

And then on Amazon, Tom, obviously Amazon is a very interesting company. We don't work directly with them in our core business. We would be very happy to do so and we think we could add significant value to Amazon, but that's not the case today. I would say Amazon obviously and you've seen in the press recently, there's quite a bit of discussion about Amazon media services and their advertising services. Some of the services within media services are competitive with Criteo Sponsored Products and to us it's validation of our model. Obviously, we -- our value proposition is to come forward and offer a network of retailers outside of Amazon or sort of if you will the network that is non-Amazon. And sort of that flies very well and works very well with brands. And so from that perspective, I think it's an interesting development. I think as you look at Amazon and the growth they've had and the growth of e-commerce which of course is significant compared to the rest of the industry what that has created also for retailers is the need to think about how they reached scale and how can they bring technology to basically compete on better terms. And that if you think about the proposition and the products that we're pulling forward and pushing forward for these brands, it's a terrific set of offerings that retails are willing to take, in particular because of the pressure that Amazon has. So Amazon is obviously a strong force and it's helping us drive our business and get more retailers to work with us.

然後是亞馬遜，湯姆，顯然亞馬遜是一家非常有趣的公司。我們的核心業務並不直接與他們合作。我們很樂意這樣做，我們認為我們可以為亞馬遜增加巨大的價值，但今天的情況並非如此。我想說的是亞馬遜，你最近在媒體上看到，有很多關於亞馬遜媒體服務及其廣告服務的討論。媒體服務中的一些服務與 Criteo 贊助產品具有競爭力，對我們來說，這是對我們模型的驗證。顯然，我們的價值主張是挺身而出，提供亞馬遜以外的零售商網絡，或者如果您願意的話，可以提供非亞馬遜的網絡。這種方式運作得很好，並且與品牌合作得很好。因此，從這個角度來看，我認為這是一個有趣的發展。我認為，當你看到亞馬遜以及他們的成長和電子商務的成長時，與行業其他公司相比，這當然是顯著的，這也為零售商創造了思考他們如何達到規模的需要他們如何利用技術來基本上以更好的條件進行競爭。如果你考慮我們為這些品牌推動和推動的主張和產品，你會發現這是零售商願意接受的一系列很棒的產品，特別是因為亞馬遜面臨的壓力。因此，亞馬遜顯然是一股強大的力量，它正在幫助我們推動業務並吸引更多零售商與我們合作。

Thank you, Tom. This concludes our call for today. Thank you very much. Have a good day everyone and if you have any further question, please feel free to contact the IR team. Thank you, everyone.

謝謝你，湯姆。我們今天的呼籲到此結束。非常感謝。祝大家有美好的一天，如果您有任何其他問題，請隨時聯繫 IR 團隊。謝謝大家。

Thank you.

謝謝。

Thank you.

謝謝。

Ladies and gentlemen, this does conclude today's conference call with you. Thank you for attending. You may now disconnect your lines.

女士們、先生們，今天的電話會議到此結束。感謝您的出席。現在您可以斷開線路。