Advertising Technology, or Adtech, has gained prominence since the demand for online advertising skyrocketed amid the COVID-19 pandemic, with businesses focusing on digitizing their operations and marketing. This trend will likely continue given the rapid tech integration in virtually all sectors. Digital ad formats are expected to account for two-thirds of total ad sales in 2021. In addition, U.S. advertising revenues are expected to rise 6.4% year-over-year to $240 billion in the current year.
Recently, Alphabet Inc. (GOOGL) decided to delay its action on eliminating third-party cookies to 2023, giving adtech companies ample time to devise a solution to deliver privacy-conscious targeted ads.
Criteo S.A. (CRTO)
CRTO is a Paris, France-based technology company that provides marketing and monetization services for the open internet. In addition, it provides a commerce media platform for marketers and media owners to reach their advertising goals.
On August 4, CRTO partnered with its long-time customer and electronic retailer Best Buy Co., Inc. (BBY) on the former’s self-service retail media platform for servicing customers with sponsored products based on their preferences. BBY’s brand value is expected to help CRTO register a significant increase in revenues in the near term.
In June, CRTO signed a three-year contract with Carrefour Group, a food retailing company, to market the latter’s inventories. The contract should enable CRTO to leverage Carrefour’s technical expertise to gain a greater market share in retail media.
In its second fiscal quarter, ended June 30, CRTO’s revenue increased 26% year-over-year to $551.31 million. Its adjusted EBITDA improved 72.9% from its prior-year quarter to $67.27 million. The company’s adjusted net income came in at $40.86 million, representing a 144.5% increase from the same period last year, while its adjusted net income per share increased 133.3% year-over-year to $0.63.
A $2.54 consensus EPS estimate in the current year (fiscal 2021) reflects a 17.1% year-over-year increase. Likewise, the $901.28 million consensus revenue estimate for the current year indicates a 9.2% year-over-year rise. CRTO has an impressive surprise earnings history too; it has topped consensus EPS estimates in each of the four trailing quarters. The stock has gained 194.4% in price over the past year to close yesterday’s trading session at $35.97.
CRTO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CRTO has an A Growth grade, and a Value, Momentum, and Quality grade of B. In the 41-stock Internet – Services industry, it is ranked #1.
Click here to see the additional POWR Ratings for CRTO (Stability and Sentiment).
Tremor International Ltd (TRMR)
TRMR is an advertising software company that designs data-driven technology to provide a marketplace for advertisers and publishers. It is headquartered in Tel Aviv-Yafo, Israel. TRMR went public on the NASDAQ Global Market via an initial public offering of its American depositary shares on June 18, 2021.
On August 5, TRMR, in partnership with ICX Media, introduced Unified Social Data, an all-screen data solution. Regarding this development, Jessica La Rosa, Vice President, Partnerships & Data Operations at Tremor Video, said, “This is the latest example of our commitment to bringing dynamic data innovations to market that equip clients with impactful audience-reach strategies.”
TRMR’s revenue increased 128% year-over-year to $81.38 million in its second fiscal quarter, ended June 30. The company’s gross profit rose 282.3% from the same period last year to $60.13 million. Its non-IFRS net income increased to $32.76 million, up 1,110.8% year-over-year. Its non-IFRS EPS has increased substantially from its negative year-ago value to $0.23.
The Street’s $312.80 million revenue estimate for the current year (fiscal 2021) reflects a 47.6% year-over-year increase. The stock has gained 20.1% in price since it started trading publicly on June 18, to close yesterday’s trading session at $21.49.
It’s no surprise that TRMR has an overall rating of B, which translates to Buy in our POWR Ratings system.
TRMR is graded an A for Sentiment, and a B for Momentum and Quality. In addition, it is ranked #5 out of the 18 stocks in the Advertising industry.
To see additional POWR Ratings for Growth, Value, and Stability for TRMR, click here.
Perion Network Ltd. (PERI)
PERI is an advertising company that delivers online advertising solutions and search monetization to brands and publishers. It provides data-driven execution, from high-impact ad formats to branded search, and a unified social and mobile programmatic platform. It is based in Holon, Israel.
Undertone, a PERI subsidiary, announced on August 24 that it partnered with CPG service company SmartCommerce to provide technology to customers that add products directly to the cart by clicking on an Undertone advertisement. This should allow PERI to enhance the customer experience significantly.
In June, PERI announced that Undertone would be opening its retail marketing segment, expanding PERI’s presence in the retail market. This launch has come at the perfect time because retail stores are seeing a rise in foot traffic owing to significant progress on the COVID-19 vaccination drive. This might prove to be highly profitable for PERI.
For its second fiscal quarter, ended June 30, PERI’s total revenue increased 81.8% year-over-year to $109.68 million. This can be attributed to a 210.7% year-over-year increase in display and social advertising revenues to $58.03 million. Its non-GAAP net income improved 536.2% from the prior-year quarter to $12.32 million, while its non-GAAP EPS increased 371.4% from the same period last year to $0.33.
Analysts expect its EPS to increase 112.5% year-over-year to $0.17 in the current quarter (ending September 2021). The Street’s $108.21 million revenue estimate for the current quarter indicates a 29.7% year-over-year rise. In addition, PERI beat the consensus EPS estimates in each of the four trailing quarters. PERI’s stock has gained 235.8% in price over the past year to close yesterday’s trading session at $20.45.
PERI’s POWR Ratings reflect this promising outlook. It has a Growth, Value, and Sentiment grade of A, and is ranked #3 of 41 stocks within the Internet – Services industry.
In addition to the POWR Ratings we’ve stated above, one can see PERI’s ratings for Momentum, Stability, and Quality here.
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CRTO shares were trading at $36.02 per share on Friday afternoon, up $0.05 (+0.14%). Year-to-date, CRTO has gained 75.62%, versus a 20.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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