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How ad tech firm Criteo ( CRTO ) fares in Wall Street’s eyes after reporting Q4 earnings on Wednesday morning hinges on the company’s outlook for 2016 after the Paris-based firm transitions to reporting in U.S. dollars, an analyst says. “The key issue into earnings is the 2016 guidance,” wrote Cowen and Co. analyst John Blackledge in a research note on Monday. He said Paris-based Criteo will cease reporting in euros after Q4. The company is transitioning to a U.S. domestic issuer and will be adhering to GAAP reporting in U.S. dollars. Blackledge said he is looking for 2016 revenue guidance ex-TAC at 20-25% year over year, assuming a “5% foreign exchange headwind.” For Q4, he also expects Criteo’s customer additions to rise a “strong” 10% year over year to 10,000. Criteo embeds browser cookies — tiny text files that let websites recognize users and their preferences when they return to a site — for about half of the 100 largest retail and travel websites in the U.S. Criteo gets paid for serving ads only if a user clicks on them and collects a bigger cut if the user goes on to buy a product from or otherwise engage with that advertiser. Wall Street is also keen to get an update on how an Apple ( AAPL )‘s decision to allow browser ad blocking on iPhones for the first time is impacting Criteo, said Blackledge. Apple began letting users install apps that prevent ads from appearing in its Safari mobile browser last year. Apple’s action is seen as a potential blow to Criteo. which gets paid for serving ads only if a user clicks on them, and it collects a bigger cut if the user goes on to buy a product from or otherwise engage with that advertiser. Analysts have said reducing the ad supply could impact Criteo’s growth. However, Jefferies analyst Brian Pitz wrote in a note on Oct. 2 that he doubted “the enabling of ad blockers for Apple iOS 9 will meaningfully impact” Criteo, which “has stated that a majority of their mobile revenue is driven through Alphabet ( GOOGL )-owned Google Android products rather than Apple.” Criteo is “creating one of the largest cross-device advertising mousetraps, which will complement advertisers’ ability to measure performance outside of Facebook ( FB ) and Google,” said another analyst, RBC Capital Markets’ Rohit Kulkarni, in a November research note. Another major point of interest for investors this week is Criteo’s strategy in China and whether Alibaba Group ( BABA ) emerges as a major client in 2016. Blackledge said he also wants an update on how the company is faring with the mobile Dynamic Product Ad inventory on Facebook as well as what new search products may be ahead. In Q3, Criteo posted revenue minus traffic acquisition costs — what it must pay other websites to carry ads — of 120.3 million euros, about $134 million at current exchange rates, up 55% year over year in local currency. That beat the 117.9 million euros analysts polled by Thomson Reuters had been expecting. For Q4, the company guided revenue minus traffic acquisition costs of between 134 million euros and 139 million euros, up 39% to 44% year over year in local currency, equal to about $153 million at the midpoint at current exchange rates. That Q4 revenue guidance was short of the 141.63 million euros that analysts had wanted to see. Analysts polled by Thomson Reuters are expecting Criteo to report Q4 revenue minus TAC — traffic acquisition costs, or what the company pays other sites to carry its ads — of 138.2 million euros, up 43% year over year in euros. Analysts are modeling Q4 EPS ex items of 0.40 euros, up 8% year over year in euros. Criteo stock was down 8% in midday trading in the stock market today , near 25.50. Criteo stock is 35% below where it was trading this time last year and is off 58% from its all-time high of 60.95 touched in early March 2014. Scalper1 News
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