Edouard Lassalle - IR JB Rudelle - Chairman and CEO Benoit Fouilland - CFO Eric Eichmann - President and Chief Operating Officer.

Ross Sandler - Deutsche Bank Brian Fitz - Jefferies Debra Schwartz - Goldman Sachs Douglas Anmuth - JPMorgan Charles Bedouelle - Exane Rocco Strauss - Arete Research John Egbert - Stifel.

Good day and welcome to the Criteo’s Q4 Full Year Earnings Presentation Conference Call. Today' conference is being recorded. At this time, I would like to turn the conference over to Mr. Edouard Lassalle, Head of IR. Please go ahead..

Thank you, Sandra. Good morning and good afternoon to all of you and welcome to Criteo’s Financial Results for the Fourth Quarter and Fiscal Year ended December 31, 2014. Joining us on the call today are JB Rudelle, Chairman and CEO, Benoit Fouilland, Chief Financial Officer, and Eric Eichmann, President and Chief Operating Officer.

Eric will participate in the Q&A session of our call. Please note that the earnings release issued before the opening of the US market today, along with a live broadcast of the earnings call are both available on our Investor Relations website at ir.criteo.com. A replay of the call will also be available later on our Investor Relations website.

Before we begin discussing our earnings, I'd like to remind you that some of our discussions today will contain forward-looking statements.

These may include projected financial results, our operating metrics, business strategies, anticipated future products and services, anticipated investment and expansion plans, anticipated market demand or opportunities and other forward-looking statements. As always these statements are subject to 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 and reported results should not be considered as an indication of future performance.

Also I’d like to remind you that during the course of this call we will discuss non-IFRS measures of our performance. Definition of such metrics and the reconciliations to the most directly comparable IFRS financial measures are provided in the earnings press release and accompanying financial tables issued earlier today.

Unless otherwise stated all gross comparisons made in the course of this call are against the same period in the prior year. With this in mind, let me now turn the call over to JB Rudelle, Criteo’s Chairman and Chief Executive Officer. JB, the line is all yours..

Thank you, Edouard. I am very pleased to present our fourth quarter and full year 2014 results to all of you today. We closed another great quarter and a record year of profitable high growth. We exceeded the high-end of our guidance, for both revenue ex-TAC and adjusted EBITDA.

In the fourth quarter, we grew revenue ex-TAC by 73% at constant currency to €96million, and adjusted EBITDA by 120% to €32million. For the full year of 2014, our revenue, ex-TAC grew by 72% at constant currency to €304 million, while adjusted EBITDA increased 154% to over €79 million. As we'd like to say, at Criteo, performance is everything.

This powerful idea is at the very core of our DNA. Our most important only objective is to generate more incremental sales for our clients through innovation and technology. As we drive more sales for our clients, it also makes our own business more successful.

In 2014, we increased the total amount of post-click sales we generate for our clients by 77%, as you can see we have grown the revenue of our clients even faster than our own revenue. Our clear focus on performance combined with discipline execution enable us to grow faster in 2014 than in 2013 and further accelerate our year-over-year growth in Q4.

Overall, 2014 has been a truly great year for us, confirming the power of our business model. During the year, we had added over 2,000 clients to a total of more than 7,000. Despite this important client growth, we had maintained client retention rates above 90%. We also continue to generate over 75% of our business from uncapped budgets.

We significantly improved our core prediction technology. We have broadened our product portfolio in particular with our complete mobile solution at full scale. Now over 80% of our clients use our multi-screen solution, the technology only introduced towards the end of 2013. We believe all of this makes our solution more strategic for our clients.

Overall I would say our focus on performance had paid off in 2014. Moving now to our Q4 results. Our strong performance resulted from three main drivers. First, the complete roll-out of our new prediction engine, second, the continued momentum of our multi-screen solution, third our record client and publisher growth.

By the end of December 2014, we had roll-out to a new generation of our prediction engine to 95% of our clients. As a reminder, this release came into production early last year and was a major breakthrough for our Criteo Engine. Optimizing our targeting not only on our engagement, but also on direct conversions.

It has enabled our clients to significantly increase post-click sales, while at the same time also improving the return on investments. As you know during the holiday season we typically see our clients be more aggressively on the CPCs to win high volumes of inventories and generate more sales.

This year we saw much cheaper increase in CPC, especially between Thanksgiving and Cyber Monday as our clients were taking full advantage of our enhanced Criteo Engine. The continued momentum on multi screen solution was the second driver of our performance.

This complete solution allows our clients to seamlessly engage and convert customers across all devices and leading operating systems. In December, 80% of our clients used our multi screen solution. The growth in mobile commerce continues to be huge opportunity for us.

To help our clients understand this critical new sales channel, we released our first report on the state of mobile commerce which is the start of a quarterly series. Based on our own data from billions of dollars of transaction, this showed that globally mobile now accounts for approximately 30% of all e-commerce transactions.

Our technology improvements and ability to engage seamlessly with end customers across all big and small screens have generate more sales for our clients. As a result, our clients have kept increasing their spend with us. In Q4 our revenue ex-TAC per clients increased 24% mainly driven by significant growth from existing clients.

Put differently, our Q4 2013 clients that were live with us in Q4 2014 generated 37% more revenue ex-TAC compared to the prior year. Our ability to convert a very large portion of our clients to uncapped budgets is also key driver of this growth in the revenue ex-TAC per clients.

With regards to our third performance driver, we added this quarter more than 600 new clients. This is the largest quarterly addition in Criteo's history. We ended 2014 with a record of 7190 clients. We continue to add large clients in all geos. In addition, we are also very pleased with our strong momentum with mid-market clients.

Our revenue ex-TAC growth in this area was close to 100% in Q4, while we believe we have only penetrated a small fraction of the addressable mid market segment. In parallel, we continue to make good progress in expanding our publisher relationships.

During the last quarter we added more than 900 new publishers bringing the total of our direct relationships to over 9000 publishers at the end of 2014. This also represents the largest quarterly addition in Criteo's history. Latest comScore data showed that Criteo ads reached more than billion unique users worldwide in December 2014.

Our publisher marketplace for mid sized publishers continues to enjoy very positive traction and increasingly contributes to the success of our business. In addition, we delivered significant technical improvements to our buying technologies, leading to further scale across all publishers.

We also find deals with large local RTB platforms in major emerging markets like China, Russia and Korea. Moving now to our performance per region. We continue to be pleased with our execution across all geos, starting with the Americas.

Our year-over-year growth in revenue ex-TAC continued to accelerate in this region for the fourth consecutive quarter from 62% in Q4 2013, 66% in Q1, 78% in Q2 and 97% in Q3. Our year-over-year growth reached 114% at constant currency in the fourth quarter.

In the US, we continue to see very positive traction driven by greater scale, increasing buying power and best-in-class performance. Our client method adoption of our new engine optimizing on sales had a particularly strong impact on volumes delivered at the peak of the holiday season.

The increasing contribution of the mobile screens to the holiday shopping mix had also been particularly beneficial to us. Furthermore, the rapid ramp up of our mid-market business out of Boston continue to be a strong contributor to their regions growth. Moving now to EMEA.

Our growth continued to be strong across all markets in Q4 and accelerated to 57% at constant currency in Q4. This acceleration was driven by both new and existing clients. Our current base in EMEA further expanded across market segments and verticals.

Our enhance engine, along with mobile and email continue to drive incremental spend from existing clients, in particular during the holiday season. In Asia Pacific, revenue ex-TAC grew 61% at constant currency and 6% sequentially. Higher adoption of our multi screen solution and enhanced engine continue to increase spend from existing clients.

We recently implemented a new sales organization in Japan and launch our APAC mid market organization out of Tokyo. We see near term potential for EMEA market across the whole region. We are also making good progress in Southeast Asia out of our Singapore office, as well as in China.

Overall we continue to be very excited about the opportunity to capture incremental growth across this fast moving APAC region. Moving now to 2015, we are focused on a clear set of priorities.

Number one, help our clients to expand their marketing channels, number two, continue to innovate in products and technology, and number three, growing our presence globally. So our first priority is to help our clients to get the full benefit of our multi channel performance marketing solution.

Converting end customers across multiple marketing channels is critical for CMOS. Our solution already covers four key marketing channels, display, social, in-app and email and more will come in the future.

Leveraging the huge momentum in mobile e-commerce, we have started to engage in various exciting initiatives in this area, starting with mobile native ads on major social platforms. In Q4, we continued to work closely with Facebook on a solution that supports performance advertising on their mobile in-app inventory.

We delivered our first in-app advertisements on Facebook in the fourth quarter. In 2015, we aim to access Facebook in-app inventory on a much larger scale and bring our clients the same performance in this important source of mobile traffic. This will be one of our key areas of focus for 2015.

We also are working with other major players with large mobile inventory in native formats. We also plan to deploy our cross-device solution at scale.

In a world where each end customer increasingly uses multiple digital devices, it is more challenging than ever for our clients to match the performance marketing dollars that’s spend on one device with the sales that generate on another device or screen.

With our cross- device matching solution, we are excited to empower marketers to seamlessly solve this challenge. We believe that in 2015 we will be one of the very few company's in the world capable of doing this at scale based on an exact match rather than a statistical guess.

In Q4 we announced the release of our cross-device matching solution and rolled it out with set of group of clients. We will roll this out more broadly in Q1 2015. Our overall multi marketing solution, we aim to become increasingly a strategic partner for our clients by delivering best-in-class performance marketing across all key channels.

Our second priority is to continue to innovate in products and technology. We had always been business primarily driven by technology, and we see a multiple of areas where we can further improve our solution. Our R&D team has grown significantly in 2014 which we believe fits up as very well for 2015 in several exciting areas.

In particular, we plan to make significant improvements around our prediction engine, the structuring of campaigns and creative optimization. The major breakthrough in our prediction engine release in 2014 focus on conversion optimization. We are now also working on the next generation of our engine.

This new generation is able to predict not only the likelihood of a user to buy, but also to predict the value of the basket. The first version of this new engine was released in Q4 and rollout to approximately to 10% of our clients by the end of December.

In 2015, we focused on further improving it and rolling this out to a larger part of our client base, with always a single goal in mind, generating more sales and revenue for our clients.

We are also excited to announce the acquisition of DataPop, a Los Angeles based technology company, specialized in connecting the products of a retailers catalog to actual user shopping intent. As you know, predicting user shopping intent has always been the cornerstone of our solution.

DataPop technology enables an advanced structuring of large clients product catalogs that allows easier and more optimize recommendation to potential end customers. We expect DataPop's unique technology to enable further improvements in our performance offering. We are also working a new generation of our creative platform.

Real-time creative optimization is critical in driving customer engagement and generating sales. Since our inception we've been at the forefront in this area. In 2015, we plan to dramatically improve our creative optimization capabilities including in-app. Our third priority is to further expand our geo footprint.

We already have a broad global presence serving clients in around 70 markets worldwide. In 2015, we intend to further increase our penetration in existing large markets, such as US. We also plan to further penetrate early stage markets like China, Russia and Latin America.

We also have plans to establish local presence in new markets such as Canada, Dubai and Turkey. In the mid-market segments, beyond the US, we will expand our APAC organization and accelerate our European expansion from our recently opened hub in Barcelona.

Overall, we are more committed than ever to our long-term vision of building a disruptive multi channel solution for performance marketing that delivers measurable incremental sales. We believe our focus on performance through broader set of channels will make our solution even more strategic for our clients.

In summary, we are very pleased with our performance in 2014. Our technology improvements, our significant scale and increasing value we delivered to clients all contributed to expanding our position in performance marketing. 2015 would be another very exciting year for Criteo. I look forward to updating you on all initiatives as we progress in 2015.

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

Thank you, JB. I’m also delighted to report another very strong quarter and fiscal year today. I will walk you through our financial performance in detail, as well as our guidance for the first quarter and fiscal year 2015. I would then open up the call to your questions.

We delivered record profitable growth in the quarter on the fiscal year and exceeded our expectation for both revenue ex-TAC on adjusted EBITDA. In particular, we are very pleased with our accelerating growth, which was not only faster in fiscal year 2014 than in 2013, but also further accelerated in Q4. Let me start with our revenue.

In Q4, we grew total revenue by 71% or 69% at constant currency to €233 million. For fiscal year 2014, we grew total revenue by 68% or 70% at constant currency to €745 million. As we are repeated ever since our IPO, we consider revenue ex-TAC as the key financial measure to evaluate and monitor our business performance.

In Q4, our global revenue ex-TAC grew 76% or 73% at constant currency to €96 million, compared with €55 million in the fourth quarter 2013. Our revenue ex-TAC margin in the quarter was 41.4% improving 1 percentage point compared with Q4 2013.

For fiscal 2014, our global revenue ex-TAC increased 70% or 72% at constant currency to €304 million, compared with €179 million in fiscal year 2013. As a reminder, our year-over-year growth in 2013 was 66% at constant currency.

In fiscal 2014, our revenue ex-TAC margin improved 50 basis points to 40.8% and remained points well within our long-term target trend of 39% to 41%. In Q4, revenue ex-TAC growth in the Americas continue to accelerate to 121% or 114% at constant currency to €33 million.

In EMEA, revenue ex-TAC growth in the quarter accelerated to 58% or 57% at constant currency to reach €46 million. Revenue ex-TAC in Asia-Pacific for the quarter grew 58% or 61% at constant currency to €17 million. For fiscal 2014, revenue ex-TAC in the Americas increased by 88% or 91% at constant currency to €90 million.

In EMEA, full year ex-TAC grew 59% or 58% at constant currency to €155 million. All in Asia-Pac we grew revenue ex-TAC 73% or 84% at constant currency to €59 million in the full year 2014.

Overall, change in foreign exchange rates in the fourth quarter in particular the strengthening of the US dollar represented a 2 percentage point tailwind to our reported growth in revenue ex-TAC. For fiscal year 2014, changes in foreign currency represented a 2 percentage point headwind to our reported growth in revenue ex-TAC.

Moving on to the profitability of our operations. We grew Q4 adjusted EBITDA by 120% or 121% at constant currency to €32 million. As a percentage of revenue, our adjusted EBITDA margin improved 3 percentage points to 13.7% compared with Q4 2013.

The strong increase in adjusted EBITDA in the quarter was primarily the result of our strong performance in revenue ex-TAC.

While more than 50% of our overall achievements in revenue ex-TAC flows through to adjusted EBITDA in the quarter, we incurred some additional valuable cost related to our revenue ex-TAC of the performance, as well as some exceptional cost primarily related to consulting fees.

For fiscal 2014 adjusted EBITDA grew by 154% or 156% at constant currency to over €79 million. Our adjusted EBITDA margin as a percentage of revenue increased by 3.6 percentage points during the year to 10.7% despite our continued focus on investing for growth throughout the year.

On the expense side, in the quarter hosting and data cost increased by 66% to €6 million, excluding depreciation and amortization, driven by continued investment in our own servers on hosting equipment. For fiscal 2014, our hosting and data cost increased 42% to €20 million, excluding the depreciation and amortization.

As we state in the past, we plan to continue invest in our own server capacity to support our anticipated future growth. In 2015, we will in particular invest in additional redundancy hosting capacity in order to further strengthen our infrastructure as we process ever larger amounts of client publisher data. Looking now at our operating expenses.

In Q4 our total operating expenses grew 58% to €66 million, as we continue to scale the organization to support our growing business. On a non-IFRS basis, Q4 operating expenses increased 59% to €58 million. On a full year view, our total OpEx increased 55% to €227 million or 53% on a non-IFRS basis to €204 million.

Growth in Q4 in the full year headcount related expenses represented over 75% of our total operating expenses. Our recruitment efforts were very ambitious in 2014, and we are pleased with the results. We closed 2014 with a global headcount of 1300.

We added 490 employees in 2014, representing an increase of 60% compared with December 2013, on 117 ads in Q4 only, an increase of 10% compared with September 2014. In 2015, we plan to continue to grow our headcount at a similar pace as in 2014.

Looking at our operating expenses by function in the fourth quarter, research and development expenses grew 36% on a non-IFRS basis to €10 million, largely driven by a 30% increase in headcount to a total of 250 employees at the end of the year, compared with December 2013.

This was partly offset by an increase in R&D tax credit compared with the prior year. Sales on operations expenses increased 76% on a non-IFRS basis in Q4 to €36, also largely driven by a 70% increase in head count to a total of 833 employees at the end of December.

Consistent with prior quarters, we continue to grow sales and account management team in all regions, in particular across our mid-market organization. General and administrative expenses grew 40% on a non-IFRS basis in Q4 to €12 million, while our G&A headcount increased 71% to a total of 217 employees at the end of the year.

This continued to be driven by the ongoing ramp-up in our HR teams to fulfill our ambitious recruitment plan, the continued strengthening of our IT infrastructure, as well as increase fees on expenses related to our public company status. On a full year view, R&D expenses grew 42% on a non-IFRS basis to €38 million in fiscal year 2014.

In 2015, we expect to continue to invest significantly in additional R&D talent. We plan to accelerate our R&D recruitment in 2015 to support our ongoing innovations. In particular, we plan to focus our investment on engine improvement, on the integration of DataPop's technology into our platform.

We will also continue to invest in our channel expansion effort in mobile native ads on our cross-device solution. Sales and operation expenses increased 55% on a non-IFRS basis to €121 million in fiscal year 2014.

As a percentage of revenue, sales and operation expenses decreased by 1.3 percentage points in 2014 to 16.3% of revenues despite our significant investments during the year. In 2015, we will continue to grow our sales and operation teams globally, in particular in our regional mid market ads in Boston, Barcelona and Tokyo.

We will also expand into Canada, Turkey and Dubai and invest into new facilities to support our global growth. Finally, our G&A expenses grew 57% on a non-IFRS basis to €45 million in fiscal year 2014. As a percentage of revenue, G&A expenses decreased by 40 basis points in 2014.

In 2015, we will continue to scale our HR, IT, finance on legal function to continue to support our strong anticipated growth and prepare to potentially become a domestic fighter in the US during the year. Moving on to our cash flow generation. In the fourth quarter, our cash flow from operating activities increased by 223% to €40 million.

This was driven primarily by strong adjusted EBITDA generation, as well as positive change in the working capital in the quarter. For fiscal year 2014, cash flow from operating activities grew 255% to €88 million, driven primarily by the growth in adjusted EBITDA in the year. Now with regard to our capital expenditures.

In Q4, our CapEx increased 39% to €10 million, primarily as a result of our continued investment in hosting equipment, and to a lesser extent in internal IT and facilities. For fiscal year 2014, CapEx grew 61% to €35 million or slightly below 5% of revenue. I will cover our CapEx expectation for 2015 later in the guidance section of our call.

Moving on to free cash flow generation. In the fourth quarter, our free cash flow grew €25 million to €30 million, representing 93% of our adjusted EBITDA for the quarter. For fiscal year 2014, free cash flow increased by €49 million to over €52 million or 66% of our adjusted EBITDA for the year.

We believe this strong conversion of EBITDA into free cash flow continues to illustrate very clearly the robustness and scalability of our financial model. Our total cash and cash equivalent were at €290 million at the end of December growing by €55 million compared with December 31, 2013.

The significant increase is primarily the result of our strong free cash flow generation over the period. We also generated €24 million in profits from capital increases, including the primary portion of our follow on offering in March, offset by €19 million in cash considerations paid for the acquisition of Tedemis and AdQuantic during the year.

I will now wrap up with our thoughts regarding our guidance. I’ll remind you that the following forward-looking statements reflect our expectation as of today February 18, 2015. 2015 will be another year of continued investment for Criteo.

As I outlined earlier, we expect to make significant investment in 2015 in particular in R&D and hosting, as well as in sales and operations. For the first quarter 2015 revenue ex-TAC is expected to be between €96 million and €99 million.

As a mid point of the range, this would imply a 55% reported growth compared with Q1 2014 or 48% at constant currency. In other words, we expect changes in foreign currency rates to represent a tailwind of 7 percentage points to our reported growth in Q1 2015.

Also for Q1 2015 adjusted EBITDA is expected to be between €18 million and €21 million, including a €2 million negative impact from the acquisition of DataPop. For fiscal year 2015, revenue ex-TAC is expected to be between €433 million and €440 million.

At the midpoint the range this would imply a 44% reported growth compared with 2014 or 39% at constant currency. In other words, we expect changes in foreign currency rates in particular as a stronger US dollar to represent a tailwind of 5 percentage points to our reported growth in fiscal year 2015.

Also for the fiscal year 2015 adjusted EBITDA is expected to be between €108 million and €115 million, including €10 million diluted impact from DataPop in the full year.

With regard to our CapEx, we expect our program to grow from below 5% of revenue in 2014 to approximately 6% of revenue in 2015, as we plan to continue to build hosting capacity in all regions and significantly increase our redundancy capacity to strengthen our infrastructure.

We will also increase our investment in internal IT and in facility globally, including in two flagship offices in New York and London.

Underlying our Q1 and fiscal year 2015 guidance, we have assumed the following exchange rates for the main currencies impacting our business, a euro-USD of 1.15, a euro-Japanese yen of 145, a euro-British pound of 0.79 and a euro-Brazilian real of 3.1.

This guidance also assumes no additional acquisitions are completed during the first of fiscal year 2015. We are confident as we enter the first quarter of the year. In the current quarter we continue to invest into our strategic initiative to support our 2015 growth. In closing, I’m very satisfied with our many great achievements in 2014.

We are also enthusiastic about our 2015 initiative. We are more focused than ever on executing on the huge opportunities ahead of us in 2015 and beyond. I look forward to continue building long-term term trust with our public investors on sharing our story of profitable growth every quarter as we continue to realize our full potential.

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

Thank you. [Operator Instructions] We are now taking our first question from Ross Sandler from Deutsche Bank. Please go ahead. Your line is open..

Great. Thanks guys. And congrats on another big quarter. I guess just three quick questions. First, Americas; second, sales productivity; and then the third, the new Facebook stuff that was announced yesterday. So the Americas growth on an ex-FX basis looks very, very strong.

I guess JB, you've been walking, can you just parse out the enterprise growth compared to middle markets and where you think that share gain is coming from? And then second on sales productivity, this looks like it's continuing to improve in the right direction as you move into some of these new international markets that you called out in 2015.

How should we think about sales productivity? And then on the Facebook dynamic product ads announced yesterday, how big do you think this could be as a contributor in 2015? Thanks..

Okay. So let me take the first one, with respect to the Americas, yes, we are very pleased with the growth and we are very pleased because the growth was across the board. I mean, both from tier 1 on the MMS. So we've been delivering growth in excess of 100% in both segments. So its an across the board phenomenon.

And we had also very strong benefits from the peak season where we've seen a very dynamic activity there.

With respect to sales productivity, yes, you're right, I mean, we've seen a nice increase in the overall sales productivity, which is a combination of increase sales to existing clients that are directly contributing to increase sales productivity and two fronts and the other side investment into new geographies and into the growth of the market.

So this is inline with our plan overall and that can be seen very clearly in the percentage of sales and operation cost when you look at this decrease in this percentage year-over-year is inline with our expectation. I think that for next year we have a strong investment program in place.

But we should see again some incremental gain in sales productivity overall in 2015..

So regarding Facebook, we obviously are very excited with this deal and now we let Eric Eichmann, our COO to give you a bit more color, he is been definitely involved in the deal.

Eric?.

Great. Thank you, JB. Thank you, Ross for the question. So, as you know from the announcement that was made by Facebook, they are now offering dynamic product ads basically allowing customers to target folks on Facebook with ads that are built on a real-time basis with product recommendation. So this obviously talks to the core of what we do.

We've been saying for a while that we've been working with Facebook very closely. We're happy that we can now finally officially say that we are serving ads with Facebook on their mobile application which as you know, is a big part of time spent by users.

A couple of things that we also announced on our press release is we, among many advertisers that we tested, we tested Menlook and Promod to e-commerce, e-retailers and what we saw were great results where we drove 6.2% of their overall mobile sales and that of course won to about 25% of what all of their sales on mobile.

So – and this is with an early product with Facebook, so our expectation is obviously that we will continue to improve the product and as we do that we'll start deploying this across all advertisers on our networks..

Thank you..

Great. Thanks, guys..

We will now take our next question from Brian Fitz from Jefferies. Please go ahead. Your line is open..

Thanks for the questions. Your competitors are under pressure while you guys continue to see tower riding growth.

Can you discuss at a high level, really the biggest factors that are driving this from your client’s perspective? And regarding the roll out of version 3 of the Criteo Engine, should we expect the same cadence to roll out as previous platform updates? Thanks..

Thank you. JB, speaking. So, regarding competition first. Our clients on a very regular basis compare us with other competitors, which is fair and pretty normal in the course of business. And as we say you know, as I said in the beginning of the call, our performance is everything.

So if you have the better performance, then the client is just going to pick you up. And so as on pretty systematic fashion we tend to get better result in those head-to-head tests. The clients, they choose us.

And so, when we're out of performance where its very easy for our client to make the difference between player A and player B and if you have the best performing in the company you tend to win most of the market. That’s probably where the key reason why you're seeing much bigger momentum for us than – and some other players.

Regarding the engine, as we said, we are already rolling out the new version, the new, new version by optimizing not only on conversion, but also on the size of the basket.

As we did the previous one, its going to take several quarters to be a rollout across a whole time base, because as you know, we have now a very large client base and we have to do this client by clients. But we believe it's going to be a significant driver for our 2015 growth..

Thank you..

We will now – from Goldman Sachs, we will take our next question from Debs Schwartz. Please go ahead. Your line is open..

Great. Thanks, and congrats on the quarter. Two questions. The first one additionally on the Facebook deal.

Are there any limitations on the inventory that you have access to and should we think of it similarly to other publisher deals that you have or there are things that make it different? And then similarly when you think about the access to inventory that you have are signing additional publisher deals, a big part of the strategy in 2015, are you kind of comfortable at where you are? Thanks..

Deb, thank you very much. This is Eric Eichmann. So, as with FBX with Facebook, when we started with them there were several parameters that sort of were changed over time to increase performance. We expect the same with mobile apps or dynamic product apps with Facebook.

The – ultimately what works best obviously is something that allows full transparency and full bidding and full creative on Facebook and our expectation is that we will continue to improve in that direction..

Absolutely. And regarding your broader question, regarding inventory. So its indeed a bit part of our strategy and we keep on pushing to get more direct publishers.

What people have to be aware is that, in the grand schema, there is a very large portion of the inventory which is not on the exchanges, where if you want to have access to this inventory you need to have direct deals with publishers, especially the premium inventory, the best stuff, which is obviously an inventory we are very excited to have access to on behalf of our clients.

So we will indeed keep on pushing and investing more to expand our reach across publishers and access as many inventory as possible and when we can with preferred access..

Great. Thank you..

We will now take question from Douglas Anmuth from JPMorgan. Please go ahead. Your line is open..

Great. Thanks for taking my question.

Guys, can you quantify the financial lift that you're seeing from the enhanced Criteo Engine perhaps just in talking about the impact on the spend per advertiser and then any early feedback that you have here on the basket size enhancement? And then also JB, you mentioned moving into other platforms as well as curious to get an update on where you guys are on email and then also what other platforms you could be looking at potentially, and then also if you have any update on your efforts in China? Thanks..

So, regarding engine, it depends on the type of clients, as now whether we are capable to measure and optimize targeting based on the size of the baskets, for client that has a very broad set of baskets, very large range, you have a bigger impact that follow on where all baskets are pretty much of the same size.

So it depends I would say on the type of verticals, that when we have clients with very diversify catalog of products from low end products to really high end, this is where you see the highest impact of the new engine.

Regarding your second question, yes, we are – we are excited that email is another very important key performance channel for our clients and as though we're trying to serve as many channels as possible. This was a very strategic move that we made. In 2015, we're going to keep pushing this.

We are obviously looking to expand to as many channels as possible and we are looking at several others that might make sense for us. What we want to be sure is when we enter a new channel, we enter with something really new, disruptive and significantly better than the existing solutions.

Our intention is not build me-too products compared to existing offers. So its time we decide to go into a channel. We do it at a time we feel ready that we have something really new and really creative like for our clients, this is what our clients are expecting, that us bringing much more performance – much better performance than existing solution.

And we will be obviously happy to update you later in the year of any initiatives in new directions.

Regarding China, Eric you want to give us an update of where we are?.

Yes. I'll talk about, that’s good question.

So, we established our office in China late in 2013 and we've had great progress in China, I think one of the challenges when you enter a new market where there are many new players both in the publisher and advertiser side, as you need you need build the two sides and we're happy we're now connected to three RTB networks and are growing or publisher relationships and now have made also good end [ph] roads into or advertiser side.

So we're seeing it grow well and our expectation is that we would see acceleration of that growth in 2015..

Great. Thank you..

We now move on to a question from Charles Bedouelle from Exane. Please go ahead. Your line is open..

Good morning. Thanks for the time. Congrats for the fantastic results. Two questions, if I may.

The first one is, can you give us a bit more details on the roll out of your cross-device measurement and how much of the 1 billion, maybe 1 billion plus customers you're reaching could be a part of that in the near or medium term? And the second question I guess is on the margin, I mean, you've made a tremendous progress on the margin side, does that change at all your long-term margin perspective? Thanks..

Thank you very much. So, regarding your first question, on cross-device this is a new product that we announced at the end of last year. It’s still at the early stage of the rollout and as we say it’s going to be one of the key focuses of 2015.

Obviously our intension is to have the biggest possible reach, you never get 200% reach by definition, when you do crossed device matching that you try to get as close as possible to that.

And when you think about it, it’s really scale issue, the more you see users, the more you identify users between different screens, different devices, the better ability we have to maximize our reach.

So, as you pointed out, the fact that we already covering more than 1 billion users, unique users on a monthly basis globally put us in a very small categories of where you have only a handful of player that are capable to do this.

And we believe this is going to further distinguish us from our smaller competitors, this ability to do cross-device at really big scale and we will be – obviously we're delighted to address you guys during the year on our progress in this area.

Regarding margin, Benoit, you want to?.

Yes.

So, I assume that you were referring to the very nice increase in EBITDA margin for the year, and clearly this is a result of our very strong performance in revenue ex-TAC and a very large portion of that has flown through the EBITDA margin, yet we are still on the same I would say on the same path from the mid term perspective that you've seen in 2015 we have a large investment program and we see a massive opportunity in front of us.

So, we will continue to manage the company, on an investments mode, of course, with the objective of continuing to deliver incremental gains but you should not assume that what you've seen in 2014 is going to repeat itself in 2015 given the very sizable investment plan that we have in front of us..

Thank you guys..

From Arete Research, we will take our next question from Rocco Strauss. Please go ahead. Your line is open..

Yes, hi. Thanks for taking my questions. Two questions I think. One on take rates, one on CapEx. And one on take rates, I think we take rates being up 150 basis points sequentially or 100 basis point year-over-year.

And I guess the question I have is, how sustainable you think is that? And secondly, what's the cost actually of the increase? Is that clients paying more so you see like higher CPCs or is it like you trending more to lower quality inventory? And also you've given the outlook of like 437 million at midpoint for ex-TAC sales, is that base on the take rate we have seen in the fourth quarter? And yes, I will let you answer that first and then ask my second question on CapEx..

From an rev ex-TAC margin in fact, yes, its true that we've seen a slight increase in rev ex-TAC margin, but doesn’t change at all our philosophy and our view on the mid term range of the 39 to 41. I mean, we are already [ph] at the top of the range.

I think what you've seen in Q4 is a result of the strong activity particularly during the peak season where what we observed that people are being increasing their CPC even more during the peak season that’s what we are observing in prior years that we should not draw conclusion with respect change in the overall dynamic of the margin over time..

Okay. Thank you. And the second one on CapEx, I mean, it looks like that CapEx as percentage of sales is coming down year-over-year.

How should we think about that forward? And, what actually what have to do is like 290 million in cash that you have kind of collected now?.

Well, on the CapEx side, I mean, thanks for asking the question because I think there is an important point to make on CapEx. Yes, its true we were just below the 5% which has been the traditional mark, 5% of revenue is what we've been spending in CapEx.

Now in 2015 we have significant investments to be made, first in our data centers we are going to invest in significant redundancy capacity in the data center we are going to invest in China with respect to data center and that is going to push this percentage both the 5% that we financially shown.

On the top of that we have also investments significant investment to be made in facilities we have two flagship offices in London and in New York that we have just signed. So all of that combined primarily driven by the data center we expect to be at 6% of revenues in CapEx in 2015.

That is going to be probably a slightly exceptional year, so 5% to 6% long-term is still something that is reasonable to keep in your model..

Thank you..

I think we have time left for last question and then we're going to wrap up the call..

Thank you. And we will now take our next question from John Egbert from Stifel. Please go ahead. Your line is open..

Thanks for taking the question. So you described mobile as being at full scale of 80% of clients testing on the cross-device solution in December.

I'm just wondering for clients that have tried this solution and that 80%, is there anything you can share on the proportion of their budget spend going toward mobile? And with your native mobile Facebook campaigns in the fourth quarter, is there anything you can share about performance of those campaigns relative to similar desktop campaigns? Thank you..

Thank you for the question. So the way we market our solution, current they don’t have specific budget for its screen, it would be very hard to manage this way, because more and more you had a continuum of screens, small, medium, bit ones, smartphone, fablets, tablets, laptop, desktop.

What they want is to maximize engagement and correlation of their end customers across all channels. So, the way we work with them is with one global budget and with new mutually agreed ROI target, this is how – this is why we don’t report specifically spending that type of screen.

What really matters is our – are client ready for this multi screen solution, revenues is 80% or then are, and are really investing heavily in this.

We still have reflection of our clients because you know we have very large client base which are not fully mobile ready, either they don’t have an app or they don’t even have sometime a mobile specific website and we are strongly encouraging them to invest in this direction as mobile, it absolutely clear in their strategy.

Regarding performance, and we've been addressing this point several times in previous quarters, what we've seen is very consistent performance across all our screens, typically as we said, as we shared previously the smallest screen you have typically slightly higher click-through rate and slightly lower post-click conversion rates and the two metrics tend to nicely balance each other.

So overall we have a very consistent economics across all screens and all devices..

Thanks..

Thank you very much..

I think with this we're going to close this session. And thanks again for everyone for joining today..

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