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Criteo (CRTO) to Post Q2 Earnings: What's in the Offing?

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Criteo S.A. (CRTO - Free Report) is scheduled to report second-quarter 2019 results on Jul 31.

Notably, the company outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average positive surprise being 27.24%.

In the last reported quarter, Criteo’s earnings were flat year over year at 60 cents per share, topping the Zacks Consensus Estimate of 43 cents.

The company’s revenues jumped 3% in constant currency and declined 1% on a reported basis, year over year, to $558 million. However, revenues ex-TAC (revenues excluding traffic acquisition cost) grew 2% in constant currency to $236 million, beating the consensus estimate of $234 million.

Outlook and Estimates for Q2

The company expects second-quarter revenues ex-TAC to be between $221 million and $224 million, down 2% to flat. The Zacks Consensus Estimate for revenues stands at $222.56 million, indicating a 3.3% fall from the year-ago reported figure.

For the quarter, the Zacks Consensus Estimate for earnings is pegged at 42 cents, indicating 20.75% decrease.

Let's see how things are shaping up for this announcement.

Criteo S.A. Price and EPS Surprise

Criteo S.A. Price and EPS Surprise

Criteo S.A. price-eps-surprise | Criteo S.A. Quote

Factors at Play

Criteo is benefiting from significant growth in its new solutions. Continued shipping of key product and positive feedback from clients are expected to boost the upcoming results.

In Marketing Solutions business, Criteo is witnessing a strong uptrend in customer wins on the back of its Customer Acquisition product performance, which drove revenues ex-TAC for the product up 155% in the last reported quarter. This is also expected to boost the upcoming results.

Continued progress in Retail Media business, particularly the transactional SaaS offering for large retailers, which grew triple digits in the last reported quarter, is expected to drive the company’s second-quarter performance.

However, Criteo expects the new capabilities associated with its ongoing transformation to a multi-product company, to take more time to reflect meaningfully in revenues due to delays in execution. The company particularly is not ready to sell its new solutions in a scalable way. This is expected to keep the top line under pressure.

Moreover, revenues ex-TAC in the EMEA (Europe, Middle East and Africa) region is facing persistent headwinds related to GDPR (General Data Protection Regulation) implementation. This is likely to weigh on second-quarter results.

Moreover, Criteo’s demand-generation programs for attracting larger number of small clients are not expected to effectively drive client additions before 2020. This is likely to weigh on the upcoming results.

Further, foreign exchange volatility is expected to hurt the top line by about $5 million.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Criteo has a Zacks Rank #3 and an Earnings ESP of 0.00%.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here are few stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat in their upcoming release:

CGI Group, Inc. (GIB - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CACI International, Inc. (CACI - Free Report) has an Earnings ESP of +4.02% and is a Zacks #2 Ranked stock.

Warrior Met Coal Inc. (HCC - Free Report) has an Earnings ESP of +8.66% and is a Zacks #2 Ranked stock.

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