Can Criteo spark interest on Wall Street?

-By Jonas Kristensen

Although Wall Street has not been overly bullish on the prospects of advertising technology companies recently, Criteo may be the next company from this fast-growing market to make its pitch to investors. But to do that, the Paris-based online ad retargeter will have to overcome a lot of burned adtech shareholders, who have seen the shares of recent IPOs in the sector (Marin Software and Millennial Media) both shed about one-quarter of their value so far this year. Meanwhile, Tremor Video is still underwater from its IPO last month.

But Criteo, which is rumored to have gross revenue of more than $500m, has one thing these other companies don’t – a profitable business. And it’s been printing black numbers for several years now. Further, it has shored up its mobile offering, where much of the adtech growth is expected to happen. (Witness the 75% growth in Q2 mobile ad revenue Facebook reported on Wednesday.) Just last week, Criteo announced the acquisition of mobile ad-tracking startup AD-X Tracking, which closes the gap in the company’s product offering and should enable it to take its retargeting technology mobile.

Given its growth rate and product portfolio, Criteo is probably out of reach of most would-be acquirers. Indeed, although M&A activity in the adtech space has increased steadily, the deals haven’t necessarily been at the top end of the market. According to The 451 M&A KnowledgeBase, there hasn’t been an adtech acquisition valued at more than $1bn since 2007.

If indeed Criteo does make it public, it doesn’t necessarily mean that the company will have to take a cut-rate valuation. After all, the other publicly traded adtech vendors have been overly discounted. Even with their sliding share prices, the trio have created more than $1.5bn in market value and trade at an average of 5x trailing sales, a higher multiple than many other tech sectors garner.

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