AAPL Apple Inc

By Lara O'Reilly 

Criteo SA, the France-based ad tech company, said Apple Inc.'s recent move to introduce a feature in its web browser to limit ad tracking could have a significant impact on its revenue in the fourth quarter and beyond.

Apple rolled out an "Intelligent Tracking Prevention" feature within the new version of its Safari browser on Sept. 19. The function, which is switched on by default, is designed to protect users' privacy by limiting third-party access to "cookie" files stored on users' devices. Marketers and advertising companies use cookies to target and measure their ads.

Criteo built itself into one of the star performers in the ad tech sector by using a technique called "retargeting"--serving ads to people who have already visited a website to remind them to return.

Retargeting relies heavily on dropping cookies to track users as they leave one website and continue browsing elsewhere on the web.

Reporting its earnings on Wednesday, Criteo said Apple's tracker blocker negatively affected its revenue by less than $1 million in the third-quarter.

But, given the expected increase in user adoption of the new Safari browser, the ad tech company said the feature could have a net negative impact of 8% to 10% of fourth-quarter ex-TAC revenues (minus traffic acquisition costs), or around $20 million.

The company's estimated revenue growth for the full year has been revised to between 26% and 27% at a constant currency basis, down from the 28% to 31% it had estimated in August.

As more Apple users switch to the latest version of the browser in 2018, Criteo said the tracking prevention tool could have a 9% to 13% impact on its revenue.

Criteo shares were down 5% in early trading on Wednesday.

Eric Eichmann, Criteo's chief executive officer, said on an earnings call that the company has been working on a solution to help mitigate the effect of Apple's tracker prevention tool that uses an identifier that isn't a cookie. The tool integrates with publisher websites and ad exchanges, allowing Criteo to collect anonymous e-commerce data across websites.

"We believe a data-driven, privacy-friendly environment is beneficial to customers, publishers and advertisers alike," Mr. Eichmann said.

Apple's Safari has a 4.4% share of the global desktop browser market and takes 31.6% of the mobile browser market, according to analytics website NetMarketShare.

In September, days before the rollout of Intelligent Tracking Prevention, six advertising trade associations wrote a joint letter protesting Apple's plans. The letter alleged the tool would "hurt the user experience and sabotage the economic model for the internet."

For its part, Criteo has been looking to diversify its revenue streams, including recently announcing plans for a data co-operative that gives retailers, publishers and brands the option to pool their data to help advertisers better target ads at the people most likely to purchase their products.

Criteo and the rest of the advertising ecosystem are also awaiting the May 2018 rollout of Europe's new General Data Protection Regulation (GDPR) that will require companies to be more transparent about the type of data they collect on individuals and how that data is then used.

Criteo does not expect GDPR to have a negative impact on its revenue.

Mr. Eichmann said on the earnings call on Wednesday he is "excited" about the prospect of GDPR for three key reasons: It takes regulation that is country-specific and makes it region wide; it makes sure users give "clear consent" about their data being collected; and companies are required to have a legitimate reason for collecting that data, "which...we feel quite good about," he said.

Criteo reported a 33% increase in ex-TAC revenue to $234 million in the third quarter, beating analysts' estimates. Net income increased 51% to $22 million from the same period a year earlier, also ahead of analysts' estimates for the quarter. The company said it expects revenue to fall between $260 million and $263 million in its fourth quarter.

Write to Lara O'Reilly at lara.o'reilly@wsj.com

(END) Dow Jones Newswires

November 01, 2017 11:32 ET (15:32 GMT)

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