How sustainable is CRTO's EPS growth trend observed in 2024?

Criteo's (CRTO) EPS growth trend in 2024 appears to be on a declining path, with the fourth quarter's EPS falling short of expectations. Here's an analysis of the company's financial performance and the sustainability of its EPS growth trend: 1. **Q4 2024 Earnings Performance**: Criteo's diluted EPS for Q4 2024 was $1.90, which is a significant decrease from the previous quarter's EPS of $0.80. This decline suggests a weakening trend in the company's earnings growth. |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |CRTO|CRTO.O|Criteo|2024 Q1|157.14285714285714|0.12|185| |CRTO|CRTO.O|Criteo|2024 Q2|1019.9999999999999|0.46|185| |CRTO|CRTO.O|Criteo|2024 Q3|-8.33333333333333|0.11|185| 2. **Comparison with Expectations**: The EPS of $1.90 for Q4 2024 missed market expectations, indicating a potential shortfall in performance compared to industry benchmarks or analyst forecasts. This could reflect operational challenges or market conditions that impacted the company's profitability. 3. **Revenue and Profit Margins**: While Criteo's revenue for Q3 2024 was $458.9 million, with a net income of $6.25 million, the profit margin was only 1.4%. The low profit margin indicates that the company is facing challenges in translating revenue into net income, which could affect the sustainability of its EPS growth. 4. **Strategic Initiatives**: Despite the challenges, Criteo has seen growth in certain areas, such as Retail Media Revenue, which showed a 23% increase in contribution ex-TAC at constant currency. This suggests that the company's strategic initiatives, particularly those focused on AI-driven retail media, may offer a path forward for future earnings growth. 5. **Outlook and Future Prospects**: Criteo's outlook for 2024 indicates a cautious approach, with the company focusing on strategic growth initiatives and cost efficiencies. The ability to execute these strategies effectively will be crucial in determining the sustainability of the EPS growth trend. In conclusion, while Criteo has shown potential in specific areas of its business, the overall trend of declining EPS and missed expectations in Q4 2024 raises questions about the sustainability of its current earnings growth trajectory. The company's future performance will likely depend on its ability to improve operational efficiencies, capitalize on growth initiatives, and adapt to market conditions.