Criteo IPO Looks To Ride the Big Data Wave

Criteo, which operates an online ad network, filed for an IPO yesterday. The company plans to list on the NASDAQ under the ticker of CRTO and the lead underwriters include JPMorgan (JPM), Deutsche Bank (DB) and Jefferies.

While ad-tech IPOs have had a rough time lately — as seen with YuMe (YUME) and Tremor Video (TRMR) — Criteo may be able to buck the trend.

According to the S-1 filing, the company uses “proprietary predictive software algorithms coupled with deep insights into expressed consumer intent and purchasing habits to price and deliver highly relevant and personalized internet and mobile display advertisements in real time.”

It’s a lot of tech-speak but for good reason: That is, Criteo wants to differentiate itself from the spate of other players in the market by showing it has defensible technology. A key part of this is leveraging Big Data. For the most part, Wall Street has a fixation on this, as seen with other top IPOs like Splunk (SPLK) and Tableau Software (DATA).

Criteo, for one, uses something called re-targeting. This means that it will track a user who visits a site but does not make a purchase. But, when the users goes elsewhere, there will be ads for the prior site. All in all, the repetition has been shown to help increase purchase intent.

The numbers bear this out, too. During the past year, Criteo’s system processed $200 billion in transactions and delivered ads that got about 1.5 billion clicks. The result: Customers — including Expedia (EXPE), Macy’s (M) and eBay (EBAY) — generated a juicy $6.5 billion in post-click sales.

Also, revenues shot up 89% in 2012 to $353.7 million. And unlike many other plays in the ad-tech world, the company has been profitable every full-year since 2009. (Although there have been losses so far in 2013 as the company ramps up spending on its infrastructure.)

But again, Criteo’s Big Data focus will be key. Just take a look at Rocket Fuel, which has a similar approach. This week the company boosted the price range on its IPO to $27 to $29, up from $24 to $27. It’s a sign that demand is strong for the deal (expected to hit the market tomorrow) and that there is an appetite for ad-tech offerings … especially if Big Data is part of the business.

That’s good news for Criteo, and any investors eyeing its soon-to-be-public stock.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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