CRITEO REPORTS STRONG FOURTH QUARTER AND FISCAL YEAR 2021 RESULTS
2021 Activated Media Spend Up 19% to $2.7 Billion
Delivered Strong Revenue Growth and Double Digit Growth in Contribution ex-TAC in 2021
2021 Operating Cash Flow Up 19% to $221 Million and Free Cash Flow Up 40% to $168 Million
Extends Share Repurchase Authorization from $175 Million to $280 Million
Targeting Double Digit Growth in Fiscal 2022, Excluding the Contemplated Acquisition of IPONWEB
NEW YORK - February 9, 2022 - Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the global technology company that provides the world's leading Commerce Media Platform, today announced financial results for the fourth quarter and fiscal year ended December 31, 2021 that exceeded the Company's guidance.
Fourth Quarter and Fiscal Year 2021 Financial Highlights:
The following table summarizes our consolidated financial results for the three and twelve months ended December 31, 2021 and 2020:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
(in millions, except EPS data)
GAAP Results
Revenue
$
653
$
661
(1)
%
$
2,254
$
2,073
9
%
Gross Profit
$
244
$
218
12
%
$
782
$
688
14
%
Net Income
$
75
$
47
60
%
$
138
$
75
84
%
Gross Profit margin
37
%
33
%
4ppt
35
%
33
%
2ppt
Diluted EPS
$
1.15
$
0.73
58
%
$
2.09
$
1.16
80
%
Cash from operating activities
$
66
$
44
50
%
$
221
$
185
19
%
Cash and cash equivalents
$
516
$
488
6
%
$
516
$
488
6
%
Non-GAAP Results1
Contribution ex-TAC
$
276
$
253
9
%
$
921
$
825
12
%
Contribution ex-TAC margin
42
%
38
%
4ppt
41
%
40
%
1ppt
Adjusted EBITDA
$
111
$
103
7
%
$
322
$
251
28
%
Adjusted diluted EPS
$
1.44
$
0.98
47
%
$
3.38
$
2.17
56
%
Free Cash Flow (FCF)
$
56
$
22
157
%
$
168
$
120
40
%
FCF / Adjusted EBITDA
50
%
21
%
29ppt
52
%
48
%
4ppt
“We delivered double-digit growth in 2021, positioning us for a successful 2022 and beyond. Our impressive performance demonstrates the tremendous progress we have made on our transformation,” said Megan Clarken, Chief Executive Officer. “In 2022, we are accelerating our strategy around commerce media to enable our customers to drive meaningful commerce outcomes.”
Operating Highlights
•Retail Media Contribution ex-TAC grew 58% year-over-year at constant currency2 in 2021 and 41% in Q4, and same-retailer Contribution ex-TAC3 for Retail Media increased 23% year-over-year in Q4.
•Marketing Solutions Contribution ex-TAC grew 6% year-over-year at constant currency2 in 2021 and 7% in Q4.
•Criteo's media spend activated4 by the Commerce Media Platform for marketers and media owners was $2.7 billion in 2021, growing 19% at constant currency2 and close to $850 million in Q4.
•We signed a three-year global partnership with GroupM to accelerate the demand and supply growth of our Retail Media business.
•We added Nordstrom and Michaels to our Retail Media Platform in Q4 and successfully launched our first retailer customers in APAC and Latin America.
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
2 Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2020 average exchange rates for the relevant period to 2021 figures.
3 Same-client profitability or Contribution ex-TAC is the profitability or Contribution ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.
4 Activated media spend is defined as the sum of our Marketing Solutions revenue and the media spend activated on behalf of our Retail Media clients.
1
•Same-client contribution ex-TAC2 increased 9% year-over-year at constant currency2 in Q4.
•We had 685 million Daily Active Users (DAUs), over 60% of which on the web are addressable through media owners we have direct access to, as we continue to build Criteo's first-party media network.
•We executed a purchase agreement to acquire the business of IPONWEB Holding Limited ("IPONWEB"), a market-leading AdTech platform company, for $380 million, which we believe will further distinguish Criteo as the commerce media partner of choice on the open internet for the post third-party identifier world.
New Reporting Segment Structure
We are now reporting results for two reportable segments: Marketing Solutions and Retail Media. We have included a table which presents the operating results of our segments in this press release.
Change in Naming of Non-GAAP Financial Measure
We have renamed Revenue ex-TAC, a non-GAAP financial measure, to Contribution ex-TAC. The change was made as the Company considers that Contribution ex-TAC is a non-GAAP financial measure of profitability, closest to Gross Profit, and not revenue. No changes were made in the calculation methodology.
Financial Summary
Revenue for Q4 2021 was $653 million, gross profit was $244 million and Contribution ex-TAC was $276 million. Net income for Q4 was $75 million, or $1.15 per share on a diluted basis. Adjusted EBITDA for Q4 was $111 million, resulting in an adjusted diluted EPS of $1.44. At constant currency, Revenue for Q4 increased by 1%, gross profit increased 14% and Contribution ex-TAC increased by 11%. Revenue for the fiscal year 2021 was $2,254 million, gross profit was $782 million and Contribution ex-TAC was $921 million, up 8%, 13% and 11% respectively at constant currency. Net income for Fiscal 2021 was $138 million, or $2.09 per share on a diluted basis. Fiscal year 2021 Adjusted EBITDA was $322 million, resulting in an adjusted diluted EPS of $3.38. Cash flow from operating activities was $66 million in Q4 and $221 million in 2021, and Q4 Free Cash Flow was $56 million, up 40% in 2021 to $168 million, representing a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021. As of December 31, 2021, we had $571 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, "We delivered outstanding top line performance and record adjusted EBITDA margin and free cash flow in 2021 while investing for future growth. Looking ahead, we are confident about our growth trajectory and expect to grow Contribution ex-TAC by double digits again in 2022 as we continue to scale and execute on our Commerce Media Platform strategy. Importantly, we expect to continue to return cash to shareholders with the extension of our share repurchase program in 2022.”
Fourth Quarter 2021 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 1% year-over-year in Q4 2021, or increased by 1% at constant currency, to $653 million (Q4 2020: $661 million). Gross profit increased by 12% year-over-year in Q4 2021, or 14% at constant currency, to $244 million (Q4 2020: $218 million). Gross profit as a percentage of revenue, or gross profit margin, was 37% (Q4 2020: 33%). Contribution ex-TAC in the fourth quarter increased 9% year-over-year, or 11% at constant currency, to $276 million (Q4 2020: $253 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 42% (Q4 2020: 38%), up 400 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.
•Marketing Solutions revenue grew 6% (or 9% at constant currency) and Marketing Solutions Contribution ex-TAC grew 4% (or 7% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
•Retail Media revenue decreased 36% (or 36% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform ("RMP"). Retail Media Contribution ex-TAC increased 41% (or 41% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.
Net Income and Adjusted Net Income
Net income grew 60% to $75 million in Q4 2021 (Q4 2020: $47 million). Net income margin as a percentage of revenue was 11% (Q4 2020: 7%). Net income available to shareholders of Criteo S.A. was $74 million, or $1.15 per share on a diluted basis (Q4 2020: $45 million, or $0.73 per share on a diluted basis).
Adjusted net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, restructuring related and transformation costs and the tax impact of these adjustments, was $92 million, or $1.44 per share on a diluted basis (Q4 2020: $61 million, or $0.98 per share on a diluted basis).
2
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 7% year-over-year, or 10% at constant currency, to $111 million (Q4 2020: $103 million), driven by the Contribution ex-TAC performance over the period and effective cost management balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 40% (Q4 2020: 41%).
Operating expenses increased 18% year-over-year to $179 million (Q4 2020: $151 million), reflecting investments in our growth areas, including Product, Sales and R&D, and higher equity award compensation expense balanced with disciplined and effective expense management. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, acquisition-related costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP operating expenses, increased by 16% or $21 million, to $151 million (Q4 2020: $130 million).
Fiscal Year 2021 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue increased 9% year-over-year (8% at constant currency), to $2,254 million (FY 2020: $2,073 million). Gross profit increased by 14% year-over-year in 2021, or 13% at constant currency, to $782 million (FY 2020: $688 million). Gross profit as a percentage of revenue, or gross profit margin, was 35% (FY 2020: 33%). Contribution ex-TAC increased 12% year-over-year (11% at constant currency), to $921 million (FY 2020: $825 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 41% (FY 2020: 40%), up 100 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.
•Marketing Solutions revenue grew 11% (or 10% at constant currency) and Marketing Solutions Contribution ex-TAC grew 7% (or 6% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
•Retail Media revenue decreased 7% (or 8% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform ("RMP"). Retail Media Contribution ex-TAC increased 59% (or 58% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.
Net Income and Adjusted Net Income
Net income increased 84% year-over-year to $138 million (FY 2020: $75 million). Net income margin as a percentage of revenue was 6% (FY 2020: 4%). In the course of the fiscal year 2021, we incurred $22 million in restructuring-related and transformation costs. Net income available to shareholders of Criteo S.A. increased 88% year-over-year to $134 million, or $2.09 per share on a diluted basis (FY 2020: $72 million, or $1.16 per share on a diluted basis).
Adjusted net income increased 62% year-over-year to $217 million, or $3.38 per share on a diluted basis (FY 2020: $134 million, or $2.17 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 28% year-over-year, or 26% at constant currency, to $322 million (FY 2020: $251 million), driven by the Contribution ex-TAC performance over the period and effective cost management, balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 35% (FY 2020: 30%).
Operating expenses increased 9% or $51 million, to $630 million (FY 2020: $579 million), mostly driven by higher headcount-related expense, including equity awards compensation expense, partially offset by disciplined expense management across the Company. Non-GAAP operating expenses increased 6% or $31 million, to $524 million (FY 2020: $493 million), largely driven by higher headcount balanced with effective cost discipline across the Company.
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased 50% year-over-year to $66 million in Q4 2021 (Q4 2020: $44 million) and grew 19% to $221 million in 2021 (fiscal year 2020: $185 million).
Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, increased 157% to $56 million in Q4 2021 (Q4 2020: $22 million), and grew 40% in 2021 to $168 million (fiscal year 2020: $120 million), driving a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021 (fiscal year 2020: 48%).
3
Cash and cash equivalents increased $28 million compared to December 31, 2020 to $516 million, and to $571 million including marketable securities, up $41 million in 2021, after spending $100 million on share repurchases in 2021.
As of December 31, 2021, the Company had total financial liquidity close to $1.1 billion, or close to $700 million after giving effect to the completion of the contemplated acquisition of IPONWEB, including the Company's cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.
IPONWEB Acquisition
As previously announced, on December 22, 2021, Criteo executed the purchase agreement to acquire IPONWEB, a market-leading AdTech company with world-class media trading capabilities, for $380 million in a combination of cash and Criteo treasury shares. The closing of the transaction is expected by the end of the first quarter of 2022, subject to customary closing conditions.
With this strategic acquisition, Criteo is expected to accelerate its Commerce Media Platform vision to offer better control to its enterprise marketers – and their agency partners – by leveraging IPONWEB's well-established DSP and SSP solutions. The acquisition is also expected to expand our media owner monetization opportunities and to provide critical services for first-party data management across the ecosystem. Together with IPONWEB, Criteo believes it will distinguish itself as the commerce media partner of choice on the open internet for the post third-party cookie and identifier world.
2022 Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of February 9, 2022. Our financial guidance for the first quarter and fiscal year 2022 excludes the contemplated acquisition of IPONWEB.
Fiscal year 2022 guidance:
•We expect Contribution ex-TAC to grow by 10% to 12% at constant currency.
•We expect an Adjusted EBITDA margin of approximately 32% of Contribution ex-TAC.
First quarter 2022 guidance:
•We expect Contribution ex-TAC between $216 million and $220 million, or year-over-year growth at constant-currency of +5% to +7%.
•We expect Adjusted EBITDA between $52 million and $56 million.
The above guidance for the first quarter and fiscal year ending December 31, 2022 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.862, a U.S. dollar-Japanese Yen rate of 115, a U.S. dollar-British pound rate of 0.741, a U.S. dollar-Korean Won rate of 1,180 and a U.S. dollar-Brazilian real rate of 5.40.
The above guidance does not include the previously announced acquisition of IPONWEB, which is expected to close by the end of Q1 2022, and assumes that no additional acquisitions are completed during the first quarter of 2022 or the fiscal year ended December 31, 2022.
Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.
Extension of Share Repurchase Authorization from $175 million to $280 million
Criteo continues to execute on its strategic plan and Company transformation, investing in the growth of the business and leveraging its strong balance sheet position.
Criteo today announces that the board of directors has authorized the extension of its current share repurchase program of up to $175 million of the Company’s outstanding American Depositary Shares to an increased amount of up to $280 million. The Company intends to use repurchased shares under this extended program to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders, as well as to fund potential acquisitions in the future.
Under the terms of the authorization, the stock purchases may be made from time to time on the Nasdaq Global Select Market in compliance with applicable state and federal securities laws and applicable provisions of French corporate law. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability, as determined by Criteo’s management team. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.
4
Non-GAAP Financial Measures
This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission ("SEC"): Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted diluted EPS, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.
Contribution ex-TAC is a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business.
Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs and restructuring related and transformation costs.
Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs and restructuring related and transformation costs, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow Conversion is defined as free cash flow divided by Adjusted EBITDA. Free Cash Flow and Free Cash Flow Conversion are key measures used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow and Free Cash Flow Conversion permit a more complete and comprehensive analysis of our available cash flows.
Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.
5
Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Contribution ex-TAC to gross profit, Contribution ex-TAC margin, Adjusted EBITDA to net income, Adjusted Net Income to net income, Free Cash Flow to cash flow from operating activities, and Non-GAAP Operating Expenses to operating expenses, in each case, the most comparable U.S. GAAP measure. Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider such non-GAAP measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: 1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and 2) other companies may report Contribution ex-TAC, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-GAAP Operating Expenses or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including projected financial results for the quarter ending March 31, 2022 and the year ended December 31, 2022, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the scope and impact of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful completion of our acquisition of IPONWEB, uncertainty regarding international growth and expansion (including related to changes in a specific country's or region's political or economic conditions), the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Contribution ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company’s SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2021, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have an impact on Criteo's business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the COVID-19 pandemic.
Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.
6
Conference Call Information
Criteo’s senior management team will discuss the Company’s earnings on a call that will take place today, February 9, 2022, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will subsequently be available for replay.
Criteo (NASDAQ: CRTO) is the global technology company that provides the world's leading Commerce Media Platform. 2,800 Criteo team members partner with 22,000 marketers and thousands of media owners around the globe to activate the world's largest set of commerce data to drive better commerce outcomes. By powering trusted and impactful advertising, Criteo brings richer experiences to every consumer while supporting a fair and open internet that enables discovery, innovation and choice. For more information, please visit www.criteo.com.
Contacts
Criteo Investor Relations
Edouard Lassalle, SVP, Capital Markets & Investor Relations, e.lassalle@criteo.com
Trade receivables, net of allowances of $45.4 million and $39.9 million at December 31, 2021 and December 31, 2020, respectively
581,988
474,055
Income taxes
8,784
11,092
Other taxes
73,388
69,987
Other current assets
34,182
21,405
Marketable securities - current portion
50,299
—
Total current assets
1,264,168
1,064,550
Property, plant and equipment, net
139,961
189,505
Intangible assets, net
82,627
79,744
Goodwill
329,699
325,805
Right of Use Asset - operating lease
120,257
114,012
Marketable securities - non current portion
5,000
41,809
Non-current financial assets
6,436
18,109
Deferred tax assets
35,443
19,876
Total non-current assets
719,423
788,860
Total assets
$
1,983,591
$
1,853,410
Liabilities and shareholders' equity
Current liabilities:
Trade payables
$
430,245
$
367,025
Contingencies
3,059
2,250
Income taxes
6,641
2,626
Financial liabilities - current portion
642
2,889
Lease liability - operating - current portion
34,066
48,388
Other taxes
60,236
58,491
Employee - related payables
98,136
85,272
Other current liabilities
39,523
33,390
Total current liabilities
672,548
600,331
Deferred tax liabilities
3,053
5,297
Defined benefit plans
5,531
6,167
Financial liabilities - non current portion
360
386
Lease liability - operating - non current portion
93,893
83,007
Other non-current liabilities
9,886
5,535
Total non-current liabilities
112,723
100,392
Total liabilities
785,271
700,723
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 65,883,347 and 66,272,106 shares authorized, issued and outstanding at December 31, 2021 and December 31, 2020, respectively.
2,149
2,161
Treasury stock, 5,207,873 and 5,632,536 shares at cost as of December 31, 2021 and December 31, 2020, respectively.
(131,560)
(85,570)
Additional paid-in capital
731,248
693,164
Accumulated other comprehensive income (loss)
(40,294)
16,028
Retained earnings
601,588
491,359
Equity - attributable to shareholders of Criteo S.A.
1,163,131
1,117,142
Non-controlling interests
35,189
35,545
Total equity
1,198,320
1,152,687
Total equity and liabilities
$
1,983,591
$
1,853,410
8
CRITEO S.A. Consolidated Statement of Income (U.S. dollars in thousands, except share and per share data, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Revenue
$
653,267
$
661,282
(1)
%
$
2,254,235
$
2,072,617
9
%
Cost of revenue
Traffic acquisition cost
(377,076)
(408,108)
(8)
%
(1,333,440)
(1,247,571)
7
%
Other cost of revenue
(31,840)
(34,700)
(8)
%
(138,851)
(137,028)
1
%
Gross profit
244,351
218,474
12
%
781,944
688,018
14
%
Operating expenses:
Research and development expenses
(44,860)
(32,797)
37
%
(151,817)
(132,513)
15
%
Sales and operations expenses
(89,892)
(85,871)
5
%
(325,616)
(330,285)
(1)
%
General and administrative expenses
(43,855)
(32,623)
34
%
(152,634)
(116,395)
31
%
Total Operating expenses
(178,607)
(151,291)
18
%
(630,067)
(579,193)
9
%
Income from operations
65,744
67,183
(2)
%
151,877
108,825
40
%
Financial and Other income (expense)
3,330
(111)
NM
1,939
(1,939)
NM
Income before taxes
69,074
67,072
3
%
153,816
106,886
44
%
Provision for income taxes
5,864
(20,254)
NM
(16,169)
(32,197)
(50)
%
Net Income
$
74,938
$
46,818
60
%
$
137,647
$
74,689
84
%
Net income available to shareholders of Criteo S.A.
$
73,765
$
45,277
63
%
$
134,456
$
71,679
88
%
Net income available to non-controlling interests
$
1,173
$
1,541
(24)
%
$
3,191
$
3,010
6
%
Weighted average shares outstanding used in computing per share amounts:
Basic
60,590,826
60,336,486
60,717,446
60,876,480
Diluted
63,985,850
62,348,489
64,231,637
61,818,593
Net income allocated to shareholders per share:
Basic
$
1.22
$
0.75
63
%
$
2.21
$
1.18
87
%
Diluted
$
1.15
$
0.73
58
%
$
2.09
$
1.16
80
%
9
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
74,938
$
46,818
60
%
$
137,647
$
74,689
84
%
Non-cash and non-operating items
21,306
48,887
(56)
%
124,879
154,629
(19)
%
- Amortization and provisions
23,015
26,960
(15)
%
90,934
106,591
(15)
%
- Equity awards compensation expense (1)
12,354
6,305
96
%
44,528
28,770
55
%
- Net gain or (loss) on disposal of non-current assets
(2,729)
(20)
NM
1,965
2,714
(28)
%
- Change in deferred taxes
(23,210)
11,417
NM
(18,642)
3,720
NM
- Change in income taxes
11,863
3,456
NM
6,043
10,867
(44)
%
- Other
13
769
(98)
%
51
1,967
(97)
%
Changes in working capital related to operating activities
(30,232)
(51,625)
(41)
%
(41,613)
(43,962)
(5)
%
- (Increase) / Decrease in trade receivables
(151,604)
(126,486)
20
%
(134,950)
(3,957)
NM
- Increase / (Decrease) in trade payables
88,384
61,989
43
%
82,691
(33,314)
NM
- (Increase) / Decrease in other current assets
(7,032)
(9,476)
(26)
%
(19,742)
(7,188)
NM
- Increase / (Decrease) in other current liabilities
38,807
26,406
47
%
33,033
6,261
NM
- Change in operating lease liabilities and right of use assets
1,213
(4,058)
NM
(2,645)
(5,764)
(54)
%
CASH FROM OPERATING ACTIVITIES
66,012
44,080
50
%
220,913
185,356
19
%
Acquisition of intangible assets, property, plant and equipment
(10,600)
(10,250)
3
%
(54,983)
(67,287)
(18)
%
Change in accounts payable related to intangible assets, property, plant and equipment
455
(12,052)
NM
1,973
1,818
9
%
Payment for businesses, net of cash acquired
(892)
(1,173)
(24)
%
(10,419)
(1,176)
NM
Change in other non-current financial assets
865
(13,819)
NM
(12,938)
(34,448)
(62)
%
CASH USED FOR INVESTING ACTIVITIES
(10,172)
(37,294)
(73)
%
(76,367)
(101,093)
(24)
%
Proceeds from borrowings under line-of-credit agreement
—
(4,315)
NM
—
153,188
NM
Repayment of borrowings
13
(167,163)
NM
(1,249)
(167,344)
(99)
%
Proceeds from exercise of stock options
3,508
1,626
NM
25,196
1,727
NM
Repurchase of treasury stocks
(27,416)
—
NM
(100,027)
(43,655)
NM
Change in other financial liabilities
(401)
347
NM
(4,037)
(1,663)
NM
CASH USED FOR FINANCING ACTIVITIES
(24,296)
(169,505)
(86)
%
(80,117)
(57,747)
39
%
Effect of exchange rates changes on cash and cash equivalents
(13,475)
23,986
NM
(36,913)
42,732
NM
Net increase in cash and cash equivalents
18,069
(138,733)
NM
27,516
69,248
(60)
%
Net cash and cash equivalents at beginning of period
497,458
626,744
(21)
%
488,011
418,763
17
%
Net cash and cash equivalents at end of period
$
515,527
$
488,011
6
%
$
515,527
$
488,011
6
%
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds
$
(5,482)
$
(5,381)
2
%
$
(28,767)
$
(17,610)
63
%
Cash paid for interest
$
(347)
$
(1,336)
(74)
%
$
(1,486)
$
(2,155)
(31)
%
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $11.9 million and $5.7 million of equity awards compensation expense for the quarter ended December 31, 2021 and 2020, respectively, and $42.7 million and $27.1 million of equity awards compensation for the twelve months ended December, 31, 2021 and 2020, respectively.
10
CRITEO S.A.
Reconciliation of Cash from Operating Activities to Free Cash Flow
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
CASH FROM OPERATING ACTIVITIES
$
66,012
$
44,080
50
%
$
220,913
$
185,356
19
%
Acquisition of intangible assets, property, plant and equipment
(10,600)
(10,250)
3
%
(54,983)
(67,287)
(18)
%
Change in accounts payable related to intangible assets, property, plant and equipment
455
(12,052)
NM
1,973
1,818
9
%
FREE CASH FLOW (1)
$
55,867
$
21,778
157
%
$
167,903
$
119,887
40
%
(1) Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment.
11
CRITEO S.A.
Reconciliation of Contribution ex-TAC to Gross Profit
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
YoY Change at Constant Currency
2021
2020
YoY Change
YoY Change at Constant Currency
Gross Profit
244,351
218,474
12
%
14
%
781,944
688,018
14
%
13
%
Other Cost of Revenue
31,840
34,700
(8)
%
(6)
%
138,851
137,028
1
%
2
%
Contribution ex-TAC (1)
$
276,191
$
253,174
9
%
11
%
$
920,795
$
825,046
12
%
11
%
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
12
CRITEO S.A.
Segment Information
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Segment
2021
2020
YoY Change
YoY Change at Constant Currency
2021
2020
YoY Change
YoY Change at Constant Currency
Revenue
Marketing Solutions
$
577,962
$
543,262
6
%
9
%
$
2,007,239
$
1,806,431
11
%
10
%
Retail Media (2)
75,305
118,020
(36)
%
(36)
%
246,996
266,186
(7)
%
(8)
%
Total
653,267
661,282
(1)
%
1
%
2,254,235
2,072,617
9
%
8
%
Contribution ex-TAC
Marketing Solutions
228,378
219,245
4
%
7
%
796,152
746,751
7
%
6
%
Retail Media (2)
47,813
33,929
41
%
41
%
124,643
78,295
59
%
58
%
Total (1)
$
276,191
$
253,174
9
%
11
%
$
920,795
$
825,046
12
%
11
%
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
(2) Criteo operates as two reportable segments as of December 31, 2021. The table above presents the operating results of our Marketing Solutions and Retail Media segments. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, and reported under the retail media segment, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin will increase. Contribution ex-TAC will not be impacted by this transition.
13
CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
74,938
$
46,818
60
%
$
137,647
$
74,689
84
%
Adjustments:
Financial (Income) expense
(347)
111
NM
1,044
1,939
(46)
%
Provision for income taxes
(5,864)
20,254
NM
16,169
32,197
(50)
%
Equity awards compensation expense
12,114
8,960
35
%
44,955
31,425
43
%
Research and development
4,762
2,482
92
%
16,334
10,253
59
%
Sales and operations
3,143
3,662
(14)
%
13,023
12,042
8
%
General and administrative
4,209
2,816
49
%
15,598
9,130
71
%
Pension service costs
319
583
(45)
%
1,324
2,232
(41)
%
Research and development
166
290
(43)
%
686
1,114
(38)
%
Sales and operations
49
103
(52)
%
207
394
(47)
%
General and administrative
104
190
(45)
%
431
724
(40)
%
Depreciation and amortization expense
21,756
22,140
(2)
%
88,402
88,238
0.2
%
Cost of revenue (data center equipment)
14,611
15,354
(5)
%
61,119
55,935
9
%
Research and development
2,967
1,712
73
%
9,484
10,741
(12)
%
Sales and operations
3,579
4,033
(11)
%
14,780
16,770
(12)
%
General and administrative
599
1,041
(42)
%
3,019
4,792
(37)
%
Acquisition-related costs
6,118
174
NM
11,256
286
NM
General and administrative
6,118
174
NM
11,256
286
NM
Restructuring related and transformation (gain) costs (1)
1,833
4,383
(58)
%
21,698
19,989
9
%
Research and development
513
747
(31)
%
5,751
4,240
36
%
Sales and operations
568
2,605
(78)
%
9,380
9,398
(0.2)
%
General and administrative
752
1,031
(27)
%
6,567
6,351
3
%
Total net adjustments
35,929
56,605
(37)
%
184,848
176,306
5
%
Adjusted EBITDA (2)
$
110,867
$
103,423
7
%
$
322,495
$
250,995
28
%
(1) For the Three Months and the Twelve Months Ended December 2021, and December 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
(Gain) from forfeitures of share-based compensation awards
239
(2,655)
(427)
(2,655)
Facilities related (gain) costs
1,328
4,158
16,020
12,975
Payroll related (gain) costs
(157)
1,422
4,480
5,911
Consulting costs related to transformation
423
1,458
1,625
3,758
Total restructuring related and transformation (gain) costs
$
1,833
$
4,383
$
21,698
$
19,989
For the three months ended and the twelve months ended December 31, 2021 and December 31, 2020, respectively, the cash outflows related to restructuring related and transformation costs were $12.4 million and $ 33.3 million, and $3.9 million and $16.9 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to real-estate facilities and other consulting fees.
(2) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, acquisition-related costs and restructuring related and transformation costs. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, and restructuring related and transformation costs in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.
14
CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Research and Development expenses
$
(44,860)
$
(32,797)
37
%
$
(151,817)
$
(132,513)
15
%
Equity awards compensation expense
4,762
2,482
92
%
16,334
10,253
59
%
Depreciation and Amortization expense
2,967
1,712
73
%
9,484
10,741
(12)
%
Pension service costs
166
290
(43)
%
686
1,114
(38)
%
Restructuring related and transformation (gain) costs
513
747
(31)
%
5,751
4,240
36
%
Non GAAP - Research and Development expenses
(36,452)
(27,566)
32
%
(119,562)
(106,165)
13
%
Sales and Operations expenses
(89,892)
(85,871)
5
%
(325,616)
(330,285)
(1)
%
Equity awards compensation expense
3,143
3,662
(14)
%
13,023
12,042
8
%
Depreciation and Amortization expense
3,579
4,033
(11)
%
14,780
16,770
(12)
%
Pension service costs
49
103
(52)
%
207
394
(47)
%
Restructuring related and transformation (gain) costs
568
2,605
(78)
%
9,380
9,398
(0.2)
%
Non GAAP - Sales and Operations expenses
(82,553)
(75,468)
9
%
(288,226)
(291,681)
(1)
%
General and Administrative expenses
(43,855)
(32,623)
34
%
(152,634)
(116,395)
31
%
Equity awards compensation expense
4,209
2,816
49
%
15,598
9,130
71
%
Depreciation and Amortization expense
599
1,041
(42)
%
3,019
4,792
(37)
%
Pension service costs
104
190
(45)
%
431
724
(40)
%
Acquisition-related costs
6,118
174
NM
11,256
286
NM
Restructuring related and transformation (gain) costs
752
1,031
(27)
%
6,567
6,351
3
%
Non GAAP - General and Administrative expenses
(32,073)
(27,371)
17
%
(115,763)
(95,112)
22
%
Total Operating expenses
(178,607)
(151,291)
18.1
%
(630,067)
(579,193)
9
%
Equity awards compensation expense
12,114
8,960
35
%
44,955
31,425
43
%
Depreciation and Amortization expense
7,145
6,786
5
%
27,283
32,303
(16)
%
Pension service costs
319
583
(45)
%
1,324
2,232
(41)
%
Acquisition-related costs
6,118
174
NM
11,256
286
NM
Restructuring related and transformation (gain) costs
1,833
4,383
(58)
%
21,698
19,989
9
%
Total Non GAAP Operating expenses (1)
$
(151,078)
$
(130,405)
16
%
$
(523,551)
$
(492,958)
6
%
(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, acquisition-related costs and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.
15
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Equity awards compensation expense
Research and development
$
4,762
$
2,482
92
%
$
16,334
$
10,253
59
%
Sales and operations
3,143
3,662
(14)
%
13,023
12,042
8
%
General and administrative
4,209
2,816
49
%
15,598
9,130
71
%
Total equity awards compensation expense
12,114
8,960
35
%
44,955
31,425
43
%
Pension service costs
Research and development
166
290
(43)
%
686
1,114
(38)
%
Sales and operations
49
103
(52)
%
207
394
(47)
%
General and administrative
104
190
(45)
%
431
724
(40)
%
Total pension service costs
319
583
(45)
%
1,324
2,232
(41)
%
Depreciation and amortization expense
Cost of revenue (data center equipment)
14,611
15,354
(5)
%
61,119
55,935
9
%
Research and development
2,967
1,712
73
%
9,484
10,741
(12)
%
Sales and operations
3,579
4,033
(11)
%
14,780
16,770
(12)
%
General and administrative
599
1,041
(42)
%
3,019
4,792
(37)
%
Total depreciation and amortization expense
21,756
22,140
(2)
%
88,402
88,238
0.2
%
Acquisition-related costs
General and administrative
6,118
174
NM
11,256
286
NM
Total acquisition-related costs
6,118
174
NM
11,256
286
NM
Restructuring related and transformation (gain) costs
Research and development
513
747
(31)
%
5,751
4,240
36
%
Sales and operations
568
2,605
(78)
%
9,380
9,398
(0.2)
%
General and administrative
752
1,031
(27)
%
6,567
6,351
3
%
Total restructuring related and transformation (gain) costs
$
1,833
$
4,383
(58)
%
$
21,698
$
19,989
9
%
16
CRITEO S.A.
Reconciliation of Adjusted Net Income to Net Income
(U.S. dollars in thousands except share and per share data, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
74,938
$
46,818
60
%
$
137,647
$
74,689
84
%
Adjustments:
Equity awards compensation expense
12,114
8,960
35
%
44,955
31,425
43
%
Amortization of acquisition-related intangible assets
3,755
2,926
28
%
12,929
15,520
(17)
%
Acquisition-related costs
6,118
174
NM
11,256
286
NM
Restructuring related and transformation (gain) costs
1,833
4,383
(58)
%
21,698
19,989
9
%
Tax impact of the above adjustments (1)
(6,557)
(2,127)
NM
(11,243)
(7,738)
45
%
Total net adjustments
17,263
14,316
21
%
79,595
59,482
34
%
Adjusted net income (2)
$
92,201
$
61,134
51
%
$
217,242
$
134,171
62
%
Weighted average shares outstanding
- Basic
60,590,826
60,336,486
60,717,446
60,876,480
- Diluted
63,985,850
62,348,489
64,231,637
61,818,593
Adjusted net income per share
- Basic
$
1.52
$
1.01
50
%
$
3.58
$
2.20
63
%
- Diluted
$
1.44
$
0.98
47
%
$
3.38
$
2.17
56
%
(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates.
(2) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, restructuring related and transformation costs, and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition-related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.
17
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
YoY Change
2021
2020
YoY Change
Revenue as reported
$
653,267
$
661,282
(1)
%
$
2,254,235
$
2,072,617
9
%
Conversion impact U.S. dollar/other currencies
14,553
—
(19,713)
—
Revenue at constant currency(1)
667,820
661,282
1
%
2,234,522
2,072,617
8
%
Traffic acquisition costs as reported
(377,076)
(408,108)
(8)
%
(1,333,440)
(1,247,571)
7
%
Conversion impact U.S. dollar/other currencies
(8,567)
—
12,263
—
Traffic Acquisition Costs at constant currency(1)
(385,643)
(408,108)
(6)
%
(1,321,177)
(1,247,571)
6
%
Contribution ex-TAC as reported(2)
276,191
253,174
9
%
920,795
825,046
12
%
Conversion impact U.S. dollar/other currencies
5,986
—
(7,450)
—
Contribution ex-TAC at constant currency(2)
282,177
253,174
11
%
913,345
825,046
11
%
Contribution ex-TAC(2)/Revenue as reported
42
%
38
%
41
%
40
%
Other cost of revenue as reported
(31,840)
(34,700)
(8)
%
(138,851)
(137,028)
1
%
Conversion impact U.S. dollar/other currencies
(919)
—
(372)
—
Other cost of revenue at constant currency(1)
(32,759)
(34,700)
(6)
%
(139,223)
(137,028)
2
%
Gross Profit as reported
244,351
218,474
12
%
781,944
688,018
14
%
Conversion impact U.S. dollar/other currencies
5,067
—
(7,822)
—
Gross Profit at constant currency(1)
249,418
218,474
14
%
774,122
688,018
13
%
Adjusted EBITDA(3)
110,867
103,423
7
%
322,495
250,995
28
%
Conversion impact U.S. dollar/other currencies
2,423
—
(7,281)
—
Adjusted EBITDA(3) at constant currency(1)
$
113,290
$
103,423
10
%
$
315,214
$
250,995
26
%
Adjusted EBITDA(3)/Contribution ex-TAC(2)
40
%
41
%
35
%
30
%
(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.
(2) Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Contribution ex-TAC to Gross Profit" for a reconciliation of Contribution ex-TAC to gross profit.
(3) Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.
18
CRITEO S.A.
Information on Share Count
(unaudited)
Twelve Months Ended
2021
2020
Shares outstanding as at January 1,
60,639,570
62,293,508
Weighted average number of shares issued during the period
Shares issued as December 31, before Treasury stocks
65,883,347
66,272,106
Treasury stock as of December 31,
(5,207,873)
(5,632,536)
Shares outstanding as of December 31, after Treasury stocks
60,675,474
60,639,570
Total dilutive effect of share options, warrants, employee warrants
6,213,932
7,400,024
Fully diluted shares as at December 31,
66,889,406
68,039,594
19
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
YoY Change
QoQ Change
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Clients
1%
—%
21,745
21,747
21,332
20,626
21,460
20,565
20,359
20,360
20,247
Revenue
(1)%
28%
653,267
508,580
551,311
541,077
661,282
470,345
437,614
503,376
652,640
Americas
(8)%
41%
287,270
204,428
221,227
203,900
312,817
204,618
185,674
191,745
306,250
EMEA
1%
25%
234,559
188,354
209,303
212,096
232,137
167,800
159,621
190,114
216,639
APAC
13%
14%
131,438
115,798
120,781
125,081
116,328
97,927
92,319
121,517
129,751
Revenue
(1)%
28%
653,267
508,580
551,311
541,077
661,282
470,345
437,614
503,376
652,640
Marketing Solutions
6%
26%
577,962
458,622
487,465
483,190
543,262
412,126
381,270
469,773
574,783
Retail Media (2)
(36)%
51%
75,305
49,958
63,846
57,887
118,020
58,219
56,344
33,603
77,857
TAC
(8)%
27%
(377,076)
(297,619)
(331,078)
(327,667)
(408,108)
(284,401)
(257,698)
(297,364)
(386,388)
Marketing Solutions
8%
26%
(349,584)
(276,498)
(294,132)
(290,873)
(324,017)
(243,616)
(218,990)
(273,057)
(331,709)
Retail Media (2)
(67)%
30%
(27,492)
(21,121)
(36,946)
(36,794)
(84,091)
(40,785)
(38,708)
(24,307)
(54,679)
Contribution ex-TAC (1)
9%
31%
276,191
210,961
220,233
213,410
253,174
185,944
179,916
206,012
266,252
Marketing Solutions
4%
25%
228,378
182,124
193,333
192,317
219,245
168,510
162,280
196,716
243,074
Retail Media (2)
41%
66%
47,813
28,837
26,900
21,093
33,929
17,434
17,636
9,296
23,178
Cash flow from operating activities
50%
29%
66,012
51,179
26,360
77,362
44,080
51,156
33,377
56,743
59,359
Capital expenditures
(55)%
(36)%
10,145
15,957
13,128
13,780
22,302
12,898
18,532
11,737
17,520
Capital expenditures/Revenue
(1)ppt
(1)ppt
2%
3%
2%
3%
3%
3%
4%
2%
3%
Net cash position
6%
4%
515,527
497,458
489,521
520,060
488,011
626,744
578,181
436,506
418,763
Headcount
7%
5%
2,781
2,658
2,572
2,532
2,594
2,636
2,685
2,701
2,755
Days Sales Outstanding (days - end of month)
9 days
(5) days
65
70
66
64
56
62
61
62
52
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures.
(2) Criteo operates as two reportable segments as of December 31, 2021. The table above presents the operating results of our Marketing Solutions and Retail Media segments. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, and reported under the retail media segment, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin will increase. Contribution ex-TAC will not be impacted by this transition.
