CRITEO REPORTS STRONG FINANCIAL RESULTS IN THIRD QUARTER 2021
Raises Outlook for Fiscal 2021 Revenue ex-TAC and Adjusted EBITDA margin
Announces Extension of Share Repurchase Authorization from $100 million to $175 million
NEW YORK - November 3, 2021 - 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 third quarter ended September 30, 2021 that exceeded the Company's quarterly guidance.
Third Quarter 2021 Financial Highlights:
The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2021 and 2020:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
(in millions, except EPS data)
GAAP Results
Revenue
$
509
$
470
8
%
$
1,601
$
1,411
13
%
Gross Profit
$
176
$
151
16
%
$
538
$
470
14
%
Net Income
$
24
$
5
358
%
$
63
$
28
125
%
Diluted EPS
$
0.37
$
0.09
311
%
$
0.94
$
0.43
119
%
Cash from operating activities
$
51
$
51
—
%
$
155
$
141
10
%
Net cash position
$
497
$
627
(21)
%
$
497
$
627
(21)
%
Non-GAAP Results1
Revenue ex-TAC
$
211
$
186
13
%
$
645
$
572
13
%
Revenue ex-TAC margin
41
%
40
%
1ppt
40
%
41
%
(1)ppt
Adjusted EBITDA
$
68
$
49
38
%
$
212
$
148
43
%
Adjusted diluted EPS
$
0.64
$
0.40
60
%
$
1.94
$
1.18
64
%
Free Cash Flow (FCF)
$
35
$
38
(8)
%
$
112
$
98
14
%
FCF / Adjusted EBITDA
51
%
77
%
(26)ppt
53
%
66
%
(13)ppt
“We achieved yet another strong quarter of double-digit growth, driven by the acceleration of our new solutions and healthy performance in retargeting,” said Megan Clarken, Chief Executive Officer. “As a global powerhouse in commerce media, we are focused on delivering the best performing commerce audiences at scale for our large and growing base of 22,000 marketer and brand customers across the open Internet. The sustained momentum in our company transformation and solid execution of our Commerce Media Platform strategy position us well to drive long-term sustainable growth and shareholder value.”
Q3 2021 Operating Highlights
•Criteo's media spend activated by the Commerce Media Platform for marketers and media owners was over $2.5 billion in the last 12 months and close to $615M in Q3 growing 23% at constant currency2.
•We delivered the highest growth in our New Solutions in four quarters at 66% year-over-year at constant currency2, now representing 28% of total revenue ex-TAC.
•Retail Media revenue ex-TAC grew 65% year-over-year at constant currency2 and same-retailer revenue ex-TAC3 for Retail Media increased 66% year-over-year.
•We added Lowe's, Walmart Canada, BestBuy and Douglas to our Retail Media Platform.
•We added over 400 net new clients and closed the quarter with close to 22,000 clients.
•Same-client revenue3 increased 5% and same-client revenue ex-TAC2 increased 9% year-over-year at constant currency2.
•About 60% of our daily active users on the web are addressable through media owners we have direct access to, as we continue to build Criteo's first-party media network.
•Manuela Montagnana was appointed Chief People Officer to lead Criteo's People team and talent strategy.
1 Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA at constant currency, Adjusted EBITDA margin, Adjusted diluted EPS, Free Cash Flow and growth at constant currency 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 revenue or Revenue ex-TAC is the revenue or Revenue 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.
1
Third Quarter Financial Summary
Revenue for Q3 2021 was $509 million and Revenue ex-TAC was $211 million. Net income was $24 million, or $0.37 per share on a diluted basis. Adjusted EBITDA was $68 million, resulting in an adjusted diluted EPS of $0.64. At constant currency, Revenue increased by 8% and Revenue ex-TAC increased by 14%. Cash flow from operating activities was $155 million and Free Cash Flow was $35 million, growing 14% in the first nine months 2021 to $112 million, representing a Free Cash Flow conversion rate of 53% of Adjusted EBITDA in the first nine months 2021. As of September 30, 2021, we had $554 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, "We are raising our financial guidance for the full year 2021 in light of our third quarter outperformance and continued business momentum carrying into the fourth quarter. Importantly, with solid operating margins and strong cash generation, we are well positioned to continue to transform and execute our commerce media vision.”
Revenue, Revenue ex-TAC and Gross Profit
Revenue increased by 8% year-over-year in Q3 2021, or 8% at constant currency, to $509 million (Q3 2020: $470 million). Revenue ex-TAC in the third quarter increased 13% year-over-year, or 14% at constant currency, to $211 million (Q3 2020: $186 million). Revenue ex-TAC as a percentage of revenue, or Revenue ex-TAC margin, was 41% (Q3 2020: 40%), up 200 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 12% at constant currency) and Marketing Solutions revenue ex-TAC grew 8% (or 8% 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 14% (or 15% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform ("RMP"). Retail Media revenue ex-TAC increased 65% (or 65% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.
•In the Americas, Revenue was flat year-over-year, or flat at constant currency, to $204 million and represented 40% of total Revenue. Revenue ex-TAC increased 19% year-over-year, or 18% at constant currency, to $88 million and represented 42% of total Revenue ex-TAC.
•In EMEA, Revenue increased 12% year-over-year, or 12% at constant currency, to $188 million and represented 37% of total Revenue. Revenue ex-TAC increased 8% year-over-year, or 8% at constant currency, to $76 million and represented 36% of total Revenue ex-TAC.
•In Asia-Pacific, Revenue increased 18% year-over-year, or 21% at constant currency, to $116 million and represented 23% of total Revenue. Revenue ex-TAC increased 13% year-over-year, or 15% at constant currency, to $47 million and represented 22% of total Revenue ex-TAC.
Gross profit increased by 16% year-over-year in Q3 2021, or 16% at constant currency, to $176 million (Q3 2020: $151 million).
Net Income and Adjusted Net Income
Net income grew 358% to $24 million in Q3 2021 (Q3 2020: $5 million). Net income margin as a percentage of revenue was 5% (Q3 2020: 1%). Net income available to shareholders of Criteo S.A. was $23 million, or $0.37 per share on a diluted basis (Q3 2020: $5 million, or $0.09 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 $41 million, or $0.64 per share on a diluted basis (Q3 2020: $24 million, or $0.40 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 38% year-over-year, or 37% at constant currency, to $68 million (Q3 2020: $49 million), driven by the Revenue ex-TAC performance over the period and effective cost management balanced with growth investments. Adjusted EBITDA as a percentage of Revenue ex-TAC, or Adjusted EBITDA margin, was 32% (Q3 2020: 27%).
Operating expenses remained flat at $144 million (Q3 2020: $143 million), reflecting investments in our growth areas, including Product, Sales and R&D, 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 6% or $7 million, to $123 million (Q3 2020: $117 million).
2
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities was flat year-over-year to $51 million in Q3 2021 (Q3 2020: $51 million) and grew 10% to $155 million in the first nine months of 2021 (9 months 2020: $141 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, decreased 8% to $35 million in Q3 2021 (Q3 2020: $38 million), and grew 14% in the first nine months 2021 to $112 million (9 months 2020: $98 million), driving a Free Cash Flow conversion rate of 53% of Adjusted EBITDA in the first nine months 2021 (9 months 2020: 67%).
Cash and cash equivalents increased $9 million compared to December 31, 2020 to $497 million and $554 million including marketable securities, after spending $73 million on share repurchases in the first nine months 2021.
As of September 30, 2021, the Company had total financial liquidity in excess of $1 billion, including its cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.
Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of November 3, 2021.
Fiscal year 2021 guidance:
•We raise our Revenue ex-TAC growth outlook to approximately +10% at constant-currency.
•We raise our Adjusted EBITDA margin outlook to approximately 35% of Revenue ex-TAC.
Fourth quarter 2021 guidance:
•We expect Revenue ex-TAC between $271 million and $274 million, or year-over-year growth at constant-currency of +8% to +9%.
•We expect Adjusted EBITDA between $107 million and $110 million, or an Adjusted EBITDA margin of 39% to 40%.
The above guidance for the fourth quarter and fiscal year ending December 31, 2021 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.839, a U.S. dollar-Japanese Yen rate of 109, a U.S. dollar-British pound rate of 0.717, a U.S. dollar-Korean Won rate of 1,144 and a U.S. dollar-Brazilian real rate of 5.34.
The above guidance assumes no acquisitions are completed during the fourth quarter and fiscal year ended December 31, 2021.
Reconciliation of Revenue ex-TAC and Adjusted EBITDA 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 $100 million to $175 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 $100 million of the Company’s outstanding American Depositary Shares to an increased amount of up to $175 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.
3
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"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, Revenue 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.
Revenue ex-TAC is our revenue excluding Traffic Acquisition Costs ("TAC") generated over the applicable measurement period and Revenue ex-TAC by Region reflects our Revenue ex-TAC by our geographies. Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, and Revenue ex-TAC margin are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our business and across our geographies.
Accordingly, we believe that Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution and Revenue ex-TAC margin provide useful information to investors and the market generally in understanding and evaluating our operating results 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.
4
Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region, Revenue ex-TAC by Solution to revenue by solution, 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 Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, 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 September 30, 2021 and the year ended December 31, 2021, 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, uncertainty regarding international growth and expansion, 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 Revenue 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.
5
Conference Call Information
Criteo’s senior management team will discuss the Company’s earnings on a call that will take place today, November 3, 2021, at 8:00 AM ET, 1:00 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. 2,700 Criteo team members partner with over 21,000 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, Market Relations & Capital Markets, e.lassalle@criteo.com
Trade receivables, net of allowances of $44.7 million and $39.9 million at September 30, 2021 and December 31, 2020, respectively
439,493
474,055
Income taxes
14,276
11,092
Other taxes
75,214
69,987
Other current assets
23,185
21,405
Marketable securities - current portion
46,311
—
Total current assets
1,095,937
1,064,550
Property, plant and equipment, net
150,112
189,505
Intangible assets, net
89,288
79,744
Goodwill
330,561
325,805
Right of Use Asset - operating lease
117,273
114,012
Marketable securities - non current portion
10,000
41,809
Non-current financial assets
7,371
18,109
Deferred tax assets
13,951
19,876
Total non-current assets
718,556
788,860
Total assets
$
1,814,493
$
1,853,410
Liabilities and shareholders' equity
Current liabilities:
Trade payables
$
349,985
$
367,025
Contingencies
2,828
2,250
Income taxes
489
2,626
Financial liabilities - current portion
489
2,889
Lease liability - operating - current portion
31,309
48,388
Other taxes
53,249
58,491
Employee - related payables
72,679
85,272
Other current liabilities
38,818
33,390
Total current liabilities
549,846
600,331
Deferred tax liabilities
4,138
5,297
Defined benefit plans
6,167
6,167
Financial liabilities - non current portion
367
386
Lease liability - operating - non current portion
92,859
83,007
Other non-current liabilities
9,864
5,535
Total non-current liabilities
113,395
100,392
Total liabilities
663,241
700,723
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 66,315,019 and 66,272,106 shares authorized, issued and outstanding at September 30, 2021 and December 31, 2020, respectively.
2,162
2,161
Treasury stock, 5,544,527 and 5,632,536 shares at cost as of September 30, 2021 and December 31, 2020, respectively.
(122,390)
(85,570)
Additional paid-in capital
727,613
693,164
Accumulated other comprehensive income (loss)
(25,349)
16,028
Retained earnings
534,320
491,359
Equity - attributable to shareholders of Criteo S.A.
1,116,356
1,117,142
Non-controlling interests
34,896
35,545
Total equity
1,151,252
1,152,687
Total equity and liabilities
$
1,814,493
$
1,853,410
7
CRITEO S.A. Consolidated Statement of Income (U.S. dollars in thousands, except share and per share data, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Revenue
$
508,580
$
470,345
8
%
$
1,600,968
$
1,411,335
13
%
Cost of revenue
Traffic acquisition cost
(297,619)
(284,401)
5
%
(956,364)
(839,463)
14
%
Other cost of revenue
(34,935)
(34,608)
1
%
(107,011)
(102,328)
5
%
Gross profit
176,026
151,336
16
%
537,593
469,544
14
%
Operating expenses:
Research and development expenses
(33,345)
(30,954)
8
%
(106,957)
(99,716)
7
%
Sales and operations expenses
(75,619)
(83,659)
(10)
%
(235,724)
(244,414)
(4)
%
General and administrative expenses
(34,877)
(28,672)
22
%
(108,779)
(83,772)
30
%
Total Operating expenses
(143,841)
(143,285)
0.4
%
(451,460)
(427,902)
6
%
Income from operations
32,185
8,051
300
%
86,133
41,642
107
%
Financial expense
(154)
(491)
(69)
%
(1,391)
(1,828)
(24)
%
Income before taxes
32,031
7,560
324
%
84,742
39,814
113
%
Provision for income taxes
(7,801)
(2,267)
244
%
(22,033)
(11,943)
84
%
Net Income
$
24,230
$
5,293
358
%
$
62,709
$
27,871
125
%
Net income available to shareholders of Criteo S.A.
$
23,481
$
5,227
349
%
$
60,691
$
26,402
130
%
Net income available to non-controlling interests
$
749
$
66
1,035
%
$
2,018
$
1,469
37
%
Weighted average shares outstanding used in computing per share amounts:
Basic
60,873,594
60,080,598
60,759,613
61,059,345
Diluted
64,197,686
61,027,795
64,313,526
61,644,827
Net income allocated to shareholders per share:
Basic
$
0.39
$
0.09
333
%
$
1.00
$
0.43
133
%
Diluted
$
0.37
$
0.09
311
%
$
0.94
$
0.43
119
%
8
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
24,230
$
5,293
358
%
$
62,709
$
27,871
125
%
Non-cash and non-operating items
37,668
39,831
(5)
%
103,573
105,742
(2)
%
- Amortization and provisions
25,533
24,680
3
%
67,919
79,631
(15)
%
- Equity awards compensation expense (1)
13,289
6,803
95
%
32,174
22,465
43
%
- Net gain or (loss) on disposal of non-current assets
735
591
24
%
4,694
2,734
72
%
- Change in deferred taxes
2,263
(80)
NM
4,568
(7,697)
(159)
%
- Change in income taxes
(4,165)
6,684
(162)
%
(5,820)
7,411
(179)
%
- Other
13
1,153
(99)
%
38
1,198
(97)
%
Changes in working capital related to operating activities
(10,719)
6,032
(278)
%
(11,381)
7,663
(249)
%
- (Increase) / Decrease in trade receivables
(9,541)
(4,177)
128
%
16,654
122,529
(86)
%
- Increase / (Decrease) in trade payables
14,213
8,494
67
%
(5,693)
(95,303)
(94)
%
- (Increase) / Decrease in other current assets
(7,523)
(2,762)
172
%
(12,710)
2,288
(656)
%
- Increase / (Decrease) in other current liabilities
(4,705)
6,303
(175)
%
(5,774)
(20,145)
(71)
%
- Change in operating lease liabilities and right of use assets
(3,163)
(1,826)
73
%
(3,858)
(1,706)
126
%
CASH FROM OPERATING ACTIVITIES
51,179
51,156
—
%
154,901
141,276
10
%
Acquisition of intangible assets, property, plant and equipment
(16,767)
(16,308)
3
%
(44,383)
(57,037)
(22)
%
Change in accounts payable related to intangible assets, property, plant and equipment
810
3,410
(76)
%
1,518
13,870
(89)
%
Payment for businesses, net of cash acquired
71
(3)
NM
(9,527)
(3)
NM
Change in other non-current financial assets
6,505
(280)
NM
(13,803)
(20,629)
(33)
%
CASH USED FOR INVESTING ACTIVITIES
(9,381)
(13,181)
(29)
%
(66,195)
(63,799)
4
%
Proceeds from borrowings under line-of-credit agreement
—
3,193
(100)
%
—
157,503
(100)
%
Repayment of borrowings
10
(12)
(183)
%
(1,262)
(181)
597
%
Proceeds from exercise of stock options
12,113
117
NM
21,688
101
NM
Repurchase of treasury stocks
(37,682)
(10,554)
257
%
(72,611)
(43,655)
66
%
Change in other financial liabilities
(2,888)
(1,083)
167
%
(3,636)
(2,010)
81
%
CASH (USED FOR) FROM FINANCING ACTIVITIES
(28,447)
(8,339)
241
%
(55,821)
111,758
(150)
%
Effect of exchange rates changes on cash and cash equivalents
(5,414)
18,927
(129)
%
(23,438)
18,746
(225)
%
Net increase in cash and cash equivalents
7,937
48,563
(84)
%
9,447
207,981
(95)
%
Net cash and cash equivalents at beginning of period
489,521
578,181
(15)
%
488,011
418,763
17
%
Net cash and cash equivalents at end of period
$
497,458
$
626,744
(21)
%
$
497,458
$
626,744
(21)
%
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds
$
(9,703)
$
4,337
(324)
%
$
(23,285)
$
(12,229)
90
%
Cash paid for interest
$
(403)
$
(153)
163
%
$
(1,139)
$
(819)
39
%
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $12.8 million and $6.5 million of equity awards compensation expense for the quarter ended September 30, 2021 and 2020, respectively, and $30.8 million and $21.4 million of equity awards compensation for the nine months ended September, 30, 2021 and 2020, respectively.
9
CRITEO S.A.
Reconciliation of Cash from Operating Activities to Free Cash Flow
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
CASH FROM OPERATING ACTIVITIES
$
51,179
$
51,156
—
%
$
154,901
$
141,276
10
%
Acquisition of intangible assets, property, plant and equipment
(16,767)
(16,308)
3
%
(44,383)
(57,037)
(22)
%
Change in accounts payable related to intangible assets, property, plant and equipment
810
3,410
(76)
%
1,518
13,870
(89)
%
FREE CASH FLOW (1)
$
35,222
$
38,258
(8)
%
$
112,036
$
98,109
14
%
(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.
10
CRITEO S.A.
Reconciliation of Revenue ex-TAC to Revenue
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Region
2021
2020
YoY Change
YoY Change at Constant Currency
2021
2020
YoY Change
YoY Change at Constant Currency
Revenue
Americas
$
204,428
$
204,618
—
%
—
%
$
629,555
$
582,037
8
%
8
%
EMEA
188,354
167,800
12
%
12
%
609,753
517,535
18
%
12
%
Asia-Pacific
115,798
97,927
18
%
21
%
361,660
311,763
16
%
15
%
Total
508,580
470,345
8
%
8
%
1,600,968
1,411,335
13
%
11
%
Traffic acquisition costs (1)
Americas
(116,796)
(130,756)
(11)
%
(11)
%
(378,756)
(366,095)
3
%
4
%
EMEA
(111,869)
(97,272)
15
%
15
%
(363,264)
(295,822)
23
%
16
%
Asia-Pacific
(68,954)
(56,373)
22
%
25
%
(214,344)
(177,546)
21
%
19
%
Total
(297,619)
(284,401)
5
%
5
%
(956,364)
(839,463)
14
%
11
%
Revenue ex-TAC (1)
Americas
87,632
73,862
19
%
18
%
250,799
215,942
16
%
16
%
EMEA
76,485
70,528
8
%
8
%
246,489
221,713
11
%
6
%
Asia-Pacific
46,844
41,554
13
%
15
%
147,316
134,217
10
%
8
%
Total
$
210,961
$
185,944
13
%
14
%
$
644,604
$
571,872
13
%
10
%
Three Months Ended
Nine Months Ended
September 30,
September 30,
Solution
2021
2020
YoY Change
YoY Change at Constant Currency
2021
2020
YoY Change
YoY Change at Constant Currency
Revenue
Marketing Solutions
$
458,622
$
412,126
11
%
12
%
$
1,429,277
$
1,263,169
13
%
11
%
Retail Media (2)
49,958
58,219
(14)
%
(15)
%
171,691
148,166
16
%
14
%
Total
508,580
470,345
8
%
8
%
1,600,968
1,411,335
13
%
11
%
Traffic acquisition costs (1)
Marketing Solutions
(276,498)
(243,616)
13
%
14
%
(861,503)
(735,663)
17
%
15
%
Retail Media (2)
(21,121)
(40,785)
(48)
%
(49)
%
(94,861)
(103,800)
(9)
%
(10)
%
Total
(297,619)
(284,401)
5
%
5
%
(956,364)
(839,463)
14
%
11
%
Revenue ex-TAC (1)
Marketing Solutions
182,124
168,510
8
%
8
%
567,774
527,506
8
%
5
%
Retail Media (2)
28,837
17,434
65
%
65
%
76,830
44,366
73
%
70
%
Total
$
210,961
$
185,944
13
%
14
%
$
644,604
$
571,872
13
%
10
%
(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution because they 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 the elimination of TAC from revenue and review of these measures by region and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution provide 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 Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution 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 Revenue, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution, or similarly titled measures but define the regions, and product families differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue 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 Revenue ex-TAC and Revenue, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC by Solution to revenue by solution.
(2) Criteo operates as one operating segment. From January 1, 2021 we have disaggregated revenues between Marketing Solutions and Retail Media. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, 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 Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by this transition.
11
CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
24,230
$
5,293
358
%
$
62,709
$
27,871
125
%
Adjustments:
Financial expense
154
491
(69)
%
1,391
1,828
(24)
%
Provision for income taxes
7,801
2,267
244
%
22,033
11,943
84
%
Equity awards compensation expense
13,290
6,803
95
%
32,841
22,465
46
%
Research and development
4,858
3,333
46
%
11,572
7,771
49
%
Sales and operations
3,875
3,190
21
%
9,880
8,380
18
%
General and administrative
4,557
280
NM
11,389
6,314
80
%
Pension service costs
330
572
(42)
%
1,005
1,649
(39)
%
Research and development
170
286
(41)
%
520
824
(37)
%
Sales and operations
52
101
(49)
%
158
291
(46)
%
General and administrative
108
185
(42)
%
327
534
(39)
%
Depreciation and amortization expense
22,301
21,752
3
%
66,646
66,098
0.8
%
Cost of revenue (data center equipment)
15,520
14,712
5
%
46,508
40,581
15
%
Research and development (1)
2,557
1,721
49
%
6,517
9,029
(28)
%
Sales and operations
3,545
4,176
(15)
%
11,201
12,737
(12)
%
General and administrative
679
1,143
(41)
%
2,420
3,751
(35)
%
Acquisition-related costs
2,091
112
NM
5,138
112
NM
General and administrative
2,091
112
NM
5,138
112
NM
Restructuring related and transformation (gain )costs (2)
(1,767)
12,181
(115)
%
19,865
15,606
27
%
Research and development
(1,029)
1,985
(152)
%
5,238
3,493
50
%
Sales and operations
(106)
5,357
(102)
%
8,812
6,793
30
%
General and administrative
(632)
4,839
(113)
%
5,815
5,320
9
%
Total net adjustments
44,200
44,178
—
%
148,919
119,701
24
%
Adjusted EBITDA (3)
$
68,430
$
49,471
38
%
$
211,628
$
147,572
43
%
(1) For the Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization expense for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(2) For the Three Months and the Nine Months Ended September 2021, and September 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
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
(Gain) from forfeitures of share-based compensation awards
—
—
(666)
—
Facilities related (gain) costs
(1,645)
7,023
14,692
8,817
Payroll related (gain) costs
(334)
2,858
4,637
4,489
Consulting costs related to transformation
212
2,300
1,202
2,300
Total restructuring related and transformation (gain) costs
$
(1,767)
$
12,181
$
19,865
$
15,606
For the three months ended and the nine months ended September 30, 2021 and September 30, 2020, respectively, the cash outflows related to restructuring related and transformation costs were $4.4 million and $ 6.2 million, and $20.9 million and $13.0 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to real-estate facilities and other consulting fees.
(3) 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.
12
CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Research and Development expenses
$
(33,345)
$
(30,954)
8
%
$
(106,957)
$
(99,716)
7
%
Equity awards compensation expense
4,858
3,333
46
%
11,572
7,771
49
%
Depreciation and Amortization expense
2,557
1,721
49
%
6,517
9,029
(28)
%
Pension service costs
170
286
(41)
%
520
824
(37)
%
Restructuring related and transformation (gain) costs
(1,029)
1,985
(152)
%
5,238
3,493
50
%
Non GAAP - Research and Development expenses
(26,789)
(23,629)
13
%
(83,110)
(78,599)
6
%
Sales and Operations expenses
(75,619)
(83,659)
(10)
%
(235,724)
(244,414)
(4)
%
Equity awards compensation expense
3,875
3,190
21
%
9,880
8,380
18
%
Depreciation and Amortization expense
3,545
4,176
(15)
%
11,201
12,737
(12)
%
Pension service costs
52
101
(49)
%
158
291
(46)
%
Restructuring related and transformation (gain) costs
(106)
5,357
(102)
%
8,812
6,793
30
%
Non GAAP - Sales and Operations expenses
(68,253)
(70,835)
(4)
%
(205,673)
(216,213)
(5)
%
General and Administrative expenses
(34,877)
(28,672)
22
%
(108,779)
(83,772)
30
%
Equity awards compensation expense
4,557
280
NM
11,389
6,314
80
%
Depreciation and Amortization expense
679
1,143
(41)
%
2,420
3,751
(35)
%
Pension service costs
108
185
(42)
%
327
534
(39)
%
Acquisition-related costs
2,091
112
NM
5,138
112
NM
Restructuring related and transformation (gain) costs
(632)
4,839
(113)
%
5,815
5,320
9
%
Non GAAP - General and Administrative expenses
(28,074)
(22,113)
27
%
(83,690)
(67,741)
24
%
Total Operating expenses
(143,841)
(143,285)
0.4
%
(451,460)
(427,902)
6
%
Equity awards compensation expense
13,290
6,803
95
%
32,841
22,465
46
%
Depreciation and Amortization expense
6,781
7,040
(4)
%
20,138
25,517
(21)
%
Pension service costs
330
572
(42)
%
1,005
1,649
(39)
%
Acquisition-related costs
2,091
112
NM
5,138
112
NM
Restructuring related and transformation (gain) costs
(1,767)
12,181
(115)
%
19,865
15,606
27
%
Total Non GAAP Operating expenses (1)
$
(123,116)
$
(116,577)
6
%
$
(372,473)
$
(362,553)
3
%
(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.
13
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Equity awards compensation expense
Research and development
$
4,858
$
3,333
46
%
$
11,572
$
7,771
49
%
Sales and operations
3,875
3,190
21
%
9,880
8,380
18
%
General and administrative
4,557
280
NM
11,389
6,314
80
%
Total equity awards compensation expense
13,290
6,803
95
%
32,841
22,465
46
%
Pension service costs
Research and development
170
286
(41)
%
520
824
(37)
%
Sales and operations
52
101
(49)
%
158
291
(46)
%
General and administrative
108
185
(42)
%
327
534
(39)
%
Total pension service costs
330
572
(42)
%
1,005
1,649
(39)
%
Depreciation and amortization expense
Cost of revenue (data center equipment)
15,520
14,712
5
%
46,508
40,581
15
%
Research and development
2,557
1,721
49
%
6,517
9,029
(28)
%
Sales and operations
3,545
4,176
(15)
%
11,201
12,737
(12)
%
General and administrative
679
1,143
(41)
%
2,420
3,751
(35)
%
Total depreciation and amortization expense
22,301
21,752
3
%
66,646
66,098
0.8
%
Acquisition-related costs
General and administrative
2,091
112
NM
5,138
112
NM
Total acquisition-related costs
2,091
112
NM
5,138
112
NM
Restructuring related and transformation (gain) costs
Research and development
(1,029)
1,985
(152)
%
5,238
3,493
50
%
Sales and operations
(106)
5,357
(102)
%
8,812
6,793
30
%
General and administrative
(632)
4,839
(113)
%
5,815
5,320
9
%
Total restructuring related and transformation (gain) costs
$
(1,767)
$
12,181
(115)
%
$
19,865
$
15,606
27
%
14
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
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Net income
$
24,230
$
5,293
358
%
$
62,709
$
27,871
125
%
Adjustments:
Equity awards compensation expense
13,290
6,803
95
%
32,841
22,465
46
%
Amortization of acquisition-related intangible assets (1)
3,303
2,899
14
%
9,174
12,594
(27)
%
Acquisition-related costs
2,091
112
NM
5,138
112
NM
Restructuring related and transformation (gain) costs
(1,767)
12,181
(115)
%
19,865
15,606
27
%
Tax impact of the above adjustments
(114)
(2,986)
(96)
%
(4,686)
(5,611)
(16)
%
Total net adjustments
16,803
19,009
(12)
%
62,332
45,166
38
%
Adjusted net income (2)
$
41,033
$
24,302
69
%
$
125,041
$
73,037
71
%
Weighted average shares outstanding
- Basic
60,873,594
60,080,598
60,759,613
61,059,345
- Diluted
64,197,686
61,027,795
64,313,526
61,644,827
Adjusted net income per share
- Basic
$
0.67
$
0.40
68
%
$
2.06
$
1.20
72
%
- Diluted
$
0.64
$
0.40
60
%
$
1.94
$
1.18
64
%
(1) For the Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization expense for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(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.
15
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
YoY Change
2021
2020
YoY Change
Revenue as reported
$
508,580
$
470,345
8
%
$
1,600,968
$
1,411,335
13
%
Conversion impact U.S. dollar/other currencies
1,050
—
(34,266)
—
Revenue at constant currency(1)
509,630
470,345
8
%
1,566,702
1,411,335
11
%
Traffic acquisition costs as reported
(297,619)
(284,401)
5
%
(956,364)
(839,463)
14
%
Conversion impact U.S. dollar/other currencies
(771)
—
20,829
—
Traffic Acquisition Costs at constant currency(1)
(298,390)
(284,401)
5
%
(935,535)
(839,463)
11
%
Revenue ex-TAC as reported(2)
210,961
185,944
13
%
644,604
571,872
13
%
Conversion impact U.S. dollar/other currencies
279
—
(13,436)
—
Revenue ex-TAC at constant currency(2)
211,240
185,944
14
%
631,168
571,872
10
%
Revenue ex-TAC(2)/Revenue as reported
41
%
40
%
40
%
41
%
Other cost of revenue as reported
(34,935)
(34,608)
1
%
(107,011)
(102,328)
5
%
Conversion impact U.S. dollar/other currencies
(334)
—
547
—
Other cost of revenue at constant currency(1)
(35,269)
(34,608)
2
%
(106,464)
(102,328)
4
%
Adjusted EBITDA(3)
68,430
49,471
38
%
211,628
147,572
43
%
Conversion impact U.S. dollar/other currencies
(674)
—
(9,698)
—
Adjusted EBITDA(3) at constant currency(1)
$
67,756
$
49,471
37
%
$
201,930
$
147,572
37
%
Adjusted EBITDA(3)/Revenue ex-TAC(2)
32
%
27
%
33
%
26
%
(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) Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Revenue ex-TAC to Revenue" for a reconciliation of Revenue Ex-TAC to revenue.
(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.
16
CRITEO S.A.
Information on Share Count
(unaudited)
Nine 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 September 30, before Treasury stocks
66,315,019
66,083,172
Treasury stock as of September 30,
(5,544,527)
(5,989,258)
Shares outstanding as of September 30, after Treasury stocks
60,770,492
60,093,914
Total dilutive effect of share options, warrants, employee warrants
6,861,312
7,581,847
Fully diluted shares as at September 30,
67,631,804
67,675,761
17
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
YoY Change
QoQ Change
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Clients
6%
2%
21,747
21,332
20,626
21,460
20,565
20,359
20,360
20,247
19,971
Revenue
8%
(8)%
508,580
551,311
541,077
661,282
470,345
437,614
503,376
652,640
522,606
Americas
—%
(8)%
204,428
221,227
203,900
312,817
204,618
185,674
191,745
306,250
213,937
EMEA
12%
(10)%
188,354
209,303
212,096
232,137
167,800
159,621
190,114
216,639
185,556
APAC
18%
(4)%
115,798
120,781
125,081
116,328
97,927
92,319
121,517
129,751
123,113
Revenue
8%
(8)%
508,580
551,311
541,077
661,282
470,345
437,614
503,376
N.A
N.A
Marketing Solutions
11%
(6)%
458,622
487,465
483,190
543,262
412,126
381,270
469,773
N.A
N.A
Retail Media (2)
(14)%
(22)%
49,958
63,846
57,887
118,020
58,219
56,344
33,603
N.A
N.A
TAC
5%
(10)%
(297,619)
(331,078)
(327,667)
(408,108)
(284,401)
(257,698)
(297,364)
(386,388)
(301,901)
Americas
(11)%
(13)%
(116,796)
(134,332)
(127,628)
(203,341)
(130,756)
(115,317)
(120,022)
(189,092)
(129,047)
EMEA
15%
(10)%
(111,869)
(124,747)
(126,648)
(137,384)
(97,272)
(90,153)
(108,397)
(124,939)
(103,899)
APAC
22%
(4)%
(68,954)
(71,999)
(73,391)
(67,383)
(56,373)
(52,228)
(68,945)
(72,357)
(68,955)
TAC
5%
(10)%
(297,619)
(331,078)
(327,667)
(408,108)
(284,401)
(257,698)
(297,364)
N.A
N.A
Marketing Solutions
13%
(6)%
(276,498)
(294,132)
(290,873)
(324,017)
(243,616)
(218,990)
(273,057)
N.A
N.A
Retail Media (2)
(48)%
(43)%
(21,121)
(36,946)
(36,794)
(84,091)
(40,785)
(38,708)
(24,307)
N.A
N.A
Revenue ex-TAC (1)
13%
(4)%
210,961
220,233
213,410
253,174
185,944
179,916
206,012
266,252
220,705
Americas
19%
1%
87,632
86,895
76,272
109,476
73,862
70,357
71,723
117,158
84,890
EMEA
8%
(10)%
76,485
84,556
85,448
94,753
70,528
69,468
81,717
91,700
81,657
APAC
13%
(4)%
46,844
48,782
51,690
48,945
41,554
40,091
52,572
57,394
54,158
Revenue ex-TAC (1)
13%
(4)%
210,961
220,233
213,410
253,174
185,944
179,916
206,012
N.A
N.A
Marketing Solutions
8%
(6)%
182,124
193,333
192,317
219,245
168,510
162,280
196,716
N.A
N.A
Retail Media (2)
65%
7%
28,837
26,900
21,093
33,929
17,434
17,636
9,296
N.A
N.A
Cash flow from operating activities
—%
94%
51,179
26,360
77,362
44,080
51,156
33,377
56,743
59,359
43,289
Capital expenditures
24%
22%
15,957
13,128
13,780
22,302
12,898
18,532
11,737
17,520
23,944
Capital expenditures/Revenue
N.A
N.A
3%
2%
3%
3%
3%
4%
2%
3%
5%
Net cash position
(21)%
2%
497,458
489,521
520,060
488,011
626,744
578,181
436,506
418,763
409,178
Headcount
1%
3%
2,658
2,572
2,532
2,594
2,636
2,685
2,701
2,755
2,794
Days Sales Outstanding (days - end of month)
N.A
N.A
70
66
64
56
62
61
62
52
57
(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution because they 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 the elimination of TAC from revenue and review of these measures by region and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution provide 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 Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution 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 Revenue, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution, or similarly titled measures but define the regions, and product families differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue 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 Revenue ex-TAC and Revenue, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC by Solution to revenue by solution.
(2) Criteo operates as one operating segment. From January 1, 2021 we have disaggregated revenues between Marketing Solutions and Retail Media. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, 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 Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by this transition.