CRITEO REPORTS FOURTH QUARTER AND FISCAL YEAR 2022 RESULTS
2022 Activated Media Spend Up 25% to 3.3 Billion
2022 Operating Cash Flow Up 16% to $256 Million and Free Cash Flow Up 19% to $200 Million
Deployed $136 Million of Capital to Share Repurchases in 2022
Targeting High-Single-Digit to Low-Double-Digit Growth in 2023
NEW YORK - February 8, 2023 - Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.
Fourth Quarter and Fiscal Year 2022 Financial Highlights:
The following table summarizes our consolidated financial results for the three and twelve months ended December 31, 2022:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
YoY Change
2022
2021
YoY Change
(in millions, except EPS data)
GAAP Results
Revenue
$
564
$
653
(14)
%
$
2,017
$
2,254
(11)
%
Gross Profit
$
247
$
244
1
%
$
795
$
782
2
%
Net Income
$
16
$
75
(79)
%
$
11
$
138
(92)
%
Gross Profit margin
44
%
37
%
7ppt
39
%
35
%
4ppt
Diluted EPS
$
0.25
$
1.15
(78)
%
$
0.14
$
2.09
(93)
%
Cash from operating activities
$
125
$
66
90
%
$
256
$
221
16
%
Cash and cash equivalents
$
348
$
516
(32)
%
$
348
$
516
(32)
%
Non-GAAP Results1
Contribution ex-TAC
$
283
$
276
3
%
$
928
$
921
1
%
Contribution ex-TAC margin
50
%
42
%
8ppt
46
%
41
%
5ppt
Adjusted EBITDA
$
104
$
111
(6)
%
$
267
$
322
(17)
%
Adjusted diluted EPS
$
0.84
$
1.44
(42)
%
$
2.76
$
3.38
(18)
%
Free Cash Flow (FCF)
$
111
$
56
99
%
$
200
$
168
19
%
FCF / Adjusted EBITDA
106
%
50
%
56ppt
75
%
52
%
23ppt
“In 2022, we made great strides in the transformation of Criteo and the acceleration of our strategy. As a clear leader in Commerce and Retail Media, we are uniquely positioned to capitalize on the largest market opportunity in digital advertising,” said Megan Clarken, Chief Executive Officer of Criteo. “In 2023, we are focused on the execution of our plan that delivers growth for our clients and drives shareholder value.”
Operating Highlights
•We renewed and extended our global partnership with Ascential and its world-class e-commerce businesses; we signed a three-year U.S. partnership with a major holding agency to accelerate the demand for both Retail Media and Marketing Solutions.
•Retail Media Contribution ex-TAC grew 23% year-over-year at constant currency in Q4 and 33% in 20222.
•Same-retailer Contribution ex-TAC3 retention for Retail Media was 122% and 130% in Q4 and 2022, respectively.
•We expanded our platform adoption to 175 retailers and 1,800 brands in Retail Media, including new retailer wins in the grocery, agricultural retail, and health and beauty sectors.
•Marketing Solutions Contribution ex-TAC was down 7% year-over-year at constant currency2 in Q4 and flat in 2022.
•Criteo's activated media spend4, including Iponweb, was $3.3 billion in the last 12 months and $1.2 billion in Q4, growing 39% at constant currency2.
•We deployed $136 million of capital for share repurchases in 2022, and we extended our share repurchase authorization from $280 million to $480 million in December 2022.
1
Financial Summary
Revenue for Q4 2022 was $564 million, gross profit was $247 million and Contribution ex-TAC was $283 million. Net income for Q4 was $16 million, or $0.25 per share on a diluted basis. Adjusted EBITDA for Q4 was $104 million, resulting in an adjusted diluted EPS of $0.84. As reported, revenue for Q4 decreased by 14%, gross profit increased 1% and Contribution ex-TAC increased by 3%. At constant currency, revenue for Q4 decreased by 8% and Contribution ex-TAC increased by 10%.
Revenue for the fiscal year 2022 was $2.0 billion, gross profit was $795 million and Contribution ex-TAC was $928 million. As reported, revenue for 2022 decreased by 11%, gross profit increased 2% and Contribution ex-TAC increased by 1%. At constant currency, revenue for 2022 decreased by 4% and Contribution ex-TAC increased by 10%. Net income for fiscal 2022 was $11 million, or $0.14 per share on a diluted basis. Fiscal year 2022 Adjusted EBITDA was $267 million, resulting in an adjusted diluted EPS of $2.76. Cash flow from operating activities was $125 million in Q4 and $256 million in 2022. Free Cash Flow was $111 million in Q4 and up 19% to a record $200 million in 2022. As of December 31, 2022, we had $373 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, “Despite the challenging macro-economic environment, we delivered 10% growth in Contribution ex-TAC at constant currency, an adjusted EBITDA margin of 29% and record Free Cash Flow conversion of 75% of adjusted EBITDA in 2022. In 2023, we are capitalizing on our momentum in Retail Media and accelerating cost efficiency initiatives.”
Fourth Quarter 2022 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 14% year-over-year in Q4 2022, or 8% at constant currency, to $564 million (Q4 2021: $653 million). Gross profit increased by 1% year-over-year in Q4 2022 to $247 million (Q4 2021: $244 million). Gross profit as a percentage of revenue, or gross profit margin, was 44% (Q4 2021: 37%). Contribution ex-TAC in the fourth quarter increased 3% year-over-year, or increased 10% at constant currency, to $283 million (Q4 2021: $276 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 50% (Q4 2021: 42%), up 800 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Company's platform.
•Marketing Solutions revenue decreased 19%, or decreased 12% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 16%, or decreased 7% at constant currency, driven by a slowdown in Retail, anticipated signal loss impacts and the suspension of the Company's operations in Russia, partially offset by strength in Travel.
•Retail Media revenue decreased 21%, or 18% at constant currency, reflecting the impact related to the ongoing client migration to the Company's platform. Retail Media Contribution ex-TAC increased 19%, or 23% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
•Iponweb revenue reflects three months of contribution following the closing of the acquisition on August 1, 2022.
Net Income and Adjusted Net Income
Net income was $16 million in Q4 2022 (Q4 2021: $75 million). Net income margin as a percentage of revenue was 3% (Q4 2021: 11%). Net income available to shareholders of Criteo was $15 million, or $0.25 per share on a diluted basis (Q4 2021: $74 million, or $1.15 per share on a diluted basis).
Adjusted net income, a non-GAAP financial measure, was $52 million, or $0.84 per share on a diluted basis (Q4 2021: $92 million, or $1.44 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $104 million, above the Company's guidance, representing a decrease of 6% year-over-year (Q4 2021: $111 million). This was driven by planned growth investments, partially offset by higher Contribution ex-TAC over the period. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 37% (Q4 2021: 40%).
Operating expenses increased 11% year-over-year to $198 million (Q4 2021: $179 million), mostly driven by higher headcount-related expense from planned investments, equity awards compensation expense, and operating costs from our acquisition of Iponweb. Non-GAAP operating expenses increased by 2% or $3 million, to $154 million (Q4 2021: $151 million).
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 prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar.
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 are 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, the media spend activated on behalf of our Retail Media clients, and the media spend activated by Iponweb.
2
Fiscal Year 2022 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 11% year-over-year, or 4% at constant currency, to $2,017 million (FY 2021: $2,254 million). Gross profit increased by 2% year-over-year to $795 million (FY 2021: $782 million). Gross profit as a percentage of revenue, or gross profit margin, was 39% (FY 2021: 35%). Contribution ex-TAC increased 1% year-over-year, or increased 10% at constant currency, to $928 million (FY 2021: $921 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 46% (FY 2021: 41%), up 500 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Company's platform.
•Marketing Solutions revenue decreased 12%, or decreased 5% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 10%, or was flat at constant currency, driven by solid growth for Commerce Audiences offset by lower Retargeting primarily due to anticipated signal loss impacts and the suspension of the Company's operations in Russia.
•Retail Media revenue decreased 18%, or 16% at constant currency, reflecting the impact related to the ongoing client migration to the Company's platform. Retail Media Contribution ex-TAC increased 29%, or 33% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
•Iponweb revenue reflects five months of contribution following the closing of the acquisition on August 1, 2022.
Net Income and Adjusted Net Income
Net income was $11 million (FY 2021: $138 million). Net income available to shareholders of Criteo was $9 million, or $0.14 per share on a diluted basis (FY 2021: $134 million, or $2.09 per share on a diluted basis).
Adjusted net income was $173 million, or $2.76 per share on a diluted basis (FY 2021: $217 million, or $3.38 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $267 million (FY 2021: $322 million), reflecting planned growth investments, partially offset by higher Contribution ex-TAC and cost management. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 29% (FY 2021: 35%).
Operating expenses increased 22% year-over-year to $771 million (FY 2021: $630 million), mostly driven by higher headcount-related expense from planned investments, equity awards compensation expense, and inclusion of the operating costs from our acquisition of Iponweb. Non-GAAP operating expenses increased by 11% or $56 million, to $580 million (FY 2021: $524 million).
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased 90% year-over-year to $125 million in Q4 2022 (Q4 2021: $66 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 to $111 million in Q4 2022 (Q4 2021: $56 million).
Cash and cash equivalents, and marketable securities, decreased $198 million compared to December 31, 2021 to $373 million, after spending approximately $135 million for the acquisition of Iponweb (net of cash acquired), which closed on August 1, 2022, and approximately $136 million on share repurchases in 2022.
As of December 31, 2022, the Company had total financial liquidity of approximately $835 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.
3
2023 Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of February 8, 2023.
Fiscal year 2023 guidance:
•High single-digit to low double-digit growth in Contribution ex-TAC at constant currency, including the contribution from our Iponweb acquisition
•Adjusted EBITDA margin of approximately 28% of Contribution ex-TAC
First quarter 2023 guidance:
•Contribution ex-TAC between $210 million and $216 million, or year-over-year growth at constant currency of +5% to +7%, including the contribution from our Iponweb acquisition
•Adjusted EBITDA between $30 million and $32 million
The above guidance for the first quarter and fiscal year ending December 31, 2023 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.952, a U.S. dollar-Japanese Yen rate of 135, a U.S. dollar-British pound rate of 0.838, a U.S. dollar-Korean Won rate of 1,290 and a U.S. dollar-Brazilian real rate of 5.25.
The above guidance assumes that no additional acquisitions are completed during the first quarter of 2023 or the fiscal year ended December 31, 2023.
Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures are 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.
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 costs 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, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter. 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 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 assets, certain restructuring, integration and transformation costs, certain acquisition costs, a loss contingency related to a regulatory matter, 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 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 equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition and integration costs, and a loss contingency related to a regulatory matter. 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, 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, Contribution ex-TAC margin, 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, 2023 and the year ending December 31, 2023, 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 effects 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 integration 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 the invasion of Ukraine by Russia (including resulting sanctions), 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 25, 2022, 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, and macro-economic conditions including inflation and rising interest rates in the U.S. could have, an impact on Criteo's business, financial condition, cash flow and results of operations. There are 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 8, 2023, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website at https://criteo.investorroom.com/ and will subsequently be available for replay.
•United States: +1 855 209 8212
•International: +1 412 317 0788
•France 080-510-2319
Please ask to be joined into the "Criteo" call.
About Criteo
Criteo (NASDAQ: CRTO) is the global commerce media company that enables marketers and media owners to drive better commerce outcomes. Its industry leading Commerce Media Platform connects 22,000 marketers and thousands of media owners to deliver richer consumer experiences from product discovery to purchase. By powering trusted and impactful advertising, Criteo supports an open internet that encourages discovery, innovation, and choice. For more information, please visit www.criteo.com.
Contacts
Criteo Investor Relations
Melanie Dambre, m.dambre@criteo.com
Criteo Public Relations
Jessica Meyers, j.meyers@criteo.com
Financial information to follow
7
CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
348,200
$
515,527
Trade receivables, net of allowances of $47.8 million and $45.4 million at December 31, 2022 and December 31, 2021, respectively
708,949
581,988
Income taxes
23,609
8,784
Other taxes
78,274
73,388
Other current assets
51,866
34,182
Restricted cash - current
25,000
—
Marketable securities - current portion
25,098
50,299
Total current assets
1,260,996
1,264,168
Property, plant and equipment, net
131,207
139,961
Intangible assets, net
175,983
82,627
Goodwill
515,140
329,699
Right of Use Asset - operating lease
102,176
120,257
Restricted cash - non current
75,000
—
Marketable securities - non current portion
—
5,000
Non-current financial assets
5,928
6,436
Other non-current assets
50,818
—
Deferred tax assets
31,646
35,443
Total non-current assets
1,087,898
719,423
Total assets
$
2,348,894
$
1,983,591
Liabilities and shareholders' equity
Current liabilities:
Trade payables
$
742,918
$
430,245
Contingencies - current portion
65,759
3,059
Income taxes
13,037
6,641
Financial liabilities - current portion
219
642
Lease liability - operating - current portion
31,003
34,066
Other taxes
58,031
60,236
Employee - related payables
85,569
98,136
Other current liabilities
83,457
39,523
Total current liabilities
1,079,993
672,548
Deferred tax liabilities
3,463
3,053
Defined benefit plans
3,708
5,531
Financial liabilities - non current portion
74
360
Lease liability - operating - non current portion
77,536
93,893
Contingencies - non current portion
33,788
—
Other non-current liabilities
69,226
9,886
Total non-current liabilities
187,795
112,723
Total liabilities
1,267,788
785,271
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 63,248,728 and 65,883,347 shares authorized, issued and outstanding at December 31, 2022 and December 31, 2021, respectively.
2,079
2,149
Treasury stock, 5,985,104 and 5,207,873 shares at cost as of December 31, 2022 and December 31, 2021, respectively.
(174,293)
(131,560)
Additional paid-in capital
734,492
731,248
Accumulated other comprehensive income (loss)
(91,890)
(40,294)
Retained earnings
577,653
601,588
Equity - attributable to shareholders of Criteo S.A.
1,048,041
1,163,131
Non-controlling interests
33,065
35,189
Total equity
1,081,106
1,198,320
Total equity and liabilities
$
2,348,894
$
1,983,591
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,
2022
2021
YoY Change
2022
2021
YoY Change
Revenue
$
564,425
$
653,267
(14)
%
$
2,017,003
$
2,254,235
(11)
%
Cost of revenue
Traffic acquisition cost
(281,021)
(377,076)
(25)
%
(1,088,779)
(1,333,440)
(18)
%
Other cost of revenue
(36,810)
(31,840)
16
%
(133,024)
(138,851)
(4)
%
Gross profit
246,594
244,351
1
%
795,200
781,944
2
%
Operating expenses:
Research and development expenses
(69,348)
(44,860)
55
%
(187,596)
(151,817)
24
%
Sales and operations expenses
(99,633)
(89,892)
11
%
(377,996)
(325,616)
16
%
General and administrative expenses
(28,969)
(43,855)
(34)
%
(205,330)
(152,634)
35
%
Total Operating expenses
(197,950)
(178,607)
11
%
(770,922)
(630,067)
22
%
Income from operations
48,644
65,744
(26)
%
24,278
151,877
(84)
%
Financial and Other income (expense)
(6,144)
3,330
NM
17,783
1,939
NM
Income before taxes
42,500
69,074
(38)
%
42,061
153,816
(73)
%
Provision for income taxes
(26,451)
5,864
NM
(31,186)
(16,169)
93
%
Net Income
$
16,049
$
74,938
(79)
%
$
10,875
$
137,647
(92)
%
Net income available to shareholders of Criteo S.A.
$
15,400
$
73,765
(79)
%
$
8,952
$
134,456
(93)
%
Net income available to non-controlling interests
$
649
$
1,173
(45)
%
$
1,923
$
3,191
(40)
%
Weighted average shares outstanding used in computing per share amounts:
Basic
58,732,771
60,590,826
60,004,707
60,717,446
Diluted
61,898,460
63,985,850
62,760,197
64,231,637
Net income allocated to shareholders per share:
Basic
$
0.26
$
1.22
(79)
%
$
0.15
$
2.21
(93)
%
Diluted
$
0.25
$
1.15
(78)
%
$
0.14
$
2.09
(93)
%
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,
2022
2021
YoY Change
2022
2021
YoY Change
Net income
$
16,049
$
74,938
(79)
%
$
10,875
$
137,647
(92)
%
Non-cash and non-operating items
62,986
21,306
NM
185,029
124,879
48
%
- Amortization and provisions
15,611
23,015
(32)
%
150,261
90,934
65
%
- Equity awards compensation expense (1)
22,440
12,354
82
%
65,034
44,528
46
%
- Net gain or (loss) on disposal of non-current assets
167
(2,729)
NM
(194)
1,965
NM
- Interest accrued and non-cash financial income and expenses
1,985
—
NM
(259)
—
NM
- Change in uncertain tax positions
412
—
NM
412
—
NM
- Net change in fair value of Earn-out
771
—
NM
771
—
NM
- Change in deferred taxes
19,653
(23,210)
NM
3,602
(18,642)
NM
- Change in income taxes
1,947
11,863
(84)
%
(10,952)
6,043
NM
- Other
—
13
NM
(23,646)
51
NM
Changes in working capital related to operating activities
46,420
(30,232)
NM
60,081
(41,613)
NM
- (Increase) / Decrease in trade receivables
(117,309)
(151,604)
(23)
%
(41,910)
(134,950)
(69)
%
- Increase / (Decrease) in trade payables
153,318
88,384
73
%
133,792
82,691
62
%
- (Increase) / Decrease in other current assets
8,537
(7,032)
NM
(14,687)
(19,742)
(26)
%
- Increase / (Decrease) in other current liabilities
2,316
38,807
(94)
%
(17,862)
33,033
NM
- Change in operating lease liabilities and right of use assets
(442)
1,213
NM
748
(2,645)
NM
CASH FROM OPERATING ACTIVITIES
125,455
66,012
90
%
255,985
220,913
16
%
Acquisition of intangible assets, property, plant and equipment
(35,841)
(10,600)
NM
(84,796)
(54,983)
54
%
Change in accounts payable related to intangible assets, property, plant and equipment
21,319
455
NM
28,951
1,973
NM
Payment for businesses, net of cash acquired
(2,574)
(892)
NM
(138,027)
(10,419)
NM
Change in other non-current financial assets
(15,299)
865
NM
27,753
(12,938)
NM
CASH USED FOR INVESTING ACTIVITIES
(32,395)
(10,172)
NM
(166,119)
(76,367)
NM
Proceeds from borrowings under line-of-credit agreement
—
—
NM
78,513
—
NM
Repayment of borrowings
—
13
NM
(78,513)
(1,249)
NM
Proceeds from exercise of stock options
411
3,508
(88)
%
1,028
25,196
(96)
%
Repurchase of treasury stocks
(76,523)
(27,416)
NM
(135,685)
(100,027)
36
%
Change in other financial liabilities
(372)
(401)
(7)
%
(265)
(4,037)
(93)
%
Other
(364)
—
NM
21,878
—
NM
CASH USED FOR FINANCING ACTIVITIES
(76,848)
(24,296)
NM
(113,044)
(80,117)
41
%
Effect of exchange rates changes on cash and cash equivalents
24,665
(13,475)
NM
(44,149)
(36,913)
20
%
Net increase in cash and cash equivalents
40,877
18,069
NM
(67,327)
27,516
NM
Net cash and cash equivalents at beginning of period
407,323
497,458
(18)
%
515,527
488,011
6
%
Net cash and cash equivalents and restricted cash at end of period
$
448,200
$
515,527
(13)
%
$
448,200
$
515,527
(13)
%
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds
$
(4,439)
$
(5,482)
(19)
%
$
(38,124)
$
(28,767)
33
%
Cash paid for interest
$
(339)
$
(347)
(2)
%
$
(1,298)
$
(1,486)
(13)
%
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $22.1 million and $11.9 million of equity awards
compensation expense for the quarters ended December 31, 2022 and 2021, respectively, and $63.2 million and $42.7 million of equity awards compensation for the twelve months ended December 31, 2022 and 2021, 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,
2022
2021
YoY Change
2022
2021
YoY Change
CASH FROM OPERATING ACTIVITIES
$
125,455
$
66,012
90
%
$
255,985
$
220,913
16
%
Acquisition of intangible assets, property, plant and equipment
(35,841)
(10,600)
NM
(84,796)
(54,983)
54
%
Change in accounts payable related to intangible assets, property, plant and equipment
21,319
455
NM
28,951
1,973
NM
FREE CASH FLOW (1)
$
110,933
$
55,867
99
%
$
200,140
$
167,903
19
%
(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,
2022
2021
YoY Change
2022
2021
YoY Change
Gross Profit
246,594
244,351
1
%
795,200
781,944
2
%
Other Cost of Revenue
36,810
31,840
16
%
133,024
138,851
(4)
%
Contribution ex-TAC (1)
$
283,404
$
276,191
3
%
$
928,224
$
920,795
1
%
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
12
CRITEO S.A.
Segment Information
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
Segment
2022
2021
YoY Change
YoY Change at Constant Currency (3)
2022
2021
YoY Change
YoY Change at Constant Currency (3)
Revenue
Marketing Solutions
$
470,918
$
577,962
(19)
%
(12)
%
$
1,762,517
$
2,007,239
(12)
%
(5.1)
%
Retail Media (2)
59,801
75,305
(21)
%
(18)
%
202,317
246,996
(18)
%
(16)
%
Iponweb
33,706
—
N/A
N/A
52,169
—
N/A
N/A
Total
564,425
653,267
(14)
%
(8)
%
2,017,003
2,254,235
(11)
%
(4)
%
Contribution ex-TAC
Marketing Solutions
192,616
228,378
(16)
%
(7)
%
714,695
796,152
(10)
%
(0.3)
%
Retail Media (2)
57,082
47,813
19
%
23
%
161,360
124,643
29
%
33
%
Iponweb
33,706
—
N/A
N/A
52,169
—
N/A
N/A
Total (1)
$
283,404
$
276,191
3
%
10
%
$
928,224
$
920,795
1
%
10
%
(1) Refer to the Non-GAAP Financial Measures section of this filing for a definition of the Non-GAAP metric.
(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo’s Commerce Media Platform and is reported under the retail media segment. It 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 were accounted for on a gross basis. Most clients using Criteo’s legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition.
(3) Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar.
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,
2022
2021
YoY Change
2022
2021
YoY Change
Net income
$
16,049
$
74,938
(79)
%
$
10,875
$
137,647
(92)
%
Adjustments:
Financial (Income) expense
6,427
(347)
NM
(17,053)
1,044
NM
Provision for income taxes
26,451
(5,864)
NM
31,186
16,169
93
%
Equity awards compensation expense
22,441
12,114
85
%
65,035
44,955
45
%
Pension service costs
970
319
NM
1,756
1,324
33
%
Depreciation and amortization expense
27,450
21,756
26
%
89,018
88,402
1
%
Acquisition-related costs
1,093
6,118
(82)
%
12,584
11,256
12
%
Loss contingency on regulatory matters
(699)
—
NM
63,221
—
NM
Restructuring, integration and transformation costs (1)
4,123
1,833
NM
10,677
21,698
(51)
%
Total net adjustments
88,256
35,929
NM
256,424
184,848
39
%
Adjusted EBITDA (2)
$
104,305
$
110,867
(6)
%
$
267,299
$
322,495
(17)
%
(1) For the three and twelve months ended December 31, 2022 and December 31, 2021, respectively, the Company recognized restructuring, integration 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,
2022
2021
2022
2021
(Gain) from forfeitures of share-based compensation awards
—
239
—
(427)
Facilities related costs
450
1,328
1,452
16,020
Payroll related (gain) costs
2,687
(157)
7,373
4,480
Integration and transformation costs
986
423
1,852
1,625
Total restructuring, integration and transformation costs
$
4,123
$
1,833
$
10,677
$
21,698
(2) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
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,
2022
2021
YoY Change
2022
2021
YoY Change
Total Operating expenses
(197,950)
(178,607)
10.8
%
(770,922)
(630,067)
22.4
%
Equity awards compensation expense
22,441
12,114
85
%
65,035
44,955
45
%
Depreciation and Amortization expense
15,797
7,145
NM
38,136
27,283
40
%
Pension service costs
970
319
NM
1,756
1,324
33
%
Acquisition-related costs
1,093
6,118
(82)
%
12,584
11,256
12
%
Loss contingency on regulatory matters
(699)
—
NM
63,221
—
NM
Restructuring, integration and transformation costs
4,123
1,833
NM
10,677
21,698
(51)
%
Total Non GAAP Operating expenses (1)
$
(154,225)
$
(151,078)
2
%
$
(579,513)
$
(523,551)
11
%
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
15
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,
2022
2021
YoY Change
2022
2021
YoY Change
Net income
$
16,049
$
74,938
(79)
%
$
10,875
$
137,647
(92)
%
Adjustments:
Equity awards compensation expense
22,441
12,114
85
%
65,035
44,955
45
%
Amortization of acquisition-related intangible assets
12,423
3,755
NM
23,276
12,929
80
%
Acquisition-related costs
1,093
6,118
(82)
%
12,584
11,256
12
%
Loss contingency on regulatory matters
(699)
—
NM
63,221
—
NM
Restructuring, integration and transformation costs
4,123
1,833
NM
10,677
21,698
(51)
%
Tax impact of the above adjustments (1)
(3,535)
(6,557)
(46)
%
(12,513)
(11,243)
11
%
Total net adjustments
35,846
17,263
NM
162,280
79,595
NM
Adjusted net income(2)
$
51,895
$
92,201
(44)
%
$
173,155
$
217,242
(20)
%
Weighted average shares outstanding
- Basic
58,732,771
60,590,826
60,004,707
60,717,446
- Diluted
61,898,460
63,985,850
62,760,197
64,231,637
Adjusted net income per share
- Basic
$
0.88
$
1.52
(42)
%
$
2.89
$
3.58
(19)
%
- Diluted
$
0.84
$
1.44
(42)
%
$
2.76
$
3.38
(18)
%
(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) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
16
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
YoY Change
2022
2021
YoY Change
Gross Profit as reported
$
246,594
$
244,351
1
%
$
795,200
$
781,944
2
%
Other cost of revenue as reported
(36,810)
(31,840)
16
%
(133,024)
(138,851)
(4)
%
Contribution ex-TAC as reported(2)
283,404
276,191
3
%
928,224
920,795
1
%
Conversion impact U.S. dollar/other currencies
21,462
—
84,202
—
Contribution ex-TAC at constant currency
304,866
276,191
10
%
1,012,426
920,795
10
%
Contribution ex-TAC(2)/Revenue as reported
50
%
42
%
46
%
41
%
Traffic acquisition costs as reported
(281,021)
(377,076)
(25)
%
(1,088,779)
(1,333,440)
(18)
%
Conversion impact U.S. dollar/other currencies
(16,065)
—
(63,434)
—
Traffic acquisition costs at constant currency
(297,086)
(377,076)
(21)
%
(1,152,213)
(1,333,440)
(14)
%
Revenue as reported
564,425
653,267
(14)
%
2,017,003
2,254,235
(11)
%
Conversion impact U.S. dollar/other currencies
37,527
—
147,636
—
Revenue at constant currency
$
601,952
$
653,267
(8)
%
$
2,164,639
$
2,254,235
(4)
%
(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) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
17
CRITEO S.A.
Information on Share Count
(unaudited)
Twelve Months Ended
2022
2021
Shares outstanding as at January 1,
60,675,474
60,639,570
Weighted average number of shares issued during the period
Shares issued as December 31, before Treasury stocks
63,248,728
65,883,347
Treasury stock as of December 31,
(5,985,104)
(5,207,873)
Shares outstanding as of December 31, after Treasury stocks
57,263,624
60,675,474
Total dilutive effect of share options, warrants, employee warrants
9,507,770
6,213,932
Fully diluted shares as at December 31,
66,771,394
66,889,406
18
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
YoY Change
QoQ Change
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Clients
(0.7)%
(0.3)%
21,600
21,673
21,711
21,597
21,745
21,747
21,332
20,626
21,460
Revenue
(14)%
26%
564,425
446,921
495,090
510,567
653,267
508,580
551,311
541,077
661,282
Americas
(2)%
40%
281,806
201,274
213,340
194,847
287,270
204,428
221,227
203,900
312,817
EMEA
(21)%
23%
185,125
150,915
176,867
193,954
234,559
188,354
209,303
212,096
232,137
APAC
(26)%
3%
97,494
94,732
104,883
121,766
131,438
115,798
120,781
125,081
116,328
Revenue
(14)%
26%
564,425
446,921
495,090
510,567
653,267
508,580
551,311
541,077
661,282
Marketing Solutions
(19)%
22%
470,918
387,288
440,423
463,888
577,962
458,622
487,465
483,190
543,262
Retail Media (2)
(21)%
45%
59,801
41,170
54,667
46,679
75,305
49,958
63,846
57,887
118,020
Iponweb
N/A
83%
33,706
18,463
—
—
—
—
—
—
—
TAC
(25)%
20%
(281,021)
(233,543)
(280,565)
(293,650)
(377,076)
(297,619)
(331,078)
(327,667)
(408,108)
Marketing Solutions
(20)%
21%
(278,302)
(229,266)
(262,454)
(277,800)
(349,584)
(276,498)
(294,132)
(290,873)
(324,017)
Retail Media (2)
(90)%
(36)%
(2,719)
(4,277)
(18,111)
(15,850)
(27,492)
(21,121)
(36,946)
(36,794)
(84,091)
Iponweb
N/A
N/A
—
—
—
—
—
—
—
—
—
Contribution ex-TAC (1)
3%
33%
283,404
213,378
214,525
216,917
276,191
210,961
220,233
213,410
253,174
Marketing Solutions
(16)%
22%
192,616
158,022
177,969
186,088
228,378
182,124
193,333
192,317
219,245
Retail Media (2)
19%
55%
57,082
36,893
36,556
30,829
47,813
28,837
26,900
21,093
33,929
Iponweb
N/A
83%
33,706
18,463
—
—
—
—
—
—
—
Cash flow from operating activities
90%
201%
125,455
41,628
13,972
74,930
66,012
51,179
26,360
77,362
44,080
Capital expenditures
43%
(28)%
14,522
20,307
15,452
5,564
10,145
15,957
13,128
13,780
22,302
Capital expenditures/Revenue
1ppt
(2)ppt
3%
5%
3%
1%
2%
3%
2%
3%
3%
Net cash position
(13)%
10%
448,200
407,323
562,546
589,343
515,527
497,458
489,521
520,060
488,011
Headcount
34%
5%
3,716
3,537
3,146
2,939
2,781
2,658
2,572
2,532
2,594
Days Sales Outstanding (days - end of month)
6 days
(7) days
71
78
76
74
65
70
66
64
56
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.
(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo’s Commerce Media Platform and is reported under the retail media segment. It 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 were accounted for on a gross basis. Most clients using Criteo’s legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition.
