NEW YORK - October 28, 2022 - Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the three and nine months ended September 30, 2022.
Third Quarter 2022 Financial Highlights:
The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2022:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
YoY Change
2022
2021
YoY Change
(in millions, except EPS data)
GAAP Results
Revenue
$
447
$
509
(12)
%
$
1,453
$
1,601
(9)
%
Gross Profit
$
180
$
176
2
%
$
549
$
538
2
%
Net Income (loss)
$
7
$
24
(73)
%
$
(5)
$
63
NM
Gross Profit margin
40
%
35
%
5ppt
38
%
34
%
4ppt
Diluted EPS
$
0.10
$
0.37
(73)
%
$
(0.10)
$
0.94
(111)
%
Cash from operating activities
$
42
$
51
(19)
%
$
131
$
155
(16)
%
Cash and cash equivalents
$
307
$
497
(38)
%
$
307
$
497
(38)
%
Non-GAAP Results1
Contribution ex-TAC
$
213
$
211
1
%
$
645
$
645
—
%
Contribution ex-TAC margin
48
%
41
%
7ppt
44
%
40
%
4ppt
Adjusted EBITDA
$
50
$
68
(27)
%
$
163
$
212
(23)
%
Adjusted diluted EPS
$
0.53
$
0.64
(17)
%
$
1.92
$
1.94
(1)
%
Free Cash Flow (FCF)
$
21
$
35
(39)
%
$
89
$
112
(20)
%
FCF / Adjusted EBITDA
42
%
51
%
(9)ppt
55
%
53
%
2ppt
“I am pleased with our solid performance in the third quarter and our progress in integrating our acquisition of Iponweb, which is already helping to accelerate our product roadmap,” said Megan Clarken, Chief Executive Officer of Criteo. “By bringing the best of our technology together, we’re building solutions for our clients like our new DSP, Commerce Max, that are helping marketers and media owners achieve their goals in today’s competitive landscape.”
Operating Highlights
•We completed the acquisition of Iponweb, a market-leading AdTech platform company with world-class media trading capabilities, on August 1, 2022.
•We launched Commerce Max – a self-service, all-in-one demand-side platform (DSP) for enterprise marketers built for scale and powered by our leading retail media and programmatic capabilities.
•Retail Media Contribution ex-TAC grew 32% year-over-year at constant currency2, and same-retailer Contribution ex-TAC3 retention for Retail Media was 133%.
•Marketing Solutions Contribution ex-TAC grew 1% year-over-year at constant currency2.
•We expanded our platform adoption with large retailers and marketplaces, including MediaMarkt, Giant Eagle and Metro Canada.
•Criteo's activated media spend4 by the Commerce Media Platform for marketers and media owners was over $2.8 billion in the last 12 months and $656 million in Q3, growing 7% at constant currency2.
•In September 2022, we entered into a new, expanded five-year revolving credit facility to €407 million ($397 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 and the media spend activated on behalf of our Retail Media clients.
1
Financial Summary
Revenue for Q3 2022 was $447 million, gross profit was $180 million and Contribution ex-TAC was $213 million. Net income for Q3 was $7 million, or $0.10 per share on a diluted basis. Adjusted EBITDA for Q3 was $50 million, resulting in an adjusted diluted EPS of $0.53. As reported, Revenue for Q3 decreased by 12%, gross profit increased 2% and Contribution ex-TAC increased by 1%. At constant currency, Revenue for Q3 decreased by 3% and Contribution ex-TAC increased by 14%. Cash flow from operating activities was $42 million and Free Cash Flow was $21 million in Q3. As of September 30, 2022, we had $317 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, “We delivered 14% growth in Contribution ex-TAC at constant currency, with solid organic growth and despite a challenging macro environment. We remain focused on executing on our growth strategy with rigorous financial discipline, while delivering value to shareholders with the acceleration of our share buyback program.”
Third Quarter 2022 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 12% year-over-year in Q3 2022, or 3% at constant currency, to $447 million (Q3 2021: $509 million). Gross profit increased by 2% year-over-year in Q3 2022 to $180 million (Q3 2021: $176 million). Gross profit as a percentage of revenue, or gross profit margin, was 40% (Q3 2021: 35%). Contribution ex-TAC in the third quarter increased 1% year-over-year, or increased 14% at constant currency, to $213 million (Q3 2021: $211 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 48% (Q3 2021: 41%), up 700 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 16%, or decreased 6% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 13%, or increased 1% at constant currency, driven by a rebound in Travel, partially offset by a slowdown in Retail, anticipated identity and privacy changes and the suspension of the Company's operations in Russia.
•Retail Media revenue decreased 18%, or 14% at constant currency, reflecting the impact related to the ongoing client migration to the Company's platform. Retail Media Contribution ex-TAC increased 28%, or 32% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
•Iponweb revenue reflects two months of contribution following the closing of the acquisition on August 1, 2022.
Net Income and Adjusted Net Income
Net income was $7 million in Q3 2022 (Q3 2021: $24 million). Net income margin as a percentage of revenue was 1% (Q3 2021: 5%). Net income available to shareholders of Criteo was $7 million, or $0.10 per share on a diluted basis (Q3 2021: $23 million, or $0.37 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 assets, restructuring and transformation costs, certain acquisition and integration costs, a loss contingency related to a regulatory matter, and the tax impact of these adjustments, was $33 million, or $0.53 per share on a diluted basis (Q3 2021: $41 million, or $0.64 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $50 million, in line with the Company's guidance, representing a decrease of 27% year-over-year (Q3 2021: $68 million). This was driven by planned growth investments, including investments in our people, partially offset by higher Contribution ex-TAC over the period. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 24% (Q3 2021: 32%).
Operating expenses increased 22% year-over-year to $175 million (Q3 2021: $144 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. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, acquisition-related costs, restructuring related and transformation costs, loss contingency on regulatory matters, and depreciation and amortization, which we refer to as Non-GAAP operating expenses, increased by 15% or $18 million, to $141 million (Q3 2021: $123 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
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities decreased 19% year-over-year to $42 million in Q3 2022 (Q3 2021: $51 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 to $21 million in Q3 2022 (Q3 2021: $35 million).
Cash and cash equivalents, and marketable securities, decreased $256 million compared to December 31, 2021 to $317 million, after spending approximately $135 million for the acquisition of Iponweb (net of cash acquired), which closed on August 1, 2022, and approximately $30 million on share repurchases in the third quarter of 2022.
As of September 30, 2022, the Company had total financial liquidity of approximately $740 million, including its cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.
2022 Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of October 28, 2022.
Fourth quarter 2022 guidance:
•We expect Contribution ex-TAC between $275 million and $280 million, or year-over-year growth at constant-currency of +11% to +13%, including the contribution from our Iponweb acquisition.
•We expect Adjusted EBITDA between $90 million and $95 million.
Fiscal year 2022 guidance:
•We now expect Contribution ex-TAC to grow by 10% to 11% at constant currency, including the contribution from our IPONWEB acquisition.
•We now expect an Adjusted EBITDA margin of approximately 28% to 29% of Contribution ex-TAC and a Free Cash Flow conversion rate of about 45% of Adjusted EBITDA.
The above guidance for the fourth quarter and fiscal year ending December 31, 2022 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.962, a U.S. dollar-Japanese Yen rate of 132, a U.S. dollar-British pound rate of 0.817, a U.S. dollar-Korean Won rate of 1,300 and a U.S. dollar-Brazilian real rate of 5.11.
The above guidance assumes that no additional acquisitions are completed during the fourth quarter of 2022.
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.
New Revolving Credit Facility
Criteo closed an expanded €407 million ($397 million), five-year revolving credit facility, replacing the Company's prior €294 million ($287 million) facility. The increased borrowing capacity reflects Criteo's financial strength and growth outlook.
2022 Investor Day
Criteo will host an Investor Day in New York City on October 31, 2022. During this event, Criteo will be featuring presentations from its Chief Executive Officer, Megan Clarken, and other members of Criteo's executive leadership team followed by a live Q&A session. Presentations will begin at approximately 8:30 AM ET. A live webcast and Investor Day materials will be made available on the Company's investor relations website.
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"): 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, restructuring and transformation costs, certain acquisition and integration 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, restructuring and transformation costs, certain acquisition and integration 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, restructuring 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.
4
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 December 31, 2022 and the year ending December 31, 2022, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the 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 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.
5
Conference Call Information
Criteo’s senior management team will discuss the Company’s earnings on a call that will take place today, October 28, 2022, 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
6
CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)
September 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
307,323
$
515,527
Trade receivables, net of allowances of $57.6 million and $45.4 million at September 30, 2022 and December 31, 2021, respectively
576,082
581,988
Income taxes
16,474
8,784
Other taxes
75,795
73,388
Other current assets
34,347
34,182
Restricted cash - current
25,000
—
Marketable securities - current portion
10,000
50,299
Total current assets
1,045,021
1,264,168
Property, plant and equipment, net
114,493
139,961
Intangible assets, net
77,464
82,627
Goodwill
597,781
329,699
Right of Use Asset - operating lease
101,982
120,257
Restricted cash - non current
75,000
—
Marketable securities - non current portion
—
5,000
Non-current financial assets
6,864
6,436
Other non-current assets
54,478
—
Deferred tax assets
49,487
35,443
Total non-current assets
1,077,549
719,423
Total assets
$
2,122,570
$
1,983,591
Liabilities and shareholders' equity
Current liabilities:
Trade payables
$
576,762
$
430,245
Contingencies - current portion
60,038
3,059
Income taxes
5,602
6,641
Financial liabilities - current portion
—
642
Lease liability - operating - current portion
30,469
34,066
Other taxes
56,894
60,236
Employee - related payables
72,897
98,136
Other current liabilities
60,810
39,523
Total current liabilities
863,472
672,548
Deferred tax liabilities
2,842
3,053
Defined benefit plans
2,836
5,531
Financial liabilities - non current portion
270
360
Lease liability - operating - non current portion
77,901
93,893
Contingencies - non current portion
32,731
—
Other non-current liabilities
65,618
9,886
Total non-current liabilities
182,198
112,723
Total liabilities
1,045,670
785,271
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 64,985,388 and 65,883,347 shares authorized, issued and outstanding at September 30, 2022 and December 31, 2021, respectively.
2,125
2,149
Treasury stock, 5,049,409 and 5,207,873 shares at cost as of September 30, 2022 and December 31, 2021, respectively.
(152,889)
(131,560)
Additional paid-in capital
760,666
731,248
Accumulated other comprehensive income (loss)
(131,651)
(40,294)
Retained earnings
569,218
601,588
Equity - attributable to shareholders of Criteo S.A.
1,047,469
1,163,131
Non-controlling interests
29,431
35,189
Total equity
1,076,900
1,198,320
Total equity and liabilities
$
2,122,570
$
1,983,591
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,
2022
2021
YoY Change
2022
2021
YoY Change
Revenue
$
446,921
$
508,580
(12)
%
$
1,452,578
$
1,600,968
(9)
%
Cost of revenue
Traffic acquisition cost
(233,543)
(297,619)
(22)
%
(807,758)
(956,364)
(16)
%
Other cost of revenue
(33,771)
(34,935)
(3)
%
(96,214)
(107,011)
(10)
%
Gross profit
179,607
176,026
2
%
548,606
537,593
2
%
Operating expenses:
Research and development expenses
(42,725)
(33,345)
28
%
(118,248)
(106,957)
11
%
Sales and operations expenses
(90,051)
(75,619)
19
%
(278,363)
(235,724)
18
%
General and administrative expenses
(42,353)
(34,877)
21
%
(176,361)
(108,779)
62
%
Total Operating expenses
(175,129)
(143,841)
22
%
(572,972)
(451,460)
27
%
Income from operations
4,478
32,185
(86)
%
(24,366)
86,133
NM
Financial and Other income (expense)
3,485
(154)
NM
23,927
(1,391)
NM
Income before taxes
7,963
32,031
(75)
%
(439)
84,742
NM
Provision for income taxes
(1,442)
(7,801)
(82)
%
(4,735)
(22,033)
(79)
%
Net Income (loss)
$
6,521
$
24,230
(73)
%
$
(5,174)
$
62,709
NM
Net income (loss) available to shareholders of Criteo S.A.
$
6,579
$
23,481
(72)
%
$
(6,448)
$
60,691
NM
Net income (loss) available to non-controlling interests
$
(58)
$
749
NM
$
1,274
$
2,018
(37)
%
Weighted average shares outstanding used in computing per share amounts:
Basic
60,318,114
60,873,594
60,431,597
60,759,613
Diluted
63,235,811
64,197,686
63,050,355
64,313,526
Net income (loss) allocated to shareholders per share:
Basic
$
0.11
$
0.39
(72)
%
$
(0.11)
$
1.00
(111)
%
Diluted
$
0.10
$
0.37
(73)
%
$
(0.10)
$
0.94
(111)
%
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,
2022
2021
YoY Change
2022
2021
YoY Change
Net income (loss)
$
6,521
$
24,230
(73)
%
$
(5,174)
$
62,709
NM
Non-cash and non-operating items
23,816
37,668
(37)
%
122,043
103,573
18
%
- Amortization and provisions
20,148
25,533
(21)
%
134,650
67,919
98
%
- Equity awards compensation expense (1)
21,084
13,289
59
%
42,594
32,174
32
%
- Net gain or (loss) on disposal of non-current assets
335
735
(54)
%
(361)
4,694
NM
- Interest accrued and non-cash financial income and expenses
(2,244)
—
NM
(2,244)
—
NM
- Change in deferred taxes
(8,937)
2,263
NM
(16,051)
4,568
NM
- Change in income taxes
1,779
(4,165)
NM
(12,899)
(5,820)
NM
- Other
(8,349)
13
NM
(23,646)
38
NM
Changes in working capital related to operating activities
11,291
(10,719)
NM
13,661
(11,381)
NM
- (Increase) / Decrease in trade receivables
9,923
(9,541)
NM
75,399
16,654
NM
- Increase / (Decrease) in trade payables
(2,549)
14,213
NM
(19,526)
(5,693)
NM
- (Increase) / Decrease in other current assets
(8,629)
(7,523)
15
%
(23,224)
(12,710)
83
%
- Increase / (Decrease) in other current liabilities
11,135
(4,705)
NM
(20,178)
(5,774)
NM
- Change in operating lease liabilities and right of use assets
1,411
(3,163)
NM
1,190
(3,858)
NM
CASH FROM OPERATING ACTIVITIES
41,628
51,179
(19)
%
130,530
154,901
(16)
%
Acquisition of intangible assets, property, plant and equipment
(16,161)
(16,767)
(4)
%
(48,955)
(44,383)
10
%
Change in accounts payable related to intangible assets, property, plant and equipment
(4,146)
810
NM
7,632
1,518
NM
Payment for businesses, net of cash acquired
(135,453)
71
NM
(135,453)
(9,527)
NM
Change in other non-current financial assets
(1,259)
6,505
NM
43,052
(13,803)
NM
CASH USED FOR (FROM) INVESTING ACTIVITIES
(157,019)
(9,381)
NM
(133,724)
(66,195)
NM
Proceeds from borrowings under line-of-credit agreement
—
—
NM
78,513
—
NM
Repayment of borrowings
—
10
NM
(78,513)
(1,262)
NM
Proceeds from exercise of stock options
266
12,113
(98)
%
617
21,688
(97)
%
Repurchase of treasury stocks
(29,828)
(37,682)
(21)
%
(59,162)
(72,611)
(19)
%
Change in other financial liabilities
107
(2,888)
NM
107
(3,636)
NM
Other
7,768
—
NM
22,242
—
NM
CASH USED FOR FINANCING ACTIVITIES
(21,687)
(28,447)
(24)
%
(36,196)
(55,821)
(35)
%
Effect of exchange rates changes on cash and cash equivalents
(18,145)
(5,414)
NM
(68,813)
(23,438)
NM
Net increase in cash and cash equivalents
(155,223)
7,937
NM
(108,203)
9,447
NM
Net cash and cash equivalents at beginning of period
562,546
489,521
15
%
515,526
488,011
6
%
Net cash and cash equivalents and restricted cash at end of period
$
407,323
$
497,458
(18)
%
$
407,323
$
497,458
(18)
%
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds
$
(8,600)
$
(9,703)
(11)
%
$
(33,685)
$
(23,285)
45
%
Cash paid for interest
$
(333)
$
(403)
(17)
%
$
(959)
$
(1,139)
(16)
%
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $20.5 million and $12.8 million of equity awards
compensation expense for the quarters ended September 30, 2022 and 2021, respectively, and $41.1 million and $30.8 million of equity awards compensation for the nine months ended September 30, 2022 and 2021, 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,
2022
2021
YoY Change
2022
2021
YoY Change
CASH FROM OPERATING ACTIVITIES
$
41,628
$
51,179
(19)
%
$
130,530
$
154,901
(16)
%
Acquisition of intangible assets, property, plant and equipment
(16,161)
(16,767)
(4)
%
(48,955)
(44,383)
10
%
Change in accounts payable related to intangible assets, property, plant and equipment
(4,146)
810
NM
7,632
1,518
NM
FREE CASH FLOW (1)
$
21,321
$
35,222
(39)
%
$
89,207
$
112,036
(20)
%
(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 Contribution ex-TAC to Gross Profit
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
YoY Change
2022
2021
YoY Change
Gross Profit
179,607
176,026
2
%
548,606
537,593
2
%
Other Cost of Revenue
33,771
34,935
(3)
%
96,214
107,011
(10)
%
Contribution ex-TAC (1)
$
213,378
$
210,961
1
%
$
644,820
$
644,604
—
%
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
11
CRITEO S.A.
Segment Information
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Segment
2022
2021
YoY Change
YoY Change at Constant Currency (3)
2022
2021
YoY Change
YoY Change at Constant Currency (3)
Revenue
Marketing Solutions
$
387,288
$
458,622
(16)
%
(6)
%
$
1,291,599
$
1,429,277
(10)
%
(2.2)
%
Retail Media (2)
41,170
49,958
(18)
%
(14)
%
142,516
171,691
(17)
%
(15)
%
Iponweb
18,463
—
N/A
N/A
18,463
—
N/A
N/A
Total
446,921
508,580
(12)
%
(3)
%
1,452,578
1,600,968
(9)
%
(2)
%
Contribution ex-TAC
Marketing Solutions
158,022
182,124
(13)
%
1
%
522,079
567,774
(8)
%
2
%
Retail Media (2)
36,893
28,837
28
%
32
%
104,278
76,830
36
%
40
%
Iponweb
18,463
—
N/A
N/A
18,463
—
N/A
N/A
Total (1)
$
213,378
$
210,961
1
%
14
%
$
644,820
$
644,604
—
%
10
%
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
(2) 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 are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin is expected to increase. Contribution ex-TAC is 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.
12
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,
2022
2021
YoY Change
2022
2021
YoY Change
Net income (loss)
$
6,521
$
24,230
(73)
%
$
(5,174)
$
62,709
NM
Adjustments:
Financial (Income) expense
(3,526)
154
NM
(23,480)
1,391
NM
Provision for income taxes
1,442
7,801
(82)
%
4,735
22,033
(79)
%
Equity awards compensation expense
21,084
13,290
59
%
42,594
32,841
30
%
Research and development
11,621
4,858
NM
21,166
11,572
83
%
Sales and operations
4,577
3,875
18
%
9,695
9,880
(2)
%
General and administrative
4,886
4,557
7
%
11,733
11,389
3
%
Pension service costs
247
330
(25)
%
786
1,005
(22)
%
Research and development
130
170
(24)
%
408
520
(22)
%
Sales and operations
40
52
(23)
%
119
158
(25)
%
General and administrative
77
108
(29)
%
259
327
(21)
%
Depreciation and amortization expense
19,283
22,301
(14)
%
61,568
66,646
(8)
%
Cost of revenue (data center equipment)
11,972
15,520
(23)
%
39,229
46,508
(16)
%
Research and development
3,208
2,557
25
%
9,682
6,517
49
%
Sales and operations
3,540
3,545
—
%
10,878
11,201
(3)
%
General and administrative
563
679
(17)
%
1,779
2,420
(26)
%
Acquisition-related costs
6,970
2,091
NM
11,491
5,138
NM
Sales and operations
(11)
—
NM
167
—
NM
General and administrative
6,981
2,091
NM
11,324
5,138
NM
Loss contingency on regulatory matters
(1,764)
—
NM
63,920
—
NM
General and administrative
(1,764)
—
NM
63,920
—
NM
Restructuring related and transformation (gain) costs (1)
(81)
(1,767)
(95)
%
6,554
19,865
(67)
%
Cost of revenue
—
—
NM
—
—
NM
Research and development
(53)
(1,029)
(95)
%
985
5,238
(81)
%
Sales and operations
(624)
(106)
NM
3,908
8,812
(56)
%
General and administrative
596
(632)
NM
1,661
5,815
(71)
%
Total net adjustments
43,655
44,200
(1)
%
168,168
148,919
13
%
Adjusted EBITDA (2)
$
50,176
$
68,430
(27)
%
$
162,994
$
211,628
(23)
%
(1) For the three and nine months ended September 30, 2022 and September 30, 2021, 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,
June 30,
2022
2021
2022
2021
(Gain) from forfeitures of share-based compensation awards
—
—
—
(666)
Facilities related (gain) costs
(284)
(1,645)
1,002
14,692
Payroll related (gain) costs
(306)
(334)
4,686
4,637
Consulting costs related to transformation
509
212
866
1,202
Total restructuring related and transformation (gain) costs
$
(81)
$
(1,767)
$
6,554
$
19,865
For the three and nine months ended September 30, 2022 and September 30, 2021, respectively, the cash outflows related to restructuring related and transformation costs were $6.6 million, and $4.4 million and 9.7 million, and $20.9 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to real-estate facilities and other consulting fees.
(2) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, depreciation and amortization expense and certain restructuring and transformation costs, certain acquisition and integration costs and a loss contingency related to a regulatory matter. 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. 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.
13
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,
2022
2021
YoY Change
2022
2021
YoY Change
Research and Development expenses
$
(42,725)
$
(33,345)
28
%
$
(118,248)
$
(106,957)
11
%
Equity awards compensation expense
11,621
4,858
NM
21,166
11,572
83
%
Depreciation and Amortization expense
3,208
2,557
25
%
9,682
6,517
49
%
Pension service costs
130
170
(24)
%
408
520
(22)
%
Restructuring related and transformation (gain) costs
(53)
(1,029)
(95)
%
985
5,238
(81)
%
Non GAAP - Research and Development expenses
(27,819)
(26,789)
4
%
(86,007)
(83,110)
3
%
Sales and Operations expenses
(90,051)
(75,619)
19
%
(278,363)
(235,724)
18
%
Equity awards compensation expense
4,577
3,875
18
%
9,695
9,880
(2)
%
Depreciation and Amortization expense
3,540
3,545
—
%
10,878
11,201
(3)
%
Pension service costs
40
52
(23)
%
119
158
(25)
%
Acquisition-related costs
(11)
—
NM
167
—
NM
Restructuring related and transformation (gain) costs
(624)
(106)
NM
3,908
8,812
(56)
%
Non GAAP - Sales and Operations expenses
(82,529)
(68,253)
21
%
(253,596)
(205,673)
23
%
General and Administrative expenses
(42,353)
(34,877)
21
%
(176,361)
(108,779)
62
%
Equity awards compensation expense
4,886
4,557
7
%
11,733
11,389
3
%
Depreciation and Amortization expense
563
679
(17)
%
1,779
2,420
(26)
%
Pension service costs
77
108
(29)
%
259
327
(21)
%
Acquisition-related costs
6,981
2,091
NM
11,324
5,138
NM
Restructuring related and transformation (gain) costs
596
(632)
NM
1,661
5,815
(71)
%
Loss contingency on regulatory matters
(1,764)
0
NM
63,920
0
NM
Non GAAP - General and Administrative expenses
(31,014)
(28,074)
10
%
(85,685)
(83,690)
2
%
Total Operating expenses
(175,129)
(143,841)
21.8
%
(572,972)
(451,460)
26.9
%
Equity awards compensation expense
21,084
13,290
59
%
42,594
32,841
30
%
Depreciation and Amortization expense
7,311
6,781
8
%
22,339
20,138
11
%
Pension service costs
247
330
(25)
%
786
1,005
(22)
%
Acquisition-related costs
6,970
2,091
NM
11,491
5,138
NM
Loss contingency on regulatory matters
(1,764)
—
NM
63,920
—
NM
Restructuring related and transformation (gain) costs
(81)
(1,767)
(95)
%
6,554
19,865
(67)
%
Total Non GAAP Operating expenses (1)
$
(141,362)
$
(123,116)
15
%
$
(425,288)
$
(372,473)
14
%
(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate equity awards compensation expense, pension service costs, restructuring 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.
14
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
YoY Change
2022
2021
YoY Change
Equity awards compensation expense
Research and development
$
11,621
$
4,858
NM
$
21,166
$
11,572
83
%
Sales and operations
4,577
3,875
18
%
9,695
9,880
(2)
%
General and administrative
4,886
4,557
7
%
11,733
11,389
3
%
Total equity awards compensation expense
21,084
13,290
59
%
42,594
32,841
30
%
Pension service costs
Research and development
130
170
(24)
%
408
520
(22)
%
Sales and operations
40
52
(23)
%
119
158
(25)
%
General and administrative
77
108
(29)
%
259
327
(21)
%
Total pension service costs
247
330
(25)
%
786
1,005
(22)
%
Depreciation and amortization expense
Cost of revenue (data center equipment)
11,972
15,520
(23)
%
39,229
46,508
(16)
%
Research and development
3,208
2,557
25
%
9,682
6,517
49
%
Sales and operations
3,540
3,545
—
%
10,878
11,201
(3)
%
General and administrative
563
679
(17)
%
1,779
2,420
(26)
%
Total depreciation and amortization expense
19,283
22,301
(14)
%
61,568
66,646
(8)
%
Acquisition-related costs
Sales and operations
(11)
—
NM
167
—
NM
General and administrative
6,981
2,091
NM
11,324
5,138
NM
Total acquisition-related costs
6,970
2,091
NM
11,491
5,138
NM
Loss contingency on regulatory matters
General and administrative
(1,764)
—
NM
63,920
—
NM
Total loss contingency on regulatory matters
(1,764)
—
NM
63,920
—
NM
Restructuring related and transformation (gain) costs
Cost of revenue
—
—
NM
—
—
NM
Research and development
(53)
(1,029)
(95)
%
985
5,238
(81)
%
Sales and operations
(624)
(106)
NM
3,908
8,812
(56)
%
General and administrative
596
(632)
NM
1,661
5,815
(71)
%
Total restructuring related and transformation (gain) costs
$
(81)
$
(1,767)
(95)
%
$
6,554
$
19,865
(67)
%
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
Nine Months Ended
September 30,
September 30,
2022
2021
YoY Change
2022
2021
YoY Change
Net income (loss)
$
6,521
$
24,230
(73)
%
$
(5,174)
$
62,709
NM
Adjustments:
Equity awards compensation expense
21,084
13,290
59
%
42,594
32,841
30
%
Amortization of acquisition-related intangible assets
3,531
3,303
7
%
10,853
9,174
18
%
Acquisition-related costs
6,970
2,091
NM
11,491
5,138
NM
Loss contingency on regulatory matters
(1,764)
—
NM
63,920
—
NM
Restructuring related and transformation (gain) costs
(81)
(1,767)
(95)
%
6,554
19,865
(67)
%
Tax impact of the above adjustments (1)
(3,036)
(114)
NM
(8,978)
(4,686)
92
%
Total net adjustments
26,704
16,803
59
%
126,434
62,332
NM
Adjusted net income(2)
$
33,225
$
41,033
(19)
%
$
121,260
$
125,041
(3)
%
Weighted average shares outstanding
- Basic
60,318,114
60,873,594
60,431,597
60,759,613
- Diluted
63,235,811
64,197,686
63,050,355
64,313,526
Adjusted net income per share
- Basic
$
0.55
$
0.67
(18)
%
$
2.01
$
2.06
(2)
%
- Diluted
$
0.53
$
0.64
(17)
%
$
1.92
$
1.94
(1)
%
(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates.
(2) We define Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related assets, restructuring and transformation costs, certain acquisition and integration 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. 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.
16
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
YoY Change
2022
2021
YoY Change
Gross Profit as reported
$
179,607
$
176,026
2
%
$
548,606
$
537,593
2
%
Other cost of revenue as reported
(33,771)
(34,935)
(3)
%
(96,214)
(107,011)
(10)
%
Contribution ex-TAC as reported(2)
213,378
210,961
1
%
644,820
644,604
—
%
Conversion impact U.S. dollar/other currencies
27,832
—
62,740
—
Contribution ex-TAC at constant currency(2)
241,210
210,961
14
%
707,560
644,604
10
%
Contribution ex-TAC(2)/Revenue as reported
48
%
41
%
44
%
40
%
Traffic acquisition costs as reported(2)
(233,543)
(297,619)
(22)
%
(807,758)
(956,364)
(16)
%
Conversion impact U.S. dollar/other currencies
(18,558)
—
(47,369)
—
Traffic acquisition costs at constant currency(2)
(252,101)
(297,619)
(15)
%
(855,127)
(956,364)
(11)
%
Revenue as reported(2)
446,921
508,580
(12)
%
1,452,578
1,600,968
(9)
%
Conversion impact U.S. dollar/other currencies
46,390
—
110,109
—
Revenue at constant currency(2)
$
493,311
$
508,580
(3)
%
$
1,562,687
$
1,600,968
(2)
%
(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.
(2) Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Contribution ex-TAC to Gross Profit" for a reconciliation of Contribution ex-TAC to gross profit..
17
CRITEO S.A.
Information on Share Count
(unaudited)
Nine 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 September 30, before Treasury stocks
64,985,388
66,315,019
Treasury stock as of September 30,
(5,049,409)
(5,544,527)
Shares outstanding as of September 30, after Treasury stocks
59,935,979
60,770,492
Total dilutive effect of share options, warrants, employee warrants
9,403,211
6,861,312
Fully diluted shares as at September 30,
69,339,190
67,631,804
18
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
YoY Change
QoQ Change
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Clients
(0.3)%
(0.2)%
21,673
21,711
21,597
21,745
21,747
21,332
20,626
21,460
20,565
Revenue
(12)%
(10)%
446,921
495,090
510,567
653,267
508,580
551,311
541,077
661,282
470,345
Americas
(2)%
(6)%
201,274
213,340
194,847
287,270
204,428
221,227
203,900
312,817
204,618
EMEA
(20)%
(15)%
150,915
176,867
193,954
234,559
188,354
209,303
212,096
232,137
167,800
APAC
(18)%
(10)%
94,732
104,883
121,766
131,438
115,798
120,781
125,081
116,328
97,927
Revenue
(12)%
(10)%
446,921
495,090
510,567
653,267
508,580
551,311
541,077
661,282
470,345
Marketing Solutions
(16)%
(12)%
387,288
440,423
463,888
577,962
458,622
487,465
483,190
543,262
412,126
Retail Media (2)
(18)%
(25)%
41,170
54,667
46,679
75,305
49,958
63,846
57,887
118,020
58,219
Iponweb
N/A
N/A
18,463
—
—
—
—
—
—
—
—
TAC
(22)%
(17)%
(233,543)
(280,565)
(293,650)
(377,076)
(297,619)
(331,078)
(327,667)
(408,108)
(284,401)
Marketing Solutions
(17)%
(13)%
(229,266)
(262,454)
(277,800)
(349,584)
(276,498)
(294,132)
(290,873)
(324,017)
(243,616)
Retail Media (2)
(80)%
(76)%
(4,277)
(18,111)
(15,850)
(27,492)
(21,121)
(36,946)
(36,794)
(84,091)
(40,785)
Iponweb
N/A
N/A
—
—
—
—
—
—
—
—
—
Contribution ex-TAC (1)
1%
(1)%
213,378
214,525
216,917
276,191
210,961
220,233
213,410
253,174
185,944
Marketing Solutions
(13)%
(11)%
158,022
177,969
186,088
228,378
182,124
193,333
192,317
219,245
168,510
Retail Media (2)
28%
1%
36,893
36,556
30,829
47,813
28,837
26,900
21,093
33,929
17,434
Iponweb
N/A
N/A
18,463
—
—
—
—
—
—
—
—
Cash flow from operating activities
(19)%
198%
41,628
13,972
74,930
66,012
51,179
26,360
77,362
44,080
51,156
Capital expenditures
27%
31%
20,307
15,452
5,564
10,145
15,957
13,128
13,780
22,302
12,898
Capital expenditures/Revenue
2ppt
2ppt
5%
3%
1%
2%
3%
2%
3%
3%
3%
Net cash position
(18)%
(28)%
407,323
562,546
589,343
515,527
497,458
489,521
520,060
488,011
626,744
Headcount
33%
12%
3,537
3,146
2,939
2,781
2,658
2,572
2,532
2,594
2,636
Days Sales Outstanding (days - end of month)
8 days
2 days
78
76
74
65
70
66
64
56
62
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures.
(2) 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 are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin is expected to increase. Contribution ex-TAC is not impacted by this transition.
