Criteo Reports Strong First Quarter 2021 Financial Results

NEW YORK, May 5, 2021 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO), the global technology company powering the world's marketers with trusted and impactful advertising, today announced financial results for the first quarter ended March 31, 2021 that exceeded the Company's quarterly guidance.

First Quarter 2021 Financial Highlights:

The following table summarizes our consolidated financial results for the three months ended March 31, 2021 and 2020:


Three Months Ended


March 31,


2021


2020


YoY
Change


(in millions, except EPS data)

GAAP Results






Revenue

$

541



$

503



7

%

Net Income

$

23



$

16



43

%

Diluted EPS

$

0.35



$

0.25



40

%

Cash from operating activities

$

77



$

57



36

%

Net cash position

$

520



$

437



19

%







Non-GAAP Results1






Revenue ex-TAC

$

213



$

206



4

%

Revenue ex-TAC margin

39

%


41

%


(2)

%

Adjusted EBITDA

$

76



$

59



28

%

Adjusted diluted EPS

$

0.67



$

0.52



29

%

Free Cash Flow (FCF)

$

64



$

45



41

%

FCF / Adjusted EBITDA

84

%


76

%


8

%

Megan Clarken, Chief Executive Officer of Criteo, said, "Our commitments to deliver measurable results for our customers, our growth investments and our consistent focus on execution and productivity enabled us to deliver strong top line and margin."

Q1 2021 Operating Highlights

  • New solutions grew 60% year-over-year at constant currency2 to 21% of total Revenue ex-TAC.
  • Retail Media revenue grew 69% year-over-year at constant currency2 and Retail Media Revenue ex-TAC grew 122% at constant currency2. Same-client revenue3 for Retail Media grew 61% and same-client Revenue ex-TAC3 for Retail Media increased 89% year-over-year.
  • Criteo launched its contextual advertising solution, a first-of-its-kind product that connects first-party commerce data with real-time contextual signals, paving the way for marketers to continue to drive and measure incremental revenue in a post-cookie world.
  • Same-client revenue3 increased 8% year-over-year, accelerating vs. Q4 2020, and same-client Revenue ex-TAC3 increased 3% year-over-year at constant currency2.
  • We added over 120 net new live clients in Q1 2021 and closed the quarter with 20,626 clients4.

___________________________________________________

1 Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA at constant currency, Adjusted EBITDA margin, Adjusted diluted EPS, Free Cash Flow and growth at constant currency are not measures calculated in accordance with U.S. GAAP.
2Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2020 average exchange rates for the relevant period to 2021 figures.
3Same-client revenue or Revenue ex-TAC is the revenue or Revenue ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.
4Our client metric, which is a lagging indicator counting all clients that have been live over the preceding 12 months, in Q1 2021 reflected the annualized impact of client churn that peaked in Q2 2020 when COVID started to impact the global economy.

Financial Summary

Revenue for Q1 2021 was $541 million and Revenue ex-TAC was $213 million. Adjusted EBITDA for the quarter was $76 million, resulting in an adjusted diluted EPS of $0.67. At constant currency, Q1 2021 Revenue increased by 4% and Revenue ex-TAC increased by 0.5%. Excluding the estimated $18 million incremental impact of the pandemic, we estimate that Revenue ex-TAC increased about 9% in Q1 2021. Free Cash Flow was $64 million in Q1 2021, up 41% year-over-year. Free Cash Flow conversion was 84% of Adjusted EBITDA in Q1 2021, representing the highest quarterly level for the past 21 quarters. We had $566 million in cash and marketable securities on our balance sheet at the end of Q1 2021.

Sarah Glickman, Chief Financial Officer, said, "We are on track to achieve about 50% growth from our new solutions in 2021, and excited to deliver value to newly signed customers in Retail Media and for our newly launched Contextual advertising product."

Revenue and Revenue ex-TAC

Revenue increased by 7% year-over-year in Q1 2021, or 4% at constant currency, to $541 million (Q1 2020: $503 million). Revenue ex-TAC in the quarter increased 4% year-over-year, or 0.5% at constant currency, to $213 million (Q1 2020: $206 million), after an approximately $18 million net negative impact from the COVID-19 disruption incremental to 2020, or approximately 9 points of year-over-over growth at constant currency. Good performance of retargeting, driven by our retail clients, stellar performance of Retail Media and continued growth of our Audience Targeting and Omnichannel solutions offset Q1 2021 COVID-19 pandemic impact, in particular on our travel clients. Revenue ex-TAC as a percentage of revenue, or Revenue ex-TAC margin, was 39% (Q1 2020: 41%).

  • In the Americas, Revenue increased 6% year-over-year, or 8% at constant currency, to $204 million and represented 38% of total Revenue. Revenue ex-TAC increased 6% year-over-year, or 8% at constant currency, to $76 million and represented 36% of total Revenue ex-TAC.
  • In EMEA, Revenue increased 12% year-over-year, or 4% at constant currency, to $212 million and represented 39% of total Revenue. Revenue ex-TAC increased 5% year-over-year, or decreased 2% at constant currency, to $85 million and represented 40% of total Revenue ex-TAC.
  • In Asia-Pacific, Revenue increased 3% year-over-year, or declined 1% at constant currency, to $125 million and represented 23% of total Revenue. Revenue ex-TAC declined 2% year-over-year, or 5% at constant currency, to $52 million and represented 24% of total Revenue ex-TAC.

Net Income and Adjusted Net Income

Net income increased 43% year-over-year in Q1 2021 to $23 million (Q1 2020: $16 million). Net income margin as a percentage of revenue was 4% (Q1 2020: 3%). In the quarter, we incurred $12 million in restructuring related and transformation costs. Net income available to shareholders of Criteo S.A. increased 45% year-over-year to $22 million, or $0.35 per share on a diluted basis (Q1 2020: $15 million, or $0.25 per share on a diluted basis).

Adjusted Net Income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, increased 35% year-over-year to $43 million, or $0.67 per share on a diluted basis (Q1 2020: $32 million, or $0.52 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA increased 28% year-over-year, or 21% at constant currency, to $76 million (Q1 2020: $59 million), driven by the Revenue ex-TAC performance over the period and effective cost discipline balanced with investments in our growth areas. Adjusted EBITDA as a percentage of Revenue ex-TAC, or Adjusted EBITDA margin, was 36% (Q1 2020: 29%).

Operating expenses decreased by 3% or $4 million, to $144 million (Q1 2020: $148 million), mostly driven by lower headcount-related expense and disciplined expense management across the Company. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP Operating Expenses, decreased 6% or $8 million, to $118 million (Q1 2020: $126 million), largely driven by lower headcount and effective cost discipline, after investing in the growth areas of the Company.

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities increased 36% year-over-year to $77 million (Q1 2020: $57 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 41% to $64 million (Q1 2020: $45 million), or 84% of Adjusted EBITDA (Q1 2020: 76%), driven by our Adjusted EBITDA performance over the period and positive working capital.

Cash and cash equivalents increased $32 million compared to December 31, 2020 to $520 million, after spending $5 million on share repurchases in the first quarter 2021.

As of March 31, 2021, the Company had total financial liquidity of approximately $1 billion, including its cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.

Business Outlook

The following forward-looking statements reflect Criteo's expectations as of May 5, 2021.

Second quarter 2021 guidance:

  • We expect Revenue ex-TAC to be approximately $208 million, translating into constant-currency growth of about 14% year-over-year.
  • We expect Adjusted EBITDA to be approximately $60 million.

Fiscal year 2021 guidance:

  • We maintain our target of low to mid-single digit growth in Revenue ex-TAC at constant-currency.
  • We maintain our expectation of an Adjusted EBITDA margin above 30% of Revenue ex-TAC.

The above guidance for the second quarter and the fiscal year ending December 31, 2021 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.847, a U.S. dollar-Japanese Yen rate of 108, a U.S. dollar-British pound rate of 0.746, a U.S. dollar-Korean Won rate of 1,150 and a U.S. dollar-Brazilian real rate of 5.70.

The above guidance assumes no acquisitions are completed during the second quarter ending June 30, 2021 and fiscal year ended December 31, 2021.

Reconciliation of Revenue ex-TAC and Adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.

Investor Day 2021

Criteo will hold a virtual investor day on Thursday, June 3rd, 2021. More details will be provided ahead of the event, which will be webcast live, on the Company's Investor Relations website http://ir.criteo.com.

Non-GAAP Financial Measures

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission ("SEC"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted diluted EPS, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.

Revenue ex-TAC is our revenue excluding Traffic Acquisition Costs ("TAC") generated over the applicable measurement period and Revenue ex-TAC by Region reflects our Revenue ex-TAC by our geographies. Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, and Revenue ex-TAC margin are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our business and across our geographies.

Accordingly, we believe that Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution and Revenue ex-TAC margin provide useful information to investors and the market generally in understanding and evaluating our operating results in the same manner as our management and board of directors.

Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs and restructuring related and transformation costs.

Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs and restructuring related and transformation costs, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow Conversion is defined as free cash flow divided by Adjusted EBITDA. Free Cash Flow and Free Cash Flow Conversion are key measures used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow and Free Cash Flow Conversion permit a more complete and comprehensive analysis of our available cash flows.

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.

Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region, Revenue ex-TAC by Solution to revenue by solution, Adjusted EBITDA to net income, Adjusted Net Income to net income, Free Cash Flow to cash flow from operating activities, and Non-GAAP Operating Expenses to operating expenses, in each case, the most comparable U.S. GAAP measure. Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider such non-GAAP measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: 1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and 2) other companies may report Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-GAAP Operating Expenses or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending June 30, 2021 and the year ended December 31, 2021, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the scope and impact of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2021, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have a significant impact on Criteo's business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the virus.

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.

Conference Call Information

Criteo's senior management team will discuss the Company's earnings on a call that will take place today, May 5, 2021, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com  and will be available for replay.

  • U.S. callers:               +1 855 209 8212
  • International callers:   +1 412 317 0788 or +33 1 76 74 05 02

Please ask to be joined into the "Criteo S.A." call.

About Criteo

Criteo (NASDAQ: CRTO) is the global technology company powering the world's marketers with trusted and impactful advertising. 2,500 Criteo team members partner with over 20,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers. For more information, please visit www.criteo.com.

Contacts

Criteo Investor Relations
Edouard Lassalle, SVP, Market Relations & Capital Markets, e.lassalle@criteo.com
Clemence Vermersch, Director, Investor Relations, c.vermersch@criteo.com

Criteo Public Relations
Jessica Meyers, Director, Public Relations, Americas, j.meyers@criteo.com

Financial information to follow

 

CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)




March 31, 2021


December 31, 2020

Assets





Current assets:





Cash and cash equivalents


$

520,060



$

488,011


 Trade receivables, net of allowances of $38.7 million and $39.9 million at March 31, 2021 and December 31, 2020, respectively 


416,910



474,055


Income taxes


12,750



11,092


Other taxes


69,692



69,987


Other current assets


22,494



21,405


Marketable Securities - current portion


17,586




Total current assets


1,059,492



1,064,550


Property, plant and equipment, net


168,036



189,505


Intangible assets, net


79,440



79,744


Goodwill


322,821



325,805


Right of Use Asset - operating lease


96,266



114,012


Marketable securities - non current portion


28,281



41,809


Non-current financial assets


14,788



18,109


Deferred tax assets


13,511



19,876


    Total non-current assets


723,143



788,860


Total assets


$

1,782,635



$

1,853,410







Liabilities and shareholders' equity





Current liabilities:





Trade payables


$

347,209



$

367,025


Contingencies


1,773



2,250


Income taxes


1,201



2,626


Financial liabilities - current portion


2,114



2,889


Lease liability - operating - current portion


44,501



48,388


Other taxes


56,192



58,491


Employee - related payables


71,450



85,272


Other current liabilities


32,693



33,390


Total current liabilities


557,133



600,331


Deferred tax liabilities


4,066



5,297


Retirement benefit obligation


5,621



6,167


Financial liabilities - non-current portion


371



386


Lease liability - operating - non-current portion


61,874



83,007


Other non-current liabilities


9,807



5,535


    Total non-current liabilities


81,739



100,392


Total liabilities


638,872



700,723


Commitments and contingencies





Shareholders' equity:





Common shares, €0.025 par value, 66,391,906 and 66,272,106  shares authorized, issued and outstanding at March 31, 2021 and December 31, 2020, respectively.


2,164



2,161


Treasury stock, 5,597,601 and  5,632,536 shares at cost as of March 31, 2021 and December 31, 2020, respectively.


(87,263)



(85,570)


Additional paid-in capital


702,022



693,164


Accumulated other comprehensive income (loss)


(17,825)



16,028


Retained earnings


510,528



491,359


Equity - attributable to shareholders of Criteo S.A.


1,109,626



1,117,142


Non-controlling interests


34,137



35,545


Total equity


1,143,763



1,152,687


Total equity and liabilities


$

1,782,635



$

1,853,410


 

CRITEO S.A.
Consolidated Statement of Income
(U.S. dollars in thousands, except share and per share data, unaudited)




Three Months Ended





March 31,





2021


2020


YoY

Change








Revenue


$

541,077



$

503,376



7

%








Cost of revenue







Traffic acquisition cost


(327,667)



(297,364)



10

%

Other cost of revenue


(34,712)



(33,806)



3

%








Gross profit


178,698



172,206



4

%








Operating expenses:







Research and development expenses


(31,697)



(37,515)



(16)

%

Sales and operations expenses


(79,354)



(84,974)



(7)

%

General and administrative expenses


(33,428)



(25,915)



29

%

Total Operating expenses


(144,479)



(148,404)



(3)

%

Income from operations


34,219



23,802



44

%

Financial expense


(718)



(334)



NM

Income before taxes


33,501



23,468



43

%

Provision for income taxes


(10,051)



(7,040)



43

%

Net Income


$

23,450



$

16,428



43

%








Net income available to shareholders of Criteo S.A.


$

22,406



$

15,459



45

%

Net income available to non-controlling interests


$

1,044



$

969



8

%








Weighted average shares outstanding used in computing per share amounts:







Basic


60,741,674



61,691,001




Diluted


64,077,409



62,125,582











Net income allocated to shareholders per share:







Basic


$

0.37



$

0.25



48

%

Diluted


$

0.35



$

0.25



40

%

 

CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY

Change

Net income


$

23,450



$

16,428



43

%

Non-cash and non-operating items


30,017



32,828



(9)

%

           - Amortization and provisions


17,225



27,044



(36)

%

           - Equity awards compensation expense (1)


7,215



8,502



(15)

%

           - Net gain or (loss) on disposal of non-current assets


3,945



2,266



74

%

           - Change in deferred taxes


4,998



(2,678)



NM


           - Change in income taxes


(3,379)



(2,329)



45

%

           - Other


13



23



(43)

%

Changes in working capital related to operating activities


23,895



7,487



NM


           - (Increase) / Decrease in trade receivables


47,226



99,388



(52)

%

           - Increase / (Decrease) in trade payables


(10,640)



(81,679)



(87)

%

           - (Increase) / Decrease in other current assets


(5,050)



(10,398)



(51)

%

           - Increase / (Decrease) in other current liabilities


(4,527)



(945)



NM


           - Change in operating lease liabilities and right of use assets


(3,114)



1,121



NM


CASH FROM OPERATING ACTIVITIES


77,362



56,743



36

%

Acquisition of intangible assets, property, plant and equipment


(11,953)



(11,258)



6

%

Change in accounts payable related to intangible assets, property, plant and equipment


(1,827)



(479)



NM


Change in other non-current financial assets


(3,252)



889



NM


CASH USED FOR INVESTING ACTIVITIES


(17,032)



(10,848)



57

%

Repayment of borrowings


(182)



(170)



7

%

Proceeds from capital increase


2,074



4



NM


Repurchase of treasury stocks


(4,930)



(18,241)



(73)

%

Change in other financial liabilities


(378)



(354)



7

%

CASH USED FOR FINANCING ACTIVITIES


(3,416)



(18,761)



(82)

%

Effect of exchange rates changes on cash and cash equivalents


(24,865)



(9,391)



NM


Net increase (decrease) in cash and cash equivalents


32,049



17,743



81

%

Net cash and cash equivalents at beginning of period


488,011



418,763



17

%

Net cash and cash equivalents at end of period


$

520,060



$

436,506



19

%








SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION







Cash paid for taxes, net of refunds


$

(8,432)



$

(12,047)



(30)

%

Cash paid for interest


$

(367)



$

(349)



5

%


(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $6.8 million and $8.1 million of equity awards compensation expense for the quarter ended March  31, 2021 and 2020, respectively

 

CRITEO S.A.
Reconciliation of Cash from Operating Activities to Free Cash Flow
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY

Change








CASH FROM OPERATING ACTIVITIES


$

77,362



$

56,743



36

%

Acquisition of intangible assets, property, plant and equipment


(11,953)



(11,258)



6

%

Change in accounts payable related to intangible assets, property, plant and equipment


(1,827)



(479)



NM


FREE CASH FLOW (1)


$

63,582



$

45,006



41

%


(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.

 

CRITEO S.A.
Reconciliation of Revenue ex-TAC to Revenue
(U.S. dollars in thousands, unaudited)





Three Months Ended








March 31,






Region


2021


2020


YoY Change


YoY Change
at Constant
Currency

Revenue










Americas


$

203,900



$

191,745



6

%


8

%


EMEA


212,096



190,114



12

%


4

%


Asia-Pacific


125,081



121,517



3

%


(1)

%


Total


541,077



503,376



7

%


4

%











Traffic acquisition costs (1)










Americas


(127,628)



(120,022)



6

%


7

%


EMEA


(126,648)



(108,397)



17

%


9

%


Asia-Pacific


(73,391)



(68,945)



6

%


2

%


Total


(327,667)



(297,364)



10

%


7

%











Revenue ex-TAC (1)










Americas


76,272



71,723



6

%


8

%


EMEA


85,448



81,717



5

%


(2)

%


Asia-Pacific


51,690



52,572



(2)

%


(5)

%


Total


$

213,410



$

206,012



4

%


0.5

%

 




Three Months Ended








March 31,






Solution


2021


2020


YoY Change


YoY Change
at Constant
Currency

Revenue










Marketing Solutions


$

483,190



$

469,773



3

%


(0.5)

%


Retail Media (2)


57,887



33,603



72

%


69

%


Total


541,077



503,376



7

%


4

%











Traffic acquisition costs (1)










Marketing Solutions


(290,873)



(273,057)



7

%


3

%


Retail Media (2)


(36,794)



(24,307)



51

%


49

%


Total


(327,667)



(297,364)



10

%


7

%











Revenue ex-TAC (1)










Marketing Solutions


192,317



196,716



(2)

%


(5)

%


Retail Media (2)


21,093



9,296



127

%


122

%


Total


$

213,410



$

206,012



4

%


0.5

%


(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution because they are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue and review of these measures by region and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Revenue, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution, or similarly titled measures but define the regions, and product families differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Revenue ex-TAC and Revenue, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC by Solution to revenue by solution.


(2) Criteo operates as one operating segment. From January 1,2021 we have disaggregated revenues between Marketing Solutions and Retail Media.  A strategic building block of Criteo's Commerce Media Platform, the Retail Media Platform, introduced in June 2020, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. Over time, we expect most clients using Criteo's legacy Retail Media solutions to transition to this platform. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by this transition.

 

CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY

Change

Net income


$

23,450



$

16,428



43

%

Adjustments:







Financial expense


718



334



NM


Provision for income taxes


10,051



7,040



43

%

Equity awards compensation expense


7,882



8,503



(7)

%

Research and development


2,496



2,370



5

%

Sales and operations


2,369



3,618



(35)

%

General and administrative


3,017



2,515



20

%

Pension service costs


338



538



(37)

%

Research and development


175



269



(35)

%

Sales and operations


53



95



(44)

%

General and administrative


110



174



(37)

%

Depreciation and amortization expense


21,854



24,138



(9)

%

Cost of revenue


15,244



12,771



19

%

Research and development (1)


1,753



5,650



(69)

%

Sales and operations


3,954



4,340



(9)

%

General and administrative


903



1,377



(34)

%

Restructuring related and transformation costs (2)


11,636



2,209



NM


Research and development


1,436



995



44

%

Sales and operations


7,367



1,021



NM


General and administrative


2,833



193



NM


Total net adjustments


52,479



42,762



23

%

Adjusted EBITDA (3)


$

75,929



$

59,190



28

%


(1) For the Three Months Ended March 31, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($3.3 million in Research and development).


(2) For the Three Months Ended March 2021, and March 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy:



Three Months Ended


March 31,


2021


2020

(Gain) from forfeitures of share-based compensation awards

(666)




Facilities and impairment related costs

6,616



987


Payroll related costs

5,152



1,222


Consulting costs related to transformation

534




Total restructuring related and transformation costs

11,636



2,209



For the Three Months Ended March 31, 2021 and March 31, 2020, respectively, the cash outflows related to restructuring related and transformation costs were $6.1 million, and $4.5 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to facilities and other consulting fees.


(3) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, and restructuring related and transformation costs. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, and restructuring related and transformation costs in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.

 

CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY
Change

Research and Development expenses


$

(31,697)



$

(37,515)



(16)

%

Equity awards compensation expense


2,496



2,370



5

%

Depreciation and Amortization expense


1,753



5,650



(69)

%

Pension service costs


175



269



(35)

%

Restructuring related and transformation costs


1,436



995



44

%

Non GAAP - Research and Development expenses


(25,837)



(28,231)



(8)

%

Sales and Operations expenses


(79,354)



(84,974)



(7)

%

Equity awards compensation expense


2,369



3,618



(35)

%

Depreciation and Amortization expense


3,954



4,340



(9)

%

Pension service costs


53



95



(44)

%

Restructuring related and transformation costs


7,367



1,021



NM


Non GAAP - Sales and Operations expenses


(65,611)



(75,900)



(14)

%

General and Administrative expenses


(33,428)



(25,915)



29

%

Equity awards compensation expense


3,017



2,515



20

%

Depreciation and Amortization expense


903



1,377



(34)

%

Pension service costs


110



174



(37)

%

Restructuring related and transformation costs


2,833



193



NM


Non GAAP - General and Administrative expenses


(26,565)



(21,656)



23

%

Total Operating expenses


(144,479)



(148,404)



(3)

%

Equity awards compensation expense


7,882



8,503



(7)

%

Depreciation and Amortization expense


6,610



11,367



(42)

%

Pension service costs


338



538



(37)

%

Restructuring related and transformation costs


11,636



2,209



NM


Total Non GAAP Operating expenses (1)


$

(118,013)



$

(125,787)



(6)

%


(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.

 

CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY Change

Equity awards compensation expense







Research and development


$

2,496



$

2,370



5

%

Sales and operations


2,369



3,618



(35)

%

General and administrative


3,017



2,515



20

%

Total equity awards compensation expense


7,882



8,503



(7)

%








Pension service costs







Research and development


175



269



(35)

%

Sales and operations


53



95



(44)

%

General and administrative


110



174



(37)

%

Total pension service costs


338



538



(37)

%








Depreciation and amortization expense







Cost of revenue


15,244



12,771



19

%

Research and development


1,753



5,650



(69)

%

Sales and operations


3,954



4,340



(9)

%

General and administrative


903



1,377



(34)

%

Total depreciation and amortization expense


21,854



24,138



(9)

%








Restructuring related and transformation costs







Research and development


1,436



995



44

%

Sales and operations


7,367



1,021



NM


General and administrative


2,833



193



NM


Total restructuring related and transformation costs


$

11,636



$

2,209



NM


 

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





March 31,





2021


2020


YoY
Change








Net income


$

23,450



$

16,428



43

%

Adjustments:







Equity awards compensation expense


7,882



8,503



(7)

%

Amortization of acquisition-related intangible assets (1)


2,935



6,848



(57)

%

Restructuring related and transformation costs


11,636



2,209



NM

Tax impact of the above adjustments


(2,751)



(1,960)



40

%

Total net adjustments


19,702



15,600



26

%

Adjusted net income (2)


$

43,152



$

32,028



35

%








Weighted average shares outstanding







 - Basic


60,741,674



61,691,001




 - Diluted


64,077,409



62,125,582











Adjusted net income per share







 - Basic


$

0.71



$

0.52



37

%

 - Diluted


$

0.67



$

0.52



29

%


(1) For the Three Months Ended March 31, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($3.3 million in Research and development).


(2) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.

 

CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)




Three Months Ended





March 31,





2021


2020


YoY

Change








Revenue as reported


$

541,077



$

503,376



7

%

Conversion impact U.S. dollar/other currencies


(16,747)






Revenue at constant currency(1)


524,330



503,376



4

%








Traffic acquisition costs as reported


(327,667)



(297,364)



10

%

Conversion impact U.S. dollar/other currencies


10,317






Traffic Acquisition Costs at constant currency(1)


(317,350)



(297,364)



7

%








Revenue ex-TAC as reported(2)


213,410



206,012



4

%

Conversion impact U.S. dollar/other currencies


(6,430)






Revenue ex-TAC at constant currency(2)


206,980



206,012



0.5

%

Revenue ex-TAC(2)/Revenue as reported


39

%


41

%










Other cost of revenue as reported


(34,712)



(33,806)



3

%

Conversion impact U.S. dollar/other currencies


322






Other cost of revenue at constant currency(1)


(34,390)



(33,806)



2

%








Adjusted EBITDA(3)


75,929



59,190



28

%

Conversion impact U.S. dollar/other currencies


(4,591)






Adjusted EBITDA(3) at constant currency(1)


$

71,338



$

59,190



21

%

Adjusted EBITDA(3)/Revenue ex-TAC(2)


36

%


29

%




(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and Board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.


(2) Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Revenue ex-TAC to Revenue" for a reconciliation of Revenue Ex-TAC to revenue.


(3) Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.

 

CRITEO S.A.
Information on Share Count
(unaudited)




Three Months Ended



2021


2020

Shares outstanding as at January 1,


60,639,570



62,293,508


Weighted average number of shares issued during the period


102,104



(602,507)


Basic number of shares - Basic EPS basis


60,741,674



61,691,001


Dilutive effect of share options, warrants, employee warrants - Treasury method


3,335,736



434,581


Diluted number of shares - Diluted EPS basis


64,077,410



62,125,582







Shares issued as March  31, before Treasury stocks


66,391,906



66,202,881


Treasury stock as of March 31,


(5,597,601)



(4,533,650)


Shares outstanding as of March 31, after Treasury stocks


60,794,305



61,669,231


Total dilutive effect of share options, warrants, employee warrants


7,458,737



6,982,753


Fully diluted shares as at March  31,


68,253,042



68,651,984


 

CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)



YoY

Change

QoQ Change

Q1

2021

Q4

2020

Q3

2020

Q2

2020

Q1

2020

Q4

2019

Q3

2019

Q2

2019

Q1

2019













Clients

1%

(4)%

20,626

21,460

20,565

20,359

20,360

20,247

19,971

19,733

19,373













Revenue 

7%

(18)%

541,077

661,282

470,345

437,614

503,376

652,640

522,606

528,147

558,123

Americas

6%

(35)%

203,900

312,817

204,618

185,674

191,745

306,250

213,937

213,974

217,993

EMEA

12%

(9)%

212,096

232,137

167,800

159,621

190,114

216,639

185,556

194,359

209,643

APAC

3%

8%

125,081

116,328

97,927

92,319

121,517

129,751

123,113

119,814

130,487













Revenue

7%

(18)%

541,077

661,282

470,345

437,614

503,376

N.A

N.A

N.A

N.A

Marketing Solutions

3%

(11)%

483,190

543,262

412,126

381,270

469,773

N.A

N.A

N.A

N.A

Retail Media

72%

(51)%

57,887

118,020

58,219

56,344

33,603

N.A

N.A

N.A

N.A













TAC

10%

(20)%

(327,667)

(408,108)

(284,401)

(257,698)

(297,364)

(386,388)

(301,901)

(304,229)

(322,429)

Americas

6%

(37)%

(127,628)

(203,341)

(130,756)

(115,317)

(120,022)

(189,092)

(129,047)

(129,491)

(131,545)

EMEA

17%

(8)%

(126,648)

(137,384)

(97,272)

(90,153)

(108,397)

(124,939)

(103,899)

(107,401)

(117,291)

APAC

6%

9%

(73,391)

(67,383)

(56,373)

(52,228)

(68,945)

(72,357)

(68,955)

(67,337)

(73,593)













TAC

10%

(20)%

(327,667)

(408,108)

(284,401)

(257,698)

(297,364)

N.A

N.A

N.A

N.A

Marketing Solutions

7%

(10)%

(290,873)

(324,017)

(243,616)

(218,990)

(273,057)

N.A

N.A

N.A

N.A

Retail Media

51%

(56)%

(36,794)

(84,091)

(40,785)

(38,708)

(24,307)

N.A

N.A

N.A

N.A













Revenue ex-TAC (1)

4%

(16)%

213,410

253,174

185,944

179,916

206,012

266,252

220,705

223,918

235,694

Americas

6%

(30)%

76,272

109,476

73,862

70,357

71,723

117,158

84,890

84,483

86,448

EMEA

5%

(10)%

85,448

94,753

70,528

69,468

81,717

91,700

81,657

86,958

92,352

APAC

(2)%

6%

51,690

48,945

41,554

40,091

52,572

57,394

54,158

52,477

56,894













Revenue ex-TAC (1)

4%

(16)%

213,410

253,174

185,944

179,916

206,012

N.A

N.A

N.A

N.A

Marketing Solutions

(2)%

(12)%

192,317

219,245

168,510

162,280

196,716

N.A

N.A

N.A

N.A

Retail Media

127%

(38)%

21,093

33,929

17,434

17,636

9,296

N.A

N.A

N.A

N.A













Cash flow from operating activities 

36%

76%

77,362

44,080

51,156

33,377

56,743

59,359

43,289

52,964

67,220













Capital expenditures

17%

(38)%

13,780

22,302

12,898

18,532

11,737

17,520

23,944

32,792

23,684













Capital expenditures/Revenue

N.A

N.A

3%

3%

3%

4%

2%

3%

5%

6%

4%













Net cash position

19%

7%

520,060

488,011

626,744

578,181

436,506

418,763

409,178

422,053

395,771













Headcount

(6)%

(2)%

2,532

2,594

2,636

2,685

2,701

2,755

2,794

2,873

2,813













Days Sales Outstanding (days - end of month)

N.A

N.A

64

56

62

61

62

52

57

58

59


(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution because they are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue and review of these measures by region and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Revenue, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution, or similarly titled measures but define the regions, and product families differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Revenue ex-TAC and Revenue, Traffic Acquisition Costs,  Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC by Solution to revenue by solution.

 

Cision View original content:http://www.prnewswire.com/news-releases/criteo-reports-strong-first-quarter-2021-financial-results-301284133.html

SOURCE Criteo S.A.

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