CRITEO REPORTS RECORD FOURTH QUARTER 2023 RESULTS

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February 7, 2024 7:00 AM EST

2023 Activated Media Spend Up 30% to $4.1 Billion

Deployed $125 Million to Repurchase Shares in 2023 and Increases Share Buyback Authorization by $150 Million

Targeting Mid-Single-Digit Growth in 2024

NEW YORK, Feb. 7, 2024 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2023.

Fourth Quarter and Fiscal Year 2023 Financial Highlights:

The following table summarizes our consolidated financial results for the three months and twelve months ended December 31, 2023:



Three Months Ended


Twelve Months Ended



December 31,


December 31,



2023


2022


YoY Change


2023


2022


YoY Change



(in millions, except EPS data)

GAAP Results













Revenue


$566


$564


0.3 %


$1,949


$2,017


(3) %

Gross Profit


$277


$247


12 %


$863


$795


9 %

Net Income


$62


$16


287 %


$55


$11


402 %

Gross Profit margin


49 %


44 %


5ppt


44 %


39 %


5ppt

Diluted EPS


$1.02


$0.25


308 %


$0.88


$0.14


529 %

Cash from operating activities


$161


$125


29 %


$224


$256


(12) %

Cash and cash equivalents


$336


$348


(3) %


$336


$348


(3) %














Non-GAAP Results1













Contribution ex-TAC


$316


$283


12 %


$1,023


$928


10 %

Contribution ex-TAC margin


56 %


50 %


6ppt


52 %


46 %


6ppt

Adjusted EBITDA


$139


$104


33 %


$302


$267


13 %

Adjusted diluted EPS


$1.52


$0.84


81 %


$3.18


$2.76


15 %

Free Cash Flow (FCF)


$142


$111


28 %


$110


$200


(45) %

FCF / Adjusted EBITDA


102 %


106 %


(4)ppt


36 %


75 %


(39)ppt

"We achieved double-digit growth for the second consecutive year, with a historic milestone of crossing $1 billion in Contribution ex-TAC for the first time and Retail Media now surpassing $200 million in annual revenue," said Megan Clarken, Chief Executive Officer of Criteo. "As we step into 2024, we look forward to harnessing the opportunities that lie ahead, and our commitment remains steadfast towards sustainable, profitable growth to drive shareholder value."

Operating Highlights

  • Criteo's activated media spend2 was $1.3 billion in Q4 and $4.1 billion in the last 12 months, growing 30% year-over-year at constant currency3.
  • Our focus on efficiencies delivered over $70 million in cost savings and an adjusted EBITDA margin of 30% in 2023.
  • Retail Media Contribution ex-TAC grew 29% year-over-year at constant currency3 in Q4 and 26% in 2023.
  • Same-retailer Contribution ex-TAC4 retention for Retail Media was 121% in both Q4 and 2023.
  • We expanded our platform adoption to 2,600 brands and 220 retailers, including Albertsons and PcComponentes.
  • Marketing Solutions Contribution ex-TAC was up 6% year-over-year at constant currency3 in Q4.
  • We deployed $125 million of capital for share repurchases in 2023, and our Board of Directors authorized a $150 million increase to the Company's existing share repurchase program in February 2024.
  • We amended our syndicated credit facility to a €407 million ($450 million) sustainability-linked credit facility.
  • The Science Based Targets Initiative approved Criteo's greenhouse gas (GHG) emissions reduction targets, in line with the Paris Agreement's goal to limit the global average temperature increase to 1.5° Celsius.







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 Activated media spend is defined as the sum of our Marketing Solutions revenue, the media spend activated on behalf of our Retail Media clients, and the media spend activated by Iponweb.

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.

4 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.

Financial Summary

Revenue for Q4 2023 was $566 million, gross profit was $277 million and Contribution ex-TAC was $316 million. Net income for Q4 was $62 million, or $1.02 per share on a diluted basis. Adjusted EBITDA for Q4 was $139 million, resulting in an adjusted diluted EPS of $1.52. As reported, revenue for Q4 was flat, gross profit increased 12% and Contribution ex-TAC increased by 12%. At constant currency, revenue for Q4 was flat and Contribution ex-TAC increased by 10%.

Revenue for the fiscal year 2023 was $1.9 billion, gross profit was $863 million and Contribution ex-TAC was $1.0 billion. As reported, revenue for 2023 decreased by 3%, gross profit increased 9% and Contribution ex-TAC increased by 10%. At constant currency, revenue for 2023 decreased by 3% and Contribution ex-TAC increased by 11%. Net income for fiscal 2023 was $55 million, or $0.88 per share on a diluted basis. Fiscal year 2023 Adjusted EBITDA was $302 million, resulting in an adjusted diluted EPS of $3.18. Cash flow from operating activities was $161 million in Q4 and Free Cash Flow was $142 million in Q4. As of December 31, 2023, we had $359 million in cash and marketable securities on our balance sheet.

Sarah Glickman, Chief Financial Officer, said, "In 2023, we delivered an adjusted EBITDA margin of 30%,  above guidance, and we deployed $125 million of capital for share repurchases to drive shareholder value. Our record fourth quarter performance reflects building momentum for our  Commerce Media Platform and our strong focus on cost efficiencies, setting the stage for continued growth and robust profitability in 2024."

Fourth Quarter 2023 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue was flat year-over-year in Q4 2023, and flat at constant currency, to $566 million (Q4 2022: $564 million). Gross profit increased by 12% year-over-year in Q4 2023 to $277 million (Q4 2022: $247 million). Gross profit as a percentage of revenue, or gross profit margin, was 49% (Q4 2022: 44%). Contribution ex-TAC in the fourth quarter increased 12% year-over-year, or increased 10% at constant currency, to $316 million (Q4 2022: $283 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 56% (Q4 2022: 50%), up 600 basis points year-over-year, largely driven by Retail Media and Marketing Solutions.

  • Marketing Solutions revenue decreased 3%, or 3% at constant currency, and Marketing Solutions Contribution ex-TAC increased 8%, or 6% at constant currency, driven by the continued traction of Commerce Audiences as more clients adopt full funnel activation.
  • Retail Media revenue increased 28%, or 26% at constant currency, reflecting continued strength in Retail Media onsite. Retail Media Contribution ex-TAC increased 30%, or 29% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
  • Iponweb revenue increased 3%, or 2% at constant currency, to $35 million.

Net Income and Adjusted Net Income

Net income was $62 million in Q4 2023 (Q4 2022: net income of $16 million). Net income allocated to shareholders of Criteo was $61 million, or $1.02 per share on a diluted basis (Q4 2022: net income available to shareholders of $15 million, or $0.25 per share on a diluted basis).

Adjusted net income, a non-GAAP financial measure, was $91 million, or $1.52 per share on a diluted basis (Q4 2022: $52 million, or $0.84 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA was $139 million, representing an increase of 33% year-over-year (Q4 2022: $104 million). This reflects higher Contribution ex-TAC over the period and planned cost reduction actions. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 44% (Q4 2022: 37%).

Operating expenses decreased by 5% year-over-year to $188 million (Q4 2022: $198 million), mostly driven by cost reduction actions. Non-GAAP operating expenses decreased by 5% to $147 million (Q4 2022: $154 million).

Fiscal Year 2023 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue decreased by 3% year-over-year, or 3% at constant currency, to $1,949 million (FY 2022: $2,017 million). Gross profit increased by 9% year-over-year to $863 million (FY 2022: $795 million). Gross profit as a percentage of revenue, or gross profit margin, was 44% (FY 2022: 39%). Contribution ex-TAC increased 10% year-over-year, or increased 11% at constant currency, to $1,023 million (FY 2022: $928 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 52% (FY 2022: 46%), up 600 basis points year-over-year, largely driven by Retail Media and Iponweb.

  • Marketing Solutions revenue decreased 8%, or 8% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 3%, or 2% at constant currency, driven by lower Retargeting, partially offset by solid growth for Commerce Audiences.
  • Retail Media revenue increased 3%, or 3% at constant currency, reflecting the impact related to the client migration to the Company's platform. Retail Media Contribution ex-TAC increased 26%, or 26% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
  • Iponweb revenue increased 135%, or 133% at constant currency, to $122 million following the closing of the acquisition on August 1, 2022.

Net Income and Adjusted Net Income

Net income was $55 million (FY 2022: $11 million). Net income available to shareholders of Criteo was $53 million, or $0.88 per share on a diluted basis (FY 2022: $9 million, or $0.14 per share on a diluted basis).

Adjusted net income was $191 million, or $3.18 per share on a diluted basis (FY 2022: $173 million, or $2.76 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA was $302 million, representing an increase of 13% year-over-year (FY 2022: $267 million).  This reflects higher Contribution ex-TAC and planned cost reduction actions. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 30% (FY 2022: 29%).

Operating expenses increased 2% year-over-year to $786 million (FY 2022: $771 million), mostly driven by equity awards compensation expense and operating costs from Iponweb, partially offset by cost reduction actions. Non-GAAP operating expenses increased by 5% or $28 million to $607 million (FY 2022: $580 million).

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities increased to $161 million in Q4 2023 (Q4 2022: $125 million).

Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, increased to $142 million in Q4 2023 (Q4 2022: $111 million).

Cash and cash equivalents, and marketable securities, decreased $14 million compared to December 31, 2022 to $359 million, after spending $125 million on share repurchases in 2023.

As of December 31, 2023, the Company had total financial liquidity of approximately $837 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.

Sustainability-Linked Revolving Credit Facility

A key pillar of our sustainability strategy is reducing our carbon footprint, and we committed to reducing our greenhouse gas (GHG) emissions by 2030 in line with the 1.5°C scenario of the Paris Agreement. Criteo recently became the first AdTech company to have its GHG emissions reduction targets approved by the Science Based Targets initiative ("SBTi").

On November 17, 2023, we updated certain terms of our €407 million ($450 million) syndicated credit facility to a €407 million ($450 million) sustainability-linked credit facility, the framework for which was provided for in the initial credit facility agreement. Certain terms and conditions of the amended credit facility are now linked to our sustainability goals to increase the representation of women in tech roles and reduce our GHG emissions, while the rest of the credit facility agreement remains unchanged.

2024 Business Outlook

The following forward-looking statements reflect Criteo's expectations as of February 7, 2024.

Fiscal year 2024 guidance:

  • Mid-single-digit growth in Contribution ex-TAC at constant currency
  • Adjusted EBITDA margin of approximately 29% to 30% of Contribution ex-TAC

First quarter 2024 guidance:

  • Contribution ex-TAC between $243 million and $247 million, or year-over-year growth at constant-currency of +10% to +12%
  • Adjusted EBITDA between $50 million and $54 million

The above guidance for the first quarter and fiscal year ending December 31, 2024 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.909, a U.S. dollar-Japanese Yen rate of 145, a U.S. dollar-British pound rate of 0.791, a U.S. dollar-Korean Won rate of 1,300 and a U.S. dollar-Brazilian real rate of 4.95.

The above guidance assumes that no additional acquisitions are completed during the first quarter of 2024 or the fiscal year ended December 31, 2024.

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.

Extension of Share Repurchase Authorization

Criteo's Board of Directors has authorized a $150 million extension of its previously authorized share repurchase program of up to $480 million of the Company's outstanding American Depository Shares to an increased amount of up to $630 million. The Company intends to use repurchased shares under this extended program to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders, as well as to fund potential acquisitions in the future.

Under the terms of the authorization, the stock purchases may be made from time to time in compliance with applicable state and federal securities laws and applicable provisions of French corporate law. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability, as determined by Criteo's management team. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.

Non-GAAP Financial Measures

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

Contribution ex-TAC is a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other costs of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter. Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related assets, certain restructuring, integration and transformation costs, certain acquisition costs, a loss contingency related to a regulatory matter, and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

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

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

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

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending March 31, 2024 and the year ending December 31, 2024, 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 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 (including related to changes in a specific country's or region's political or economic conditions), the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Contribution ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2023, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, macro-economic conditions including inflation and rising interest rates in the U.S. have impacted Criteo's business, financial condition, cash flow and results of operations.

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, February 7, 2024, 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 thousands of marketers and 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, [email protected] 

Criteo Public Relations
Jessica Meyers, [email protected] 

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands, unaudited)




December 31, 2023


December 31, 2022

Assets





Current assets:





Cash and cash equivalents


$                         336,341


$                         348,200

Trade receivables, net of allowances of $ 43.3 million and $ 47.8 million at

December 31, 2023 and December 31, 2022, respectively


775,589


708,949

Income taxes


2,065


23,609

Other taxes


109,306


78,274

Other current assets


48,291


51,866

Restricted cash - current


75,000


25,000

Marketable securities - current portion


5,970


25,098

Total current assets


1,352,562


1,260,996

Property, plant and equipment, net


126,494


131,207

Intangible assets, net


180,888


175,983

Goodwill


524,197


515,140

Right of Use Asset - operating lease


112,487


102,176

Restricted cash - non current


—


75,000

Marketable securities - non current portion


16,575


—

Non-current financial assets


5,294


5,928

Other non-current assets


60,742


50,818

Deferred tax assets


52,680


31,646

    Total non-current assets


1,079,357


1,087,898

Total assets


$                     2,431,919


$                     2,348,894






Liabilities and shareholders' equity





Current liabilities:





Trade payables


$                         838,522


$                         742,918

Contingencies - current portion


1,467


65,759

Income taxes


17,213


13,037

Financial liabilities - current portion


3,389


219

Lease liability - operating - current portion


35,398


31,003

Other taxes


66,659


58,031

Employee - related payables


113,287


85,569

Other current liabilities


104,552


83,457

Total current liabilities


1,180,487


1,079,993

Deferred tax liabilities


1,083


3,463

Defined benefit plans


4,123


3,708

Financial liabilities - non current portion


77


74

Lease liability - operating - non current portion


83,051


77,536

Contingencies - non current portion


32,625


33,788

Other non-current liabilities


19,082


69,226

    Total non-current liabilities


140,041


187,795

Total liabilities


1,320,528


1,267,788

Commitments and contingencies





Shareholders' equity:





Common shares, €0.025 par value,  61,165,663 and 63,248,728 shares

authorized, issued and outstanding at December 31, 2023  and December 31,

2022 , respectively.


2,023


2,079

Treasury stock, 5,400,572 and 5,985,104 shares at cost as of December 31,

2023  and December 31, 2022 , respectively.


(161,788)


(174,293)

Additional paid-in capital


769,240


734,492

Accumulated other comprehensive income (loss)


(85,326)


(91,890)

Retained earnings


555,456


577,653

Equity - attributable to shareholders of Criteo S.A.


1,079,605


1,048,041

Non-controlling interests


31,786


33,065

Total equity


1,111,391


1,081,106

Total equity and liabilities


$                     2,431,919


$                     2,348,894

 

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




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY
change


2023


2022


YoY
change














Revenue


$    566,302


$    564,425


— %


$ 1,949,445


$ 2,017,003


(3) %














Cost of revenue













Traffic acquisition cost


(249,926)


(281,021)


(11) %


(926,839)


(1,088,779)


(15) %

Other cost of revenue


(39,750)


(36,810)


8 %


(159,562)


(133,024)


20 %














Gross profit


276,626


246,594


12 %


863,044


795,200


9 %














Operating expenses:













Research and development expenses


(48,402)


(69,348)


(30) %


(242,289)


(187,596)


29 %

Sales and operations expenses


(97,687)


(99,633)


(2) %


(406,012)


(377,996)


7 %

General and administrative expenses


(42,219)


(28,969)


46 %


(137,525)


(205,330)


(33) %

Total Operating expenses


(188,308)


(197,950)


(5) %


(785,826)


(770,922)


2 %

Income (loss) from operations


88,318


48,644


82 %


77,218


24,278


218 %

Financial and Other income (expense)


(4,498)


(6,144)


(27) %


(2,490)


17,783


(114) %

Income (loss) before taxes


83,820


42,500


97 %


74,728


42,061


78 %

Provision for income tax (expense) benefit


(21,769)


(26,451)


(18) %


(20,084)


(31,186)


(36) %

Net income (loss)


$       62,051


$       16,049


287 %


$       54,644


$       10,875


402 %














Net income (loss) available to shareholders of Criteo S.A.


$       61,017


$       15,400


296 %


$       53,259


$         8,952


495 %

Net income (loss) available to non-controlling interests


$         1,034


$            649


59 %


$         1,385


$         1,923


(28) %














Weighted average shares outstanding used in computing per share amounts:













Basic


56,107,042


58,732,771


(4) %


56,170,658


60,004,707


(6) %

Diluted


59,687,020


61,898,460


(4) %


60,231,627


62,760,198


(4) %














Net income (loss) allocated to shareholders per share:













Basic


$           1.09


$           0.26


319 %


$           0.95


$           0.15


533 %

Diluted


$           1.02


$           0.25


308 %


$           0.88


$           0.14


529 %

 

CRITEO S.A.

Consolidated Statement of Cash Flows

(U.S. dollars in thousands, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net income (loss)


$      62,051


$      16,049


287 %


$      54,644


$      10,875


NM

Non-cash and non-operating items


60,663


62,986


(4) %


103,369


185,029


(44) %

           - Amortization and provisions


16,048


15,611


3 %


72,336


150,261


(52) %

           - Payment for contingent liability on regulatory matters


—


—


NM


(43,334)


—


NM

           - Equity awards compensation expense (1)


20,832


22,440


(7) %


97,185


65,034


49 %

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


974


167


483 %


(7,929)


(194)


NM

 - Interest accrued and non-cash financial income and expenses


—


1,985


(100) %


—


(259)


— %

          - Change in uncertain tax positions


(566)


412


(237) %


(880)


412


NM

- Net change in fair value of Earn-out


845


771


10 %


2,344


771


NM

          - Change in deferred taxes


1,154


19,653


(94) %


(23,588)


3,602


NM

          - Change in income taxes


22,431


1,947


NM


4,424


(10,952)


NM

          - Other


(1,055)


—


NM


2,811


(23,646)


NM

Changes in working capital related to operating activities


38,626


46,420


(17) %


66,233


60,081


10 %

           - (Increase) / Decrease in trade receivables


(135,234)


(117,309)


15 %


(56,344)


(41,910)


34 %

           - Increase / (Decrease) in trade payables


159,127


153,318


4 %


87,937


133,792


(34) %

           - (Increase) / Decrease in other current assets


(10,447)


8,537


(222) %


(8,479)


(14,687)


(42) %

           - Increase / (Decrease) in other current liabilities


25,889


2,316


NM


43,815


(17,862)


NM

           - Change in operating lease liabilities and right of use assets


(709)


(442)


60 %


(696)


748


NM

CASH FROM (USED FOR) OPERATING ACTIVITIES


161,340


125,455


29 %


224,246


255,985


(12) %

Acquisition of intangible assets, property, plant and equipment


(14,663)


(35,841)


(59) %


(92,501)


(84,796)


9 %

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


(5,061)


21,319


(124) %


(21,810)


28,951


NM

Payment for business, net of cash acquired


132


(2,574)


(105) %


(6,825)


(138,027)


(95) %

Proceeds from disposition of investment


(778)


—


NM


8,847


—


NM

Change in other non-current financial assets


15,857


(15,299)


(204) %


3,577


27,753


(87) %

CASH FROM (USED FOR) INVESTING ACTIVITIES


(4,513)


(32,395)


(86) %


(108,712)


(166,119)


(35) %

Proceeds from borrowings under line-of-credit agreement


—


—


NM


—


78,513


NM

Repayment of borrowings


—


—


NM


—


(78,513)


NM

Change in other financial liabilities


235


(372)


(163) %


235


(265)


NM

Proceeds from exercise of stock options


(3)


411


(101) %


1,945


1,028


89 %

Repurchase of treasury stocks


(22,135)


(76,523)


(71) %


(125,489)


(135,685)


(8) %

Cash payment for contingent consideration


—


—


NM


(22,025)


—


NM

Other


(493)


(364)


35 %


(1,920)


21,878


NM

CASH FROM (USED FOR) FINANCING ACTIVITIES


(22,396)


(76,848)


(71) %


(147,254)


(113,044)


30 %

Effect of exchange rates changes on cash and cash equivalents


6,969


24,665


(72) %


(5,223)


(44,149)


(88) %

Net increase (decrease) in cash and cash equivalents


141,400


40,877


246 %


(36,943)


(67,327)


(45) %

Net cash and cash equivalents at beginning of period


269,857


407,323


(34) %


448,200


515,526


(13) %

Net cash and cash equivalents and restricted cash at end of period


$    411,257


$    448,200


(8) %


$    411,257


$    448,200


(8) %














SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION













Cash paid for taxes, net of refunds


$        1,250


$      (4,439)


(128) %


$    (40,127)


$    (38,124)


5 %

Cash paid for interest


$          (424)


$          (339)


25 %


$      (1,539)


$      (1,298)


19 %


(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $20.3 million and $22.1 million of equity awards compensation expense for the quarters ended December 31,  2023 and 2022, respectively, and $95.3 million and $63.2 million of equity awards compensation for the twelve months ended December 31, 2023 and 2022, respectively.

 

CRITEO S.A.

Reconciliation of Cash from Operating Activities to Free Cash Flow

(U.S. dollars in thousands, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY

Change


2023


2022


YoY

Change














CASH FROM (USED FOR) OPERATING ACTIVITIES


$ 161,340


$ 125,455


29 %


$   224,246


$   255,985


(12) %

Acquisition of intangible assets, property, plant and equipment


(14,663)


(35,841)


(59) %


(92,501)


(84,796)


9 %

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


(5,061)


21,319


(124) %


(21,810)


28,951


NM

FREE CASH FLOW (1)


$ 141,616


$ 110,933


28 %


$   109,935


$   200,140


(45) %


(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 Contribution ex-TAC to Gross Profit

(U.S. dollars in thousands, unaudited)



Three Months Ended




Twelve Months Ended



December 31,




December 31,



2023


2022


YoY Change


2023


2022


YoY Change













Gross Profit

276,626


246,594


12 %


863,044


795,200


9 %













Other Cost of Revenue

39,750


36,810


8 %


159,562


133,024


20 %













Contribution ex-TAC (1)

$     316,376


$     283,404


12 %


$  1,022,606


$     928,224


10 %


(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.


 


CRITEO S.A.

Segment Information

(U.S. dollars in thousands, unaudited)






Three Months Ended






Twelve Months Ended








December 31,






December 31,






Segment


2023


2022


YoY
Change


YoY
Change
at
Constant
Currency
(3)


2023


2022


YoY
Change


YoY
Change
at
Constant
Currency
(3)

Revenue


















Marketing Solutions


$      455,030


$      470,918


(3) %


(3) %


$   1,617,973


$   1,762,517


(8) %


(8) %


Retail Media (2)


76,583


59,801


28 %


26 %


209,007


202,317


3 %


3 %


Iponweb


34,689


33,706


3 %


2 %


122,465


52,169


135 %


133 %


Total


566,302


564,425


0.3 %


0.3 %


1,949,445


2,017,003


(3) %


(3) %



















Contribution ex-TAC


















Marketing Solutions


207,533


192,616


8 %


6 %


696,681


714,695


(3) %


(2) %


Retail Media (2)


74,154


57,082


30 %


29 %


203,460


161,360


26 %


26 %


Iponweb


34,689


33,706


3 %


2 %


122,465


52,169


135 %


133 %


Total (1)


$      316,376


$      283,404


12 %


10 %


$   1,022,606


$      928,224


10 %


11 %


(1) Refer to the Non-GAAP Financial Measures section of this filing for a definition of the Non-GAAP metric.


(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo's Commerce Media Platform and is reported under the retail media segment. It is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions were accounted for on a gross basis. Most clients using Criteo's legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition.


(3) Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar.

 

CRITEO S.A.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(U.S. dollars in thousands, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net income (loss)


$    62,051


$    16,049


287 %


$    54,644


$    10,875


402 %

Adjustments:













Financial (Income) expense


4,497


6,427


(30) %


2,805


(17,053)


(116) %

Provision for income taxes


21,769


26,451


(18) %


20,084


31,186


(36) %

Equity awards compensation expense


21,003


22,441


(6) %


99,222


65,035


53 %

Pension service costs


(131)


970


(114) %


401


1,756


(77) %

Depreciation and amortization expense


23,079


27,450


(16) %


99,653


89,018


12 %

Acquisition-related costs


613


1,093


(44) %


1,894


12,584


(85) %

Net loss contingency on regulatory matters


35


(699)


(105) %


(21,632)


63,221


(134) %

Restructuring, integration and transformation costs


5,729


4,123


39 %


44,727


10,677


319 %

Total net adjustments


76,594


88,256


(13) %


247,154


256,424


(4) %

Adjusted EBITDA (1)


$  138,645


$  104,305


33 %


$  301,798


$  267,299


13 %


(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.

 

CRITEO S.A.

Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP

(U.S. dollars in thousands, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY
Change


2023


2022


YoY
Change

Research and Development expenses


$      (48,402)


$      (69,348)


(30) %


$    (242,289)


$    (187,596)


29 %

Equity awards compensation expense


10,465


15,348


(32) %


55,078


36,514


51 %

Depreciation and Amortization expense


10,258


12,792


(20) %


38,485


22,474


71 %

Pension service costs


(18)


483


(104) %


263


891


(70) %

Acquisition-related costs


(3)


(2)


50 %


504


165


205 %

Restructuring, integration and transformation costs


1,030


633


63 %


9,853


1,618


509 %

Non GAAP - Research and Development expenses


(26,670)


(40,094)


(33) %


(138,106)


(125,934)


10 %

Sales and Operations expenses


(97,687)


(99,633)


(2) %


(406,012)


(377,996)


7 %

Equity awards compensation expense


4,819


4,505


7 %


21,633


14,200


52 %

Depreciation and Amortization expense


3,140


3,930


(20) %


13,267


14,808


(10) %

Pension service costs


(132)


220


(160) %


(49)


339


(114) %

Acquisition-related costs


—


—


NM


—


—


NM

Restructuring, integration and transformation costs


2,913


408


614 %


19,923


4,316


362 %

Non GAAP - Sales and Operations expenses


(86,947)


(90,570)


(4) %


(351,238)


(344,333)


2 %

General and Administrative expenses


(42,219)


(28,969)


46 %


(137,525)


(205,330)


(33) %

Equity awards compensation expense


5,719


2,588


121 %


22,511


14,321


57 %

Depreciation and Amortization expense


477


(925)


(152) %


2,127


854


149 %

Pension service costs


19


267


(93) %


187


526


(64) %

Acquisition-related costs


616


1,095


(44) %


1,390


12,419


(89) %

Restructuring, integration and transformation costs


1,786


3,082


(42) %


14,951


4,743


215 %

Net loss contingency on regulatory matters


35


(699)


(105) %


(21,632)


63,221


(134) %

Non GAAP - General and Administrative expenses


(33,567)


(23,561)


42 %


(117,991)


(109,246)


8 %

Total Operating expenses


(188,308)


(197,950)


(5) %


(785,826)


(770,922)


2 %

Equity awards compensation expense


21,003


22,441


(6) %


99,222


65,035


53 %

Depreciation and Amortization expense


13,875


15,797


(12) %


53,879


38,136


41 %

Pension service costs


(131)


970


(114) %


401


1,756


(77) %

Acquisition-related costs


613


1,093


(44) %


1,894


12,584


(85) %

Restructuring, integration and transformation costs


5,729


4,123


39 %


44,727


10,677


319 %

Net loss contingency on regulatory matters


35


(699)


(105) %


(21,632)


63,221


(134) %

Total Non GAAP Operating expenses (1)


(147,184)


$    (154,225)


(5) %


(607,335)


(579,513)


5 %


(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.

 

CRITEO S.A.

Reconciliation of Adjusted Net Income to Net Income (Loss)

(U.S. dollars in thousands except share and per share data, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY
Change


2023


2022


YoY
Change














Net income (loss)


$        62,051


$        16,049


287 %


$        54,644


$        10,875


402 %

Adjustments:













Equity awards compensation expense


21,003


22,441


(6) %


99,222


65,035


53 %

Amortization of acquisition-related intangible assets


8,943


12,423


(28) %


34,980


23,276


50 %

Acquisition-related costs


613


1,093


(44) %


1,894


12,584


(85) %

Net loss contingency on regulatory matters


35


(699)


(105) %


(21,632)


63,221


(134) %

Restructuring, integration and transformation costs


5,729


4,123


39 %


44,727


10,677


319 %

Tax impact of the above adjustments (1)


(7,469)


(3,535)


111 %


(22,536)


(12,513)


80 %

Total net adjustments


28,854


35,846


(20) %


136,655


162,280


(16) %

Adjusted net income(2)


$        90,905


$        51,895


75 %


$     191,299


$     173,155


10 %














Weighted average shares outstanding













 - Basic


56,107,042


58,732,771




56,170,658


60,004,707



 - Diluted


59,687,020


61,898,460




60,231,627


62,760,198
















Adjusted net income per share













 - Basic


$            1.62


$            0.88


84 %


$            3.41


$            2.89


18 %

 - Diluted


$            1.52


$            0.84


81 %


$            3.18


$            2.76


15 %


(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates.


(2) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.

 

CRITEO S.A.

Constant Currency Reconciliation(1)

(U.S. dollars in thousands, unaudited)




Three Months Ended




Twelve Months Ended





December 31,




December 31,





2023


2022


YoY

Change


2023


2022


YoY

Change














Gross Profit as reported


$    276,626


$    246,594


12 %


$    863,044


$    795,200


9 %














Other cost of revenue as reported


(39,750)


(36,810)


8 %


(159,562)


(133,024)


20 %














Contribution ex-TAC as reported(2)


316,376


283,404


12 %


1,022,606


928,224


10 %

Conversion impact U.S. dollar/other currencies


(4,174)


—




3,112


—



Contribution ex-TAC at constant currency


312,202


283,404


10 %


1,025,718


928,224


11 %

Contribution ex-TAC(2)/Revenue as reported


56 %


50 %




52 %


46 %
















Traffic acquisition costs as reported


(249,926)


(281,021)


(11) %


(926,839)


(1,088,779)


(15) %

Conversion impact U.S. dollar/other currencies


(3,965)


—




(5,815)


—



Traffic acquisition costs at constant currency


(253,891)


(281,021)


(10) %


(932,654)


(1,088,779)


(14) %














Revenue as reported


566,302


564,425


0.3 %


1,949,445


2,017,003


(3) %

Conversion impact U.S. dollar/other currencies


(209)


—




8,927


—



Revenue at constant currency


$    566,093


$    564,425


0.3 %


$ 1,958,372


$ 2,017,003


(3) %


(1) 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.


(2) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.

 

CRITEO S.A.

Information on Share Count

(unaudited)




Twelve Months Ended



2023


2022

Shares outstanding as at January 1,


57,263,624


60,675,474

Weighted average number of shares issued during the period


(1,092,966)


(670,767)

Basic number of shares - Basic EPS basis


56,170,658


60,004,707

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


4,060,969


2,755,491

Diluted number of shares - Diluted EPS basis


60,231,627


62,760,198






Shares issued as at December 31, before Treasury stocks


61,165,663


63,248,728

Treasury stocks as of December 31,


(5,400,572)


(5,985,104)

Shares outstanding as of December 31, after Treasury stocks


55,765,091


57,263,624

Total dilutive effect of share options, warrants, employee warrants


8,471,113


9,507,770

Fully diluted shares as at December 31,


64,236,204


66,771,394

 

CRITEO S.A.

Supplemental Financial Information and Operating Metrics

(U.S. dollars in thousands except where stated, unaudited)



YoY

Change

QoQ

Change

Q4

2023

Q3

2023

Q2

2023

Q1

2023

Q4

2022

Q3

2022

Q2

2022

Q1

2022

Q4

2021













Clients

(4) %

(1) %

18,197

18,423

18,646

18,679

18,990

19,008

18,911

18,764

NA













Revenue 

0.3 %

21 %

566,302

469,193

468,934

445,016

564,425

446,921

495,090

510,567

653,267

Americas

(0.4) %

31 %

280,597

213,607

204,755

188,288

281,806

201,274

213,340

194,847

287,270

EMEA

2 %

15 %

189,291

164,890

158,215

160,214

185,125

150,915

176,867

193,954

234,559

APAC

(1) %

6 %

96,414

90,696

105,964

96,514

97,494

94,732

104,883

121,766

131,438













Revenue

0.3 %

21 %

566,302

469,193

468,934

445,016

564,425

446,921

495,090

510,567

653,267

Marketing Solutions

(3) %

18 %

455,030

385,762

395,274

381,907

470,918

387,288

440,423

463,888

577,962

Retail Media (2)

28 %

54 %

76,583

49,813

44,590

38,021

59,801

41,170

54,667

46,679

75,305

Iponweb

3 %

3 %

34,689

33,618

29,070

25,088

33,706

18,463

—

—

—













TAC

(11) %

12 %

(249,926)

(223,798)

(228,717)

(224,398)

(281,021)

(233,543)

(280,565)

(293,650)

(377,076)

Marketing Solutions

(11) %

11 %

(247,497)

(222,421)

(227,645)

(223,729)

(278,302)

(229,266)

(262,454)

(277,800)

(349,584)

Retail Media (2)

(11) %

76 %

(2,429)

(1,377)

(1,072)

(669)

(2,719)

(4,277)

(18,111)

(15,850)

(27,492)

Iponweb

NM

NM

—

—

—

—

—

—

—

—

—













Contribution ex-TAC (1)

12 %

29 %

316,376

245,395

240,217

220,618

283,404

213,378

214,525

216,917

276,191

Marketing Solutions

8 %

27 %

207,533

163,341

167,629

158,178

192,616

158,022

177,969

186,088

228,378

Retail Media (2)

30 %

53 %

74,154

48,436

43,518

37,352

57,082

36,893

36,556

30,829

47,813

Iponweb

3 %

3 %

34,689

33,618

29,070

25,088

33,706

18,463

—

—

—













Cash flow from operating activities 

29 %

723 %

161,340

19,614

1,328

41,964

125,455

41,628

13,972

74,930

66,012













Capital expenditures

36 %

24 %

19,724

15,849

45,519

33,219

14,522

20,307

15,452

5,564

10,145













Net cash position

(8) %

52 %

411,257

269,857

298,183

380,663

448,200

407,323

562,546

589,343

515,527













Headcount

(4) %

2 %

3,563

3,487

3,514

3,636

3,716

3,537

3,146

2,939

2,781













Days Sales Outstanding (days - end of month) (3)

(13) days

(3) days

58

61

69

74

71

78

76

74

65


(1)  Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.


(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo's Commerce Media Platform and is reported under the retail media segment. It is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions were accounted for on a gross basis. Most clients using Criteo's legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition.


(3) From September 2023, we have included Iponweb in our calculation of Days Sales Outstanding. Days Sales Outstanding excluding Iponweb would have been 71 days for the same period.

 

Cision View original content:https://www.prnewswire.com/news-releases/criteo-reports-record-fourth-quarter-2023-results-302055356.html

SOURCE Criteo Corp


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