CRITEO REPORTS STRONG THIRD QUARTER 2023 RESULTS

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November 2, 2023 7:00 AM EDT

Q3 Activated Media Spend Up 32%
Launched Commerce Max DSP into General Availability

NEW YORK, Nov. 2, 2023 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the three and nine months ended September 30, 2023.

Third Quarter 2023 Financial Highlights:

The following table summarizes our consolidated financial results for the three months and nine months ended September 30, 2023:


Three Months Ended

Nine Months Ended


September 30,

September 30,


2023


2022


YoY
Change

2023


2022


YoY
Change


(in millions, except EPS data)

GAAP Results











Revenue

$469


$447


5 %

$1,383


$1,453


(5) %

Gross Profit

$205


$180


14 %

$586


$549


7 %

Net Income (loss)

$7


$7


2 %

$(7)


$(5)


43 %

Gross Profit margin

44 %


40 %


4ppt

42 %


38 %


4ppt

Diluted EPS

$0.12


$0.10


20 %

$(0.14)


$(0.11)


27 %

Cash from operating activities

$20


$42


(53) %

$63


$131


(52) %

Cash and cash equivalents

$195


$307


(37) %

$195


$307


(37) %












Non-GAAP Results1











Contribution ex-TAC

$245


$213


15 %

$706


$645


10 %

Contribution ex-TAC margin

52 %


48 %


4ppt

51 %


44 %


7ppt

Adjusted EBITDA

$68


$50


36 %

$163


$163


— %

Adjusted diluted EPS

$0.71


$0.53


34 %

$1.66


$1.92


(14) %

Free Cash Flow (FCF)

$4


$21


(82) %

$(32)


$89


NM

FCF / Adjusted EBITDA

6 %


42 %


(36)ppt

(19) %


55 %


(74)ppt

"We are pleased to report a strong third quarter marked by organic growth acceleration and market share gains in Retail Media. We continue to pivot our business towards areas of high growth, which represented more than half of our business for the first time ever this quarter," said Megan Clarken, Chief Executive Officer of Criteo. "We have built the only unified, AI-driven platform that directly connects advertisers with retailers and publishers to drive commerce on retailers' sites and the open internet, which, we believe, will drive long-term shareholder value."

Operating Highlights

  • We launched Commerce Max into general availability, a first-of-its-kind self-service demand-side platform (DSP) giving brands and agencies a single point of entry to retail media inventory onsite and across premium publishers offsite.
  • We expanded our retailer monetization solution suite, Commerce Yield, offering retailers the means to tap previously unattainable demand by paving the way for the integration of marketplace and in-store monetization technologies.
  • Criteo's activated media spend2, including Iponweb, was $4.0 billion in the last 12 months and $1.0 billion in Q3, growing 32% year-over-year at constant currency3.
  • Retail Media Contribution ex-TAC grew 29% year-over-year at constant currency3 and same-retailer Contribution ex-TAC4 retention for Retail Media was 123%.
  • We expanded our platform adoption to 2,500 brands and 220 retailers, including Saks, DocMorris, and Mercatus.
  • Marketing Solutions Contribution ex-TAC was up 1% year-over-year at constant currency3.
  • We deployed $103 million of capital for share repurchases in the first nine months of 2023.






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 Q3 2023 was $469 million, gross profit was $205 million and Contribution ex-TAC was $245 million. Net income for Q3 was $7 million, or $0.12 per share on a diluted basis. Adjusted EBITDA for Q3 was $68 million, resulting in an adjusted diluted EPS of $0.71. As reported, revenue for Q3 increased by 5%, gross profit increased 14% and Contribution ex-TAC increased by 15%. At constant currency, revenue for Q3 increased by 2% and Contribution ex-TAC increased by 13%. Cash flow from operating activities was $20 million in Q3 and Free Cash Flow was $4 million in Q3. As of September 30, 2023, we had $232 million in cash and marketable securities on our balance sheet.

Sarah Glickman, Chief Financial Officer, said, "Our third quarter performance demonstrates our strong focus on execution and cost discipline. Despite a challenging macro environment, we believe we are well on our way to achieving over $1 billion in Contribution ex-TAC this year for the first time in Criteo's history."

Third Quarter 2023 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue increased by 5% year-over-year in Q3 2023, or 2% at constant currency, to $469 million (Q3 2022: $447 million). Gross profit increased by 14% year-over-year in Q3 2023 to $205 million (Q3 2022: $180 million). Gross profit as a percentage of revenue, or gross profit margin, was 44% (Q3 2022: 40%). Contribution ex-TAC in the third quarter increased 15% year-over-year, or increased 13% at constant currency, to $245 million (Q3 2022: $213 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 52% (Q3 2022: 48%), up 400 basis points year-over-year, largely driven by Retail Media and our client transition to the Company's platform.

  • Marketing Solutions revenue was flat, or decreased 4% at constant currency, and Marketing Solutions Contribution ex-TAC increased 3%, or increased 1% at constant currency, driven by the continued traction of Commerce Audiences as more clients adopt full funnel activation.
  • Retail Media revenue increased 21%, or 19% at constant currency, reflecting continued strength in Retail Media onsite, partially offset by the impact related to the client migration to the Company's platform. Retail Media Contribution ex-TAC increased 31%, 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 82%, or 79% on constant currency basis, to $34 million following the closing of the acquisition on August 1, 2022.

Net Income (Loss) and Adjusted Net Income

Net income was $7 million in Q3 2023 (Q3 2022: net income of $7 million). Net income allocated to shareholders of Criteo was $7 million, or $0.12 per share on a diluted basis (Q3 2022: net income available to shareholders of $7 million, or $0.10 per share on a diluted basis).

Adjusted net income, a non-GAAP financial measure, was $43 million, or $0.71 per share on a diluted basis (Q3 2022: $33 million, or $0.53 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA was $68 million, representing an increase of 36% year-over-year (Q3 2022: $50 million). This reflects higher Contribution ex-TAC over the period and planned cost reduction actions, partially offset by incremental costs following the acquisition of Iponweb. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 28% (Q3 2022: 24%).

Operating expenses increased by 11% year-over-year to $194 million (Q3 2022: $175 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% to $148 million (Q3 2022: $141 million).

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities decreased to $20 million in Q3 2023 (Q3 2022: $42 million).

Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, decreased to $4 million in Q3 2023 (Q3 2022: $21 million). This was mainly driven by the CNIL payment of $43 million in Q3 2023.

Cash and cash equivalents, and marketable securities, decreased $141 million compared to December 31, 2022 to $232 million, after spending $103 million on share repurchases in the first nine months of 2023.

As of September 30, 2023, the Company had total financial liquidity of approximately $747 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.

2023 Business Outlook

The following forward-looking statements reflect Criteo's expectations as of November 2, 2023, amidst an uncertain macro-economic and geopolitical backdrop.

Fiscal year 2023 guidance:

  • +9% to +10% growth in Contribution ex-TAC at constant currency, including the contribution from our Iponweb acquisition
  • Adjusted EBITDA margin of approximately 27% to 28% of Contribution ex-TAC, reflecting the flow-through of our refined Contribution ex-TAC projections and incremental currency headwinds

Fourth quarter 2023 guidance:

  • Contribution ex-TAC between $296 million and $302 million, or year-over-year growth at constant-currency of +5% to +7%
  • Adjusted EBITDA between $109 million and $115 million

The above guidance for the fourth quarter and fiscal year ending December 31, 2023 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.926, a U.S. dollar-Japanese Yen rate of 141, a U.S. dollar-British pound rate of 0.809, a U.S. dollar-Korean Won rate of 1,318 and a U.S. dollar-Brazilian real rate of 5.03.

The above guidance assumes that no additional acquisitions are completed during the fourth quarter of 2023 or the fiscal year ended December 31, 2023.

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

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 December 31, 2023 and the year ending December 31, 2023, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful integration of our acquisitions of Iponweb and Brandcrush, 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, November 2, 2023, at 8:00 AM ET, 1:00 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
Florian Herzing, [email protected] 

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands, unaudited)




September 30, 2023


December 31, 2022

Assets





Current assets:





Cash and cash equivalents


$                         194,857


$                         348,200

Trade receivables, net of allowances of $ 49.4 million and $ 47.8 million at
September 30, 2023 and December 31, 2022, respectively


624,562


708,949

Income taxes


29,916


23,609

Other taxes


87,465


78,274

Other current assets


42,052


51,866

Restricted cash - current


75,000


25,000

Marketable securities - current portion


21,091


25,098

Total current assets


1,074,943


1,260,996

Property, plant and equipment, net


134,241


131,207

Intangible assets, net


174,029


175,983

Goodwill


518,655


515,140

Right of Use Asset - operating lease


112,178


102,176

Restricted cash - non current


—


75,000

Marketable securities - non current portion


15,891


—

Non-current financial assets


4,977


5,928

Other non-current assets


49,719


50,818

Deferred tax assets


56,010


31,646

    Total non-current assets


1,065,700


1,087,898

Total assets


$                     2,140,643


$                     2,348,894






Liabilities and shareholders' equity





Current liabilities:





Trade payables


$                         668,550


$                         742,918

Contingencies - current portion


1,608


65,759

Income taxes


1,633


13,037

Financial liabilities - current portion


672


219

Lease liability - operating - current portion


35,296


31,003

Other taxes


59,584


58,031

Employee - related payables


100,483


85,569

Other current liabilities


93,115


83,457

Total current liabilities


960,941


1,079,993

Deferred tax liabilities


3,427


3,463

Defined benefit plans


4,034


3,708

Financial liabilities - non current portion


74


74

Lease liability - operating - non current portion


83,004


77,536

Contingencies - non current portion


32,625


33,788

Other non-current liabilities


21,688


69,226

    Total non-current liabilities


144,852


187,795

Total liabilities


1,105,793


1,267,788

Commitments and contingencies





Shareholders' equity:





Common shares, €0.025 par value,  63,350,663 and 63,248,728 shares
authorized, issued and outstanding at September 30, 2023  and December 31,
2022 , respectively.


2,082


2,079

Treasury stock, 7,094,574 and 5,985,104 shares at cost as of September 30,
2023  and December 31, 2022 , respectively.


(212,094)


(174,293)

Additional paid-in capital


811,381


734,492

Accumulated other comprehensive income (loss)


(100,482)


(91,890)

Retained earnings


504,346


577,653

Equity - attributable to shareholders of Criteo S.A.


1,005,233


1,048,041

Non-controlling interests


29,617


33,065

Total equity


1,034,850


1,081,106

Total equity and liabilities


$                     2,140,643


$                     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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY
change


2023


2022


YoY
change














Revenue


$    469,193


$    446,921


5 %


$ 1,383,143


$ 1,452,578


(5) %














Cost of revenue













Traffic acquisition cost


(223,798)


(233,543)


(4) %


(676,913)


(807,758)


(16) %

Other cost of revenue


(40,268)


(33,771)


19 %


(119,812)


(96,214)


25 %














Gross profit


205,127


179,607


14 %


586,418


548,606


7 %














Operating expenses:













Research and development expenses


(62,522)


(42,725)


46 %


(193,887)


(118,248)


64 %

Sales and operations expenses


(94,572)


(90,051)


5 %


(308,325)


(278,363)


11 %

General and administrative expenses


(36,599)


(42,353)


(14) %


(95,306)


(176,361)


(46) %

Total Operating expenses


(193,693)


(175,129)


11 %


(597,518)


(572,972)


4 %

Income (loss) from operations


11,434


4,478


155 %


(11,100)


(24,366)


(54) %

Financial and Other income (expense)


(2,967)


3,485


(185) %


2,008


23,927


(92) %

Income (loss) before taxes


8,467


7,963


6 %


(9,092)


(439)


NM

Provision for income tax (expense) benefit


(1,832)


(1,442)


27 %


1,685


(4,735)


(136) %

Net income (loss)


$         6,635


$         6,521


2 %


$       (7,407)


$       (5,174)


43 %














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


$         6,927


$         6,579


5 %


$       (7,758)


$       (6,448)


20 %

Net income (loss) available to non-controlling interests


$          (292)


$             (58)


403 %


$            351


$         1,274


(72) %














Weighted average shares outstanding used in computing
per share amounts:













Basic


56,297,666


60,318,114


(7) %


56,173,218


60,431,597


(7) %

Diluted


60,172,953


63,235,811


(5) %


56,173,218


60,431,597


(7) %














Net income (loss) allocated to shareholders per share:













Basic


$           0.12


$           0.11


9 %


$         (0.14)


$         (0.11)


27 %

Diluted


$           0.12


$           0.10


20 %


$         (0.14)


$         (0.11)


27 %

 

CRITEO S.A.

Consolidated Statement of Cash Flows

(U.S. dollars in thousands, unaudited)




Three Months Ended




Nine Months Ended





September 30,




September 30,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net income (loss)


$        6,635


$        6,521


2 %


$      (7,407)


$      (5,174)


43 %

Non-cash and non-operating items


(6,180)


23,816


(126) %


42,706


122,043


(65) %

           - Amortization and provisions


18,866


20,148


(6) %


56,288


134,650


(58) %

           - Payment for contingent liability on regulatory matters


(43,334)


—


NM


(43,334)


—


NM

           - Equity awards compensation expense (1)


24,012


21,084


14 %


76,353


42,594


79 %

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


(106)


335


(132) %


(8,903)


(361)


NM

 - Interest accrued and non-cash financial income and
expenses


—


(2,244)


(100) %


—


(2,244)


— %

          - Change in deferred taxes


(4,206)


(8,937)


(53) %


(24,742)


(16,051)


54 %

          - Change in income taxes


(4,392)


1,779


(347) %


(18,007)


(12,899)


40 %

          - Other


2,980


(8,349)


(136) %


5,051


(23,646)


NM

Changes in working capital related to operating
activities


19,159


11,291


70 %


27,607


13,661


NM

           - (Increase) / Decrease in trade receivables


(50,564)


9,923


(610) %


78,890


75,399


5 %

           - Increase / (Decrease) in trade payables


57,367


(2,549)


NM


(71,190)


(19,526)


NM

           - (Increase) / Decrease in other current assets


8,620


(8,629)


(200) %


1,968


(23,224)


NM

           - Increase / (Decrease) in other current liabilities


3,329


11,135


(70) %


17,926


(20,178)


NM

           - Change in operating lease liabilities and right of use
assets


407


1,411


(71) %


13


1,190


(99) %

CASH FROM (USED FOR) OPERATING ACTIVITIES


19,614


41,628


(53) %


62,906


130,530


(52) %

Acquisition of intangible assets, property, plant and
equipment


(16,331)


(16,161)


1 %


(77,838)


(48,955)


59 %

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


482


(4,146)


(112) %


(16,749)


7,632


NM

Payment for business, net of cash acquired


—


(135,453)


(100) %


(6,957)


(135,453)


(95) %

Proceeds from disposition of investment


—


—


NM


9,625


—


NM

Change in other non-current financial assets


(13)


(1,259)


(99) %


(12,280)


43,052


NM

CASH FROM (USED FOR) INVESTING ACTIVITIES


(15,862)


(157,019)


(90) %


(104,199)


(133,724)


(22) %

Proceeds from borrowings under line-of-credit agreement


—


—


NM


—


78,513


NM

Repayment of borrowings


—


—


NM


—


(78,513)


NM

Change in other financial liabilities


—


107


(100) %


—


107


NM

Proceeds from exercise of stock options


251


266


(6) %


1,948


617


NM

Repurchase of treasury stocks


(28,488)


(29,828)


(4) %


(103,354)


(59,162)


75 %

Cash payment for contingent consideration


—


—


NM


(22,025)


—


NM

Other


(504)


7,768


(106) %


(1,427)


22,242


NM

CASH FROM (USED FOR) FINANCING ACTIVITIES


(28,741)


(21,687)


33 %


(124,858)


(36,196)


NM

Effect of exchange rates changes on cash and cash
equivalents


(3,337)


(18,145)


(82) %


(12,192)


(68,813)


(82) %

Net increase (decrease) in cash and cash equivalents


(28,326)


(155,223)


(82) %


(178,343)


(108,203)


65 %

Net cash and cash equivalents at beginning of period


298,183


562,546


(47) %


448,200


515,526


(13) %

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


$    269,857


$    407,323


(34) %


$    269,857


$    407,323


(34) %














SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION













Cash paid for taxes, net of refunds


$    (10,276)


$      (8,600)


19 %


$    (41,377)


$    (33,685)


23 %

Cash paid for interest


$          (439)


$          (333)


32 %


$      (1,055)


$          (959)


10 %

(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $23.5 million and $20.5 million of equity awards compensation expense for the quarters ended September 30,  2023 and 2022, respectively, and $74.9 million and $41.1 million of equity awards compensation for the nine months ended September 30, 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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY

Change


2023


2022


YoY

Change














CASH FROM (USED FOR) OPERATING
ACTIVITIES


$    19,614


$    41,628


(53) %


$      62,906


$   130,530


(52) %

Acquisition of intangible assets, property, plant and
equipment


(16,331)


(16,161)


1 %


(77,838)


(48,955)


59 %

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


482


(4,146)


(112) %


(16,749)


7,632


NM

FREE CASH FLOW (1)


$      3,765


$    21,321


(82) %


$    (31,681)


$      89,207


NM

(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




Nine Months Ended



September 30,




September 30,



2023


2022


YoY Change


2023


2022


YoY Change













Gross Profit

205,127


179,607


14 %


586,418


548,606


7 %













Other Cost of Revenue

40,268


33,771


19 %


119,812


96,214


25 %













Contribution ex-TAC (1)

$     245,395


$     213,378


15 %


$     706,230


$     644,820


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






Nine Months Ended








September 30,






September 30,






Segment


2023


2022


YoY
Change


YoY
Change
at
Constant
Currency
(3)


2023


2022


YoY
Change


YoY
Change
at
Constant
Currency
(3)

Revenue


















Marketing Solutions


$      385,762


$      387,288


— %


(4) %


$   1,162,943


$   1,291,599


(10) %


(9) %


Retail Media (2)


49,813


41,170


21 %


19 %


132,424


142,516


(7) %


(7) %


Iponweb


33,618


18,463


82 %


79 %


87,776


18,463


375 %


372 %


Total


469,193


446,921


5 %


2 %


1,383,143


1,452,578


(5) %


(4) %



















Contribution ex-TAC


















Marketing Solutions


163,341


158,022


3 %


1 %


489,148


522,079


(6) %


(5) %


Retail Media (2)


48,436


36,893


31 %


29 %


129,306


104,278


24 %


24 %


Iponweb


33,618


18,463


82 %


79 %


87,776


18,463


375 %


372 %


Total (1)


$      245,395


$      213,378


15 %


13 %


$      706,230


$      644,820


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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net income (loss)


$      6,635


$      6,521


2 %


$    (7,407)


$    (5,174)


43 %

Adjustments:













Financial (Income) expense


2,958


(3,526)


(184) %


(1,692)


(23,480)


(93) %

Provision for income taxes


1,832


1,442


27 %


(1,685)


4,735


(136) %

Equity awards compensation expense


24,323


21,084


15 %


78,219


42,594


84 %

Pension service costs


179


247


(28) %


532


786


(32) %

Depreciation and amortization expense


24,648


19,283


28 %


76,574


61,568


24 %

Acquisition-related costs


86


6,970


(99) %


1,281


11,491


(89) %

Net loss contingency on regulatory matters


(51)


(1,764)


(97) %


(21,667)


63,920


(134) %

Restructuring, integration and transformation costs


7,833


(81)


NM


38,998


6,554


495 %

Total net adjustments


61,808


43,655


42 %


170,560


168,168


1 %

Adjusted EBITDA (1)


$    68,443


$    50,176


36 %


$  163,153


$  162,994


— %

(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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY
Change


2023


2022


YoY
Change

Research and Development expenses


$      (62,522)


$      (42,725)


46 %


$    (193,887)


$    (118,248)


64 %

Equity awards compensation expense


11,938


11,621


3 %


44,613


21,166


111 %

Depreciation and Amortization expense


9,383


3,208


192 %


28,227


9,682


192 %

Pension service costs


95


130


(27) %


281


408


(31) %

Acquisition-related costs


4


—


NM


507


—


NM

Restructuring, integration and transformation costs


3,482


(53)


NM


8,823


985


796 %

Non GAAP - Research and Development expenses


(37,620)


(27,819)


35 %


(111,436)


(86,007)


30 %

Sales and Operations expenses


(94,572)


(90,051)


5 %


(308,325)


(278,363)


11 %

Equity awards compensation expense


6,387


4,577


40 %


16,814


9,695


73 %

Depreciation and Amortization expense


3,252


3,540


(8) %


10,127


10,878


(7) %

Pension service costs


28


40


(30) %


83


119


(30) %

Acquisition-related costs


—


(11)


(100) %


—


167


(100) %

Restructuring, integration and transformation costs


(391)


(624)


(37) %


17,010


3,908


335 %

Non GAAP - Sales and Operations expenses


(85,296)


(82,529)


3 %


(264,291)


(253,596)


4 %

General and Administrative expenses


(36,599)


(42,353)


(14) %


(95,306)


(176,361)


(46) %

Equity awards compensation expense


5,998


4,886


23 %


16,792


11,733


43 %

Depreciation and Amortization expense


564


563


— %


1,650


1,779


(7) %

Pension service costs


56


77


(27) %


168


259


(35) %

Acquisition-related costs


82


6,981


(99) %


774


11,324


(93) %

Restructuring, integration and transformation costs


4,742


596


696 %


13,165


1,661


693 %

Net loss contingency on regulatory matters


(51)


(1,764)


(97) %


(21,667)


63,920


(134) %

Non GAAP - General and Administrative expenses


(25,207)


(31,014)


(19) %


(84,424)


(85,685)


(1) %

Total Operating expenses


(193,693)


(175,129)


11 %


(597,518)


(572,972)


4 %

Equity awards compensation expense


24,323


21,084


15 %


78,219


42,594


84 %

Depreciation and Amortization expense


13,199


7,311


81 %


40,004


22,339


79 %

Pension service costs


179


247


(28) %


532


786


(32) %

Acquisition-related costs


86


6,970


(99) %


1,281


11,491


(89) %

Restructuring, integration and transformation costs


7,833


(81)


NM


38,998


6,554


495 %

Net loss contingency on regulatory matters


(51)


(1,764)


(97) %


(21,667)


63,920


(134) %

Total Non GAAP Operating expenses (1)


(148,124)


$    (141,362)


5 %


(460,151)


(425,288)


8 %

(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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY
Change


2023


2022


YoY
Change














Net income (loss)


$          6,635


$          6,521


2 %


$        (7,407)


$        (5,174)


43 %

Adjustments:













Equity awards compensation expense


24,323


21,084


15 %


78,219


42,594


84 %

Amortization of acquisition-related intangible assets


8,692


3,531


146 %


26,037


10,853


140 %

Acquisition-related costs


86


6,970


(99) %


1,281


11,491


(89) %

Net loss contingency on regulatory matters


(51)


(1,764)


(97) %


(21,667)


63,920


(134) %

Restructuring, integration and transformation costs


7,833


(81)


NM


38,998


6,554


495 %

Tax impact of the above adjustments (1)


(4,785)


(3,036)


58 %


(15,067)


(8,978)


68 %

Total net adjustments


36,098


26,704


35 %


107,801


126,434


(15) %

Adjusted net income(2)


$        42,733


$        33,225


29 %


$     100,394


$     121,260


(17) %














Weighted average shares outstanding













 - Basic


56,297,666


60,318,114




56,173,218


60,431,597



 - Diluted


60,172,953


63,235,811




60,394,517


63,050,355
















Adjusted net income per share













 - Basic


$            0.76


$            0.55


38 %


$            1.79


$            2.01


(11) %

 - Diluted


$            0.71


$            0.53


34 %


$            1.66


$            1.92


(14) %

(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




Nine Months Ended





September 30,




September 30,





2023


2022


YoY

Change


2023


2022


YoY

Change














Gross Profit as reported


$    205,127


$    179,607


14 %


$    586,418


$    548,606


7 %














Other cost of revenue as reported


(40,268)


(33,771)


19 %


(119,812)


(96,214)


25 %














Contribution ex-TAC as reported(2)


245,395


213,378


15 %


706,230


644,820


10 %

Conversion impact U.S. dollar/other currencies


(4,858)


—




7,286


—



Contribution ex-TAC at constant currency


240,537


213,378


13 %


713,516


644,820


11 %

Contribution ex-TAC(2)/Revenue as reported


52 %


48 %




51 %


44 %
















Traffic acquisition costs as reported


(223,798)


(233,543)


(4) %


(676,913)


(807,758)


(16) %

Conversion impact U.S. dollar/other currencies


8,808


—




(1,850)


—



Traffic acquisition costs at constant currency


(214,990)


(233,543)


(8) %


(678,763)


(807,758)


(16) %














Revenue as reported


469,193


446,921


5 %


1,383,143


1,452,578


(5) %

Conversion impact U.S. dollar/other currencies


(13,666)


—




9,136


—



Revenue at constant currency


$    455,527


$    446,921


2 %


$ 1,392,279


$ 1,452,578


(4) %

(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)




Nine 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


(1,090,406)


(243,877)

Basic number of shares - Basic EPS basis


56,173,218


60,431,597

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


—


—

Diluted number of shares - Diluted EPS basis


56,173,218


60,431,597






Shares issued as at September 30, before Treasury stocks


63,350,663


64,985,388

Treasury stocks as of September 30,


(7,094,574)


(5,049,409)

Shares outstanding as of September 30, after Treasury stocks


56,256,089


59,935,979

Total dilutive effect of share options, warrants, employee warrants


8,341,387


9,403,211

Fully diluted shares as at September 30,


64,597,476


69,339,190

 

CRITEO S.A.

Supplemental Financial Information and Operating Metrics

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



YoY

Change

QoQ

Change

Q3

2023

Q2

2023

Q1

2023

Q4

2022

Q3

2022

Q2

2022

Q1

2022

Q4

2021

Q3

2021

Q2

2021














Clients

(3) %

(1) %

18,423

18,646

18,679

18,990

19,008

18,911

18,764

NA

NA

NA














Revenue 

5 %

— %

469,193

468,934

445,016

564,425

446,921

495,090

510,567

653,267

508,580

551,311

Americas

6 %

4 %

213,607

204,755

188,288

281,806

201,274

213,340

194,847

287,270

204,428

221,227

EMEA

9 %

4 %

164,890

158,215

160,214

185,125

150,915

176,867

193,954

234,559

188,354

209,303

APAC

(4) %

(14) %

90,696

105,964

96,514

97,494

94,732

104,883

121,766

131,438

115,798

120,781














Revenue

5 %

— %

469,193

468,934

445,016

564,425

446,921

495,090

510,567

653,267

508,580

551,311

Marketing Solutions

— %

(2) %

385,762

395,274

381,907

470,918

387,288

440,423

463,888

577,962

458,622

487,465

Retail Media (2)

21 %

12 %

49,813

44,590

38,021

59,801

41,170

54,667

46,679

75,305

49,958

63,846

Iponweb

82 %

16 %

33,618

29,070

25,088

33,706

18,463

—

—

—

—

—














TAC

(4) %

(2) %

(223,798)

(228,717)

(224,398)

(281,021)

(233,543)

(280,565)

(293,650)

(377,076)

(297,619)

(331,078)

Marketing Solutions

(3) %

(2) %

(222,421)

(227,645)

(223,729)

(278,302)

(229,266)

(262,454)

(277,800)

(349,584)

(276,498)

(294,132)

Retail Media (2)

(68) %

28 %

(1,377)

(1,072)

(669)

(2,719)

(4,277)

(18,111)

(15,850)

(27,492)

(21,121)

(36,946)

Iponweb

NM

NM

—

—

—

—

—

—

—

—

—

—














Contribution ex-TAC (1)

15 %

2 %

245,395

240,217

220,618

283,404

213,378

214,525

216,917

276,191

210,961

220,233

Marketing Solutions

3 %

(3) %

163,341

167,629

158,178

192,616

158,022

177,969

186,088

228,378

182,124

193,333

Retail Media (2)

31 %

11 %

48,436

43,518

37,352

57,082

36,893

36,556

30,829

47,813

28,837

26,900

Iponweb

82 %

16 %

33,618

29,070

25,088

33,706

18,463

—

—

—

—

—














Cash flow from
operating activities 

(53) %

NM

19,614

1,328

41,964

125,455

41,628

13,972

74,930

66,012

51,179

26,360














Capital expenditures

(22) %

(65) %

15,849

45,519

33,219

14,522

20,307

15,452

5,564

10,145

15,957

13,128














Net cash position

(34) %

(9) %

269,857

298,183

380,663

448,200

407,323

562,546

589,343

515,527

497,458

489,521














Headcount

(1) %

(1) %

3,487

3,514

3,636

3,716

3,537

3,146

2,939

2,781

2,658

2,572














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

(17) days

(8) days

61

69

74

71

78

76

74

65

70

66

(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-strong-third-quarter-2023-results-301974959.html

SOURCE Criteo Corp


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