Form 8-K Criteo S.A. For: Feb 03
Please note that because we are a French company, the full text of the by-laws has been translated from French. In the case of any discrepancy between this version and the French version, the French version will prevail. Société anonyme Share capital: €1,647,083.675 Registered office: 32 rue Blanche, 75009 Paris, France 484 786 249 RCS Paris _____________________ UPDATED BY-LAWS as of February 3, 2022
TITLE I LEGAL FORM, NAME, PURPOSES, REGISTERED OFFICE AND TERM OF THE COMPANY ARTICLE 1 ~ LEGAL FORM The Company was incorporated as a société par actions simplifiée (simplified corporation) and subsequently converted into a société anonyme by a decision adopted by the shareholders on March 3, 2006. It is governed by Book II of the Commercial Code (Code de Commerce) and by these by-laws. ARTICLE 2 ~ NAME The Company’s name is: CRITEO In all instruments and documents issued by the Company and intended for third parties, the Company’s name shall always be immediately preceded or followed by the words “société anonyme” or the acronym “S.A.” and by the amount of share capital. ARTICLE 3 ~ PURPOSES The Company’s purposes, directly or indirectly, both in France and abroad, are: - Providing IT services and software, acting as a communication agency, providing consulting services to companies and engaging in distance sales; - Taking equity stakes or acquiring interests in all commercial, industrial, financial, real or personal property companies and enterprises by creating new companies, making contributions, subscribing for or purchasing securities or corporate rights, carrying out corporate mergers and entering into alliances or consortia, whether by taking equity stakes or otherwise; - Managing, administering and disposing of said equity stakes, including providing consulting services in the fields of administration and management, in particular commercial, financial and administrative administration and management; and - More broadly, engaging in all financial, commercial, industrial and personal or real property operations that may be directly or indirectly related to the purposes above or any similar or connected purposes that may promote the Company’s expansion or development in France and abroad. ARTICLE 4 ~ REGISTERED OFFICE The Company’s registered office is located at: 32 rue Blanche, 75009 Paris. The registered office may be transferred to any other location in France by a decision of the Board of Directors, provided such decision is ratified by the next ordinary general shareholders’ meeting, and anywhere else by a decision adopted by an extraordinary general shareholders’ meeting. If a transfer is decided by the Board of Directors, the Board of Directors is authorized to amend the by-laws and perform the publication and filing formalities required as a result, provided it is stated that the transfer is subject to the aforementioned ratification.
ARTICLE 5 ~ TERM The term of the Company shall be ninety-nine (99) years from the date of its registration with the Trade and Companies Registry, except in the event it is dissolved before the expiration of its term or if said term is extended by an extraordinary general shareholders’ meeting. *** *** *** *** TITLE II SHARE CAPITAL AND SHARES ARTICLE 6 ~ SHARE CAPITAL The share capital amounts to €1,647,083.675. It is divided into 65,883,347 shares with a par value of €0.025 each, fully paid. ARTICLE 7 ~ LEGAL FORM All shares shall be registered shares. Shares shall be registered in an account, in accordance with the law. ARTICLE 8 ~ SHARE TRANSFERS 8.1. All share transfers shall be carried out in accordance with the law. All expenses generated by a share transfer shall be borne by the transferee. 8.2. Shares are freely transferable. ARTICLE 9 ~ RIGHTS AND OBLIGATIONS PERTAINING TO SHARES The rights and obligations pertaining to shares follow the shares, regardless of who holds the shares, and share transfers shall include all dividends declared but not paid and future dividends and, if applicable, the relevant share of reserve funds and provisions. Ownership of a share shall ipso facto be deemed the shareholder’s approval of these by-laws and of decisions adopted by general shareholders’ meetings. Except as otherwise provided by the law, each shareholder shall have in general meetings as many votes as the number of shares he or she owns, provided that all required payments due for such share have been met. For the same par value, each share entitles its holder to one vote. Each share carries a right to a share of corporate assets, of profits, and of liquidation surplus, proportional to the number and nominal value of the existing shares. Whenever it is necessary to hold more than one share, whether or not preferred shares, or securities to exercise any right, the shareholders or holders of securities shall take it upon themselves to pool the number of shares or securities required.
ARTICLE 10 ~ PAYMENT FOR SHARES Amounts to be paid, in cash, as payment for shares subscribed pursuant to a capital increase shall be payable in accordance with the requirements imposed by an extraordinary general shareholders’ meeting. The initial payment shall not be less than one-fourth, at the time of a capital increase, of the par value of the shares. If applicable, the initial payment shall include the entire amount of the issue premium. The Board of Directors shall make calls for payment of the balance, in one or more installments, within a period of five years from the date the capital increase is completed. Each shareholder shall be notified of the amounts called and the date on which the corresponding sums are to be paid at least fifteen days before the due date. Shareholders who do not pay amounts owed on the shares they hold by the due date shall automatically and without the need for a formal demand for payment owe the Company late payment interest calculated on a daily basis, on the basis of a 365 day year, as of the due date at the legal rate in commercial matters, plus three points, without prejudice to the Company’s personal action against the shareholder in breach and the enforcement measures authorized by law. *** *** *** *** TITLE III MANAGEMENT OF THE COMPANY ARTICLE 11 ~ BOARD OF DIRECTORS 11.1. Composition The Company is administered by a board composed of at least three (3) members and no more than ten (10) members, whether individuals or legal entities. At the time they are appointed, legal entities shall designate an individual as their permanent representative to the Board of Directors. The term of office of the permanent representative shall have the same duration as the term of office of the legal entity s/he represents. If a legal entity removes its permanent representative from office, it shall immediately appoint a replacement. The same provision shall also apply in the event of the death or resignation of the permanent representative. The directors are appointed for a term of two years. The office of a director shall terminate at the close of the ordinary general meeting of shareholders which deliberated on the accounts of the preceding financial year and held in the year during which the term of office of said director comes to an end. Directors are always eligible for reappointment. They may be removed from office at any time by a decision of a general shareholders’ meeting. In the event of one or more vacancies on the Board of Directors due to death or resignation, the Board of Directors may make temporary appointments between two general shareholders’ meetings. A director appointed to replace another director shall serve only for the remaining portion of his/her predecessor’s term of office.
Appointments made by the Board of Directors pursuant to the preceding paragraph shall be submitted for ratification by the next ordinary general shareholders’ meeting. If such appointments are not ratified, decisions adopted and acts performed by the Board of Directors shall nevertheless remain valid. If the number of directors falls below the statutory minimum, the remaining directors shall immediately convene an ordinary general shareholders’ meeting for the purpose of completing the membership of the Board of Directors. Company employees may be appointed as directors. However, their employment contracts must correspond to actual employment. In such case, employees do not lose the benefit of their employment contracts. The number of directors who are parties to an employment contract with the Company shall not exceed one-third of the directors in office. The number of directors over the age of 70 shall not exceed one-third of the directors in office. If this limit is exceeded during the directors’ terms of office, the oldest director shall automatically be deemed to have resigned at the conclusion of the next general shareholders’ meeting. 11.2. Chairperson The Board of Directors shall elect a Chairperson from among its members, who shall be an individual. The Board of Directors shall determine the duration of his/her term of office, which shall not exceed his/her term of office as director, and may remove him/her from office at any time. The Board of Directors shall set his/her compensation. The Chairperson shall organize and manage the work of the Board of Directors and report thereon to the general shareholders’ meetings. The Chairperson shall ensure the satisfactory functioning of the Company’s governing bodies and, in particular, ensure that the directors are able to perform their duties. The Chairperson of the Board of Directors shall not be over the age of 70. If the Chairperson reaches this age limit during his/her term of office as Chairperson, s/he shall automatically be deemed to have resigned. The Chairperson’s term of office shall continue until the next Board of Directors’ meeting, at which his/her successor shall be appointed. Subject to this provision, the Chairperson of the Board of Directors is always eligible for reappointment. 11.3. Vice-chairperson of the board of directors If it deems it useful, the Board may appoint, from among its members, one or more vice- chairpersons, who must be individuals and whose duties are to preside over meetings of the board of directors and the shareholders general meetings in the absence of the chairperson of the board of directors. The board shall determine the term of office of the vice-chairperson which cannot exceed the term of his or her office as director and may dismiss a vice-chairperson at any time. Any vice-chairperson may also ask the chairman to convene the board of directors on a specific agenda. In this case, the chairperson of the board of directors must convene the board on a date that may not be later than fifteen days. If the request is not complied with, the vice-chairperson may convene the meeting and shall indicate the agenda for the meeting. ARTICLE 12 ~ BOARD OF DIRECTORS 12.1. The Board of Directors shall meet as often as required by the Company’s interests. 12.2. The Chairperson shall give the directors notice of Board meetings. Notice may be given by any means, whether written or oral. The Chief Executive Officer may also request the Chairperson to convene a meeting of the Board of Directors to consider a specific agenda.
In addition, directors representing at least one-third of Board members may validly convene a Board meeting. In such case, they shall state the agenda for the meeting. If a Works Council has been created, the representatives of such Council, appointed in accordance with the provisions of the Labor Code (Code du Travail), shall be given notice of all Board of Directors’ meetings. Board meetings shall be held at the registered office or at any other place in France or abroad. 12.3. For the Board of Directors to deliberate validly, at least one-half of its members shall be present. Decisions of the Board of Directors shall be adopted by a majority of votes cast. In the event of a tie vote, the Chairperson shall not have the power to break the tie. 12.4. Internal regulations may be adopted by the board of directors providing, among others, that for the calculation of the quorum and of the majority, the directors participating in the meeting of the board by means of visioconference and telecommunication consistent with regulations in force, will be considered as attending the meeting in person. This provision is not applicable for the adoption of a resolution relating to (i) the drawing-up of the annual accounts and of the management report of the board of directors and (ii) to drawing-up of the consolidated accounts and of the management report of the group. 12.5. Each director shall receive the information necessary to perform his/her duties and hold his/her corporate office, and may obtain copies of all documents he deems of use. 12.6. Any director may, including by letter, telegram or fax, grant another director a proxy to represent him/her at a Board meeting, but no director may hold more than one proxy at any meeting. 12.7. The Board of Directors may also take by written consultation of the Directors the following decisions that fall within the specific powers of the Board of Directors: - Appointment of the Board of Directors’ members provided for in Article L. 225-24 of the French Commercial Code, - Authorization of sureties, endorsements and guarantees provided for in the last paragraph of Article L. 225-35 of the French Commercial Code, - Decisions taken upon delegation granted by the shareholder meeting pursuant the second paragraph of Article L. 225-36 of the French Commercial Code, to modify the by-laws to amend them with the legal and regulatory provisions, - Convening of the shareholders’ meetings, and - Transfer of the head office in the same department. When the decisions is taken by written consultation, the text of the proposed resolutions together with the voting form are sent by the Chairperson of the Board of Directors to every one of its members by electronic means. The directors have a period of three (3) working days (or any shorter delay indicated in the request sent by the Chairperson or the secretary of the Board of Directors) following receipt of the text of the proposed resolutions and of the voting form vote to complete and send to the Chairperson or the secretary of the Board of Directors by electronic means the voting form, dated and signed, by checking for each resolution, a unique box corresponding to the meaning of its vote. If none or more than one box have been ticked for a same resolution, the vote shall be null and void and shall not be taken into account in the calculation of the majority. Any director who has not sent his/her reply within the above mentioned time limit will be considered absent and his/her vote will therefore not be taken into account for the calculation of the quorum and the majority. During the delay of response, any director may require any additional explanations from the initiator of the consultation.
Within five (5) working days following the receipt of the last voting form, the Chairperson shall draw up and date the minutes of the deliberations to which the voting forms shall be appended and which shall be signed by the Chairperson of the Board of Directors and one director. 12.8. Copies or extracts of the minutes of Board of Directors’ meetings shall be validly certified by the Chairperson of the Board of Directors, the Chief Executive Officer, the Deputy Chief Executive Officers, a director temporarily appointed to act as Chairperson or an agent duly authorized for such purpose. ARTICLE 13 ~ POWERS OF THE BOARD OF DIRECTORS The Board of Directors determines the orientations of the Company’s activity and ensure they are carried out, in accordance with its social interest and taking into consideration its social and environmental challenges. Subject to the powers expressly granted to shareholders’ meetings, and within the limits of the corporate purposes, the Board of Directors may consider any issue relating to the proper operation of the Company and shall resolve matters that concern the Company by its decisions. ARTICLE 14 ~ EXECUTIVE MANAGEMENT 14.1.1. The Company’s executive management functions shall be performed, under his/her responsibility, by the Chairperson of the Board of Directors or another individual appointed by the Board of Directors, who shall hold the title of Chief Executive Officer. The Chief Executive Officer shall have the broadest possible powers to act in all circumstances in the name of the Company. The Chief Executive Officer shall exercise his/her powers within the limits of the corporate purposes and subject to the powers expressly granted by law to shareholders’ meetings and to the Board of Directors. S/he shall represent the Company in its dealings with third parties. The Company shall be bound by acts of the Chief Executive Officer that exceed the scope of the corporate purposes, unless the Company is able to prove that the third party was aware, or that in light of the circumstances could not have been unaware, that the act was not within said corporate purposes. However, the mere publication of the by-laws shall not be sufficient to constitute such proof. 14.1.2. The Chief Executive Officer shall not be over 70 years of age. If the Chief Executive Officer reaches this age limit, s/he shall automatically be deemed to have resigned. The Chief Executive Officer’s term of office shall continue until the next Board of Directors’ meeting, at which a new Chief Executive Officer shall be appointed. 14.1.3. If the Chief Executive Officer is a director, the term of his/her position shall not exceed his/her term of office as director. The Board of Directors may remove the Chief Executive Officer from office at any time. If the removal from office is decided without just cause, the Chief Executive Officer removed from office may claim damages unless s/he also holds the position of Chairperson of the Board of Directors. 14.1.4. By a decision adopted by a majority vote of the directors present or represented, the Board of Directors shall choose between the two executive management methods described in Article 14.1.1, paragraph 1. The shareholders and third parties shall be informed of such choice in the manner prescribed by the laws and regulations. The choice made by the Board of Directors shall remain in effect until a contrary decision of the Board of Directors or, at the Board of Directors’ discretion, for the duration of the Chief Executive Officer's term of office. If the Company’s executive management functions are carried out by the Chairperson of the Board of Directors, the provisions concerning the Chief Executive Officer shall apply to him/her. In accordance with the provisions of Article 706-43 of the Code of Criminal Procedure, the Chief Executive Officer may validly delegate to any person of his/her choice the authority to represent the Company in connection with criminal proceedings that may be initiated against the Company. 14.2.1. Pursuant to a proposal of the Chief Executive Officer, the Board of Directors may authorize one or more individuals to assist the Chief Executive Officer in the capacity of Deputy Chief Executive Officer.
In agreement with the Chief Executive Officer, the Board of Directors shall determine the scope and duration of the powers granted to the Deputy Chief Executive Officers. The Board of Directors shall set their compensation. If a Deputy Chief Executive Officer is a director, the term of his/her position shall not exceed his/her term of office as director. Vis-à-vis third parties, Deputy Chief Executive Officers shall have the same powers as the Chief Executive Officer. Deputy Chief Executive Officers have inter alia the power to initiate legal proceedings. No more than five Deputy Chief Executive Officers shall be appointed. Pursuant to a proposal of the Chief Executive Officer, the Deputy Chief Executive Officer(s) may be removed from office by the Board of Directors at any time. If the removal from office is decided without just cause, a Deputy Chief Executive Officer removed from office may claim damages. Deputy Chief Executive Officers shall not be over 70 years of age. If a Deputy Chief Executive Officer in office reaches this age limit, s/he shall automatically be deemed to have resigned. The Deputy Chief Executive Officer’s term of office shall continue until the next Board of Directors’ meeting, at which a new Deputy Chief Executive Officer may be appointed. If the Chief Executive Officer leaves office or is unable to perform his/her duties, unless otherwise decided by the Board of Directors, the Deputy Chief Executive Officer(s) shall remain in office and retain their powers until the appointment of a new Chief Executive Officer. Vis-à-vis third parties, the Deputy Chief Executive Officers shall have the same powers as the Chief Executive Officer. ARTICLE 15 – BOARD OBSERVERS Pursuant to a proposal of the Board of Directors, an ordinary general shareholders’ meeting may appoint Board observers. The Board of Directors may also appoint Board observers directly, subject to ratification by the next general shareholders’ meeting. No more than five Board observers shall be appointed, and they shall constitute a panel. They shall be appointed, without restriction, on the basis of their expertise. The observers are appointed for a term of two years. The office of an observer shall terminate at the close of the ordinary general meeting of shareholders which deliberated on the accounts of the preceding financial year and held in the year during which the term of office of said observer comes to an end. The panel of Board observers shall review matters that the Board of Directors or its Chairperson submits to it for its opinion. The Board observers shall attend Board of Directors’ meetings and shall take part in deliberations in a non-voting capacity. However, their absence shall not affect the validity of the Board of Directors’ deliberations. They shall be given notice of Board meetings in the same manner as the directors. The Board of Directors may remunerate the Board observers by allocating an amount from the directors’ fees granted annually by a general shareholders’ meeting. ARTICLE 16 ~ AGREEMENTS SUBJECT TO AUTHORIZATION 16.1. Guarantees, pledges and other security interests granted by the Company shall be authorized by the Board of Directors in accordance with the requirements prescribed by law. 16.2. All agreements made directly or through an intermediary between the Company and its Chief Executive Officer, a Deputy Chief Executive Officer, a director, a shareholder holding more than 10% of voting rights or, if the shareholder is a company, with the company controlling such shareholder within the meaning of Article L. 223-3 of the Commercial Code, shall require the prior approval of the Board of Directors.
The foregoing shall also apply to agreements in which any of the persons described in the previous paragraph has an indirect interest. Agreements made between the Company and any enterprise in which the Chief Executive Officer, a Deputy Chief Executive Officer or a director is an owner, a partner with unlimited liability, a manager, a director, a member of the Supervisory Board, or, generally, is a person with management responsibilities in such enterprise, shall also require prior authorization. The prior authorization of the Board of Directors shall be required, in accordance with the requirements prescribed by law. The foregoing provisions shall not apply to agreements concerning ordinary transactions that are entered into on arm’s length terms, nor to agreements entered into between two companies, where one holds, directly or indirectly, all the share capital of the other, less, if applicable, the minimum number of shares required to meet the requirements of Article 1832 of the French Civil Code or Articles L. 225-1 and L. 226-1 of the French Commercial Code. ARTICLE 17 ~ PROHIBITED AGREEMENTS Directors who are not legal entities shall be prohibited from obtaining, in any form whatsoever, loans from the Company, current account or other overdraft facilities from the Company or to have the Company provide a guarantee or pledge securing their undertakings to third parties. The same prohibition shall apply to the Chief Executive Officer, the Deputy Chief Executive Officers and to the permanent representatives of directors that are legal entities. The foregoing provision shall also apply to the spouses, ascendants and descendants of the persons referred to in this article, as well as to all intermediaries. ARTICLE 18 ~ STATUTORY AUDITORS The Company shall be audited, in accordance with the requirements prescribed by law, by one or more statutory auditors who meet the eligibility requirements prescribed by law. If the requirements prescribed by law are met, the Company shall appoint at least two statutory auditors. Each statutory auditor shall be appointed by an ordinary general shareholders’ meeting. An ordinary shareholders’ meeting shall appoint, when required by law, one or more deputy statutory auditors, which shall replace the principal statutory auditors in the event they refuse or are unable to perform their duties, or in the event of their resignation or death. If an ordinary general shareholders’ meeting fails to appoint a statutory auditor, any shareholder may petition the court to appoint one, after having duly joined the Chairperson of the Board of Directors to the proceedings. The term of office of a statutory auditor appointed by the court shall expire when an ordinary shareholders’ meeting appoints the statutory auditor(s). *** *** *** *** TITLE IV GENERAL SHAREHOLDERS’ MEETINGS ARTICLE 19 General shareholders’ meetings shall be convened and shall meet in the manner prescribed by law.
If the Company wishes to give notice of meetings electronically, instead of by mail, it must first obtain the agreement of the shareholders concerned, who shall provide their email address. Meetings shall be held at the registered office or at any other location specified in the notice of meeting. The right to participate in the shareholders’ meetings is evidenced by the registration of the shares in the name of the shareholder on the second (2nd) business day preceding the date of the shareholders’ meeting at 12:00 a.m., Paris time. Shareholders who do not attend the general shareholders’ meeting personally may choose one of three following options: - Granting a proxy to another shareholder, his/her spouse or his/her partner in a French domestic partnership (PACS), or - Voting by mail, or - Sending a proxy to the Company without specifying any voting instructions, in accordance with the requirements prescribed by the laws and regulations. In accordance with the requirements prescribed by the laws and regulations in force, the Board of Directors may arrange for shareholders to participate and vote by videoconference or means of telecommunication that allow them to be identified. If the Board of Directors decides to exercise this right for a particular shareholders’ meeting, such Board decision shall be mentioned in the announcement and/or notice of the meeting. Shareholders who participate in shareholders’ meetings be videoconference or any of the other means of telecommunication referred to above, as selected by the Board of Directors, shall be deemed present for the purposes of calculating the quorum and majority. Shareholders’ meetings shall be chaired by the Chairperson of the Board of Directors or, in the absence thereof, by the Chief Executive Officer, a Deputy Chief Executive Officer, if s/he is a director, or by a director specifically appointed for such purpose by the Board of Directors. Failing this, the shareholders’ meeting shall elect its own Chairperson. The duties of scrutineer shall be performed by the two members of the shareholders’ meeting who are present and hold the highest number of votes, and who agree to perform such duties. The officers shall appoint a secretary, who may but need not be a shareholder. An attendance sheet shall be kept, in accordance with the requirements prescribed by law. An ordinary general shareholders’ meeting can be validly conducted pursuant to a first or second notice of meeting only if the shareholders present or represented hold at least 33 1/3 percent of the shares having the right to vote. Decisions of ordinary general meetings shall be adopted by a majority of the votes cast by the shareholders present or represented. The votes expressed do not include those attached to the shares for which the shareholder did not take part in the vote, abstained or voted blank or void. An extraordinary general shareholders’ meeting can be validly conducted pursuant to a first or second notice of meeting only if the shareholders present or represented hold at least 33 1/3 percent of the shares having the right to vote. Decisions of extraordinary general meetings shall be adopted by a majority of two-thirds of the votes cast by the shareholders present or represented. The votes expressed do not include those attached to the shares for which the shareholder did not take part in the vote, abstained or voted blank or void. Copies or extracts of shareholder meeting minutes may be validly certified by the Chairperson of the Board of Directors, a director who holds the position of Chief Executive Officer or the secretary of the meeting. Ordinary and extraordinary general shareholders’ meetings shall exercise their respective powers in accordance with the requirements prescribed by law. *** *** ***
*** TITLE V CORPORATE INCOME ARTICLE 20 ~ FISCAL YEAR Each fiscal year shall last one year, starting on January 1 and ending on December 31. ARTICLE 21 ~ PROFITS – STATUTORY RESERVE FUND An amount of at least five percent (5%) shall be deducted from the profits for the fiscal year, reduced by prior losses, if any, in order to constitute the reserve fund known as the “statutory reserve fund”. Such deduction shall cease to be mandatory when the amount in the statutory reserve fund is equal to one-tenth of share capital. The distributable profits are comprised of the profits for the fiscal year, reduced by prior losses and the deduction required by the previous paragraph, and increased by profits carried forward. ARTICLE 22 ~ DIVIDENDS If the financial statements for the fiscal year, as approved by a general shareholders’ meeting, show a distributable profit, the general shareholders’ meeting shall post it to one or more reserve funds that they have the power to appropriate or use, carry it forward or distribute it in the form of dividends. After having confirmed the existence of reserve funds available to it, a general shareholders’ meeting may decide to distribute amounts withdrawn from such reserve funds. In such case, the decision shall expressly state the reserve items from which the withdrawals are made. However, dividends shall first be withdrawn from the distributable profits for the fiscal year. The procedures for paying dividends shall be set by a general shareholders’ meeting or, failing this, by the Board of Directors. However, dividends shall be paid within a maximum period of nine months from the end of the fiscal year. The shareholders’ meeting called to approve the accounts of the financial year may grant to each shareholder, for all or part of the dividend available for distribution, a choice between payment in the form of cash or in form of shares. In the same manner, each shareholder may be granted, for all or part of the interim dividends available for distribution, a choice between payment of said interim dividends in the form of cash or in the form of shares. The offer of a payment in the form of shares, the price and the terms of issues of shares, as well as the request for payment in the form of shares, and the terms of acknowledgment of the subsequent share capital increase are provided by the laws and regulations. In the event that a balance sheet prepared during or at the end of the fiscal year and certified as accurate by the statutory auditor(s) shows that since the end of the previous fiscal year the Company has generated a profit after necessary depreciation allowances and provisions have been booked, after deducting, if applicable, previous losses and sums to be booked into reserve funds as required by law or these by-laws, and after taking into account profits carried forward, the Board of Directors may decide to distribute interim dividends before the financial statements for the fiscal year have been approved, as well as the amount thereof and the distribution date. The amount of such interim dividends shall not exceed the amount of profits as defined in this paragraph.
*** *** *** *** TITLE VI DISSOLUTION - LIQUIDATION ARTICLE 23 ~ EARLY DISSOLUTION An extraordinary general shareholders’ meeting may, at any time, decide to dissolve the Company before the expiration of its term. ARTICLE 24 ~ LOSS OF ONE-HALF OF SHARE CAPITAL If as a result of losses reported in the accounting documents, the Company’s shareholders’ equity falls below one-half of share capital, the Board of Directors shall, within four months following the approval of the financial statements reporting such loss, convene an extraordinary general shareholders’ meeting to decide whether to dissolve the Company before the expiration of its term. If it is decided not to dissolve the Company, no later than the end of the second fiscal year following the fiscal year in which the loss is observed, and subject to the legal provisions with respect to the minimum capital of sociétés anonymes, the Company shall reduce its share capital by an amount at least equal to losses that cannot be set off against reserve funds, if during such period shareholders’ equity has not been reconstituted to an amount at least equal to one-half of share capital. If a general shareholders’ meeting is not held or if such shareholders’ meeting is unable to validly deliberate after it had been convened a second time, any interested party may petition the Commercial Court to dissolve the Company. ARTICLE 25 ~ EFFECTS OF DISSOLUTION The Company shall be in liquidation from the time it is dissolved, regardless of the reason there for. The Company’s legal personality shall continue to exist for the purposes of the liquidation until completion of the liquidation proceedings. During the entire duration of the liquidation proceedings, general shareholders’ meetings shall have the same powers as during the Company’s existence. Shares shall remain negotiable until completion of the liquidation proceedings. The Company’s dissolution shall be binding vis-à-vis third parties only as of the date that notice thereof has been published with the Trade and Companies Registry. ARTICLE 26 ~ APPOINTMENT OF LIQUIDATORS – POWERS When the Company’s term expires or if the Company is dissolved before the expiration of its term, a general shareholders’ meeting shall decide the method of liquidation, appoint one or more liquidators and establish their powers, which the liquidators shall exercise in accordance with the law. The appointment of liquidators shall cause the duties of the directors, Chairperson, Chief Executive Officer and Deputy Chief Executive Officers to end.
ARTICLE 27 ~ LIQUIDATION – CONCLUSION OF LIQUIDATION PROCEEDINGS In the event of the Company’s dissolution or liquidation, after payment of the liabilities, the remaining assets shall be used first for the payment to the shareholders of the par value of their shares which has not been amortized. Then, the balance, if any, shall be divided among all the shareholders. Upon completion of the liquidation proceedings, the shareholders shall be convened to vote on the final accounts, the discharge to be granted to the liquidators for the performance of their duties, the termination of their duties and to certify the completion of the liquidation proceedings. The completion of the liquidation proceedings shall be published in accordance with the law. *** *** *** *** TITLE VII NOTICES ARTICLE 28 All notices required by these by-laws shall be sent by certified mail, return receipt requested, or served by a bailiff (acte extra-judiciaire). At the same time, a copy of the notice shall be sent to the addressee by ordinary mail. --oo0oo--
Exhibit 99.1
CRITEO REPORTS STRONG FOURTH QUARTER AND FISCAL YEAR 2021 RESULTS
2021 Activated Media Spend Up 19% to $2.7 Billion
Delivered Strong Revenue Growth and Double Digit Growth in Contribution ex-TAC in 2021
2021 Operating Cash Flow Up 19% to $221 Million and Free Cash Flow Up 40% to $168 Million
Extends Share Repurchase Authorization from $175 Million to $280 Million
Targeting Double Digit Growth in Fiscal 2022, Excluding the Contemplated Acquisition of IPONWEB
NEW YORK - February 9, 2022 - Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the global technology company that provides the world's leading Commerce Media Platform, today announced financial results for the fourth quarter and fiscal year ended December 31, 2021 that exceeded the Company's guidance.
Fourth Quarter and Fiscal Year 2021 Financial Highlights:
The following table summarizes our consolidated financial results for the three and twelve months ended December 31, 2021 and 2020:
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||
| (in millions, except EPS data) | ||||||||||||||||||||||||||||||||
| GAAP Results | ||||||||||||||||||||||||||||||||
| Revenue | $ | 653 | $ | 661 | (1) | % | $ | 2,254 | $ | 2,073 | 9 | % | ||||||||||||||||||||
| Gross Profit | $ | 244 | $ | 218 | 12 | % | $ | 782 | $ | 688 | 14 | % | ||||||||||||||||||||
| Net Income | $ | 75 | $ | 47 | 60 | % | $ | 138 | $ | 75 | 84 | % | ||||||||||||||||||||
| Gross Profit margin | 37 | % | 33 | % | 4ppt | 35 | % | 33 | % | 2ppt | ||||||||||||||||||||||
| Diluted EPS | $ | 1.15 | $ | 0.73 | 58 | % | $ | 2.09 | $ | 1.16 | 80 | % | ||||||||||||||||||||
| Cash from operating activities | $ | 66 | $ | 44 | 50 | % | $ | 221 | $ | 185 | 19 | % | ||||||||||||||||||||
| Cash and cash equivalents | $ | 516 | $ | 488 | 6 | % | $ | 516 | $ | 488 | 6 | % | ||||||||||||||||||||
Non-GAAP Results1 | ||||||||||||||||||||||||||||||||
| Contribution ex-TAC | $ | 276 | $ | 253 | 9 | % | $ | 921 | $ | 825 | 12 | % | ||||||||||||||||||||
| Contribution ex-TAC margin | 42 | % | 38 | % | 4ppt | 41 | % | 40 | % | 1ppt | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 111 | $ | 103 | 7 | % | $ | 322 | $ | 251 | 28 | % | ||||||||||||||||||||
| Adjusted diluted EPS | $ | 1.44 | $ | 0.98 | 47 | % | $ | 3.38 | $ | 2.17 | 56 | % | ||||||||||||||||||||
| Free Cash Flow (FCF) | $ | 56 | $ | 22 | 157 | % | $ | 168 | $ | 120 | 40 | % | ||||||||||||||||||||
| FCF / Adjusted EBITDA | 50 | % | 21 | % | 29ppt | 52 | % | 48 | % | 4ppt | ||||||||||||||||||||||
“We delivered double-digit growth in 2021, positioning us for a successful 2022 and beyond. Our impressive performance demonstrates the tremendous progress we have made on our transformation,” said Megan Clarken, Chief Executive Officer. “In 2022, we are accelerating our strategy around commerce media to enable our customers to drive meaningful commerce outcomes.”
Operating Highlights
•Retail Media Contribution ex-TAC grew 58% year-over-year at constant currency2 in 2021 and 41% in Q4, and same-retailer Contribution ex-TAC3 for Retail Media increased 23% year-over-year in Q4.
•Marketing Solutions Contribution ex-TAC grew 6% year-over-year at constant currency2 in 2021 and 7% in Q4.
•Criteo's media spend activated4 by the Commerce Media Platform for marketers and media owners was $2.7 billion in 2021, growing 19% at constant currency2 and close to $850 million in Q4.
•We signed a three-year global partnership with GroupM to accelerate the demand and supply growth of our Retail Media business.
•We added Nordstrom and Michaels to our Retail Media Platform in Q4 and successfully launched our first retailer customers in APAC and Latin America.
___________________________________________________
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
2 Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2020 average exchange rates for the relevant period to 2021 figures.
3 Same-client profitability or Contribution ex-TAC is the profitability or Contribution ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.
4 Activated media spend is defined as the sum of our Marketing Solutions revenue and the media spend activated on behalf of our Retail Media clients.
1
•Same-client contribution ex-TAC2 increased 9% year-over-year at constant currency2 in Q4.
•We had 685 million Daily Active Users (DAUs), over 60% of which on the web are addressable through media owners we have direct access to, as we continue to build Criteo's first-party media network.
•We executed a purchase agreement to acquire the business of IPONWEB Holding Limited ("IPONWEB"), a market-leading AdTech platform company, for $380 million, which we believe will further distinguish Criteo as the commerce media partner of choice on the open internet for the post third-party identifier world.
New Reporting Segment Structure
We are now reporting results for two reportable segments: Marketing Solutions and Retail Media. We have included a table which presents the operating results of our segments in this press release.
Change in Naming of Non-GAAP Financial Measure
We have renamed Revenue ex-TAC, a non-GAAP financial measure, to Contribution ex-TAC. The change was made as the Company considers that Contribution ex-TAC is a non-GAAP financial measure of profitability, closest to Gross Profit, and not revenue. No changes were made in the calculation methodology.
Financial Summary
Revenue for Q4 2021 was $653 million, gross profit was $244 million and Contribution ex-TAC was $276 million. Net income for Q4 was $75 million, or $1.15 per share on a diluted basis. Adjusted EBITDA for Q4 was $111 million, resulting in an adjusted diluted EPS of $1.44. At constant currency, Revenue for Q4 increased by 1%, gross profit increased 14% and Contribution ex-TAC increased by 11%. Revenue for the fiscal year 2021 was $2,254 million, gross profit was $782 million and Contribution ex-TAC was $921 million, up 8%, 13% and 11% respectively at constant currency. Net income for Fiscal 2021 was $138 million, or $2.09 per share on a diluted basis. Fiscal year 2021 Adjusted EBITDA was $322 million, resulting in an adjusted diluted EPS of $3.38. Cash flow from operating activities was $66 million in Q4 and $221 million in 2021, and Q4 Free Cash Flow was $56 million, up 40% in 2021 to $168 million, representing a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021. As of December 31, 2021, we had $571 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, "We delivered outstanding top line performance and record adjusted EBITDA margin and free cash flow in 2021 while investing for future growth. Looking ahead, we are confident about our growth trajectory and expect to grow Contribution ex-TAC by double digits again in 2022 as we continue to scale and execute on our Commerce Media Platform strategy. Importantly, we expect to continue to return cash to shareholders with the extension of our share repurchase program in 2022.”
Fourth Quarter 2021 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 1% year-over-year in Q4 2021, or increased by 1% at constant currency, to $653 million (Q4 2020: $661 million). Gross profit increased by 12% year-over-year in Q4 2021, or 14% at constant currency, to $244 million (Q4 2020: $218 million). Gross profit as a percentage of revenue, or gross profit margin, was 37% (Q4 2020: 33%). Contribution ex-TAC in the fourth quarter increased 9% year-over-year, or 11% at constant currency, to $276 million (Q4 2020: $253 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 42% (Q4 2020: 38%), up 400 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.
•Marketing Solutions revenue grew 6% (or 9% at constant currency) and Marketing Solutions Contribution ex-TAC grew 4% (or 7% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
•Retail Media revenue decreased 36% (or 36% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform ("RMP"). Retail Media Contribution ex-TAC increased 41% (or 41% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.
Net Income and Adjusted Net Income
Net income grew 60% to $75 million in Q4 2021 (Q4 2020: $47 million). Net income margin as a percentage of revenue was 11% (Q4 2020: 7%). Net income available to shareholders of Criteo S.A. was $74 million, or $1.15 per share on a diluted basis (Q4 2020: $45 million, or $0.73 per share on a diluted basis).
Adjusted net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, restructuring related and transformation costs and the tax impact of these adjustments, was $92 million, or $1.44 per share on a diluted basis (Q4 2020: $61 million, or $0.98 per share on a diluted basis).
2
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 7% year-over-year, or 10% at constant currency, to $111 million (Q4 2020: $103 million), driven by the Contribution ex-TAC performance over the period and effective cost management balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 40% (Q4 2020: 41%).
Operating expenses increased 18% year-over-year to $179 million (Q4 2020: $151 million), reflecting investments in our growth areas, including Product, Sales and R&D, and higher equity award compensation expense balanced with disciplined and effective expense management. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, acquisition-related costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP operating expenses, increased by 16% or $21 million, to $151 million (Q4 2020: $130 million).
Fiscal Year 2021 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue increased 9% year-over-year (8% at constant currency), to $2,254 million (FY 2020: $2,073 million). Gross profit increased by 14% year-over-year in 2021, or 13% at constant currency, to $782 million (FY 2020: $688 million). Gross profit as a percentage of revenue, or gross profit margin, was 35% (FY 2020: 33%). Contribution ex-TAC increased 12% year-over-year (11% at constant currency), to $921 million (FY 2020: $825 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 41% (FY 2020: 40%), up 100 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.
•Marketing Solutions revenue grew 11% (or 10% at constant currency) and Marketing Solutions Contribution ex-TAC grew 7% (or 6% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
•Retail Media revenue decreased 7% (or 8% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform ("RMP"). Retail Media Contribution ex-TAC increased 59% (or 58% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.
Net Income and Adjusted Net Income
Net income increased 84% year-over-year to $138 million (FY 2020: $75 million). Net income margin as a percentage of revenue was 6% (FY 2020: 4%). In the course of the fiscal year 2021, we incurred $22 million in restructuring-related and transformation costs. Net income available to shareholders of Criteo S.A. increased 88% year-over-year to $134 million, or $2.09 per share on a diluted basis (FY 2020: $72 million, or $1.16 per share on a diluted basis).
Adjusted net income increased 62% year-over-year to $217 million, or $3.38 per share on a diluted basis (FY 2020: $134 million, or $2.17 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 28% year-over-year, or 26% at constant currency, to $322 million (FY 2020: $251 million), driven by the Contribution ex-TAC performance over the period and effective cost management, balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 35% (FY 2020: 30%).
Operating expenses increased 9% or $51 million, to $630 million (FY 2020: $579 million), mostly driven by higher headcount-related expense, including equity awards compensation expense, partially offset by disciplined expense management across the Company. Non-GAAP operating expenses increased 6% or $31 million, to $524 million (FY 2020: $493 million), largely driven by higher headcount balanced with effective cost discipline across the Company.
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased 50% year-over-year to $66 million in Q4 2021 (Q4 2020: $44 million) and grew 19% to $221 million in 2021 (fiscal year 2020: $185 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 157% to $56 million in Q4 2021 (Q4 2020: $22 million), and grew 40% in 2021 to $168 million (fiscal year 2020: $120 million), driving a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021 (fiscal year 2020: 48%).
3
Cash and cash equivalents increased $28 million compared to December 31, 2020 to $516 million, and to $571 million including marketable securities, up $41 million in 2021, after spending $100 million on share repurchases in 2021.
As of December 31, 2021, the Company had total financial liquidity close to $1.1 billion, or close to $700 million after giving effect to the completion of the contemplated acquisition of IPONWEB, including the Company's cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.
IPONWEB Acquisition
As previously announced, on December 22, 2021, Criteo executed the purchase agreement to acquire IPONWEB, a market-leading AdTech company with world-class media trading capabilities, for $380 million in a combination of cash and Criteo treasury shares. The closing of the transaction is expected by the end of the first quarter of 2022, subject to customary closing conditions.
With this strategic acquisition, Criteo is expected to accelerate its Commerce Media Platform vision to offer better control to its enterprise marketers – and their agency partners – by leveraging IPONWEB's well-established DSP and SSP solutions. The acquisition is also expected to expand our media owner monetization opportunities and to provide critical services for first-party data management across the ecosystem. Together with IPONWEB, Criteo believes it will distinguish itself as the commerce media partner of choice on the open internet for the post third-party cookie and identifier world.
2022 Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of February 9, 2022. Our financial guidance for the first quarter and fiscal year 2022 excludes the contemplated acquisition of IPONWEB.
Fiscal year 2022 guidance:
•We expect Contribution ex-TAC to grow by 10% to 12% at constant currency.
•We expect an Adjusted EBITDA margin of approximately 32% of Contribution ex-TAC.
First quarter 2022 guidance:
•We expect Contribution ex-TAC between $216 million and $220 million, or year-over-year growth at constant-currency of +5% to +7%.
•We expect Adjusted EBITDA between $52 million and $56 million.
The above guidance for the first quarter and fiscal year ending December 31, 2022 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.862, a U.S. dollar-Japanese Yen rate of 115, a U.S. dollar-British pound rate of 0.741, a U.S. dollar-Korean Won rate of 1,180 and a U.S. dollar-Brazilian real rate of 5.40.
The above guidance does not include the previously announced acquisition of IPONWEB, which is expected to close by the end of Q1 2022, and assumes that no additional acquisitions are completed during the first quarter of 2022 or the fiscal year ended December 31, 2022.
Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.
Extension of Share Repurchase Authorization from $175 million to $280 million
Criteo continues to execute on its strategic plan and Company transformation, investing in the growth of the business and leveraging its strong balance sheet position.
Criteo today announces that the board of directors has authorized the extension of its current share repurchase program of up to $175 million of the Company’s outstanding American Depositary Shares to an increased amount of up to $280 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 on the Nasdaq Global Select Market 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.
4
Non-GAAP Financial Measures
This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission ("SEC"): Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted diluted EPS, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.
Contribution ex-TAC is a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business.
Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs and restructuring related and transformation costs.
Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs and restructuring related and transformation costs, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow Conversion is defined as free cash flow divided by Adjusted EBITDA. Free Cash Flow and Free Cash Flow Conversion are key measures used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow and Free Cash Flow Conversion permit a more complete and comprehensive analysis of our available cash flows.
Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.
5
Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Contribution ex-TAC to gross profit, Contribution ex-TAC margin, 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, 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, 2022 and the year ended December 31, 2022, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the scope and impact of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful completion of our acquisition of IPONWEB, uncertainty regarding international growth and expansion (including related to changes in a specific country's or region's political or economic conditions), the impact of 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 26, 2021, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have an impact on Criteo's business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the COVID-19 pandemic.
Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.
6
Conference Call Information
Criteo’s senior management team will discuss the Company’s earnings on a call that will take place today, February 9, 2022, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will subsequently be available for replay.
•U.S. callers: +1 855 209 8212
•International callers: +1 412 317 0788 or +33 1 76 74 05 02
Please ask to be joined into the "Criteo" call.
About Criteo
Criteo (NASDAQ: CRTO) is the global technology company that provides the world's leading Commerce Media Platform. 2,800 Criteo team members partner with 22,000 marketers and thousands of media owners around the globe to activate the world's largest set of commerce data to drive better commerce outcomes. By powering trusted and impactful advertising, Criteo brings richer experiences to every consumer while supporting a fair and open internet that enables discovery, innovation and choice. For more information, please visit www.criteo.com.
Contacts
Criteo Investor Relations
Edouard Lassalle, SVP, Capital Markets & Investor Relations, e.lassalle@criteo.com
Melanie Dambre, Director, Investor Relations, m.dambre@criteo.com
Criteo Public Relations
Maribel Henriquez, Senior Communications Manager, m.henriquez@criteo.com
Financial information to follow
7
CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)
| December 31, 2021 | December 31, 2020 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 515,527 | $ | 488,011 | ||||||||||
Trade receivables, net of allowances of $45.4 million and $39.9 million at December 31, 2021 and December 31, 2020, respectively | 581,988 | 474,055 | ||||||||||||
| Income taxes | 8,784 | 11,092 | ||||||||||||
| Other taxes | 73,388 | 69,987 | ||||||||||||
| Other current assets | 34,182 | 21,405 | ||||||||||||
| Marketable securities - current portion | 50,299 | — | ||||||||||||
| Total current assets | 1,264,168 | 1,064,550 | ||||||||||||
| Property, plant and equipment, net | 139,961 | 189,505 | ||||||||||||
| Intangible assets, net | 82,627 | 79,744 | ||||||||||||
| Goodwill | 329,699 | 325,805 | ||||||||||||
| Right of Use Asset - operating lease | 120,257 | 114,012 | ||||||||||||
| Marketable securities - non current portion | 5,000 | 41,809 | ||||||||||||
| Non-current financial assets | 6,436 | 18,109 | ||||||||||||
| Deferred tax assets | 35,443 | 19,876 | ||||||||||||
| Total non-current assets | 719,423 | 788,860 | ||||||||||||
| Total assets | $ | 1,983,591 | $ | 1,853,410 | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Trade payables | $ | 430,245 | $ | 367,025 | ||||||||||
| Contingencies | 3,059 | 2,250 | ||||||||||||
| Income taxes | 6,641 | 2,626 | ||||||||||||
| Financial liabilities - current portion | 642 | 2,889 | ||||||||||||
| Lease liability - operating - current portion | 34,066 | 48,388 | ||||||||||||
| Other taxes | 60,236 | 58,491 | ||||||||||||
| Employee - related payables | 98,136 | 85,272 | ||||||||||||
| Other current liabilities | 39,523 | 33,390 | ||||||||||||
| Total current liabilities | 672,548 | 600,331 | ||||||||||||
| Deferred tax liabilities | 3,053 | 5,297 | ||||||||||||
| Defined benefit plans | 5,531 | 6,167 | ||||||||||||
| Financial liabilities - non current portion | 360 | 386 | ||||||||||||
| Lease liability - operating - non current portion | 93,893 | 83,007 | ||||||||||||
| Other non-current liabilities | 9,886 | 5,535 | ||||||||||||
| Total non-current liabilities | 112,723 | 100,392 | ||||||||||||
| Total liabilities | 785,271 | 700,723 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Shareholders' equity: | ||||||||||||||
Common shares, €0.025 par value, 65,883,347 and 66,272,106 shares authorized, issued and outstanding at December 31, 2021 and December 31, 2020, respectively. | 2,149 | 2,161 | ||||||||||||
Treasury stock, 5,207,873 and 5,632,536 shares at cost as of December 31, 2021 and December 31, 2020, respectively. | (131,560) | (85,570) | ||||||||||||
| Additional paid-in capital | 731,248 | 693,164 | ||||||||||||
| Accumulated other comprehensive income (loss) | (40,294) | 16,028 | ||||||||||||
| Retained earnings | 601,588 | 491,359 | ||||||||||||
| Equity - attributable to shareholders of Criteo S.A. | 1,163,131 | 1,117,142 | ||||||||||||
| Non-controlling interests | 35,189 | 35,545 | ||||||||||||
| Total equity | 1,198,320 | 1,152,687 | ||||||||||||
| Total equity and liabilities | $ | 1,983,591 | $ | 1,853,410 | ||||||||||
8
CRITEO S.A.
Consolidated Statement of Income
(U.S. dollars in thousands, except share and per share data, unaudited)
Consolidated Statement of Income
(U.S. dollars in thousands, except share and per share data, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Revenue | $ | 653,267 | $ | 661,282 | (1) | % | $ | 2,254,235 | $ | 2,072,617 | 9 | % | ||||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||||||||
| Traffic acquisition cost | (377,076) | (408,108) | (8) | % | (1,333,440) | (1,247,571) | 7 | % | ||||||||||||||||||||||||||||||
| Other cost of revenue | (31,840) | (34,700) | (8) | % | (138,851) | (137,028) | 1 | % | ||||||||||||||||||||||||||||||
| Gross profit | 244,351 | 218,474 | 12 | % | 781,944 | 688,018 | 14 | % | ||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Research and development expenses | (44,860) | (32,797) | 37 | % | (151,817) | (132,513) | 15 | % | ||||||||||||||||||||||||||||||
| Sales and operations expenses | (89,892) | (85,871) | 5 | % | (325,616) | (330,285) | (1) | % | ||||||||||||||||||||||||||||||
| General and administrative expenses | (43,855) | (32,623) | 34 | % | (152,634) | (116,395) | 31 | % | ||||||||||||||||||||||||||||||
| Total Operating expenses | (178,607) | (151,291) | 18 | % | (630,067) | (579,193) | 9 | % | ||||||||||||||||||||||||||||||
| Income from operations | 65,744 | 67,183 | (2) | % | 151,877 | 108,825 | 40 | % | ||||||||||||||||||||||||||||||
| Financial and Other income (expense) | 3,330 | (111) | NM | 1,939 | (1,939) | NM | ||||||||||||||||||||||||||||||||
| Income before taxes | 69,074 | 67,072 | 3 | % | 153,816 | 106,886 | 44 | % | ||||||||||||||||||||||||||||||
| Provision for income taxes | 5,864 | (20,254) | NM | (16,169) | (32,197) | (50) | % | |||||||||||||||||||||||||||||||
| Net Income | $ | 74,938 | $ | 46,818 | 60 | % | $ | 137,647 | $ | 74,689 | 84 | % | ||||||||||||||||||||||||||
| Net income available to shareholders of Criteo S.A. | $ | 73,765 | $ | 45,277 | 63 | % | $ | 134,456 | $ | 71,679 | 88 | % | ||||||||||||||||||||||||||
| Net income available to non-controlling interests | $ | 1,173 | $ | 1,541 | (24) | % | $ | 3,191 | $ | 3,010 | 6 | % | ||||||||||||||||||||||||||
| Weighted average shares outstanding used in computing per share amounts: | ||||||||||||||||||||||||||||||||||||||
| Basic | 60,590,826 | 60,336,486 | 60,717,446 | 60,876,480 | ||||||||||||||||||||||||||||||||||
| Diluted | 63,985,850 | 62,348,489 | 64,231,637 | 61,818,593 | ||||||||||||||||||||||||||||||||||
| Net income allocated to shareholders per share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 1.22 | $ | 0.75 | 63 | % | $ | 2.21 | $ | 1.18 | 87 | % | ||||||||||||||||||||||||||
| Diluted | $ | 1.15 | $ | 0.73 | 58 | % | $ | 2.09 | $ | 1.16 | 80 | % | ||||||||||||||||||||||||||
9
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Net income | $ | 74,938 | $ | 46,818 | 60 | % | $ | 137,647 | $ | 74,689 | 84 | % | ||||||||||||||||||||||||||
| Non-cash and non-operating items | 21,306 | 48,887 | (56) | % | 124,879 | 154,629 | (19) | % | ||||||||||||||||||||||||||||||
| - Amortization and provisions | 23,015 | 26,960 | (15) | % | 90,934 | 106,591 | (15) | % | ||||||||||||||||||||||||||||||
- Equity awards compensation expense (1) | 12,354 | 6,305 | 96 | % | 44,528 | 28,770 | 55 | % | ||||||||||||||||||||||||||||||
| - Net gain or (loss) on disposal of non-current assets | (2,729) | (20) | NM | 1,965 | 2,714 | (28) | % | |||||||||||||||||||||||||||||||
| - Change in deferred taxes | (23,210) | 11,417 | NM | (18,642) | 3,720 | NM | ||||||||||||||||||||||||||||||||
| - Change in income taxes | 11,863 | 3,456 | NM | 6,043 | 10,867 | (44) | % | |||||||||||||||||||||||||||||||
| - Other | 13 | 769 | (98) | % | 51 | 1,967 | (97) | % | ||||||||||||||||||||||||||||||
| Changes in working capital related to operating activities | (30,232) | (51,625) | (41) | % | (41,613) | (43,962) | (5) | % | ||||||||||||||||||||||||||||||
| - (Increase) / Decrease in trade receivables | (151,604) | (126,486) | 20 | % | (134,950) | (3,957) | NM | |||||||||||||||||||||||||||||||
| - Increase / (Decrease) in trade payables | 88,384 | 61,989 | 43 | % | 82,691 | (33,314) | NM | |||||||||||||||||||||||||||||||
| - (Increase) / Decrease in other current assets | (7,032) | (9,476) | (26) | % | (19,742) | (7,188) | NM | |||||||||||||||||||||||||||||||
| - Increase / (Decrease) in other current liabilities | 38,807 | 26,406 | 47 | % | 33,033 | 6,261 | NM | |||||||||||||||||||||||||||||||
| - Change in operating lease liabilities and right of use assets | 1,213 | (4,058) | NM | (2,645) | (5,764) | (54) | % | |||||||||||||||||||||||||||||||
| CASH FROM OPERATING ACTIVITIES | 66,012 | 44,080 | 50 | % | 220,913 | 185,356 | 19 | % | ||||||||||||||||||||||||||||||
| Acquisition of intangible assets, property, plant and equipment | (10,600) | (10,250) | 3 | % | (54,983) | (67,287) | (18) | % | ||||||||||||||||||||||||||||||
| Change in accounts payable related to intangible assets, property, plant and equipment | 455 | (12,052) | NM | 1,973 | 1,818 | 9 | % | |||||||||||||||||||||||||||||||
| Payment for businesses, net of cash acquired | (892) | (1,173) | (24) | % | (10,419) | (1,176) | NM | |||||||||||||||||||||||||||||||
| Change in other non-current financial assets | 865 | (13,819) | NM | (12,938) | (34,448) | (62) | % | |||||||||||||||||||||||||||||||
| CASH USED FOR INVESTING ACTIVITIES | (10,172) | (37,294) | (73) | % | (76,367) | (101,093) | (24) | % | ||||||||||||||||||||||||||||||
| Proceeds from borrowings under line-of-credit agreement | — | (4,315) | NM | — | 153,188 | NM | ||||||||||||||||||||||||||||||||
| Repayment of borrowings | 13 | (167,163) | NM | (1,249) | (167,344) | (99) | % | |||||||||||||||||||||||||||||||
| Proceeds from exercise of stock options | 3,508 | 1,626 | NM | 25,196 | 1,727 | NM | ||||||||||||||||||||||||||||||||
| Repurchase of treasury stocks | (27,416) | — | NM | (100,027) | (43,655) | NM | ||||||||||||||||||||||||||||||||
| Change in other financial liabilities | (401) | 347 | NM | (4,037) | (1,663) | NM | ||||||||||||||||||||||||||||||||
| CASH USED FOR FINANCING ACTIVITIES | (24,296) | (169,505) | (86) | % | (80,117) | (57,747) | 39 | % | ||||||||||||||||||||||||||||||
| Effect of exchange rates changes on cash and cash equivalents | (13,475) | 23,986 | NM | (36,913) | 42,732 | NM | ||||||||||||||||||||||||||||||||
| Net increase in cash and cash equivalents | 18,069 | (138,733) | NM | 27,516 | 69,248 | (60) | % | |||||||||||||||||||||||||||||||
| Net cash and cash equivalents at beginning of period | 497,458 | 626,744 | (21) | % | 488,011 | 418,763 | 17 | % | ||||||||||||||||||||||||||||||
| Net cash and cash equivalents at end of period | $ | 515,527 | $ | 488,011 | 6 | % | $ | 515,527 | $ | 488,011 | 6 | % | ||||||||||||||||||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||||||||||||||||||||||||||
| Cash paid for taxes, net of refunds | $ | (5,482) | $ | (5,381) | 2 | % | $ | (28,767) | $ | (17,610) | 63 | % | ||||||||||||||||||||||||||
| Cash paid for interest | $ | (347) | $ | (1,336) | (74) | % | $ | (1,486) | $ | (2,155) | (31) | % | ||||||||||||||||||||||||||
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $11.9 million and $5.7 million of equity awards compensation expense for the quarter ended December 31, 2021 and 2020, respectively, and $42.7 million and $27.1 million of equity awards compensation for the twelve months ended December, 31, 2021 and 2020, respectively.
10
CRITEO S.A.
Reconciliation of Cash from Operating Activities to Free Cash Flow
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| CASH FROM OPERATING ACTIVITIES | $ | 66,012 | $ | 44,080 | 50 | % | $ | 220,913 | $ | 185,356 | 19 | % | ||||||||||||||||||||||||||
| Acquisition of intangible assets, property, plant and equipment | (10,600) | (10,250) | 3 | % | (54,983) | (67,287) | (18) | % | ||||||||||||||||||||||||||||||
| Change in accounts payable related to intangible assets, property, plant and equipment | 455 | (12,052) | NM | 1,973 | 1,818 | 9 | % | |||||||||||||||||||||||||||||||
FREE CASH FLOW (1) | $ | 55,867 | $ | 21,778 | 157 | % | $ | 167,903 | $ | 119,887 | 40 | % | ||||||||||||||||||||||||||
(1) Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment.
11
CRITEO S.A.
Reconciliation of Contribution ex-TAC to Gross Profit
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | YoY Change at Constant Currency | 2021 | 2020 | YoY Change | YoY Change at Constant Currency | |||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | 244,351 | 218,474 | 12 | % | 14 | % | 781,944 | 688,018 | 14 | % | 13 | % | ||||||||||||||||||||||||||||||||||||||
| Other Cost of Revenue | 31,840 | 34,700 | (8) | % | (6) | % | 138,851 | 137,028 | 1 | % | 2 | % | ||||||||||||||||||||||||||||||||||||||
Contribution ex-TAC (1) | $ | 276,191 | $ | 253,174 | 9 | % | 11 | % | $ | 920,795 | $ | 825,046 | 12 | % | 11 | % | ||||||||||||||||||||||||||||||||||
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
12
CRITEO S.A.
Segment Information
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment | 2021 | 2020 | YoY Change | YoY Change at Constant Currency | 2021 | 2020 | YoY Change | YoY Change at Constant Currency | |||||||||||||||||||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Solutions | $ | 577,962 | $ | 543,262 | 6 | % | 9 | % | $ | 2,007,239 | $ | 1,806,431 | 11 | % | 10 | % | |||||||||||||||||||||||||||||||||||||
Retail Media (2) | 75,305 | 118,020 | (36) | % | (36) | % | 246,996 | 266,186 | (7) | % | (8) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | 653,267 | 661,282 | (1) | % | 1 | % | 2,254,235 | 2,072,617 | 9 | % | 8 | % | |||||||||||||||||||||||||||||||||||||||||
| Contribution ex-TAC | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing Solutions | 228,378 | 219,245 | 4 | % | 7 | % | 796,152 | 746,751 | 7 | % | 6 | % | |||||||||||||||||||||||||||||||||||||||||
Retail Media (2) | 47,813 | 33,929 | 41 | % | 41 | % | 124,643 | 78,295 | 59 | % | 58 | % | |||||||||||||||||||||||||||||||||||||||||
Total (1) | $ | 276,191 | $ | 253,174 | 9 | % | 11 | % | $ | 920,795 | $ | 825,046 | 12 | % | 11 | % | |||||||||||||||||||||||||||||||||||||
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures. The above table provides a reconciliation of Contribution ex-TAC to gross profit.
(2) Criteo operates as two reportable segments as of December 31, 2021. The table above presents the operating results of our Marketing Solutions and Retail Media segments. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, and reported under the retail media segment, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin will increase. Contribution ex-TAC will not be impacted by this transition.
13
CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Net income | $ | 74,938 | $ | 46,818 | 60 | % | $ | 137,647 | $ | 74,689 | 84 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Financial (Income) expense | (347) | 111 | NM | 1,044 | 1,939 | (46) | % | |||||||||||||||||||||||||||||||
| Provision for income taxes | (5,864) | 20,254 | NM | 16,169 | 32,197 | (50) | % | |||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,114 | 8,960 | 35 | % | 44,955 | 31,425 | 43 | % | ||||||||||||||||||||||||||||||
| Research and development | 4,762 | 2,482 | 92 | % | 16,334 | 10,253 | 59 | % | ||||||||||||||||||||||||||||||
| Sales and operations | 3,143 | 3,662 | (14) | % | 13,023 | 12,042 | 8 | % | ||||||||||||||||||||||||||||||
| General and administrative | 4,209 | 2,816 | 49 | % | 15,598 | 9,130 | 71 | % | ||||||||||||||||||||||||||||||
| Pension service costs | 319 | 583 | (45) | % | 1,324 | 2,232 | (41) | % | ||||||||||||||||||||||||||||||
| Research and development | 166 | 290 | (43) | % | 686 | 1,114 | (38) | % | ||||||||||||||||||||||||||||||
| Sales and operations | 49 | 103 | (52) | % | 207 | 394 | (47) | % | ||||||||||||||||||||||||||||||
| General and administrative | 104 | 190 | (45) | % | 431 | 724 | (40) | % | ||||||||||||||||||||||||||||||
| Depreciation and amortization expense | 21,756 | 22,140 | (2) | % | 88,402 | 88,238 | 0.2 | % | ||||||||||||||||||||||||||||||
| Cost of revenue (data center equipment) | 14,611 | 15,354 | (5) | % | 61,119 | 55,935 | 9 | % | ||||||||||||||||||||||||||||||
| Research and development | 2,967 | 1,712 | 73 | % | 9,484 | 10,741 | (12) | % | ||||||||||||||||||||||||||||||
| Sales and operations | 3,579 | 4,033 | (11) | % | 14,780 | 16,770 | (12) | % | ||||||||||||||||||||||||||||||
| General and administrative | 599 | 1,041 | (42) | % | 3,019 | 4,792 | (37) | % | ||||||||||||||||||||||||||||||
| Acquisition-related costs | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| General and administrative | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
Restructuring related and transformation (gain) costs (1) | 1,833 | 4,383 | (58) | % | 21,698 | 19,989 | 9 | % | ||||||||||||||||||||||||||||||
| Research and development | 513 | 747 | (31) | % | 5,751 | 4,240 | 36 | % | ||||||||||||||||||||||||||||||
| Sales and operations | 568 | 2,605 | (78) | % | 9,380 | 9,398 | (0.2) | % | ||||||||||||||||||||||||||||||
| General and administrative | 752 | 1,031 | (27) | % | 6,567 | 6,351 | 3 | % | ||||||||||||||||||||||||||||||
| Total net adjustments | 35,929 | 56,605 | (37) | % | 184,848 | 176,306 | 5 | % | ||||||||||||||||||||||||||||||
Adjusted EBITDA (2) | $ | 110,867 | $ | 103,423 | 7 | % | $ | 322,495 | $ | 250,995 | 28 | % | ||||||||||||||||||||||||||
(1) For the Three Months and the Twelve Months Ended December 2021, and December 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy:
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (Gain) from forfeitures of share-based compensation awards | 239 | (2,655) | (427) | (2,655) | |||||||||||||||||||
| Facilities related (gain) costs | 1,328 | 4,158 | 16,020 | 12,975 | |||||||||||||||||||
| Payroll related (gain) costs | (157) | 1,422 | 4,480 | 5,911 | |||||||||||||||||||
| Consulting costs related to transformation | 423 | 1,458 | 1,625 | 3,758 | |||||||||||||||||||
| Total restructuring related and transformation (gain) costs | $ | 1,833 | $ | 4,383 | $ | 21,698 | $ | 19,989 | |||||||||||||||
For the three months ended and the twelve months ended December 31, 2021 and December 31, 2020, respectively, the cash outflows related to restructuring related and transformation costs were $12.4 million and $ 33.3 million, and $3.9 million and $16.9 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to real-estate facilities and other consulting fees.
(2) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, acquisition-related costs and restructuring related and transformation costs. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, and restructuring related and transformation costs in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.
14
CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Research and Development expenses | $ | (44,860) | $ | (32,797) | 37 | % | $ | (151,817) | $ | (132,513) | 15 | % | ||||||||||||||||||||||||||
| Equity awards compensation expense | 4,762 | 2,482 | 92 | % | 16,334 | 10,253 | 59 | % | ||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 2,967 | 1,712 | 73 | % | 9,484 | 10,741 | (12) | % | ||||||||||||||||||||||||||||||
| Pension service costs | 166 | 290 | (43) | % | 686 | 1,114 | (38) | % | ||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 513 | 747 | (31) | % | 5,751 | 4,240 | 36 | % | ||||||||||||||||||||||||||||||
| Non GAAP - Research and Development expenses | (36,452) | (27,566) | 32 | % | (119,562) | (106,165) | 13 | % | ||||||||||||||||||||||||||||||
| Sales and Operations expenses | (89,892) | (85,871) | 5 | % | (325,616) | (330,285) | (1) | % | ||||||||||||||||||||||||||||||
| Equity awards compensation expense | 3,143 | 3,662 | (14) | % | 13,023 | 12,042 | 8 | % | ||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 3,579 | 4,033 | (11) | % | 14,780 | 16,770 | (12) | % | ||||||||||||||||||||||||||||||
| Pension service costs | 49 | 103 | (52) | % | 207 | 394 | (47) | % | ||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 568 | 2,605 | (78) | % | 9,380 | 9,398 | (0.2) | % | ||||||||||||||||||||||||||||||
| Non GAAP - Sales and Operations expenses | (82,553) | (75,468) | 9 | % | (288,226) | (291,681) | (1) | % | ||||||||||||||||||||||||||||||
| General and Administrative expenses | (43,855) | (32,623) | 34 | % | (152,634) | (116,395) | 31 | % | ||||||||||||||||||||||||||||||
| Equity awards compensation expense | 4,209 | 2,816 | 49 | % | 15,598 | 9,130 | 71 | % | ||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 599 | 1,041 | (42) | % | 3,019 | 4,792 | (37) | % | ||||||||||||||||||||||||||||||
| Pension service costs | 104 | 190 | (45) | % | 431 | 724 | (40) | % | ||||||||||||||||||||||||||||||
| Acquisition-related costs | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 752 | 1,031 | (27) | % | 6,567 | 6,351 | 3 | % | ||||||||||||||||||||||||||||||
| Non GAAP - General and Administrative expenses | (32,073) | (27,371) | 17 | % | (115,763) | (95,112) | 22 | % | ||||||||||||||||||||||||||||||
| Total Operating expenses | (178,607) | (151,291) | 18.1 | % | (630,067) | (579,193) | 9 | % | ||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,114 | 8,960 | 35 | % | 44,955 | 31,425 | 43 | % | ||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 7,145 | 6,786 | 5 | % | 27,283 | 32,303 | (16) | % | ||||||||||||||||||||||||||||||
| Pension service costs | 319 | 583 | (45) | % | 1,324 | 2,232 | (41) | % | ||||||||||||||||||||||||||||||
| Acquisition-related costs | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 1,833 | 4,383 | (58) | % | 21,698 | 19,989 | 9 | % | ||||||||||||||||||||||||||||||
Total Non GAAP Operating expenses (1) | $ | (151,078) | $ | (130,405) | 16 | % | $ | (523,551) | $ | (492,958) | 6 | % | ||||||||||||||||||||||||||
(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, acquisition-related costs and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.
15
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Equity awards compensation expense | ||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 4,762 | $ | 2,482 | 92 | % | $ | 16,334 | $ | 10,253 | 59 | % | ||||||||||||||||||||||||||
| Sales and operations | 3,143 | 3,662 | (14) | % | 13,023 | 12,042 | 8 | % | ||||||||||||||||||||||||||||||
| General and administrative | 4,209 | 2,816 | 49 | % | 15,598 | 9,130 | 71 | % | ||||||||||||||||||||||||||||||
| Total equity awards compensation expense | 12,114 | 8,960 | 35 | % | 44,955 | 31,425 | 43 | % | ||||||||||||||||||||||||||||||
| Pension service costs | ||||||||||||||||||||||||||||||||||||||
| Research and development | 166 | 290 | (43) | % | 686 | 1,114 | (38) | % | ||||||||||||||||||||||||||||||
| Sales and operations | 49 | 103 | (52) | % | 207 | 394 | (47) | % | ||||||||||||||||||||||||||||||
| General and administrative | 104 | 190 | (45) | % | 431 | 724 | (40) | % | ||||||||||||||||||||||||||||||
| Total pension service costs | 319 | 583 | (45) | % | 1,324 | 2,232 | (41) | % | ||||||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||||||||||||||
| Cost of revenue (data center equipment) | 14,611 | 15,354 | (5) | % | 61,119 | 55,935 | 9 | % | ||||||||||||||||||||||||||||||
| Research and development | 2,967 | 1,712 | 73 | % | 9,484 | 10,741 | (12) | % | ||||||||||||||||||||||||||||||
| Sales and operations | 3,579 | 4,033 | (11) | % | 14,780 | 16,770 | (12) | % | ||||||||||||||||||||||||||||||
| General and administrative | 599 | 1,041 | (42) | % | 3,019 | 4,792 | (37) | % | ||||||||||||||||||||||||||||||
| Total depreciation and amortization expense | 21,756 | 22,140 | (2) | % | 88,402 | 88,238 | 0.2 | % | ||||||||||||||||||||||||||||||
| Acquisition-related costs | ||||||||||||||||||||||||||||||||||||||
| General and administrative | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| Total acquisition-related costs | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | ||||||||||||||||||||||||||||||||||||||
| Research and development | 513 | 747 | (31) | % | 5,751 | 4,240 | 36 | % | ||||||||||||||||||||||||||||||
| Sales and operations | 568 | 2,605 | (78) | % | 9,380 | 9,398 | (0.2) | % | ||||||||||||||||||||||||||||||
| General and administrative | 752 | 1,031 | (27) | % | 6,567 | 6,351 | 3 | % | ||||||||||||||||||||||||||||||
| Total restructuring related and transformation (gain) costs | $ | 1,833 | $ | 4,383 | (58) | % | $ | 21,698 | $ | 19,989 | 9 | % | ||||||||||||||||||||||||||
16
CRITEO S.A.
Reconciliation of Adjusted Net Income to Net Income
(U.S. dollars in thousands except share and per share data, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Net income | $ | 74,938 | $ | 46,818 | 60 | % | $ | 137,647 | $ | 74,689 | 84 | % | ||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,114 | 8,960 | 35 | % | 44,955 | 31,425 | 43 | % | ||||||||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 3,755 | 2,926 | 28 | % | 12,929 | 15,520 | (17) | % | ||||||||||||||||||||||||||||||
| Acquisition-related costs | 6,118 | 174 | NM | 11,256 | 286 | NM | ||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 1,833 | 4,383 | (58) | % | 21,698 | 19,989 | 9 | % | ||||||||||||||||||||||||||||||
Tax impact of the above adjustments (1) | (6,557) | (2,127) | NM | (11,243) | (7,738) | 45 | % | |||||||||||||||||||||||||||||||
| Total net adjustments | 17,263 | 14,316 | 21 | % | 79,595 | 59,482 | 34 | % | ||||||||||||||||||||||||||||||
Adjusted net income (2) | $ | 92,201 | $ | 61,134 | 51 | % | $ | 217,242 | $ | 134,171 | 62 | % | ||||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||||||||||||||
| - Basic | 60,590,826 | 60,336,486 | 60,717,446 | 60,876,480 | ||||||||||||||||||||||||||||||||||
| - Diluted | 63,985,850 | 62,348,489 | 64,231,637 | 61,818,593 | ||||||||||||||||||||||||||||||||||
| Adjusted net income per share | ||||||||||||||||||||||||||||||||||||||
| - Basic | $ | 1.52 | $ | 1.01 | 50 | % | $ | 3.58 | $ | 2.20 | 63 | % | ||||||||||||||||||||||||||
| - Diluted | $ | 1.44 | $ | 0.98 | 47 | % | $ | 3.38 | $ | 2.17 | 56 | % | ||||||||||||||||||||||||||
(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates.
(2) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs, restructuring related and transformation costs, and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition-related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.
17
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | YoY Change | 2021 | 2020 | YoY Change | |||||||||||||||||||||||||||||||||
| Revenue as reported | $ | 653,267 | $ | 661,282 | (1) | % | $ | 2,254,235 | $ | 2,072,617 | 9 | % | ||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | 14,553 | — | (19,713) | — | ||||||||||||||||||||||||||||||||||
Revenue at constant currency(1) | 667,820 | 661,282 | 1 | % | 2,234,522 | 2,072,617 | 8 | % | ||||||||||||||||||||||||||||||
| Traffic acquisition costs as reported | (377,076) | (408,108) | (8) | % | (1,333,440) | (1,247,571) | 7 | % | ||||||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | (8,567) | — | 12,263 | — | ||||||||||||||||||||||||||||||||||
Traffic Acquisition Costs at constant currency(1) | (385,643) | (408,108) | (6) | % | (1,321,177) | (1,247,571) | 6 | % | ||||||||||||||||||||||||||||||
Contribution ex-TAC as reported(2) | 276,191 | 253,174 | 9 | % | 920,795 | 825,046 | 12 | % | ||||||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | 5,986 | — | (7,450) | — | ||||||||||||||||||||||||||||||||||
Contribution ex-TAC at constant currency(2) | 282,177 | 253,174 | 11 | % | 913,345 | 825,046 | 11 | % | ||||||||||||||||||||||||||||||
Contribution ex-TAC(2)/Revenue as reported | 42 | % | 38 | % | 41 | % | 40 | % | ||||||||||||||||||||||||||||||
| Other cost of revenue as reported | (31,840) | (34,700) | (8) | % | (138,851) | (137,028) | 1 | % | ||||||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | (919) | — | (372) | — | ||||||||||||||||||||||||||||||||||
Other cost of revenue at constant currency(1) | (32,759) | (34,700) | (6) | % | (139,223) | (137,028) | 2 | % | ||||||||||||||||||||||||||||||
| Gross Profit as reported | 244,351 | 218,474 | 12 | % | 781,944 | 688,018 | 14 | % | ||||||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | 5,067 | — | (7,822) | — | ||||||||||||||||||||||||||||||||||
Gross Profit at constant currency(1) | 249,418 | 218,474 | 14 | % | 774,122 | 688,018 | 13 | % | ||||||||||||||||||||||||||||||
Adjusted EBITDA(3) | 110,867 | 103,423 | 7 | % | 322,495 | 250,995 | 28 | % | ||||||||||||||||||||||||||||||
| Conversion impact U.S. dollar/other currencies | 2,423 | — | (7,281) | — | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA(3) at constant currency(1) | $ | 113,290 | $ | 103,423 | 10 | % | $ | 315,214 | $ | 250,995 | 26 | % | ||||||||||||||||||||||||||
Adjusted EBITDA(3)/Contribution ex-TAC(2) | 40 | % | 41 | % | 35 | % | 30 | % | ||||||||||||||||||||||||||||||
(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.
(2) Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Contribution ex-TAC to Gross Profit" for a reconciliation of Contribution ex-TAC to gross profit.
(3) Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.
18
CRITEO S.A.
Information on Share Count
(unaudited)
| Twelve Months Ended | ||||||||||||||
| 2021 | 2020 | |||||||||||||
| Shares outstanding as at January 1, | 60,639,570 | 62,293,508 | ||||||||||||
| Weighted average number of shares issued during the period | 77,876 | (1,417,028) | ||||||||||||
| Basic number of shares - Basic EPS basis | 60,717,446 | 60,876,480 | ||||||||||||
| Dilutive effect of share options, warrants, employee warrants - Treasury method | 3,514,191 | 942,113 | ||||||||||||
| Diluted number of shares - Diluted EPS basis | 64,231,637 | 61,818,593 | ||||||||||||
| Shares issued as December 31, before Treasury stocks | 65,883,347 | 66,272,106 | ||||||||||||
| Treasury stock as of December 31, | (5,207,873) | (5,632,536) | ||||||||||||
| Shares outstanding as of December 31, after Treasury stocks | 60,675,474 | 60,639,570 | ||||||||||||
| Total dilutive effect of share options, warrants, employee warrants | 6,213,932 | 7,400,024 | ||||||||||||
| Fully diluted shares as at December 31, | 66,889,406 | 68,039,594 | ||||||||||||
19
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
| YoY Change | QoQ Change | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||||||||||||
| Clients | 1% | —% | 21,745 | 21,747 | 21,332 | 20,626 | 21,460 | 20,565 | 20,359 | 20,360 | 20,247 | ||||||||||||||||||||||||
| Revenue | (1)% | 28% | 653,267 | 508,580 | 551,311 | 541,077 | 661,282 | 470,345 | 437,614 | 503,376 | 652,640 | ||||||||||||||||||||||||
| Americas | (8)% | 41% | 287,270 | 204,428 | 221,227 | 203,900 | 312,817 | 204,618 | 185,674 | 191,745 | 306,250 | ||||||||||||||||||||||||
| EMEA | 1% | 25% | 234,559 | 188,354 | 209,303 | 212,096 | 232,137 | 167,800 | 159,621 | 190,114 | 216,639 | ||||||||||||||||||||||||
| APAC | 13% | 14% | 131,438 | 115,798 | 120,781 | 125,081 | 116,328 | 97,927 | 92,319 | 121,517 | 129,751 | ||||||||||||||||||||||||
| Revenue | (1)% | 28% | 653,267 | 508,580 | 551,311 | 541,077 | 661,282 | 470,345 | 437,614 | 503,376 | 652,640 | ||||||||||||||||||||||||
| Marketing Solutions | 6% | 26% | 577,962 | 458,622 | 487,465 | 483,190 | 543,262 | 412,126 | 381,270 | 469,773 | 574,783 | ||||||||||||||||||||||||
Retail Media (2) | (36)% | 51% | 75,305 | 49,958 | 63,846 | 57,887 | 118,020 | 58,219 | 56,344 | 33,603 | 77,857 | ||||||||||||||||||||||||
| TAC | (8)% | 27% | (377,076) | (297,619) | (331,078) | (327,667) | (408,108) | (284,401) | (257,698) | (297,364) | (386,388) | ||||||||||||||||||||||||
| Marketing Solutions | 8% | 26% | (349,584) | (276,498) | (294,132) | (290,873) | (324,017) | (243,616) | (218,990) | (273,057) | (331,709) | ||||||||||||||||||||||||
Retail Media (2) | (67)% | 30% | (27,492) | (21,121) | (36,946) | (36,794) | (84,091) | (40,785) | (38,708) | (24,307) | (54,679) | ||||||||||||||||||||||||
Contribution ex-TAC (1) | 9% | 31% | 276,191 | 210,961 | 220,233 | 213,410 | 253,174 | 185,944 | 179,916 | 206,012 | 266,252 | ||||||||||||||||||||||||
| Marketing Solutions | 4% | 25% | 228,378 | 182,124 | 193,333 | 192,317 | 219,245 | 168,510 | 162,280 | 196,716 | 243,074 | ||||||||||||||||||||||||
Retail Media (2) | 41% | 66% | 47,813 | 28,837 | 26,900 | 21,093 | 33,929 | 17,434 | 17,636 | 9,296 | 23,178 | ||||||||||||||||||||||||
| Cash flow from operating activities | 50% | 29% | 66,012 | 51,179 | 26,360 | 77,362 | 44,080 | 51,156 | 33,377 | 56,743 | 59,359 | ||||||||||||||||||||||||
| Capital expenditures | (55)% | (36)% | 10,145 | 15,957 | 13,128 | 13,780 | 22,302 | 12,898 | 18,532 | 11,737 | 17,520 | ||||||||||||||||||||||||
| Capital expenditures/Revenue | (1)ppt | (1)ppt | 2% | 3% | 2% | 3% | 3% | 3% | 4% | 2% | 3% | ||||||||||||||||||||||||
| Net cash position | 6% | 4% | 515,527 | 497,458 | 489,521 | 520,060 | 488,011 | 626,744 | 578,181 | 436,506 | 418,763 | ||||||||||||||||||||||||
| Headcount | 7% | 5% | 2,781 | 2,658 | 2,572 | 2,532 | 2,594 | 2,636 | 2,685 | 2,701 | 2,755 | ||||||||||||||||||||||||
| Days Sales Outstanding (days - end of month) | 9 days | (5) days | 65 | 70 | 66 | 64 | 56 | 62 | 61 | 62 | 52 | ||||||||||||||||||||||||
(1) We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S. GAAP financial result measures.
(2) Criteo operates as two reportable segments as of December 31, 2021. The table above presents the operating results of our Marketing Solutions and Retail Media segments. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, and reported under the retail media segment, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. We expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform by the second half of 2022. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Contribution ex-TAC margin will increase. Contribution ex-TAC will not be impacted by this transition.
20