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CRITEO REPORTS STRONG SECOND QUARTER 2023 RESULTS

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Q2 Activated Media Spend Up 53%

Launched First-ever Supply-side Platform Built for Commerce

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

Second Quarter 2023 Financial Highlights:

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


Three Months Ended

Six Months Ended


June 30,

June 30,


2023


2022


YoY

Change

2023


2022


YoY

Change


(in millions, except EPS data)

GAAP Results











Revenue

$469


$495


(5) %

$914


$1,006


(9) %

Gross Profit

$200


$185


8 %

$381


$369


3 %

Net Income (loss)

$(2)


$(33)


94 %

$(14)


$(12)


(20) %

Gross Profit margin

43 %


37 %


6ppt

42 %


37 %


5ppt

Diluted EPS

$(0.05)


$(0.56)


(91) %

$(0.26)


$(0.22)


18 %

Cash from operating activities

$1


$14


(90) %

$43


$89


(51) %

Cash and cash equivalents

$223


$563


(60) %

$223


$563


(60) %












Non-GAAP Results1











Contribution ex-TAC

$240


$215


12 %

$461


$431


7 %

Contribution ex-TAC margin

51 %


43 %


8ppt

50 %


43 %


7ppt

Adjusted EBITDA

$56


$50


12 %

$95


$113


(16) %

Adjusted diluted EPS

$0.49


$0.37


32 %

$0.95


$0.90


6 %

Free Cash Flow (FCF)

$(44)


$(1)


NM

$(35)


$68


NM

FCF / Adjusted EBITDA

(79) %


(3) %


(76)ppt

(37) %


60 %


(97)ppt

 

"We delivered a strong performance in the second quarter, demonstrating our relentless focus on execution. Our transformation to a Commerce Media powerhouse continues to progress with the successful launch of our Commerce Grid SSP," said Megan Clarken, Chief Executive Officer of Criteo. "We have built a highly scalable Commerce Media platform to drive long-term sustainable growth and shareholder value."

Operating Highlights

  • We launched Commerce Grid, a first-of-its-kind supply-side platform (SSP) purpose-built for agencies and publishers looking to efficiently connect media and commerce with programmatic.
  • We announced our partnership with Integral Ad Science to bring viewability and invalid traffic (IVT) measurement advancements on any onsite ad format across our network of retailer partners.
  • Criteo's activated media spend2, including Iponweb, was $3.8 billion in the last 12 months and $0.9 billion in Q2, growing 53% year-over-year at constant currency3.
  • Retail Media Contribution ex-TAC grew 20% year-over-year at constant currency3 and same-retailer Contribution ex-TAC4 retention for Retail Media was 118%.
  • We expanded our platform adoption to 2,400 brands and 210 retailers, including Canadian Tire's Sport Chek and Mark's, and marketplaces like Debenhams and Sprinter.
  • Marketing Solutions Contribution ex-TAC was down 5% year-over-year at constant currency3.
  • One year after the acquisition of Iponweb, we have successfully completed the integration to accelerate our Commerce Media Platform strategy.
  • We deployed $75 million of capital for share repurchases in the first half of 2023.
  • Rik van der Kooi was appointed to the board of directors at the 2023 Annual Meeting of Shareholders.

___________________________________________________

1

Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.

2

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

3

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

4

Same-client profitability or Contribution ex-TAC is the profitability or Contribution ex-TAC generated by clients that were live with us in a given quarter and are still live with us the same quarter in the following year.

 

Financial Summary

Revenue for Q2 2023 was $469 million, gross profit was $200 million and Contribution ex-TAC was $240 million. Net loss for Q2 was $2 million, or $0.05 per share on a diluted basis. Adjusted EBITDA for Q2 was $56 million, resulting in an adjusted diluted EPS of $0.49. As reported, revenue for Q2 decreased by 5%, gross profit increased 8% and Contribution ex-TAC increased by 12%. At constant currency, revenue for Q2 decreased by 4% and Contribution ex-TAC increased by 13%. Cash flow from operating activities was $1 million in Q2 and Free Cash Flow was $(44) million in Q2. As of June 30, 2023, we had $261 million in cash and marketable securities on our balance sheet.

Sarah Glickman, Chief Financial Officer, said, "Our second quarter demonstrates the performance of our platform, the resilience of our business model, and our focus on execution. We have momentum heading into the second half of the year, and we remain confident in our 2023 growth outlook."

Second Quarter 2023 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue decreased by 5% year-over-year in Q2 2023, or 4% at constant currency, to $469 million (Q2 2022: $495 million). Gross profit increased by 8% year-over-year in Q2 2023 to $200 million (Q2 2022: $185 million). Gross profit as a percentage of revenue, or gross profit margin, was 43% (Q2 2022: 37%). Contribution ex-TAC in the second quarter increased 12% year-over-year, or increased 13% at constant currency, to $240 million (Q2 2022: $215 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 51% (Q2 2022: 43%), up 800 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Company's platform.

  • Marketing Solutions revenue decreased 10%, or decreased 9% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 6%, or decreased 5% at constant currency, driven by anticipated signal loss impacts and ongoing softness in Retail, partially offset by strength in Travel.
  • Retail Media revenue decreased 18%, or 18% at constant currency, reflecting the impact related to the client migration to the Company's platform. Retail Media Contribution ex-TAC increased 19%, or 20% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
  • Iponweb revenue reflects three months of contribution following the closing of the acquisition on August 1, 2022.

Net Income (Loss) and Adjusted Net Income

Net loss was $2 million in Q2 2023 (Q2 2022: net loss of $33 million). In the course of the second quarter 2023, we incurred $22 million in restructuring, integration and transformation costs. Net loss allocated to shareholders of Criteo was $3 million, or $0.05 per share on a diluted basis (Q2 2022: net loss available to shareholders of $34 million, or $0.56 per share on a diluted basis).

Adjusted net income, a non-GAAP financial measure, was $30 million, or $0.49 per share on a diluted basis (Q2 2022: $23 million, or $0.37 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA was $56 million, representing an increase of 12% year-over-year (Q2 2022: $50 million). This reflects higher Contribution ex-TAC over the period and planned cost reduction actions, partially offset by incremental costs following the acquisition of Iponweb. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 23% (Q2 2022: 23%).

Operating expenses decreased 18% year-over-year to $199 million (Q2 2022: $241 million), mostly driven by cost reduction actions and the partial reversal of the previously accrued liability for loss contingency following the CNIL's decision. This was partially offset by equity awards compensation expense, and operating costs from Iponweb. Non-GAAP operating expenses increased by 6% or $9 million, to $157 million (Q2 2022: $148 million).

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities decreased to $1 million in Q2 2023 (Q2 2022: $14 million).

Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, decreased to $(44) million in Q2 2023 (Q2 2022: $(1) million). This was mainly driven by the planned five-year renewal cycle of our data centers and restructuring.

Cash and cash equivalents, and marketable securities, decreased $113 million compared to December 31, 2022 to $261 million, after spending $75 million on share repurchases in the first half of 2023.

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

2023 Business Outlook

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

Fiscal year 2023 guidance:

  • High single-digit to low double-digit growth in Contribution ex-TAC at constant currency, including the contribution from our Iponweb acquisition
  • Adjusted EBITDA margin of approximately 28% of Contribution ex-TAC

Third quarter 2023 guidance:

  • Contribution ex-TAC between $238 million and $242 million, or year-over-year growth at constant-currency of +7% to +9%, including the contribution from our Iponweb acquisition
  • Adjusted EBITDA between $58 million and $62 million

The above guidance for the third quarter and fiscal year ending December 31, 2023 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.917, a U.S. dollar-Japanese Yen rate of 137, a U.S. dollar-British pound rate of 0.807, a U.S. dollar-Korean Won rate of 1,295 and a U.S. dollar-Brazilian real rate of 5.00.

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

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

Non-GAAP Financial Measures

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

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

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

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

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

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

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

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending September 30, 2023 and the year ending December 31, 2023, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful integration of our acquisitions of Iponweb and Brandcrush, uncertainty regarding international growth and expansion (including related to changes in a specific country's or region's political or economic conditions), the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Contribution ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2023, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, macro-economic conditions including inflation and rising interest rates in the U.S. have impacted Criteo's business, financial condition, cash flow and results of operations.

Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

Conference Call Information

Criteo's senior management team will discuss the Company's earnings on a call that will take place today, August 2, 2023, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website at https://criteo.investorroom.com/ and will subsequently be available for replay.

  • United States: +1 855 209 8212
  • International: +1 412 317 0788
  • France 080-510-2319

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

About Criteo

Criteo (NASDAQ: CRTO) is the global commerce media company that enables marketers and media owners to drive better commerce outcomes. Its industry leading Commerce Media Platform connects thousands of marketers and media owners to deliver richer consumer experiences from product discovery to purchase. By powering trusted and impactful advertising, Criteo supports an open internet that encourages discovery, innovation, and choice. For more information, please visit www.criteo.com.

Contacts

Criteo Investor Relations
Melanie Dambre, m.dambre@criteo.com

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

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands, unaudited)




June 30, 2023


December 31, 2022

Assets





Current assets:





Cash and cash equivalents


$                         223,183


$                         348,200

Trade receivables, net of allowances of $ 55.7 million and $ 47.8 million at

June 30, 2023 and December 31, 2022, respectively


573,463


708,949

Income taxes


28,473


23,609

Other taxes


92,063


78,274

Other current assets


45,268


51,866

Restricted cash - current


75,000


25,000

Marketable securities - current portion


21,151


25,098

Total current assets


1,058,601


1,260,996

Property, plant and equipment, net


143,724


131,207

Intangible assets, net


179,185


175,983

Goodwill


522,536


515,140

Right of Use Asset - operating lease


100,971


102,176

Restricted cash - non current



75,000

Marketable securities - non current portion


16,299


Non-current financial assets


5,311


5,928

Other non-current assets


49,719


50,818

Deferred tax assets


52,021


31,646

    Total non-current assets


1,069,766


1,087,898

Total assets


$                     2,128,367


$                     2,348,894






Liabilities and shareholders' equity





Current liabilities:





Trade payables


$                         616,590


$                         742,918

Contingencies - current portion


45,403


65,759

Income taxes


3,743


13,037

Financial liabilities - current portion


614


219

Lease liability - operating - current portion


32,180


31,003

Other taxes


60,574


58,031

Employee - related payables


100,465


85,569

Other current liabilities


89,447


83,457

Total current liabilities


949,016


1,079,993

Deferred tax liabilities


3,537


3,463

Defined benefit plans


4,358


3,708

Financial liabilities - non current portion


75


74

Lease liability - operating - non current portion


74,722


77,536

Contingencies - non current portion


32,625


33,788

Other non-current liabilities


21,022


69,226

    Total non-current liabilities


136,339


187,795

Total liabilities


1,085,355


1,267,788

Commitments and contingencies





Shareholders' equity:





Common shares, €0.025 par value,  63,337,453 and 63,248,728 shares

authorized, issued and outstanding at June 30, 2023 and December 31, 2022 , respectively.


2,081


2,079

Treasury stock, 7,412,578 and 5,985,104 shares at cost as of June 30, 2023

and December 31, 2022 , respectively.


(214,046)


(174,293)

Additional paid-in capital


787,674


734,492

Accumulated other comprehensive income (loss)


(91,328)


(91,890)

Retained earnings


527,857


577,653

Equity - attributable to shareholders of Criteo S.A.


1,012,238


1,048,041

Non-controlling interests


30,774


33,065

Total equity


1,043,012


1,081,106

Total equity and liabilities


$                     2,128,367


$                     2,348,894

 

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




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

change


2023


2022


YoY

change














Revenue


$    468,934


$    495,090


(5) %


$    913,950


$ 1,005,657


(9) %














Cost of revenue













Traffic acquisition cost


(228,717)


(280,565)


(18) %


(453,115)


(574,215)


(21) %

Other cost of revenue


(40,435)


(29,550)


37 %


(79,544)


(62,443)


27 %














Gross profit


199,782


184,975


8 %


381,291


368,999


3 %














Operating expenses:













Research and development expenses


(67,775)


(41,496)


63 %


(131,365)


(75,523)


74 %

Sales and operations expenses


(112,511)


(99,313)


13 %


(213,753)


(188,312)


14 %

General and administrative expenses


(18,537)


(100,672)


(82) %


(58,707)


(134,008)


(56) %

Total Operating expenses


(198,823)


(241,481)


(18) %


(403,825)


(397,843)


2 %

Income (loss) from operations


959


(56,506)


(102) %


(22,534)


(28,844)


(22) %

Financial and Other income (expense)


(1,852)


16,412


(111) %


4,975


20,442


(76) %

Loss before taxes


(893)


(40,094)


(98) %


(17,559)


(8,402)


109 %

Provision for income tax (expense) benefit


(1,078)


7,121


(115) %


3,517


(3,293)


(207) %

Net loss


$       (1,971)


$     (32,973)


94 %


$     (14,042)


$     (11,695)


(20) %














Net loss available to shareholders of Criteo S.A.


$       (2,876)


$     (33,614)


91 %


$     (14,685)


$     (13,027)


(13) %

Net income (loss) available to non-controlling interests


$            905


$            641


41 %


$            643


$         1,332


(52) %














Weighted average shares outstanding used in computing per share amounts:













Basic


55,924,824


60,240,344


(7) %


56,094,887


60,488,429


(7) %

Diluted


55,924,824


60,240,344


(7) %


56,094,887


60,488,429


(7) %














Net loss allocated to shareholders per share:













Basic


$         (0.05)


$         (0.56)


(91) %


$         (0.26)


$         (0.22)


18 %

Diluted


$         (0.05)


$         (0.56)


(91) %


$         (0.26)


$         (0.22)


18 %

 

CRITEO S.A.

Consolidated Statement of Cash Flows

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net loss


$      (1,971)


$    (32,973)


94 %


$    (14,042)


$    (11,695)


(20) %

Non-cash and non-operating items


16,939


63,501


(73) %


48,886


98,227


(50) %

           - Amortization and provisions


10,111


87,891


(88) %


37,422


114,502


(67) %

           - Equity awards compensation expense (1)


27,173


12,021


126 %


52,341


21,510


NM

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


(7)


(705)


(99) %


(8,797)


(696)


NM

          - Change in deferred taxes


(8,239)


(9,982)


(17) %


(20,536)


(7,114)


NM

          - Change in income taxes


(13,478)


(14,246)


(5) %


(13,615)


(14,678)


(7) %

          - Other


1,379


(11,478)


(112) %


2,071


(15,297)


NM

Changes in working capital related to operating activities


(13,640)


(16,556)


(18) %


8,448


2,370


NM

           - (Increase) / Decrease in trade receivables


(34,666)


(27,262)


27 %


129,454


65,476


98 %

           - Increase / (Decrease) in trade payables


16,454


32,695


(50) %


(128,557)


(16,977)


NM

           - (Increase) / Decrease in other current assets


6,942


4,352


60 %


(6,652)


(14,595)


(54) %

           - Increase / (Decrease) in other current liabilities


(2,069)


(28,131)


(93) %


14,597


(31,313)


NM

           - Change in operating lease liabilities and right of use assets


(301)


1,790


(117) %


(394)


(221)


78 %

CASH FROM (USED FOR) OPERATING ACTIVITIES


1,328


13,972


(90) %


43,292


88,902


(51) %

Acquisition of intangible assets, property, plant and equipment


(24,312)


(21,937)


11 %


(61,507)


(32,794)


88 %

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


(21,207)


6,485


(427) %


(17,231)


11,778


NM

Payment for business, net of cash acquired


(457)



NM


(6,957)



NM

Proceeds from disposition of investment




NM


9,625



NM

Change in other non-current financial assets


(6,259)


21,822


(129) %


(12,267)


44,311


NM

CASH FROM (USED FOR) INVESTING ACTIVITIES


(52,235)


6,370


(920) %


(88,337)


23,295


NM

Proceeds from borrowings under line-of-credit agreement




NM



78,513


NM

Repayment of borrowings




NM



(78,513)


NM

Change in other financial liabilities



7,808


(100) %




NM

Proceeds from exercise of stock options


431


80


439 %


1,697


351


NM

Repurchase of treasury stocks


(23,836)


(21,030)


13 %


(74,866)


(29,334)


NM

Cash payment for contingent consideration




NM


(22,025)



NM

Other


(495)



NM


(923)


14,474


NM

CASH FROM (USED FOR) FINANCING ACTIVITIES


(23,900)


(13,142)


82 %


(96,117)


(14,509)


NM

Effect of exchange rates changes on cash and cash equivalents


(7,673)


(33,996)


(77) %


(8,855)


(50,669)


(83) %

Net increase (decrease) in cash and cash equivalents


(82,480)


(26,796)


208 %


(150,017)


47,019


NM

Net cash and cash equivalents at beginning of period


380,663


589,342


(35) %


448,200


515,527


(13) %

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


$    298,183


$    562,546


(47) %


$    298,183


$    562,546


(47) %














SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION













Cash paid for taxes, net of refunds


$    (23,201)


$    (17,107)


36 %


$    (31,101)


$    (25,085)


24 %

Cash paid for interest


$            (60)


$          (261)


(77) %


$          (676)


$          (626)


8 %



(1)

Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $26.7 million and $11.5 million of equity awards compensation expense for the quarters ended June 30,  2023 and 2022, respectively, and $51.4 million and $20.6 million of equity awards compensation for the six months ended June 30, 2022 and 2022, respectively.

 

CRITEO S.A.

Reconciliation of Cash from Operating Activities to Free Cash Flow

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoY

Change














CASH FROM (USED FOR) OPERATING ACTIVITIES


$      1,328


$    13,972


(90) %


$      43,292


$      88,902


(51) %

Acquisition of intangible assets, property, plant and equipment


(24,312)


(21,937)


11 %


(61,507)


(32,794)


88 %

Change in accounts payable related to intangible

assets, property, plant and equipment


(21,207)


6,485


(427) %


(17,231)


11,778


NM

FREE CASH FLOW (1)


$  (44,191)


$    (1,480)


NM


$    (35,446)


$      67,886


NM



(1)

Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment.

 

CRITEO S.A.

Reconciliation of Contribution ex-TAC to Gross Profit

(U.S. dollars in thousands, unaudited)



Three Months Ended




Six Months Ended



June 30,




June 30,



2023


2022


YoY Change


2023


2022


YoY Change













Gross Profit

199,782


184,975


8 %


381,291


368,999


3 %













Other Cost of Revenue

40,435


29,550


37 %


79,544


62,443


27 %













Contribution ex-TAC (1)

$     240,217


$     214,525


12 %


$     460,835


$     431,442


7 %



(1)

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

 


CRITEO S.A.

Segment Information

(U.S. dollars in thousands, unaudited)






Three Months Ended






Six Months Ended








June 30,






June 30,






Segment


2023


2022


YoY

Change


YoY

Change at

Constant

Currency (3)


2023


2022


YoY Change


YoY

Change at

Constant

Currency (3)

Revenue


















Marketing Solutions


$      395,274


$      440,423


(10) %


(9) %


$      777,181


$      904,311


(14) %


(12) %


Retail Media (2)


44,590


54,667


(18) %


(18) %


82,611


101,346


(18) %


(18) %


Iponweb


29,070



NM


NM


54,158



NM


NM


Total


468,934


495,090


(5) %


(4) %


913,950


1,005,657


(9) %


(7) %



















Contribution ex-TAC


















Marketing Solutions


167,629


177,969


(6) %


(5) %


325,807


364,057


(11) %


(7) %


Retail Media (2)


43,518


36,556


19 %


20 %


80,870


67,385


20 %


21 %


Iponweb


29,070



NM


NM


54,158



NM


NM


Total (1)


$      240,217


$      214,525


12 %


13 %


$      460,835


$      431,442


7 %


10 %



(1)

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

(2)

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

(3)

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

 

CRITEO S.A.

Reconciliation of Adjusted EBITDA to Net Income (Loss)

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoY

Change

Net loss


$    (1,971)


$  (32,973)


(94) %


$  (14,042)


$  (11,695)


20 %

Adjustments:













Financial (Income) expense


1,956


(15,924)


(112) %


(4,650)


(19,954)


(77) %

Provision for income taxes


1,078


(7,121)


(115) %


(3,517)


3,293


(207) %

Equity awards compensation expense


27,831


12,020


132 %


53,896


21,510


151 %

Pension service costs


177


264


(33) %


353


539


(35) %

Depreciation and amortization expense


26,606


20,141


32 %


51,926


42,285


23 %

Acquisition-related costs


362


1,977


(82) %


1,194


4,521


(74) %

Net loss contingency on regulatory matters


(21,616)


65,684


(133) %


(21,616)


65,684


(133) %

Restructuring, integration and transformation costs


21,563


5,925


264 %


31,165


6,635


370 %

Total net adjustments


57,957


82,966


(30) %


108,751


124,513


(13) %

Adjusted EBITDA (1)


$    55,986


$    49,993


12 %


$    94,709


$  112,818


(16) %



(1)

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

 

CRITEO S.A.

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

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoYhange

Research and Development expenses


$      (67,775)


$      (41,496)


63 %


$    (131,365)


$      (75,523)


74 %

Equity awards compensation expense


16,339


5,578


193 %


32,675


9,545


242 %

Depreciation and Amortization expense


8,518


3,181


168 %


18,844


6,474


191 %

Pension service costs


94


136


(31) %


186


278


(33) %

Acquisition-related costs


99



NM


503



NM

Restructuring, integration and transformation costs


4,467


1,029


334 %


5,341


1,038


415 %

Non GAAP - Research and Development expenses


(38,258)


(31,572)


21 %


(73,816)


(58,188)


27 %

Sales and Operations expenses


(112,511)


(99,313)


13 %


(213,753)


(188,312)


14 %

Equity awards compensation expense


5,687


2,550


123 %


10,427


5,118


104 %

Depreciation and Amortization expense


4,059


3,729


9 %


6,875


7,338


(6) %

Pension service costs


27


39


(31) %


55


79


(30) %

Acquisition-related costs



178


(100) %



178


(100) %

Restructuring, integration and transformation costs


12,667


4,076


211 %


17,401


4,532


284 %

Non GAAP - Sales and Operations expenses


(90,071)


(88,741)


1 %


(178,995)


(171,067)


5 %

General and Administrative expenses


(18,537)


(100,672)


(82) %


(58,707)


(134,008)


(56) %

Equity awards compensation expense


5,805


3,892


49 %


10,794


6,847


58 %

Depreciation and Amortization expense


566


606


(7) %


1,086


1,216


(11) %

Pension service costs


56


89


(37) %


112


182


(38) %

Acquisition-related costs


263


1,799


(85) %


691


4,343


(84) %

Restructuring, integration and transformation costs


4,429


820


440 %


8,423


1,065


691 %

Net loss contingency on regulatory matters


(21,616)


65,684


(133) %


(21,616)


65,684


(133) %

Non GAAP - General and Administrative expenses


(29,034)


(27,782)


5 %


(59,217)


(54,671)


8 %

Total Operating expenses


(198,823)


(241,481)


(18) %


(403,825)


(397,843)


2 %

Equity awards compensation expense


27,831


12,020


132 %


53,896


21,510


151 %

Depreciation and Amortization expense


13,143


7,516


75 %


26,805


15,028


78 %

Pension service costs


177


264


(33) %


353


539


(35) %

Acquisition-related costs


362


1,977


(82) %


1,194


4,521


(74) %

Restructuring, integration and transformation costs


21,563


5,925


264 %


31,165


6,635


370 %

Net loss contingency on regulatory matters


(21,616)


65,684


(133) %


(21,616)


65,684


(133) %

Total Non GAAP Operating expenses (1)


(157,363)


$    (148,095)


6 %


(312,028)


(283,926)


10 %



(1)

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

 

CRITEO S.A.

Reconciliation of Adjusted Net Income to Net Income (Loss)

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




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoY

Change














Net loss


$        (1,971)


$      (32,973)


(94) %


$      (14,042)


$      (11,695)


20 %

Adjustments:













Equity awards compensation expense


27,831


12,020


132 %


53,896


21,510


151 %

Amortization of acquisition-related intangible assets


8,812


3,614


144 %


17,345


7,322


137 %

Acquisition-related costs


362


1,977


(82) %


1,194


4,521


(74) %

Net loss contingency on regulatory matters


(21,616)


65,684


(133) %


(21,616)


65,684


(133) %

Restructuring, integration and transformation costs


21,563


5,925


264 %


31,165


6,635


370 %

Tax impact of the above adjustments (1)


(5,333)


(33,220)


(84) %


(10,282)


(37,176)


(72) %

Total net adjustments


31,619


56,000


(44) %


71,702


68,496


5 %

Adjusted net income(2)


$        29,648


$        23,027


29 %


$        57,660


$        56,801


2 %














Weighted average shares outstanding













 - Basic


55,924,824


60,240,344




56,094,887


60,488,429



 - Diluted


60,474,688


62,303,670




60,489,192


62,957,718
















Adjusted net income per share













 - Basic


$            0.53


$            0.38


39 %


$            1.03


$            0.94


10 %

 - Diluted


$            0.49


$            0.37


32 %


$            0.95


$            0.90


6 %



(1)

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

(2)

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

 

CRITEO S.A.

Constant Currency Reconciliation

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2023


2022


YoY

Change


2023


2022


YoY

Change














Gross Profit as reported


$    199,782


$    184,975


8 %


$    381,291


$    368,999


3 %














Other cost of revenue as reported


(40,435)


(29,550)


37 %


(79,544)


(62,443)


27 %














Contribution ex-TAC as reported(1)


240,217


214,525


12 %


460,835


431,442


7 %

Conversion impact U.S. dollar/other currencies


2,205






12,144





Contribution ex-TAC at constant currency(2)


242,422


214,525


13 %


472,979


431,442


10 %

Contribution ex-TAC(2)/Revenue as reported


51 %


43 %




50 %


43 %
















Traffic acquisition costs as reported


(228,717)


(280,565)


(18) %


(453,115)


(574,215)


(21) %

Conversion impact U.S. dollar/other currencies


(2,140)






(10,658)





Traffic acquisition costs at constant currency


(230,857)


(280,565)


(18) %


(463,773)


(574,215)


(19) %














Revenue as reported


468,934


495,090


(5) %


913,950


1,005,657


(9) %

Conversion impact U.S. dollar/other currencies


4,345






22,802





Revenue at constant currency


$    473,279


$    495,090


(4) %


$    936,752


$ 1,005,657


(7) %



(1)

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

(2)

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.

 

CRITEO S.A.

Information on Share Count

(unaudited)




Six Months Ended



2023


2022

Shares outstanding as at January 1,


57,263,624


60,675,474

Weighted average number of shares issued during the period


(1,168,737)


(187,045)

Basic number of shares - Basic EPS basis


56,094,887


60,488,429

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



Diluted number of shares - Diluted EPS basis


56,094,887


60,488,429






Shares issued as at June 30, before Treasury stocks


63,337,453


65,794,032

Treasury stocks as of June 30,


(7,412,578)


(5,265,393)

Fully diluted shares as at June 30,


55,924,875


60,528,639

Total dilutive effect of share options, warrants, employee warrants


9,340,335


6,874,991

Fully diluted shares as at June 30,


65,265,210


67,403,630

 

CRITEO S.A.

Supplemental Financial Information and Operating Metrics

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



YoY

Change

QoQ

Change

Q2

2023

Q1

2023

Q4

2022

Q3

2022

Q2

2022

Q1

2022

Q4

2021

Q3

2021

Q2

2021

Q1

2021














Clients

(1.6) %

(0.4) %

18,646

18,679

18,990

19,008

18,911

18,764

NA

NA

NA

NA














Revenue 

(5) %

5 %

468,934

445,016

564,425

446,921

495,090

510,567

653,267

508,580

551,311

541,077

Americas

(4) %

9 %

204,755

188,288

281,806

201,274

213,340

194,847

287,270

204,428

221,227

203,900

EMEA

(11) %

(1) %

158,215

160,214

185,125

150,915

176,867

193,954

234,559

188,354

209,303

212,096

APAC

1 %

10 %

105,964

96,514

97,494

94,732

104,883

121,766

131,438

115,798

120,781

125,081














Revenue

(5) %

5 %

468,934

445,016

564,425

446,921

495,090

510,567

653,267

508,580

551,311

541,077

Marketing Solutions

(10) %

4 %

395,274

381,907

470,918

387,288

440,423

463,888

577,962

458,622

487,465

483,190

Retail Media (2)

(18) %

17 %

44,590

38,021

59,801

41,170

54,667

46,679

75,305

49,958

63,846

57,887

Iponweb

NM

16 %

29,070

25,088

33,706

18,463














TAC

(18) %

2 %

(228,717)

(224,398)

(281,021)

(233,543)

(280,565)

(293,650)

(377,076)

(297,619)

(331,078)

(327,667)

Marketing Solutions

(13) %

2 %

(227,645)

(223,729)

(278,302)

(229,266)

(262,454)

(277,800)

(349,584)

(276,498)

(294,132)

(290,873)

Retail Media (2)

(94) %

60 %

(1,072)

(669)

(2,719)

(4,277)

(18,111)

(15,850)

(27,492)

(21,121)

(36,946)

(36,794)

Iponweb

NM

NM














Contribution ex-TAC (1)

12 %

9 %

240,217

220,618

283,404

213,378

214,525

216,917

276,191

210,961

220,233

213,410

Marketing Solutions

(6) %

6 %

167,629

158,178

192,616

158,022

177,969

186,088

228,378

182,124

193,333

192,317

Retail Media (2)

19 %

17 %

43,518

37,352

57,082

36,893

36,556

30,829

47,813

28,837

26,900

21,093

Iponweb

NM

16 %

29,070

25,088

33,706

18,463














Cash flow from operating activities 

(90) %

(97) %

1,328

41,964

125,455

41,628

13,972

74,930

66,012

51,179

26,360

77,362














Capital expenditures

195 %

37 %

45,519

33,219

14,522

20,307

15,452

5,564

10,145

15,957

13,128

13,780














Capital expenditures/Revenue

211 %

30 %

10 %

7 %

3 %

5 %

3 %

1 %

2 %

3 %

2 %

3 %














Net cash position

(47) %

(22) %

298,183

380,663

448,200

407,323

562,546

589,343

515,527

497,458

489,521

520,060














Headcount

12 %

(3) %

3,514

3,636

3,716

3,537

3,146

2,939

2,781

2,658

2,572

2,532














Days Sales Outstanding

(days - end of month)

(7) days

(5) days

69

74

71

78

76

74

65

70

66

64



(1)

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

(2)

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

 

Cision View original content:https://www.prnewswire.com/news-releases/criteo-reports-strong-second-quarter-2023-results-301890741.html

SOURCE Criteo S.A.

Criteo S.A.

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