Criteo Reports Third Quarter 2020 Financial Results

Rhea-AI Summary

Criteo S.A. (NASDAQ: CRTO) reported its Q3 2020 financial results, achieving revenue of $470 million despite a 10% year-over-year decline, largely due to the pandemic impact. Net income plummeted 74% to $5 million, with adjusted diluted EPS at $0.40. The company demonstrated strong cash flow, with free cash flow increasing 98% to $38 million. Criteo is transforming into a Commerce Media Platform, aiming for growth through strategic investments. Operating expenses decreased by 11%, and cash on hand reached $627 million, reflecting a robust liquidity position.

Positive

• Free cash flow increased 98% year-over-year to $38 million.
• Cash position rose to $627 million, enhancing financial liquidity.
• Client growth of 3% year-over-year, adding over 200 new clients.
• Retail Media revenue grew nearly 60% year-over-year.

Negative

• Revenue declined 10% year-over-year, impacted by COVID-19.
• Net income decreased 74% year-over-year to $5 million.
• Adjusted EBITDA fell 23% year-over-year to $49 million.

NEW YORK, Oct. 28, 2020 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO), the global technology company powering the world's marketers with trusted and impactful advertising, today announced financial results for the third quarter ended September 30, 2020 that exceeded the top end of its most recent quarterly guidance, despite the continued impact of the pandemic.

Third Quarter 2020 Financial Highlights:

Our financial results reflect the continued impact of the pandemic on our business. The following table summarizes our consolidated financial results for the three months ended September 30, 2019 and 2020:

	Three Months Ended
	September 30,
	2020				2019				YoY Change
	(in millions, except EPS data)
GAAP Results
Revenue	$	470			$	523			(10)	%
Net Income	$	5			$	21			(74)	%
Diluted EPS	$	0.09			$	0.28			$ (0.19)
Cash from operating activities	$	51			$	43			18	%
Net cash position	$	627			$	409			53	%
Non-GAAP Results1
Revenue ex-TAC	$	186			$	221			(16)	%
Revenue ex-TAC margin	40		%		42		%
Adjusted EBITDA	$	49			$	64			(23)	%
Adjusted diluted EPS	$	0.40			$	0.54			$ (0.14)
Free Cash Flow	$	38			$	19			98	%

 

Megan Clarken, Chief Executive Officer of Criteo, said, "We are pleased to deliver better performance than expected on both the top and bottom lines, demonstrating the continued resilience of our business during the pandemic, relentless focus on improving execution and the talent, strength and dedication of our great people."

Clarken continued: "As we look forward, we are transforming our company to a Commerce Media Platform over the next few years to maximize the value of our unique Reach and Commerce assets, enabling our strong customer base, including global brands and retailers, to optimize their sales and digital advertising returns. We believe we have a path to growth over time with a clear product roadmap, a dedicated leadership team and the financial strength to support growth investments."

Operating Highlights

• Criteo and The Trade Desk collaborate on industry wide Unified ID 2.0, an upgraded alternative to third-party cookies.
• Total clients grew 3% year-over-year to close to 20,600 after adding over 200 net new clients, the highest number since Q4 2019.
• Same-client revenue² declined 6% year-over-year (vs. 13% decline in Q2 2020) and same-client Revenue ex-TAC² decreased 11% year-over-year (vs. 14% decline in Q2 2020) at constant currency³, including approximately 17 points directly attributable to the COVID-19 disruption on both.
• New solutions grew 43% year-over-year to 19% of total Revenue ex-TAC.
• Retail Media grew close to 60% year-over-year, and same-client Revenue ex-TAC³ for Retail Media increased 70% year-over-year.
• Our direct header-bidding technology now connects to close to 5,000 direct publishers.

^{___________________________________________________}

1	Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA at constant currency, Adjusted EBITDA margin, Adjusted diluted EPS, Free Cash Flow and growth at constant currency are not measures calculated in accordance with U.S. GAAP.
2	Same-client revenue or Revenue ex-TAC is the revenue or Revenue ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.
3	Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2019 average exchange rates for the relevant period to 2020 figures.

Financial Summary

Revenue for the quarter was $470 million and Revenue ex-TAC was $186 million. Adjusted EBITDA was over $49 million, resulting in an adjusted diluted EPS of $0.40. These all reflect year-over-year declines, largely due to the anticipated negative COVID impact. Excluding the impact of the pandemic, we estimate that Revenue ex-TAC declined about 2% in Q3 2020. Free cash flow was $38 million in Q3 2020, growing 98% year-over-year, and $98 million for the nine months 2020. We have $627M cash on the balance sheet, which includes $158M from the Revolving Credit Facility.

Sarah Glickman, Chief Financial Officer, said, "During Q3 we continued to make progress against all four of our strategic pillars and I am pleased that we were able to control costs and grow free cash flow. Our goal now is to return to growth and ensure smart investment allocation while reducing fixed costs."

Revenue and Revenue ex-TAC

Revenue declined 10% year-over-year, or 11% at constant currency, to $470 million (Q3 2019: $523 million), after an estimated $80 million net negative business impact from the COVID-19 disruption, or approximately 15 points of the year-over-over decline at constant currency. Revenue ex-TAC decreased 16% year-over-year, or 16% at constant currency, to $186 million (Q3 2019: $221 million), after an approximately $33 million net negative business impact from the COVID-19 disruption, or approximately 15 points of the year-over-over decline at constant currency. Growth in our midmarket business and increased adoption of new solutions were offset by the decline in our core business with large clients, primarily as a result of the COVID-19 pandemic impact, in particular on our Travel and Classifieds clients. Revenue ex-TAC as a percentage of revenue, or Revenue ex-TAC margin, was 40% (Q3 2019: 42%).

• In the Americas, Revenue declined 4% year-over-year, or 3% at constant currency, to $205 million and represented 43% of total Revenue. Revenue ex-TAC declined 13% year-over-year, or 11% at constant currency, to $74 million and represented 40% of total Revenue ex-TAC.
• In EMEA, Revenue declined 10% year-over-year, or 13% at constant currency, to $168 million and represented 36% of total Revenue. Revenue ex-TAC declined 14% year-over-year, or 17% at constant currency, to $71 million and represented 38% of total Revenue ex-TAC.
• In Asia-Pacific, Revenue declined 20% year-over-year, or 21% at constant currency, to $98 million and represented 21% of total Revenue. Revenue ex-TAC declined 23% year-over-year, or 24% at constant currency, to $42 million and represented 22% of total Revenue ex-TAC.

Net Income and Adjusted Net Income

Net income decreased 74% year-over-year to $5 million (Q3 2019: $21 million). Net income margin as a percentage of revenue was 1% (Q3 2019: 4%). In the course of the third quarter 2020, we incurred $12 million in restructuring related and transformation costs. Net income available to shareholders of Criteo S.A. decreased 72% year-over-year to $5 million, or $0.09 per share on a diluted basis (Q3 2019: $19 million, or $0.28 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 and deferred price consideration, restructuring related and transformation costs and the tax impact of these adjustments, decreased 31% year-over-year to $24 million, or $0.40 per share on a diluted basis (Q3 2019: $35 million, or $0.54 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA decreased 23% year-over-year, or 27% at constant currency, to $49 million (Q3 2019: $64 million), driven by the Revenue ex-TAC performance over the period, including the still meaningful impact of the COVID-19 pandemic, partly offset by effective expense management measures. Adjusted EBITDA as a percentage of Revenue ex-TAC, or Adjusted EBITDA margin, was 27% (Q3 2019: 29%).

Operating expenses decreased 11% or $17 million, to $143 million (Q3 2019: $160 million), mostly driven by lower headcount-related expense and disciplined expense management across the Company. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring related and transformation costs, depreciation and amortization and acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, decreased 15% or $21 million, to $117 million (Q3 2019: $138 million), largely driven by lower headcount and robust expense management across the Company.

The Company intends to manage its expense base in a disciplined way, while also investing in growth and innovation.

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities increased 18% year-over-year to $51 million (Q3 2019: $43 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 98% to $38 million (Q3 2019: $19 million), representing 77% of Adjusted EBITDA for the third quarter (Q3 2019: 30%) and 66% for the first nine months 2020 (9 months 2019: 44%).

Cash and cash equivalents increased $208 million compared to December 31, 2019 to $627 million, after spending $44 million on share repurchases in the first nine months 2020, and preemptively drawing $158 million of the Company's €350 million Revolving Credit Facility (RCF) in the second quarter.

The Company had financial liquidity in excess of $870 million, including its cash position and RCF as of September 30, 2020.

Business Outlook

The following forward-looking statements reflect Criteo's expectations as of October 28, 2020.

As of now, we continue to see a significant impact to our business related to the pandemic, continued economic uncertainty, customer demand and supply chain logistics of our clients.

Fourth quarter 2020 guidance:

• We expect Revenue ex-TAC to be between $223 million and $230 million, implying constant-currency decline of approximately 15% at the midpoint.
• Assumes less concentrated peak Holiday Season compared to prior years
• Assumes continued slow rebound in our Travel and Classifieds verticals
• Assumes $17M negative impact from Privacy headwinds in the fourth quarter
• We expect Adjusted EBITDA to be between $81 million and $88 million.

The above guidance for the fourth quarter ending December 31, 2020, assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.882, a U.S. dollar-Japanese Yen rate of 107, a U.S. dollar-British pound rate of 0.79, a U.S. dollar-Korean Won rate of 1,196 and a U.S. dollar-Brazilian real rate of 5.23.

The above guidance assumes no acquisitions are completed during the fourth quarter ending December 31, 2020.

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

Non-GAAP Financial Measures

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

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

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

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

During the period, we have broadened the definition of Adjusted EBITDA to exclude costs related to restructuring and transformation costs, in addition to restructuring charges previously excluded. 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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration, 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, acquisition-related costs and deferred price consideration, 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, acquisition-related costs and deferred price consideration, 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 is a key measure used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow permits 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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.

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

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending December 31, 2020, 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, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on March 2, 2020, 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 is having a significant impact on Criteo's business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the virus.

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

Conference Call Information

Criteo's senior management team will discuss the Company's earnings and provide a strategic update on a call that will take place today, October 28, 2020, at 8:00 AM EDT, 1:00 PM CEST. The conference call will be webcast live on the Company's website http://ir.criteo.com and will be available for replay.

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

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

About Criteo

Criteo (NASDAQ: CRTO) is the global technology company powering the world's marketers with trusted and impactful advertising. 2,600 Criteo team members partner with over 20,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers. For more information, please visit www.criteo.com.

Contacts

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

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

Financial information to follow

 

CRITEO S.A. Consolidated Statement of Financial Position (U.S. dollars in thousands, unaudited)
		December 31, 2019				September 30, 2020
Assets
Current assets:
Cash and cash equivalents		$	418,763			$	626,744
Trade receivables, net of allowances of $16.1 million and $38.3   million at December 31, 2019 and September 30, 2020, respectively		481,732				335,583
Income taxes		21,817				11,422
Other taxes		60,924				58,123
Other current assets		17,225				19,278
Total current assets		1,000,461				1,051,150
Property, plant and equipment, net		194,161				195,679
Intangible assets, net		86,886				78,340
Goodwill		317,100				319,595
Right of Use Asset - operating lease		142,044				120,283
Marketable securities		—				23,416
Non-current financial assets		21,747				20,174
Deferred tax assets		27,985				34,731
Total non-current assets		789,923				792,218
Total assets		$	1,790,384			$	1,843,368
Liabilities and shareholders' equity
Current liabilities:
Trade payables		$	390,277			$	293,480
Contingencies		6,385				960
Income taxes		3,422				276
Financial liabilities - current portion		3,636				167,033
Lease liability - operating - current portion		45,853				48,691
Other taxes		50,099				45,998
Employee - related payables		74,781				68,709
Other current liabilities		35,886				43,299
Total current liabilities		610,339				668,446
Deferred tax liabilities		9,272				8,439
Retirement benefit obligation		8,485				10,634
Financial liabilities - non-current portion		769				44
Lease liability - operating - non-current portion		117,988				90,560
Other non-current liabilities		5,543				3,333
Total non-current liabilities		142,057				113,010
Total liabilities		752,396				781,456
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 66,197,181 and 66,083,172 shares authorized, issued and outstanding at December 31, 2019 and September 30, 2020, respectively.		2,158				2,155
Treasury stock, 3,903,673 and 5,989,258 shares at cost as of December 31, 2019 and September 30, 2020, respectively.		(74,900)				(92,450)
Additional paid-in capital		668,389				685,841
Accumulated other comprehensive loss		(40,105)				(19,658)
Retained earnings		451,725				452,932
Equity - attributable to shareholders of Criteo S.A.		1,007,267				1,028,820
Non-controlling interests		30,721				33,092
Total equity		1,037,988				1,061,912
Total equity and liabilities		$	1,790,384			$	1,843,368

 

 

CRITEO S.A. Consolidated Statement of Income (U.S. dollars in thousands, except share and per share data, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Revenue		$	522,606			$	470,345			(10)	%		$	1,608,876			$	1,411,335			(12)	%
Cost of revenue
Traffic acquisition cost		(301,901)				(284,401)				(6)	%		(928,559)				(839,463)				(10)	%
Other cost of revenue		(31,101)				(34,608)				11	%		(86,205)				(102,328)				19	%
Gross profit		189,604				151,336				(20)	%		594,112				469,544				(21)	%
Operating expenses:
Research and development expenses		(41,414)				(30,954)				(25)	%		(132,006)				(99,716)				(24)	%
Sales and operations expenses		(85,985)				(83,659)				(3)	%		(277,397)				(244,414)				(12)	%
General and administrative expenses		(32,835)				(28,672)				(13)	%		(102,372)				(83,772)				(18)	%
Total Operating expenses		(160,234)				(143,285)				(11)	%		(511,775)				(427,902)				(16)	%
Income from operations		29,370				8,051				(73)	%		82,337				41,642				(49)	%
Financial expense		(900)				(491)				(45)	%		(4,228)				(1,828)				(57)	%
Income before taxes		28,470				7,560				(73)	%		78,109				39,814				(49)	%
Provision for income taxes		(7,913)				(2,267)				(71)	%		(23,614)				(11,943)				(49)	%
Net Income		$	20,557			$	5,293			(74)	%		$	54,495			$	27,871			(49)	%
Net income available to shareholders of Criteo S.A.		$	18,778			$	5,227			(72)	%		$	48,721			$	26,402			(46)	%
Net income available to non-controlling interests		$	1,779			$	66			(96)	%		$	5,774			$	1,469			(75)	%
Weighted average shares outstanding used in computing per share amounts:
Basic		64,868,545				60,080,598							64,600,869				61,059,345
Diluted		66,067,045				61,027,795							65,916,219				61,644,827
Net income allocated to shareholders per share:
Basic		$	0.29			$	0.09			(69)	%		$	0.75			$	0.43			(43)	%
Diluted		$	0.28			$	0.09			(68)	%		$	0.74			$	0.43			(42)	%

 

 

CRITEO S.A. Consolidated Statement of Cash Flows (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Net income		$	20,557			$	5,293			(74)	%		$	54,495			$	27,871			(49)	%
Non-cash and non-operating items		18,776				39,831				NM			72,735				105,742				45	%
- Amortization and provisions		19,455				24,680				27	%		57,381				79,631				39	%
- Equity awards compensation expense (1)		11,165				6,803				(39)	%		36,760				22,465				(39)	%
- Net gain or loss on disposal of non-current assets		—				591				NM			—				2,734				NM
- Change in deferred taxes		(2,710)				(80)				(97)	%		(1,374)				(7,697)				NM
- Change in income taxes		(9,309)				6,684				NM			(19,939)				7,411				NM
- Other		175				1,153				NM			(93)				1,198				NM
Changes in working capital related to operating activities		3,956				6,032				52	%		36,243				7,663				(79)	%
- (Increase) / Decrease in trade receivables		14,821				(4,177)				NM			120,164				122,529				2	%
- Increase / (Decrease) in trade payables		(4,415)				8,494				NM			(77,895)				(95,303)				22	%
- (Increase) / Decrease in other current assets		638				(2,762)				NM			2,150				2,288				6	%
- Increase / (Decrease) in other current liabilities		(10,177)				6,303				NM			(4,726)				(20,145)				NM
- Change in operating lease liabilities and right of use assets		3,089				(1,826)				NM			(3,450)				(1,706)				(51)	%
CASH FROM OPERATING ACTIVITIES		43,289				51,156				18	%		163,473				141,276				(14)	%
Acquisition of intangible assets, property, plant and equipment		(27,239)				(16,308)				(40)	%		(69,343)				(57,037)				(18)	%
Change in accounts payable related to intangible assets, property, plant and equipment		3,295				3,410				3	%		(11,077)				13,870				NM
(Payment for) disposal of a business, net of cash acquired (disposed)		106				(3)				NM			(4,582)				(3)				(100)	%
Change in other non-current financial assets		(165)				(280)				70	%		(1,349)				(20,629)				NM
CASH USED FOR INVESTING ACTIVITIES		(24,003)				(13,181)				(45)	%		(86,351)				(63,799)				(26)	%
Proceeds from borrowings under line-of-credit agreement		—				3,193				NM			—				157,503				NM
Repayment of borrowings		(167)				(12)				(93)	%		(506)				(181)				(64)	%
Proceeds from capital increase		725				117				(84)	%		638				101				(84)	%
Repurchase of treasury stocks		(17,603)				(10,554)				(40)	%		(17,603)				(43,655)				NM
Change in other financial liabilities		(928)				(1,083)				17	%		(1,167)				(2,010)				72	%
CASH (USED FOR) FROM FINANCING ACTIVITIES		(17,973)				(8,339)				(54)	%		(18,638)				111,758				NM
Effect of exchange rates changes on cash and cash equivalents		(14,188)				18,927				NM			(13,732)				18,746				NM
Net increase (decrease) in cash and cash equivalents		(12,875)				48,563				NM			44,752				207,981				NM
Net cash and cash equivalents at beginning of period		422,053				578,181				37	%		364,426				418,763				15	%
Net cash and cash equivalents at end of period		$	409,178			$	626,744			53	%		$	409,178			$	626,744			53	%
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds		$	(19,932)			$	4,337			NM			$	(44,927)			$	(12,229)			(73)	%
Cash paid for interest		$	(337)			$	(153)			(55)	%		$	(1,095)			$	(819)			(25)	%

 

(1)

Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $10.8 million and $6.5 million of equity awards compensation expense for the quarter ended September 30, 2019 and 2020, respectively, and $35.7 million and $21.4 million of equity awards compensation for the nine months ended September 30, 2019 and 2020, respectively.

 

 

CRITEO S.A. Reconciliation of Cash from Operating Activities to Free Cash Flow (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
CASH FROM OPERATING ACTIVITIES		$	43,289			$	51,156			18	%		$	163,473			$	141,276			(14)	%
Acquisition of intangible assets, property, plant and equipment		(27,239)				(16,308)				(40)	%		(69,343)				(57,037)				(18)	%
Change in accounts payable related to intangible assets, property, plant and equipment		3,295				3,410				3	%		(11,077)				13,870				NM
FREE CASH FLOW (1)		$	19,345			$	38,258			98	%		$	83,053			$	98,109			18	%

 

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

 

 

CRITEO S.A. Reconciliation of Revenue ex-TAC by Region to Revenue by Region (U.S. dollars in thousands, unaudited)
			Three Months Ended														Nine Months Ended
			September 30,														September 30,
	Region		2019				2020				YoY Change			YoY Change at Constant Currency			2019				2020				YoY Change			YoY Change at Constant Currency
Revenue
	Americas		$	213,937			$	204,618			(4)	%		(3)	%		$	645,904			$	582,037			(10)	%		(9)	%
	EMEA		185,556				167,800				(10)	%		(13)	%		589,558				517,535				(12)	%		(12)	%
	Asia-Pacific		123,113				97,927				(20)	%		(21)	%		373,414				311,763				(17)	%		(17)	%
	Total		522,606				470,345				(10)	%		(11)	%		1,608,876				1,411,335				(12)	%		(12)	%
Traffic acquisition costs
	Americas		(129,047)				(130,756)				1	%		3	%		(390,083)				(366,095)				(6)	%		(5)	%
	EMEA		(103,899)				(97,272)				(6)	%		(10)	%		(328,591)				(295,822)				(10)	%		(9)	%
	Asia-Pacific		(68,955)				(56,373)				(18)	%		(19)	%		(209,885)				(177,546)				(15)	%		(16)	%
	Total		(301,901)				(284,401)				(6)	%		(7)	%		(928,559)				(839,463)				(10)	%		(9)	%
Revenue ex-TAC (1)
	Americas		84,890				73,862				(13)	%		(11)	%		255,821				215,942				(16)	%		(14)	%
	EMEA		81,657				70,528				(14)	%		(17)	%		260,967				221,713				(15)	%		(14)	%
	Asia-Pacific		54,158				41,554				(23)	%		(24)	%		163,529				134,217				(18)	%		(18)	%
	Total		$	220,705			$	185,944			(16)	%		(16)	%		$	680,317			$	571,872			(16)	%		(15)	%

 

(1)

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

 

 

CRITEO S.A. Reconciliation of Adjusted EBITDA to Net Income (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Net income		$	20,557			$	5,293			(74)	%		$	54,495			$	27,871			(49)	%
Adjustments:
Financial expense		900				491				(45)	%		4,228				1,828				(57)	%
Provision for income taxes		7,913				2,267				(71)	%		23,614				11,943				(49)	%
Equity awards compensation expense		11,770				6,803				(42)	%		40,043				22,465				(44)	%
Research and development		3,230				3,333				3	%		11,458				7,771				(32)	%
Sales and operations		4,398				3,190				(27)	%		16,292				8,380				(49)	%
General and administrative		4,142				280				(93)	%		12,293				6,314				(49)	%
Pension service costs		388				572				47	%		1,173				1,649				41	%
Research and development		188				286				52	%		572				824				44	%
Sales and operations		71				101				42	%		214				291				36	%
General and administrative		129				185				43	%		387				534				38	%
Depreciation and amortization expense		22,388				21,752				(3)	%		62,999				66,098				5	%
Cost of revenue		12,193				14,712				21	%		32,175				40,581				26	%
Research and development (1)		4,249				1,721				(59)	%		11,260				9,029				(20)	%
Sales and operations		4,178				4,176				—	%		14,151				12,737				(10)	%
General and administrative		1,768				1,143				(35)	%		5,413				3,751				(31)	%
Acquisition-related costs		—				112				NM			—				112				NM
General and administrative		—				112				NM			—				112				NM
Restructuring related and transformation costs (2)		303				12,181				NM			2,921				15,606				NM
Research and development		172				1,985				NM			296				3,493				NM
Sales and operations		131				5,357				NM			2,196				6,793				NM
General and administrative		—				4,839				NM			429				5,320				NM
Total net adjustments		43,662				44,178				1	%		134,978				119,701				(11)	%
Adjusted EBITDA (3)		$	64,219			$	49,471			(23)	%		$	189,473			$	147,572			(22)	%

 

(1)	For the  Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(2)	For the Three Months Ended and the Nine Months Ended September 2019, and September 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy:

 

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2020		2019			2020
(Gain) from forfeitures of share-based compensation awards	(606)			—		(3,284)			—
Depreciation and amortization expense	—			—		1,228			—
Facilities and impairment related costs	—			7,023		1,647			8,817
Payroll related costs	909			2,858		3,330			4,489
Consulting costs related to transformation	—			2,300		—			2,300
Total restructuring related and transformation costs	303			12,181		2,921			15,606

 

For the Three Months Ended and the Nine Months Ended September 30, 2020, the cash outflows related to restructuring related and transformation costs were $6.2 million, and $13.0 million respectively, and were mainly compromised of payroll costs, broker fees and termination penalties related to facilities.
(3)	We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration. 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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.

 

 

CRITEO S.A. Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Research and Development expenses		$	(41,414)			$	(30,954)			(25)	%		$	(132,006)			$	(99,716)			(24)	%
Equity awards compensation expense		3,230				3,333				3	%		11,458				7,771				(32)	%
Depreciation and Amortization expense (1)		4,249				1,721				(59)	%		11,260				9,029				(20)	%
Pension service costs		188				286				52	%		572				824				44	%
Restructuring related and transformation costs (2)		172				1,985				NM			296				3,493				NM
Non GAAP - Research and Development expenses		(33,575)				(23,629)				(30)	%		(108,420)				(78,599)				(28)	%
Sales and Operations expenses		(85,985)				(83,659)				(3)	%		(277,397)				(244,414)				(12)	%
Equity awards compensation expense		4,398				3,190				(27)	%		16,292				8,380				(49)	%
Depreciation and Amortization expense		4,178				4,176				—	%		14,151				12,737				(10)	%
Pension service costs		71				101				42	%		214				291				36	%
Restructuring related and transformation costs (2)		131				5,357				NM			2,196				6,793				NM
Non GAAP - Sales and Operations expenses		(77,207)				(70,835)				(8)	%		(244,544)				(216,213)				(12)	%
General and Administrative expenses		(32,835)				(28,672)				(13)	%		(102,372)				(83,772)				(18)	%
Equity awards compensation expense		4,142				280				(93)	%		12,293				6,314				(49)	%
Depreciation and Amortization expense		1,768				1,143				(35)	%		5,413				3,751				(31)	%
Pension service costs		129				185				43	%		387				534				38	%
Acquisition related costs		—				112				NM			—				112				NM
Restructuring related and transformation costs (2)		—				4,839				NM			429				5,320				NM
Non GAAP - General and Administrative expenses		(26,796)				(22,113)				(17)	%		(83,850)				(67,741)				(19)	%
Total Operating expenses		(160,234)				(143,285)				(11)	%		(511,775)				(427,902)				(16)	%
Equity awards compensation expense		11,770				6,803				(42)	%		40,043				22,465				(44)	%
Depreciation and Amortization expense (1)		10,195				7,040				(31)	%		30,824				25,517				(17)	%
Pension service costs		388				572				47	%		1,173				1,649				41	%
Acquisition-related costs		—				112				NM			—				112				NM
Restructuring related and transformation costs (2)		303				12,181				NM			2,921				15,606				NM
Total Non GAAP Operating expenses (3)		$	(137,578)			$	(116,577)			(15)	%		$	(436,814)			$	(362,553)			(17)	%

 

(1)	For the  Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(2)	For the Three Months Ended and the Nine Months Ended September 2019, and September 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy.

 

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2020		2019			2020
(Gain) from forfeitures of share-based compensation awards	(606)			—		(3,284)			—
Depreciation and amortization expense	—			—		1,228			—
Facilities and impairment related costs	—			7,023		1,647			8,817
Payroll related costs	909			2,858		3,330			4,489
Consulting costs related to transformation	—			2,300		—			2,300
Total restructuring related and transformation costs	303			12,181		2,921			15,606

 

For the Three Months Ended and the Nine Months Ended September 30, 2020, the cash outflows related to restructuring related and transformation costs were $6.2 million, and $13.0 million respectively, and were mainly compromised of payroll costs, broker fees and termination penalties related to facilities
(3)	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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.

 

 

CRITEO S.A. Detailed Information on Selected Items (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Equity awards compensation expense
Research and development		$	3,230			$	3,333			3	%		$	11,458			$	7,771			(32)	%
Sales and operations		4,398				3,190				(27)	%		16,292				8,380				(49)	%
General and administrative		4,142				280				(93)	%		12,293				6,314				(49)	%
Total equity awards compensation expense		11,770				6,803				(42)	%		40,043				22,465				(44)	%
Pension service costs
Research and development		188				286				52	%		572				824				44	%
Sales and operations		71				101				42	%		214				291				36	%
General and administrative		129				185				43	%		387				534				38	%
Total pension service costs		388				572				47	%		1,173				1,649				41	%
Depreciation and amortization expense
Cost of revenue		12,193				14,712				21	%		32,175				40,581				26	%
Research and development (1)		4,249				1,721				(59)	%		11,260				9,029				(20)	%
Sales and operations		4,178				4,176				—	%		14,151				12,737				(10)	%
General and administrative		1,768				1,143				(35)	%		5,413				3,751				(31)	%
Total depreciation and amortization expense		22,388				21,752				(3)	%		62,999				66,098				5	%
Acquisition-related costs
General and administrative		—				112				NM			—				112				NM
Total acquisition-related costs		—				112				NM			—				112				NM
Restructuring related and transformation costs (2)
Research and development		172				1,985				NM			296				3,493				NM
Sales and operations		131				5,357				NM			2,196				6,793				NM
General and administrative		—				4,839				NM			429				5,320				NM
Total restructuring related and transformation costs		$	303			$	12,181			NM			$	2,921			$	15,606			NM

 

(1)	For the  Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(2)	For the Three Months Ended and the Nine Months Ended September 2019, and September 2020, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy:

 

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2020		2019			2020
(Gain) from forfeitures of share-based compensation awards	(606)			—		(3,284)			—
Depreciation and amortization expense	—			—		1,228			—
Facilities and impairment related costs	—			7,023		1,647			8,817
Payroll related costs	909			2,858		3,330			4,489
Consulting costs related to transformation	—			2,300		—			2,300
Total restructuring related and transformation costs	303			12,181		2,921			15,606

 

For the Three Months Ended and the Nine Months Ended September 30, 2020, the cash outflows related to restructuring related and transformation costs were $6.2 million, and $13.0 million respectively, and were mainly compromised of payroll costs, broker fees and termination penalties related to facilities.

 

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											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Net income		$	20,557			$	5,293			(74)	%		$	54,495			$	27,871			(49)	%
Adjustments:
Equity awards compensation expense		11,770				6,803				(42)	%		40,043				22,465				(44)	%
Amortization of acquisition-related intangible assets (1)		5,456				2,899				(47)	%		16,393				12,594				(23)	%
Acquisition-related costs		—				112				NM			—				112				NM
Restructuring related and transformation costs (2)		303				12,181				NM			2,921				15,606				NM
Tax impact of the above adjustments		(2,640)				(2,986)				13	%		(7,971)				(5,611)				(30)	%
Total net adjustments		14,889				19,009				28	%		51,386				45,166				(12)	%
Adjusted net income (3)		$	35,446			$	24,302			(31)	%		$	105,881			$	73,037			(31)	%
Weighted average shares outstanding
- Basic		64,868,545				60,080,598							64,600,869				61,059,345
- Diluted		66,067,045				61,027,795							65,916,219				61,644,827
Adjusted net income per share
- Basic		$	0.55			$	0.40			(27)	%		$	1.64			$	1.20			(27)	%
- Diluted		$	0.54			$	0.40			(26)	%		$	1.61			$	1.18			(27)	%

 

(1)	For the  Nine Months Ended September 30, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($4.0 million in Research and development).
(2)	For the Three Months Ended and the Nine Months Ended September 2019, and September 2020, respectively, the Company recognized restructuring related and transformation costs  following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy:

 

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2020		2019			2020
(Gain) from forfeitures of share-based compensation awards	(606)			—		(3,284)			—
Depreciation and amortization expense	—			—		1,228			—
Facilities and impairment related costs	—			7,023		1,647			8,817
Payroll related costs	909			2,858		3,330			4,489
Consulting costs related to transformation	—			2,300		—			2,300
Total restructuring related and transformation costs	303			12,181		2,921			15,606

 

For the Three Months Ended and the Nine Months Ended September 30, 2020, the cash outflows related to restructuring related and transformation costs were $6.2 million, and $13.0 million respectively, and were mainly compromised of payroll costs, broker fees and termination penalties related to facilities.
(3)	We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration 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, acquisition-related costs and deferred price consideration, restructuring related and transformation costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.

 

 

CRITEO S.A. Constant Currency Reconciliation (U.S. dollars in thousands, unaudited)
		Three Months Ended											Nine Months Ended
		September 30,											September 30,
		2019				2020				YoY Change			2019				2020				YoY Change
Revenue as reported		$	522,606			$	470,345			(10)	%		$	1,608,876			$	1,411,335			(12)	%
Conversion impact U.S. dollar/other currencies						(3,800)											11,732
Revenue at constant currency(1)		522,606				466,545				(11)	%		1,608,876				1,423,067				(12)	%
Traffic acquisition costs as reported		(301,901)				(284,401)				(6)	%		(928,559)				(839,463)				(10)	%
Conversion impact U.S. dollar/other currencies						2,183											(6,473)
Traffic Acquisition Costs at constant currency(1)		(301,901)				(282,218)				(7)	%		(928,559)				(845,936)				(9)	%
Revenue ex-TAC as reported(2)		220,705				185,944				(16)	%		680,317				571,872				(16)	%
Conversion impact U.S. dollar/other currencies						(1,617)											5,259
Revenue ex-TAC at constant currency(2)		220,705				184,327				(16)	%		680,317				577,131				(15)	%
Revenue ex-TAC(2)/Revenue as reported		42		%		40		%					42		%		41		%
Other cost of revenue as reported		(31,101)				(34,608)				11	%		(86,205)				(102,328)				19	%
Conversion impact U.S. dollar/other currencies						(303)											(1,271)
Other cost of revenue at constant currency(1)		(31,101)				(34,911)				12	%		(86,205)				(103,599)				20	%
Adjusted EBITDA(3)		64,219				49,471				(23)	%		189,473				147,572				(22)	%
Conversion impact U.S. dollar/other currencies						(2,399)											(182)
Adjusted EBITDA(3) at constant currency(1)		$	64,219			$	47,072			(27)	%		$	189,473			$	147,390			(22)	%
Adjusted EBITDA(3)/Revenue ex-TAC(2)		29		%		27		%					28		%		26		%

 

(1)	Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and Board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.
(2)	Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Revenue ex-TAC by Region to Revenue by Region" for a reconciliation of Revenue Ex-TAC to revenue.
(3)	Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.

 

 

CRITEO S.A. Information on Share Count (unaudited)
		Nine Months Ended
		September 30,
		2019			2020
Shares outstanding as at January 1,		64,249,084			62,293,508
Weighted average number of shares issued during the period		351,785			(1,234,163)
Basic number of shares - Basic EPS basis		64,600,869			61,059,345
Dilutive effect of share options, warrants, employee warrants - Treasury method		1,315,350			585,482
Diluted number of shares - Diluted EPS basis		65,916,219			61,644,827
Shares issued as at September 30, before Treasury stocks		66,173,983			66,083,172
Treasury stock as of September 30,		(1,807,251)			(5,989,258)
Shares outstanding as of September 30, after Treasury stocks		64,366,732			60,093,914
Total dilutive effect of share options, warrants, employee warrants		8,494,732			7,581,847
Fully diluted shares as at September 30,		72,861,464			67,675,761

 

 

CRITEO S.A. Supplemental Financial Information and Operating Metrics (U.S. dollars in thousands except where stated, unaudited)
	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	YoY Change	QoQ Change
Clients	19,213	19,419	19,373	19,733	19,971	20,247	20,360	20,359	20,565	3%	1%
Revenue	528,869	670,096	558,123	528,147	522,606	652,640	503,376	437,614	470,345	(10)%	7%
Americas	211,247	317,350	217,993	213,974	213,937	306,250	191,745	185,674	204,618	(4)%	10%
EMEA	195,230	220,904	209,643	194,359	185,556	216,639	190,114	159,621	167,800	(10)%	5%
APAC	122,392	131,842	130,487	119,814	123,113	129,751	121,517	92,319	97,927	(20)%	6%
TAC	(305,387)	(398,238)	(322,429)	(304,229)	(301,901)	(386,388)	(297,364)	(257,698)	(284,401)	(6)%	10%
Americas	(126,406)	(196,168)	(131,545)	(129,491)	(129,047)	(189,092)	(120,022)	(115,317)	(130,756)	1%	13%
EMEA	(111,131)	(128,053)	(117,291)	(107,401)	(103,899)	(124,939)	(108,397)	(90,153)	(97,272)	(6)%	8%
APAC	(67,850)	(74,017)	(73,593)	(67,337)	(68,955)	(72,357)	(68,945)	(52,228)	(56,373)	(18)%	8%
Revenue ex-TAC (1)	223,482	271,858	235,694	223,918	220,705	266,252	206,012	179,916	185,944	(16)%	3%
Americas	84,841	121,182	86,448	84,483	84,890	117,158	71,723	70,357	73,862	(13)%	5%
EMEA	84,099	92,851	92,352	86,958	81,657	91,700	81,717	69,468	70,528	(14)%	2%
APAC	54,542	57,825	56,894	52,477	54,158	57,394	52,572	40,091	41,554	(23)%	4%
Cash flow from operating activities	50,256	85,600	67,220	52,964	43,289	59,359	56,743	33,377	51,156	18%	53%
Capital expenditures	29,656	45,408	23,684	32,792	23,944	17,520	11,737	18,532	12,898	(46)%	(30)%
Capital expenditures/Revenue	6%	7%	4%	6%	5%	3%	2%	4%	3%	N.A	N.A
Net cash position	458,690	364,426	395,771	422,053	409,178	418,763	436,506	578,181	626,744	53%	8%
Headcount	2,737	2,744	2,813	2,873	2,794	2,755	2,701	2,685	2,636	(6)%	(2)%
Days Sales Outstanding (days - end of month)	60	58	59	58	57	52	62	61	62	N.A	N.A

 

(1)

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

 

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SOURCE Criteo S.A.

FAQ

What were Criteo's Q3 2020 revenue figures?

Criteo reported revenue of $470 million for Q3 2020, a 10% decline from $523 million in Q3 2019.

How did Criteo's net income change in Q3 2020?

Criteo's net income fell 74% year-over-year to $5 million in Q3 2020.

What is the adjusted diluted EPS for Criteo in Q3 2020?

The adjusted diluted EPS for Criteo in Q3 2020 was $0.40, down from $0.54 in Q3 2019.

How did free cash flow perform for Criteo in Q3 2020?

Free cash flow for Criteo increased 98% year-over-year to $38 million in Q3 2020.

What major strategic change is Criteo implementing?

Criteo is transforming into a Commerce Media Platform to maximize digital advertising returns.