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Criteo Reports Strong Results For The Fourth Quarter And Fiscal Year 2016

NEW YORK, Feb. 22, 2017 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO), the performance marketing technology company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2016.

  • Q4 revenue increased 43%, or 43% at constant currency,1 to $567 million.
  • Fiscal year revenue increased 36%, or 36% at constant currency, to $1,799 million.
     
  • Q4 revenue excluding traffic acquisition costs, or Revenue ex-TAC,2 grew 41%, or 41% at constant currency, to $225 million. Excluding Criteo Sponsored Products, formerly HookLogic,3 Q4 Revenue ex-TAC grew 33%, or 33% at constant currency, to $213 million, or 41% of revenue.
  • Fiscal year Revenue ex-TAC grew 37%, or 37% at constant currency, to $730 million. Excluding Criteo Sponsored Products, fiscal year Revenue ex-TAC grew 34%, or 34% at constant currency, to $718 million, or 41% of revenue.
     
  • Q4 net income increased 5% to $41 million, or 7% of revenue and 18% of Revenue ex-TAC.
  • Fiscal year net income increased 40% to $87 million, or 5% of revenue and 12% of Revenue ex-TAC.
     
  • Q4 Adjusted EBITDA3 increased 55% to $83 million. Excluding Criteo Sponsored Products, Q4 Adjusted EBITDA increased 46% to $78 million, or 15% of revenue and 37% of Revenue ex-TAC.
  • Fiscal year Adjusted EBITDA increased 57% to $225 million. Excluding Criteo Sponsored Products, fiscal year Adjusted EBITDA increased 53% to $219 million, or 13% of revenue and 31% of Revenue ex-TAC.
     
  • Q4 Adjusted Net Income per diluted share3 grew 16% to $0.84.
  • Fiscal year Adjusted Net Income per diluted share grew 51% to $2.08.
     
  • Q4 cash flow from operating activities excluding Criteo Sponsored Products increased 15% to $77 million.
  • Fiscal year cash flow from operating activities excluding Criteo Sponsored Products increased 16% to $159 million.
     
  • Q4 Free Cash Flow3 excluding Criteo Sponsored Products increased 15% to $55 million.
  • Fiscal year Free Cash Flow excluding Criteo Sponsored Products increased 31% to $82 million.

"We made great progress in 2016," said Eric Eichmann, CEO. "We bolstered our performance marketing platform for commerce and brands and opened exciting new avenues of growth."

"We continued to deliver rapid growth, expanding profitability and strong cash flow," said Benoit Fouilland, CFO. "This attractive combination demonstrates the unique attributes of our model."

Operating Highlights

  • We added close to 1,600 net clients in Q4 including Criteo Sponsored products, surpassing 14,400 clients.
  • Revenue ex-TAC from existing clients, live in Q4 2015 and still live in Q4 2016, grew 20% at constant currency, demonstrating our ability to drive revenue expansion within our customer base.
  • Close to 63% of our Revenue ex-TAC in Q4 excluding Criteo Sponsored Products was generated on mobile ads.
  • Users matched through our Universal Match technology generated 60% of Revenue ex-TAC, reflecting the growing adoption of our solution and the high value of matched users for advertisers.
  • On October 25, 2016, we launched Criteo Predictive Search, a groundbreaking product that brings our proven performance-based approach to the large and fast-growing Google Shopping market.

Acquisition of HookLogic

On November 9, 2016, Criteo completed the acquisition of HookLogic, Inc., a New York-based company connecting many of the world's largest ecommerce retailers with consumer brand manufacturers. The acquisition of HookLogic expands Criteo's business to brand manufacturers and strengthens our performance marketing platform for commerce and brands. We now offer HookLogic's products under the "Criteo Sponsored Products" name.

Revenue and Revenue ex-TAC

Q4 revenue grew 43%, or 43% at constant currency, to $567 million (Q4 2015: $397 million). Excluding Criteo Sponsored Products, Q4 revenue increased 31%, or 31% at constant currency, to $522 million.

Fiscal year revenue grew 36%, or 36% at constant currency, to $1,799 million (2015: $1,323 million). Excluding Criteo Sponsored Products, fiscal year revenue increased 33%, or 32% at constant currency, to $1,754 million.

Q4 Revenue ex-TAC grew 41%, or 41% at constant currency, to $225 million (Q4 2015: $160 million). Excluding Criteo Sponsored Products, Q4 Revenue ex-TAC grew 33%, or 33% at constant currency, to $213 million. This increase was primarily driven by continued innovation in technology and products, a record addition of new clients and a broader access to publisher inventory.

Fiscal year Revenue ex-TAC grew 37%, or 37% at constant currency, to $730 million (2015: $534 million). Excluding Criteo Sponsored Products, fiscal year Revenue ex-TAC grew 34%, or 34% at constant currency, to $718 million.

  • In the Americas region, Q4 Revenue ex-TAC grew by 52%, or 50% at constant currency, to $99 million (Q4 2015: $65 million) and represented 44% of total Revenue ex-TAC.
  • Americas Revenue ex-TAC for fiscal year 2016 grew by 42%, or 42% at constant currency, to $279 million (2015: $197 million) and represented 38% of total Revenue ex-TAC.
  • In the EMEA region, Q4 Revenue ex-TAC grew by 30%, or 36% at constant currency, to $81 million (Q4 2015: $62 million) and represented 36% of total Revenue ex-TAC.
  • EMEA Revenue ex-TAC for fiscal year 2016 increased by 26%, or 30% at constant currency, to $287 million (2015: $227 million) and represented 39% of total Revenue ex-TAC.
  • In the Asia-Pacific region, Q4 Revenue ex-TAC grew by 38%, or 29% at constant currency, to $45 million (Q4 2015: $32 million) and represented 20% of total Revenue ex-TAC.
  • Asia-Pacific Revenue ex-TAC for fiscal year 2016 grew by 50%, or 40% at constant currency, to $164 million (2015: $110 million) and represented 22% of total Revenue ex-TAC.

Q4 Revenue ex-TAC margin as a percentage of revenue was 40%, in line with expectations. Excluding Criteo Sponsored Products, Q4 Revenue ex-TAC margin as a percentage of revenue was 41%, in line with prior quarters.

Fiscal year Revenue ex-TAC margin as a percentage of revenue was 41%, in line with prior years. Excluding Criteo Sponsored Products, fiscal year Revenue ex-TAC margin as a percentage of revenue was 41%.

Net Income and Adjusted Net Income

Q4 net income increased 5% to $41 million (Q4 2015: $39 million). Q4 net income available to shareholders of Criteo S.A. increased 4% to $39 million, or $0.60 per share on a diluted basis (Q4 2015: $38 million, or $0.58 per share on a diluted basis). Excluding Criteo Sponsored Products, Q4 net income decreased 2% to $38 million.

Fiscal year net income increased 40% to $87 million (2015: $62 million). Fiscal year net income available to shareholders of Criteo S.A. increased 38% to $82 million, or $1.25 per share on a diluted basis (2015: $60 million, or $0.91 per share on a diluted basis). Excluding Criteo Sponsored Products, fiscal year net income increased 36% to $85 million.

Q4 Adjusted Net Income, defined as 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 and the tax impact of these adjustments, grew 18% to $55 million, or $0.84 per share on a diluted basis (Q4 2015: $47 million, or $0.72 per share on a diluted basis).

Fiscal year Adjusted Net Income increased 52% to $137 million, or $2.08 per share on a diluted basis (2015: $90 million, or $1.38 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Q4 Adjusted EBITDA increased 55%, or 55% at constant currency, to $83 million (Q4 2015: $53 million). Excluding Criteo Sponsored Products, Q4 Adjusted EBITDA increased 46%, or 45% at constant currency, to $78 million. This increase in Adjusted EBITDA is primarily the result of the strong Revenue ex-TAC performance across all regions in the quarter.

Fiscal year Adjusted EBITDA increased 57%, or 55% at constant currency, to $225 million (2015: $143 million). Excluding Criteo Sponsored Products, fiscal year Adjusted EBITDA increased 53%, or 52% at constant currency to $219 million.

Q4 Adjusted EBITDA margin as a percentage of revenue improved 120 basis points to 15% (Q4 2015: 13%) and 350 basis points as a percentage of Revenue ex-TAC to 37% (Q4 2015: 33%). Excluding Criteo Sponsored Products, Q4 Adjusted EBITDA margin as a percentage of revenue improved 150 basis points to 15% and 320 basis points as a percentage of Revenue ex-TAC to 37%.

Fiscal year Adjusted EBITDA margin as a percentage of revenue improved 160 basis points to 12% (2015: 11%) and 390 basis points as a percentage of Revenue ex-TAC to 31% (2015: 27%).
Excluding Criteo Sponsored Products, fiscal year Adjusted EBITDA margin as a percentage of revenue improved 170 basis points to 13% and 370 basis points to 31% as a percentage of Revenue ex-TAC.

Q4 operating expenses increased by 37% to $148 million (Q4 2015: $108 million). Excluding Criteo Sponsored Products, Q4 operating expenses increased by 29% to $139 million.

Q4 operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, increased by 32% to $128 million (Q4 2015: $97 million). This increase is primarily related to year-over-year headcount growth, including CSP, in Research & Development (51%), Sales & Operations (32%) and General & Administration (29%) to further expand our organization. Excluding Criteo Sponsored Products, Q4 Non-GAAP Operating Expenses increased by 25% to $122 million.

Excluding Criteo Sponsored Products, Q4 Non-GAAP Operating Expenses as a percentage of revenue decreased by over 110 basis points to 23% (2015: 25%) and by 350 basis points to 57% as a percentage of Revenue ex-TAC (2015: 61%).

Fiscal year operating expenses increased by 32% to $524 million (2015: $395 million). Excluding Criteo Sponsored Products, fiscal year operating expenses increased by 30% to $515 million.

Fiscal year Non-GAAP Operating Expenses increased 28% to $459 million (2015: $358 million). Excluding Criteo Sponsored Products, fiscal year Non-GAAP Operating Expenses increased by 26% to $452 million

Excluding Criteo Sponsored Products, fiscal year Non-GAAP Operating Expenses as a percentage of revenue decreased by 130 basis points to 26% (2015: 27%) and by 410 basis points to 63% as a percentage of Revenue ex-TAC (2015: 67%).

Cash Flow and Cash Position

Q4 cash flow from operating activities increased 7% to $72 million (Q4 2015: $67 million). Excluding Criteo Sponsored Products, Q4 cash flow from operating activities increased 15% to $77 million.

Fiscal year cash flow from operating activities increased 12% to $153 million (2015: $137 million). Excluding Criteo Sponsored Products, fiscal year cash flow from operating activities increased 16% to $159 million.

Q4 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, grew 2% to $49 million (Q4 2015: $48 million). Excluding Criteo Sponsored Products, Q4 Free Cash Flow grew 15% to $55 million.

Fiscal year Free Cash Flow increased 21% to $76 million (2015: $63 million). Excluding Criteo Sponsored Products, fiscal year Free Cash Flow increased 31% to $82 million.

Total cash and cash equivalents were $270 million as of December 31, 2016 (2015: $354 million).

Business Outlook

The following forward-looking statements reflect Criteo's expectations as of February 22, 2017.

First Quarter 2017 Guidance:

  • We expect Revenue ex-TAC to be between $200 million and $205 million. At the foreign exchange rates provided in connection with our Q4 2016 guidance, this would equate to Revenue ex-TAC between $208 million and $213 million.
  • We expect Adjusted EBITDA to be between $47 million and $52 million. At the foreign exchange rates provided in connection with our Q4 2016 guidance this would equate to Adjusted EBITDA between $51 million and $56 million.

Fiscal Year 2017 Guidance:

  • We expect Revenue ex-TAC growth to be between 27% and 31% at constant currency.
  • We expect Adjusted EBITDA margin as a percentage of Revenue ex-TAC to increase between 0 basis point and 50 basis points.

The above guidance for the first quarter ending March 31, 2017 and the fiscal year ending December 31, 2017 assumes the following exchange rates for the main currencies having an impact on our business: a U.S. dollar-euro rate of 0.94, a U.S. dollar-Japanese yen rate of 116, a U.S. dollar-British pound rate of 0.81 and a U.S. dollar-Brazilian real rate of 3.25.

The above guidance assumes no acquisitions are completed during the fiscal year ending December 31, 2017.

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. We expect the variability of the above charges to have a significant, and potentially unpredictable, 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 (the "SEC"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per diluted share, 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, acquisition-related costs and deferred price consideration. 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, service costs (pension), 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, and the tax impact of these adjustments. Adjusted Net Income and Adjusted Net Income per diluted share 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, and the tax impact of these adjustments, Adjusted Net Income and Adjusted Net Income per diluted share can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted Net Income per diluted share 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, 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 March 31, 2017 and the fiscal year ending December 31, 2017, 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 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, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, the impact of competition, uncertainty regarding international growth and expansion, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters, 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 February 29, 2016, as well as future filings and reports by the Company. 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 earnings conference call will take place today, February 22, 2017, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will be available for replay.

 

Conference call details:

  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) delivers personalized performance marketing at an extensive scale. Measuring return on post-click sales, Criteo makes ROI transparent and easy to measure. Criteo has over 2,500 employees in more than 30 offices across the Americas, EMEA and Asia-Pacific, serving over 14,000 advertisers worldwide and with direct relationships with thousands of publishers.

For more information, please visit www.criteo.com.




1 Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 2015 average exchange rates for the relevant
period to 2016 figures.

2 Revenue ex-TAC, Adjusted EBITDA, Adjusted Net Income per diluted share and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.

3 Excluding the contribution of Criteo Sponsored Products (formerly HookLogic) for the period from November 9, 2016 until December 31, 2016.

 

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands)

(unaudited)






December 31,


December 31,


2015


2016

Assets




Current assets:




    Cash and cash equivalents

$

353,537


$

270,317

    Trade receivables, net of allowances

261,581


397,244

    Income taxes

2,714


2,741

    Other taxes

29,552


52,942

    Other current assets

16,030


19,340

    Total current assets

663,414


742,584

Property, plant and equipment, net

82,482


108,581

Intangible assets, net

16,470


102,944

Goodwill

41,973


209,418

Non-current financial assets

17,184


17,029

Deferred tax assets

20,196


30,630

    Total non-current assets

178,305


468,602

Total assets

$

841,719


$

1,211,186

Liabilities and shareholders' equity




Current liabilities:




    Trade payables

$

246,382


$

365,788

    Contingencies

668


654

    Income taxes

15,365


14,454

    Financial liabilities - current portion

7,156


7,969

    Other taxes

30,463


44,831

    Employee - related payables

42,275


55,874

    Other current liabilities

15,531


30,221

    Total current liabilities

357,840


519,791

Deferred tax liabilities

139


686

Retirement benefit obligation

1,445


3,221

Financial liabilities - non current portion

3,272


77,611

    Total non-current liabilities

4,856


81,518

Total liabilities

362,696


601,309

Commitments and contingencies




Shareholders' equity:




Common shares, €0.025 per value, 62,470,881 and 63,978,204 shares authorized,
issued and outstanding at December 31, 2015 and December 31, 2016, respectively.

2,052


2,093

Additional paid-in capital

425,220


488,277

Accumulated other comprehensive (loss)

(69,023)


(88,593)

Retained earnings

116,076


198,355

Equity - attributable to shareholders of Criteo S.A.

474,325


600,132

Non-controlling interests

4,698


9,745

Total equity

479,023


609,877

Total equity and liabilities

$

841,719


$

1,211,186

 

 

CRITEO S.A.

Consolidated Statement of Income

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

(unaudited)










Three Months Ended




Twelve Months Ended




December 31,




December 31,




2015


2016


YoY
Change


2015


2016


YoY
Change

Revenue

$

397,018


$

566,825


43

%


$

1,323,169


$

1,799,146


36

%













Cost of revenue












Traffic acquisition cost

(237,056)


(341,877)


44

%


(789,152)


(1,068,911)


35

%

Other cost of revenue

(17,782)


(24,309)


37

%


(62,201)


(85,260)


37

%













Gross profit

142,180


200,639


41

%


471,816


644,975


37

%













Operating expenses:












Research and development expenses

(26,665)


(35,552)


33

%


(86,807)


(123,649)


42

%

Sales and operations expenses

(60,410)


(80,991)


34

%


(229,530)


(282,853)


23

%

General and administrative expenses

(21,280)


(31,630)


49

%


(79,145)


(117,469)


48

%

Total Operating expenses

(108,355)


(148,173)


37

%


(395,482)


(523,971)


32

%

Income from operations

33,825


52,466


55

%


76,334


121,004


59

%

Financial income (expense)

735


1,435


95

%


(4,541)


(546)


(88)

%

Income before taxes

34,560


53,901


56

%


71,793


120,458


68

%

Provision for income taxes

4,378


(13,161)


(401)

%


(9,517)


(33,129)


248

%

Net Income

$

38,938


$

40,740


5

%


$

62,276


$

87,329


40

%













Net income available to shareholders of Criteo
S.A.

$

37,936


$

39,403




$

59,553


$

82,272



Net income available to non-controlling
interests

$

1,002


$

1,337




$

2,723


$

5,057















Weighted average shares outstanding used in
computing per share amounts:












Basic

62,348,620


63,760,491




61,835,499


63,337,792



Diluted

65,092,423


66,145,704




65,096,486


65,633,470















Net income allocated to shareholders of Criteo
S.A. per share:












Basic

0.61


0.62




0.96


1.30



Diluted

0.58


0.60




0.91


1.25



 

 

CRITEO S.A.

Consolidated Statement of Cash Flows

(U.S. dollars in thousands)

(unaudited)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

Net income

$

38,938


$

40,740


$

62,276


$

87,329

Adjustments to reconcile to cash from operating activities

15,764


42,888


78,448


139,123

                 - Amortization and provisions

14,648


17,178


47,085


62,733

                 - Equity awards compensation expense (1)

7,748


13,229


23,989


43,259

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

(2,212)


(82)


(2,127)


(81)

                 - Interest accrued

(3)


(606)


6


2

                 - Non-cash financial income and expenses

5


8


22


37

                 - Change in deferred taxes

(12,599)


(2,478)


(15,748)


(10,023)

                 - Income tax for the period

8,177


15,639


25,221


43,196

Changes in working capital requirement

17,572


(6,600)


15,231


(29,460)

                 - (Increase)/decrease in trade receivables

(55,986)


(113,442)


(83,420)


(117,970)

                 - Increase/(decrease) in trade payables

60,529


85,793


100,047


81,862

                 - (Increase)/decrease in other current assets

563


(9,799)


(24,101)


(28,432)

                 - Increase/(decrease) in other current liabilities

12,466


30,848


22,705


35,080

Income taxes paid

(5,568)


(5,370)


(18,805)


(43,522)

CASH FROM OPERATING ACTIVITIES

66,706


71,658


137,150


153,470

Acquisition of intangible assets, property, plant and equipment

(12,936)


(30,163)


(75,607)


(85,133)

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

(6,269)


7,182


1,128


7,752

Payments for acquired business, net of cash acquired

10


(230,467)


(20,542)


(235,541)

Change in other non-current financial assets

(320)


(38)


(6,612)


159

CASH USED FOR INVESTING ACTIVITIES

(19,515)


(253,486)


(101,633)


(312,763)

Issuance of long-term borrowings

788


80,224


4,023


84,022

Repayment of borrowings

(2,797)


(7,889)


(8,980)


(13,305)

Proceeds from capital increase

3,758


2,893


13,768


20,075

Change in other financial liabilities


(26)


(1,000)


(222)

CASH FROM FINANCING ACTIVITIES

1,749


75,202


7,811


90,570









CHANGE IN NET CASH AND CASH EQUIVALENTS

48,940


(106,626)


43,328


(68,723)

Net cash and cash equivalents at beginning of period

314,644


407,158


351,827


353,537

Effect of exchange rates changes on cash and cash equivalents

(10,047)


(30,215)


(41,618)


(14,497)

Net cash and cash equivalents at end of period

$

353,537


$

270,317


$

353,537


$

270,317













(1) $12.9 million and $41.6 million of equity awards compensation expense consisted of share-based compensation expense according to

ASC 718 - Compensation - stock compensation for the quarter ended and year to date December 31, 2016, respectively.

 

 

CRITEO S.A.

Reconciliation of Cash from Operating Activities to Free Cash Flow

(U.S. dollars in thousands)

(unaudited)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

CASH FROM OPERATING ACTIVITIES

66,706


71,658


137,150


153,470

Acquisition of intangible assets, property, plant and equipment

(12,936)


(30,163)


(75,607)


(85,133)

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

(6,269)


7,182


1,128


7,752

FREE CASH FLOW (1)

47,501


48,677


62,671


76,089









(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








Twelve Months Ended





December 31,








December 31,



Region


2015


2016


YoY
Change


YoY
Change
at
Constant
Currency


YoY
Change
at
Constant
Currency
excluding
CSP


2015


2016


YoY
Change


YoY
Change
at
Constant
Currency


YoY
Change
at
Constant
Currency
excluding
CSP

Revenue


Americas

$

170,133


$

266,438


57

%


55

%


33

%


$

505,653


$

730,873


45

%


45

%


38

%


EMEA

144,905


189,298


31

%


37

%


32

%


541,105


660,523


22

%


26

%


24

%


Asia-Pacific

81,980


111,089


36

%


26

%


26

%


276,411


407,750


48

%


37

%


37

%


Total

397,018


566,825


43

%


43

%


31

%


1,323,169


1,799,146


36

%


36

%


32

%






















Traffic acquisition costs


Americas

(104,646)


(167,046)


60

%


59

%


32

%


(308,427)


(451,774)


46

%


47

%


38

%


EMEA

(82,905)


(108,567)


31

%


37

%


32

%


(313,928)


(373,664)


19

%


23

%


21

%


Asia-Pacific

(49,505)


(66,264)


34

%


24

%


24

%


(166,797)


(243,473)


46

%


36

%


36

%


Total

(237,056)


(341,877)


44

%


44

%


30

%


(789,152)


(1,068,911)


35

%


35

%


31

%






















Revenue ex-TAC (1)


Americas

65,487


99,392


52

%


50

%


35

%


197,226


279,099


42

%


42

%


37

%


EMEA

62,000


80,731


30

%


36

%


33

%


227,177


286,859


26

%


30

%


29

%


Asia-Pacific

32,475


44,825


38

%


29

%


29

%


109,614


164,277


50

%


40

%


40

%


Total

$

159,962


$

224,948


41

%


41

%


33

%


$

534,017


$

730,235


37

%


37

%


34

%
































(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 in this Form 8-K 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


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

Net income

$

38,938


$

40,740


$

62,276


$

87,329

Adjustments:








Financial (income) expense

(735)


(1,435)


4,541


546

Provision for income taxes

(4,378)


13,161


9,517


33,129

Equity awards compensation expense

7,748


13,229


23,989


43,259

Research and development

$

2,167


$

2,860


$

6,520


$

12,108

Sales and operations

3,606


5,816


11,678


16,838

General and administrative

1,975


4,553


5,791


14,313

Pension service costs

109


133


441


524

Research and development

40


52


163


211

Sales and operations

38


37


153


144

General and administrative

31


44


125


169

Depreciation and amortization expense

13,967


16,190


44,564


56,779

Cost of revenue

8,579


10,623


29,866


38,469

Research and development

3,183


2,106


7,994


7,211

Sales and operations

1,744


2,153


5,178


7,757

General and administrative

461


1,308


1,526


3,342

Acquisition-related costs


980



2,921

General and administrative


980



2,921

Acquisition-related deferred price consideration

(2,172)


(3)


(1,894)


85

Research and development

46


(3)


324


85

General and administrative

(2,218)



(2,218)


Total net adjustments

14,539


42,255


81,158


137,243

Adjusted EBITDA (1)

$

53,477


$

82,995


$

143,434


$

224,572













(1) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, acquisition-related costs and 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 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, pension service 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


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

Research and Development expenses

$

(26,665)


$

(35,552)


$

(86,807)


$

(123,649)

Equity awards compensation expense

$

2,167


$

2,860


$

6,520


$

12,108

Depreciation and Amortization expense

3,183


2,106


7,994


7,211

Pension service costs

40


52


163


211

Acquisition-related deferred price consideration

46


(3)


324


85

Non-GAAP - Research and Development expenses

(21,229)


(30,537)


(71,806)


(104,034)

Sales and Operations expenses

(60,410)


(80,991)


(229,530)


(282,853)

Equity awards compensation expense

3,606


5,816


11,678


16,838

Depreciation and Amortization expense

1,744


2,153


5,178


7,757

Pension service costs

38


37


153


144

Non-GAAP - Sales and Operations expenses

(55,022)


(72,985)


(212,521)


(258,114)

General and Administrative expenses

(21,280)


(31,630)


(79,145)


(117,469)

Equity awards compensation expense

1,975


4,553


5,791


14,313

Depreciation and Amortization expense

461


1,308


1,526


3,342

Pension service costs

31


44


125


169

Acquisition-related costs


980



2,921

Acquisition-related deferred price consideration

(2,218)



(2,218)


Non-GAAP - General and Administrative expenses

(21,031)


(24,745)


(73,921)


(96,724)

Total Operating expenses

(108,355)


(148,173)


(395,482)


(523,971)

Equity awards compensation expense

7,748


13,229


23,989


43,259

Depreciation and Amortization expense

5,388


5,567


14,698


18,310

Pension service costs

109


133


441


524

Acquisition-related costs


980



2,921

Acquisition-related deferred price consideration

(2,172)


(3)


(1,894)


85

Total Non-GAAP Operating expenses (1)

(97,282)


(128,267)


(358,248)


(458,872)









(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, acquisition-related costs and 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 its 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


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

Equity awards compensation expense








Research and development

$

2,167


$

2,860


$

6,520


$

12,108

Sales and operations

3,606


5,816


11,678


16,838

General and administrative

1,975


4,553


5,791


14,313

Total equity awards compensation expense

7,748


13,229


23,989


43,259









Pension service costs








Research and development

40


52


163


211

Sales and operations

38


37


153


144

General and administrative

31


44


125


169

Total pension service costs

109


133


441


524









Depreciation and amortization expense








Cost of revenue

8,579


10,623


29,866


38,469

Research and development

3,183


2,106


7,994


7,211

Sales and operations

1,744


2,153


5,178


7,757

General and administrative

461


1,308


1,526


3,342

Total depreciation and amortization expense

13,967


16,190


44,564


56,779









Acquisition-related costs








General and administrative


980



2,921

Total acquisition-related costs


980



2,921









Acquisition-related deferred price consideration








Research and development

46


(3)


324


85

General and administrative

(2,218)



(2,218)


Total acquisition-related deferred price consideration

$

(2,172)


$

(3)


$

(1,894)


$

85

 

 

CRITEO S.A.

Reconciliation of Adjusted Net Income to Net Income

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

(unaudited)






Three Months Ended


Twelve Months Ended


December 31,


December 31,


2015


2016


2015


2016

Net income

$

38,938


$

40,740


$

62,276


$

87,329

Adjustments:








Equity awards compensation expense

7,748


13,229


23,989


43,259

Amortization of acquisition-related intangible assets

2,548


986


6,342


4,131

Acquisition-related costs


980



2,921

Acquisition-related deferred price consideration

(2,172)


(3)


(1,894)


85

Tax impact of the above adjustments

(47)


(432)


(878)


(948)

Total net adjustments

8,077


14,760


27,559


49,448

Adjusted net income (1)

$

47,015


$

55,500


$

89,835


$

136,777









Weighted average shares outstanding








 - Basic

62,348,620


63,760,491


61,835,499


63,337,792

 - Diluted

65,092,423


66,145,704


65,096,486


65,633,470









Adjusted net income per share








 - Basic

$

0.75


$

0.87


$

1.45


$

2.16

 - Diluted

$

0.72


$

0.84


$

1.38


$

2.08


(1) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs 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,  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




Twelve Months Ended




December 31,




December 31,




2015


2016


YoY
Change


2015


2016


YoY
Change

Revenue as reported

$

397,018



$

566,825



43

%


$

1,323,169



$

1,799,146



36

%

Conversion impact U.S. dollar/other currencies



(836)







(5,022)




Revenue at constant currency (1)

$

397,018



$

565,989



43

%


$

1,323,169



$

1,794,124



36

%

Revenue at constant currency (1) excluding CSP

397,018



520,797



31

%


1,323,169



1,748,932



32

%













Traffic acquisition costs as reported

(237,056)



(341,877)



44

%


(789,152)



(1,068,911)



35

%

Conversion impact U.S. dollar/other currencies



643







3,852




Traffic Acquisition Costs at constant currency (1)

$

(237,056)



$

(341,234)



44

%


$

(789,152)



$

(1,065,059)



35

%

Traffic Acquisition Costs at constant currency (1)
excluding CSP

(237,056)



(308,346)



30

%


(789,152)



(1,032,170)



31

%













Revenue ex-TAC (2) as reported

159,962



224,948



41

%


534,017



730,235



37

%

Conversion impact U.S. dollar/other currencies



(193)







(1,170)




Revenue ex-TAC (2) at constant currency (1)

$

159,962



$

224,755



41

%


$

534,017



$

729,065



37

%

Revenue ex-TAC (2) at constant currency (1)

excluding CSP

159,962



212,450



33

%


534,017



716,762



34

%

Revenue ex-TAC (2)/Revenue as reported

40

%


40

%




40

%


41

%















Other cost of revenue as reported

(17,782)



(24,309)



37

%


(62,201)



(85,260)



37

%

Conversion impact U.S. dollar/other currencies



(306)







(40)




Other cost of revenue at constant currency (1)

$

(17,782)



$

(24,615)



38

%


$

(62,201)



$

(85,300)



37

%

Other cost of revenue at constant currency (1)

excluding CSP

$

(17,782)



(23,882)



34

%


$

(62,201)



(84,566)



36

%













Adjusted EBITDA (3)

53,477



82,995



55

%


143,434



224,572



57

%

Conversion impact U.S. dollar/other currencies



(343)







(1,751)




Adjusted EBITDA (3) at constant currency (1)

$

53,477



$

82,652



55

%


$

143,434



$

222,821



55

%

Adjusted EBITDA (3) at constant currency (1)

excluding CSP

$

53,477



$

77,499



45

%


$

143,434



$

217,668



52

%























(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)




Twelve Months Ended


December 31,


2015


2016

Shares outstanding as at January 1,

60,902,695


62,470,881

Weighted average number of shares issued during the period

932,804


866,911

Basic number of shares - Basic EPS basis

61,835,499


63,337,792

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

3,260,987


2,295,679

Diluted number of shares - Diluted EPS basis

65,096,486


65,633,471





Shares outstanding as at December 31,

62,470,881


63,978,204

Total dilutive effect of share options, warrants, employee warrants

7,798,348


8,391,496

Fully diluted shares as at December 31,

70,269,229


72,369,700

 

 

CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated)
(unaudited)














Q1

2015

Q2

2015

Q3

2015

Q4

2015

Q1

 2016

Q2

 2016

Q3

 2016

Q4

2016

YoY

Change

QoQ
Change














Clients

7,832

8,564

9,290

10,198

10,962

11,874

12,882

14,468

42%

12%














Revenue

294,172

299,306

332,674

397,018

401,253

407,201

423,867

566,825

43%

34%


Americas

100,624

110,872

124,024

170,133

147,174

156,522

160,739

266,438

57%

66%


EMEA

132,208

126,807

137,185

144,905

159,405

153,899

157,921

189,298

31%

20%


APAC

61,340

61,627

71,465

81,980

94,674

96,780

105,207

111,089

36%

6%














TAC

(175,888)

(177,239)

(198,970)

(237,056)

(238,755)

(240,969)

(247,310)

(341,877)

44%

38%


Americas

(61,244)

(66,853)

(75,684)

(104,646)

(90,929)

(96,560)

(97,239)

(167,046)

60%

72%


EMEA

(78,158)

(73,155)

(79,710)

(82,905)

(91,185)

(86,820)

(87,092)

(108,567)

31%

25%


APAC

(36,486)

(37,231)

(43,576)

(49,505)

(56,641)

(57,589)

(62,979)

(66,264)

34%

5%














Revenue ex-
TAC

118,284

122,067

133,704

159,962

162,498

166,232

176,557

224,948

41%

27%


Americas

39,380

44,019

48,340

65,487

56,245

59,962

63,500

99,391

52%

57%


EMEA

54,050

53,652

57,475

62,000

68,220

67,079

70,829

80,731

30%

14%


APAC

24,854

24,396

27,889

32,475

38,033

39,191

42,228

44,826

38%

6%














Cash flow
from
operating
activities

41,007

11,938

17,500

66,706

18,907

19,274

43,631

71,658

7%

64%



Capital
expenditures

12,862

18,348

24,066

19,205

12,109

22,386

19,907

22,981

20%

15%



Net cash
position

316,376

321,109

314,644

353,537

386,110

377,407

407,158

270,318

(24)%

(34)%



Days Sales
Outstanding
(days - end
of month) (1)





56

57

56

53
















(1) Due to the conversion from IFRS (euros) to U.S. GAAP (U.S. dollars), the Days Sales Outstanding for historic quarters has not been recalculated and is not available.

 

 

SOURCE Criteo S.A.

For further information: Criteo Investor Relations: Edouard Lassalle, Head of IR, e.lassalle@criteo.com; Friederike Edelmann, Sr. Manager IR, f.edelmann@criteo.com; Criteo Public Relations: Emma Ferns, Global PR director, e.ferns@criteo.com