2022 Activated Media Spend Up 25% to 3.3 Billion
2022 Operating Cash Flow Up 16% to $256 Million and Free Cash Flow Up 19% to $200 Million
Deployed $136 Million of Capital to Share Repurchases in 2022
Targeting High-Single-Digit to Low-Double-Digit Growth in 2023
NEW YORK, Feb. 8, 2023 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2022.
Fourth Quarter and Fiscal Year 2022 Financial Highlights:
The following table summarizes our consolidated financial results for the three and twelve months ended December 31, 2022:
Three Months Ended | Twelve Months Ended | |||||||||
December 31, | December 31, | |||||||||
2022 | 2021 | YoY | 2022 | 2021 | YoY | |||||
(in millions, except EPS data) | ||||||||||
GAAP Results | ||||||||||
Revenue | $ 564 | $ 653 | (14) % | $ 2,017 | $ 2,254 | (11) % | ||||
Gross Profit | $ 247 | $ 244 | 1 % | $ 795 | $ 782 | 2 % | ||||
Net Income | $ 16 | $ 75 | (79) % | $ 11 | $ 138 | (92) % | ||||
Gross Profit margin | 44 % | 37 % | 7ppt | 39 % | 35 % | 4ppt | ||||
Diluted EPS | $ 0.25 | $ 1.15 | (78) % | $ 0.14 | $ 2.09 | (93) % | ||||
Cash from operating activities | $ 125 | $ 66 | 90 % | $ 256 | $ 221 | 16 % | ||||
Cash and cash equivalents | $ 348 | $ 516 | (32) % | $ 348 | $ 516 | (32) % | ||||
Non-GAAP Results1 | ||||||||||
Contribution ex-TAC | $ 283 | $ 276 | 3 % | $ 928 | $ 921 | 1 % | ||||
Contribution ex-TAC margin | 50 % | 42 % | 8ppt | 46 % | 41 % | 5ppt | ||||
Adjusted EBITDA | $ 104 | $ 111 | (6) % | $ 267 | $ 322 | (17) % | ||||
Adjusted diluted EPS | $ 0.84 | $ 1.44 | (42) % | $ 2.76 | $ 3.38 | (18) % | ||||
Free Cash Flow (FCF) | $ 111 | $ 56 | 99 % | $ 200 | $ 168 | 19 % | ||||
FCF / Adjusted EBITDA | 106 % | 50 % | 56ppt | 75 % | 52 % | 23ppt | ||||
"In 2022, we made great strides in the transformation of Criteo and the acceleration of our strategy. As a clear leader in Commerce and Retail Media, we are uniquely positioned to capitalize on the largest market opportunity in digital advertising," said Megan Clarken, Chief Executive Officer of Criteo. "In 2023, we are focused on the execution of our plan that delivers growth for our clients and drives shareholder value."
Operating Highlights
Financial Summary
Revenue for Q4 2022 was $564 million, gross profit was $247 million and Contribution ex-TAC was $283 million. Net income for Q4 was $16 million, or $0.25 per share on a diluted basis. Adjusted EBITDA for Q4 was $104 million, resulting in an adjusted diluted EPS of $0.84. As reported, revenue for Q4 decreased by 14%, gross profit increased 1% and Contribution ex-TAC increased by 3%. At constant currency, revenue for Q4 decreased by 8% and Contribution ex-TAC increased by 10%.
Revenue for the fiscal year 2022 was $2.0 billion, gross profit was $795 million and Contribution ex-TAC was $928 million. As reported, revenue for 2022 decreased by 11%, gross profit increased 2% and Contribution ex-TAC increased by 1%. At constant currency, revenue for 2022 decreased by 4% and Contribution ex-TAC increased by 10%. Net income for fiscal 2022 was $11 million, or $0.14 per share on a diluted basis. Fiscal year 2022 Adjusted EBITDA was $267 million, resulting in an adjusted diluted EPS of $2.76. Cash flow from operating activities was $125 million in Q4 and $256 million in 2022. Free Cash Flow was $111 million in Q4 and up 19% to a record $200 million in 2022. As of December 31, 2022, we had $373 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, "Despite the challenging macro-economic environment, we delivered 10% growth in Contribution ex-TAC at constant currency, an adjusted EBITDA margin of 29% and record Free Cash Flow conversion of 75% of adjusted EBITDA in 2022. In 2023, we are capitalizing on our momentum in Retail Media and accelerating cost efficiency initiatives."
Fourth Quarter 2022 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 14% year-over-year in Q4 2022, or 8% at constant currency, to $564 million (Q4 2021: $653 million). Gross profit increased by 1% year-over-year in Q4 2022 to $247 million (Q4 2021: $244 million). Gross profit as a percentage of revenue, or gross profit margin, was 44% (Q4 2021: 37%). Contribution ex-TAC in the fourth quarter increased 3% year-over-year, or increased 10% at constant currency, to $283 million (Q4 2021: $276 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 50% (Q4 2021: 42%), up 800 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Company's platform.
Net Income and Adjusted Net Income
Net income was $16 million in Q4 2022 (Q4 2021: $75 million). Net income margin as a percentage of revenue was 3% (Q4 2021: 11%). Net income available to shareholders of Criteo was $15 million, or $0.25 per share on a diluted basis (Q4 2021: $74 million, or $1.15 per share on a diluted basis).
Adjusted net income, a non-GAAP financial measure, was $52 million, or $0.84 per share on a diluted basis (Q4 2021: $92 million, or $1.44 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $104 million, above the Company's guidance, representing a decrease of 6% year-over-year (Q4 2021: $111 million). This was driven by planned growth investments, partially offset by higher Contribution ex-TAC over the period. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 37% (Q4 2021: 40%).
Operating expenses increased 11% year-over-year to $198 million (Q4 2021: $179 million), mostly driven by higher headcount-related expense from planned investments, equity awards compensation expense, and operating costs from our acquisition of Iponweb. Non-GAAP operating expenses increased by 2% or $3 million, to $154 million (Q4 2021: $151 million).
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP. | ||||||||
2 Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar. | ||||||||
3 Same-client profitability or Contribution ex-TAC is the profitability or Contribution ex-TAC generated by clients that were live with us in a given quarter and are still live with us the same quarter in the following year. | ||||||||
4 Activated media spend is defined as the sum of our Marketing Solutions revenue, the media spend activated on behalf of our Retail Media clients, and the media spend activated by Iponweb. | ||||||||
Fiscal Year 2022 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 11% year-over-year, or 4% at constant currency, to $2,017 million (FY 2021: $2,254 million). Gross profit increased by 2% year-over-year to $795 million (FY 2021: $782 million). Gross profit as a percentage of revenue, or gross profit margin, was 39% (FY 2021: 35%). Contribution ex-TAC increased 1% year-over-year, or increased 10% at constant currency, to $928 million (FY 2021: $921 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 46% (FY 2021: 41%), up 500 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Company's platform.
Net Income and Adjusted Net Income
Net income was $11 million (FY 2021: $138 million). Net income available to shareholders of Criteo was $9 million, or $0.14 per share on a diluted basis (FY 2021: $134 million, or $2.09 per share on a diluted basis).
Adjusted net income was $173 million, or $2.76 per share on a diluted basis (FY 2021: $217 million, or $3.38 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $267 million (FY 2021: $322 million), reflecting planned growth investments, partially offset by higher Contribution ex-TAC and cost management. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 29% (FY 2021: 35%).
Operating expenses increased 22% year-over-year to $771 million (FY 2021: $630 million), mostly driven by higher headcount-related expense from planned investments, equity awards compensation expense, and inclusion of the operating costs from our acquisition of Iponweb. Non-GAAP operating expenses increased by 11% or $56 million, to $580 million (FY 2021: $524 million).
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased 90% year-over-year to $125 million in Q4 2022 (Q4 2021: $66 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 to $111 million in Q4 2022 (Q4 2021: $56 million).
Cash and cash equivalents, and marketable securities, decreased $198 million compared to December 31, 2021 to $373 million, after spending approximately $135 million for the acquisition of Iponweb (net of cash acquired), which closed on August 1, 2022, and approximately $136 million on share repurchases in 2022.
As of December 31, 2022, the Company had total financial liquidity of approximately $835 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.
2023 Business Outlook
The following forward-looking statements reflect Criteo's expectations as of February 8, 2023.
Fiscal year 2023 guidance:
First quarter 2023 guidance:
The above guidance for the first quarter and fiscal year ending December 31, 2023 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.952, a U.S. dollar-Japanese Yen rate of 135, a U.S. dollar-British pound rate of 0.838, a U.S. dollar-Korean Won rate of 1,290 and a U.S. dollar-Brazilian real rate of 5.25.
The above guidance assumes that no additional acquisitions are completed during the first quarter of 2023 or the fiscal year ended December 31, 2023.
Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures are not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.
Non-GAAP Financial Measures
This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission ("SEC"): Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted diluted EPS, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.
Contribution ex-TAC is a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other costs of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Contribution ex-TAC provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter. Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related assets, certain restructuring, integration and transformation costs, certain acquisition costs, a loss contingency related to a regulatory matter, and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow Conversion is defined as free cash flow divided by Adjusted EBITDA. Free Cash Flow and Free Cash Flow Conversion are key measures used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow and Free Cash Flow Conversion permit a more complete and comprehensive analysis of our available cash flows.
Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition and integration costs, and a loss contingency related to a regulatory matter. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.
Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Contribution ex-TAC to gross profit, Adjusted EBITDA to net income, Adjusted Net Income to net income, Free Cash Flow to cash flow from operating activities, and Non-GAAP Operating Expenses to operating expenses, in each case, the most comparable U.S. GAAP measure. Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider such non-GAAP measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: 1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and 2) other companies may report Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-GAAP Operating Expenses or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including projected financial results for the quarter ending March 31, 2023 and the year ending December 31, 2023, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the effects of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful integration of our acquisition of Iponweb, uncertainty regarding international growth and expansion (including related to changes in a specific country's or region's political or economic conditions), the impact of the invasion of Ukraine by Russia (including resulting sanctions), the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Contribution ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 25, 2022, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have, and macro-economic conditions including inflation and rising interest rates in the U.S. could have, an impact on Criteo's business, financial condition, cash flow and results of operations. There are uncertainties about the duration and the extent of the impact of the COVID-19 pandemic.
Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.
Conference Call Information
Criteo's senior management team will discuss the Company's earnings on a call that will take place today, February 8, 2023, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website at https://criteo.investorroom.com/ and will subsequently be available for replay.
Please ask to be joined into the "Criteo" call.
About Criteo
Criteo (NASDAQ: CRTO) is the global commerce media company that enables marketers and media owners to drive better commerce outcomes. Its industry leading Commerce Media Platform connects 22,000 marketers and thousands of media owners to deliver richer consumer experiences from product discovery to purchase. By powering trusted and impactful advertising, Criteo supports an open internet that encourages discovery, innovation, and choice. For more information, please visit www.criteo.com.
Contacts
Criteo Investor Relations
Melanie Dambre, m.dambre@criteo.com
Criteo Public Relations
Jessica Meyers, j.meyers@criteo.com
Financial information to follow
CRITEO S.A. | ||||
Consolidated Statement of Financial Position | ||||
(U.S. dollars in thousands, unaudited) | ||||
December 31, 2022 | December 31, 2021 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ 348,200 | $ 515,527 | ||
Trade receivables, net of allowances of $47.8 million and $45.4 million at December 31, 2022 and | 708,949 | 581,988 | ||
Income taxes | 23,609 | 8,784 | ||
Other taxes | 78,274 | 73,388 | ||
Other current assets | 51,866 | 34,182 | ||
Restricted cash - current | 25,000 | — | ||
Marketable securities - current portion | 25,098 | 50,299 | ||
Total current assets | 1,260,996 | 1,264,168 | ||
Property, plant and equipment, net | 131,207 | 139,961 | ||
Intangible assets, net | 175,983 | 82,627 | ||
Goodwill | 515,140 | 329,699 | ||
Right of Use Asset - operating lease | 102,176 | 120,257 | ||
Restricted cash - non current | 75,000 | — | ||
Marketable securities - non current portion | — | 5,000 | ||
Non-current financial assets | 5,928 | 6,436 | ||
Other non-current assets | 50,818 | — | ||
Deferred tax assets | 31,646 | 35,443 | ||
Total non-current assets | 1,087,898 | 719,423 | ||
Total assets | $ 2,348,894 | $ 1,983,591 | ||
Liabilities and shareholders' equity | ||||
Current liabilities: | ||||
Trade payables | $ 742,918 | $ 430,245 | ||
Contingencies - current portion | 65,759 | 3,059 | ||
Income taxes | 13,037 | 6,641 | ||
Financial liabilities - current portion | 219 | 642 | ||
Lease liability - operating - current portion | 31,003 | 34,066 | ||
Other taxes | 58,031 | 60,236 | ||
Employee - related payables | 85,569 | 98,136 | ||
Other current liabilities | 83,457 | 39,523 | ||
Total current liabilities | 1,079,993 | 672,548 | ||
Deferred tax liabilities | 3,463 | 3,053 | ||
Defined benefit plans | 3,708 | 5,531 | ||
Financial liabilities - non current portion | 74 | 360 | ||
Lease liability - operating - non current portion | 77,536 | 93,893 | ||
Contingencies - non current portion | 33,788 | — | ||
Other non-current liabilities | 69,226 | 9,886 | ||
Total non-current liabilities | 187,795 | 112,723 | ||
Total liabilities | 1,267,788 | 785,271 | ||
Commitments and contingencies | ||||
Shareholders' equity: | ||||
Common shares, €0.025 par value, 63,248,728 and 65,883,347 shares authorized, issued and | 2,079 | 2,149 | ||
Treasury stock, 5,985,104 and 5,207,873 shares at cost as of December 31, 2022 and December 31, | (174,293) | (131,560) | ||
Additional paid-in capital | 734,492 | 731,248 | ||
Accumulated other comprehensive income (loss) | (91,890) | (40,294) | ||
Retained earnings | 577,653 | 601,588 | ||
Equity - attributable to shareholders of Criteo S.A. | 1,048,041 | 1,163,131 | ||
Non-controlling interests | 33,065 | 35,189 | ||
Total equity | 1,081,106 | 1,198,320 | ||
Total equity and liabilities | $ 2,348,894 | $ 1,983,591 | ||
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, | |||||||||||
2022 | 2021 | YoY Change | 2022 | 2021 | YoY Change | |||||||
Revenue | $ 564,425 | $ 653,267 | (14) % | $ 2,017,003 | $ 2,254,235 | (11) % | ||||||
Cost of revenue | ||||||||||||
Traffic acquisition cost | (281,021) | (377,076) | (25) % | (1,088,779) | (1,333,440) | (18) % | ||||||
Other cost of revenue | (36,810) | (31,840) | 16 % | (133,024) | (138,851) | (4) % | ||||||
Gross profit | 246,594 | 244,351 | 1 % | 795,200 | 781,944 | 2 % | ||||||
Operating expenses: | ||||||||||||
Research and development expenses | (69,348) | (44,860) | 55 % | (187,596) | (151,817) | 24 % | ||||||
Sales and operations expenses | (99,633) | (89,892) | 11 % | (377,996) | (325,616) | 16 % | ||||||
General and administrative expenses | (28,969) | (43,855) | (34) % | (205,330) | (152,634) | 35 % | ||||||
Total Operating expenses | (197,950) | (178,607) | 11 % | (770,922) | (630,067) | 22 % | ||||||
Income from operations | 48,644 | 65,744 | (26) % | 24,278 | 151,877 | (84) % | ||||||
Financial and Other income (expense) | (6,144) | 3,330 | NM | 17,783 | 1,939 | NM | ||||||
Income before taxes | 42,500 | 69,074 | (38) % | 42,061 | 153,816 | (73) % | ||||||
Provision for income taxes | (26,451) | 5,864 | NM | (31,186) | (16,169) | 93 % | ||||||
Net Income | $ 16,049 | $ 74,938 | (79) % | $ 10,875 | $ 137,647 | (92) % | ||||||
Net income available to shareholders of | $ 15,400 | $ 73,765 | (79) % | $ 8,952 | $ 134,456 | (93) % | ||||||
Net income available to non-controlling | $ 649 | $ 1,173 | (45) % | $ 1,923 | $ 3,191 | (40) % | ||||||
Weighted average shares outstanding used in | ||||||||||||
Basic | 58,732,771 | 60,590,826 | 60,004,707 | 60,717,446 | ||||||||
Diluted | 61,898,460 | 63,985,850 | 62,760,197 | 64,231,637 | ||||||||
Net income allocated to shareholders per | ||||||||||||
Basic | $ 0.26 | $ 1.22 | (79) % | $ 0.15 | $ 2.21 | (93) % | ||||||
Diluted | $ 0.25 | $ 1.15 | (78) % | $ 0.14 | $ 2.09 | (93) % | ||||||
CRITEO S.A. | ||||||||||||
Consolidated Statement of Cash Flows | ||||||||||||
(U.S. dollars in thousands, unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2022 | 2021 | YoY Change | 2022 | 2021 | YoY Change | |||||||
Net income | $ 16,049 | $ 74,938 | (79) % | $ 10,875 | $ 137,647 | (92) % | ||||||
Non-cash and non-operating items | 62,986 | 21,306 | NM | 185,029 | 124,879 | 48 % | ||||||
- Amortization and provisions | 15,611 | 23,015 | (32) % | 150,261 | 90,934 | 65 % | ||||||
- Equity awards compensation expense (1) | 22,440 | 12,354 | 82 % | 65,034 | 44,528 | 46 % | ||||||
- Net gain or (loss) on disposal of non-current | 167 | (2,729) | NM | (194) | 1,965 | NM | ||||||
- Interest accrued and non-cash financial | 1,985 | — | NM | (259) | — | NM | ||||||
- Change in uncertain tax positions | 412 | — | NM | 412 | — | NM | ||||||
- Net change in fair value of Earn-out | 771 | — | NM | 771 | — | NM | ||||||
- Change in deferred taxes | 19,653 | (23,210) | NM | 3,602 | (18,642) | NM | ||||||
- Change in income taxes | 1,947 | 11,863 | (84) % | (10,952) | 6,043 | NM | ||||||
- Other | — | 13 | NM | (23,646) | 51 | NM | ||||||
Changes in working capital related to operating | 46,420 | (30,232) | NM | 60,081 | (41,613) | NM | ||||||
- (Increase) / Decrease in trade receivables | (117,309) | (151,604) | (23) % | (41,910) | (134,950) | (69) % | ||||||
- Increase / (Decrease) in trade payables | 153,318 | 88,384 | 73 % | 133,792 | 82,691 | 62 % | ||||||
- (Increase) / Decrease in other current | 8,537 | (7,032) | NM | (14,687) | (19,742) | (26) % | ||||||
- Increase / (Decrease) in other current | 2,316 | 38,807 | (94) % | (17,862) | 33,033 | NM | ||||||
- Change in operating lease liabilities and | (442) | 1,213 | NM | 748 | (2,645) | NM | ||||||
CASH FROM OPERATING ACTIVITIES | 125,455 | 66,012 | 90 % | 255,985 | 220,913 | 16 % | ||||||
Acquisition of intangible assets, property, plant and | (35,841) | (10,600) | NM | (84,796) | (54,983) | 54 % | ||||||
Change in accounts payable related to intangible | 21,319 | 455 | NM | 28,951 | 1,973 | NM | ||||||
Payment for businesses, net of cash acquired | (2,574) | (892) | NM | (138,027) | (10,419) | NM | ||||||
Change in other non-current financial assets | (15,299) | 865 | NM | 27,753 | (12,938) | NM | ||||||
CASH USED FOR INVESTING ACTIVITIES | (32,395) | (10,172) | NM | (166,119) | (76,367) | NM | ||||||
Proceeds from borrowings under line-of-credit | — | — | NM | 78,513 | — | NM | ||||||
Repayment of borrowings | — | 13 | NM | (78,513) | (1,249) | NM | ||||||
Proceeds from exercise of stock options | 411 | 3,508 | (88) % | 1,028 | 25,196 | (96) % | ||||||
Repurchase of treasury stocks | (76,523) | (27,416) | NM | (135,685) | (100,027) | 36 % | ||||||
Change in other financial liabilities | (372) | (401) | (7) % | (265) | (4,037) | (93) % | ||||||
Other | (364) | — | NM | 21,878 | — | NM | ||||||
CASH USED FOR FINANCING ACTIVITIES | (76,848) | (24,296) | NM | (113,044) | (80,117) | 41 % | ||||||
Effect of exchange rates changes on cash and cash | 24,665 | (13,475) | NM | (44,149) | (36,913) | 20 % | ||||||
Net increase in cash and cash equivalents | 40,877 | 18,069 | NM | (67,327) | 27,516 | NM | ||||||
Net cash and cash equivalents at beginning of period | 407,323 | 497,458 | (18) % | 515,527 | 488,011 | 6 % | ||||||
Net cash and cash equivalents and restricted | $ 448,200 | $ 515,527 | (13) % | $ 448,200 | $ 515,527 | (13) % | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH | ||||||||||||
Cash paid for taxes, net of refunds | $ (4,439) | $ (5,482) | (19) % | $ (38,124) | $ (28,767) | 33 % | ||||||
Cash paid for interest | $ (339) | $ (347) | (2) % | $ (1,298) | $ (1,486) | (13) % | ||||||
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $22.1 million and $11.9 million of equity awards compensation expense for the quarters ended December 31, 2022 and 2021, respectively, and $63.2 million and $42.7 million of equity awards compensation for the twelve months ended December 31, 2022 and 2021, 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, | |||||||||||
2022 | 2021 | YoY Change | 2022 | 2021 | YoY Change | |||||||
CASH FROM OPERATING ACTIVITIES | $ 125,455 | $ 66,012 | 90 % | $ 255,985 | $ 220,913 | 16 % | ||||||
Acquisition of intangible assets, property, plant and | (35,841) | (10,600) | NM | (84,796) | (54,983) | 54 % | ||||||
Change in accounts payable related to intangible | 21,319 | 455 | NM | 28,951 | 1,973 | NM | ||||||
FREE CASH FLOW (1) | $ 110,933 | $ 55,867 | 99 % | $ 200,140 | $ 167,903 | 19 % | ||||||
(1) Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. |
CRITEO S.A. | |||||||||||
Reconciliation of Contribution ex-TAC to Gross Profit | |||||||||||
(U.S. dollars in thousands, unaudited) | |||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
December 31, | December 31, | ||||||||||
2022 | 2021 | YoY | 2022 | 2021 | YoY | ||||||
Gross Profit | 246,594 | 244,351 | 1 % | 795,200 | 781,944 | 2 % | |||||
Other Cost of Revenue | 36,810 | 31,840 | 16 % | 133,024 | 138,851 | (4) % | |||||
Contribution ex-TAC (1) | $ 283,404 | $ 276,191 | 3 % | $ 928,224 | $ 920,795 | 1 % | |||||
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. | |||||||||||
CRITEO S.A. | |||||||||||||||||
Segment Information | |||||||||||||||||
(U.S. dollars in thousands, unaudited) | |||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
Segment | 2022 | 2021 | YoY | YoY | 2022 | 2021 | YoY | YoY | |||||||||
Revenue | |||||||||||||||||
Marketing Solutions | $ 470,918 | $ 577,962 | (19) % | (12) % | $ 1,762,517 | $ 2,007,239 | (12) % | (5.1) % | |||||||||
Retail Media (2) | 59,801 | 75,305 | (21) % | (18) % | 202,317 | 246,996 | (18) % | (16) % | |||||||||
Iponweb | 33,706 | — | N/A | N/A | 52,169 | — | N/A | N/A | |||||||||
Total | 564,425 | 653,267 | (14) % | (8) % | 2,017,003 | 2,254,235 | (11) % | (4) % | |||||||||
Contribution ex-TAC | |||||||||||||||||
Marketing Solutions | 192,616 | 228,378 | (16) % | (7) % | 714,695 | 796,152 | (10) % | (0.3) % | |||||||||
Retail Media (2) | 57,082 | 47,813 | 19 % | 23 % | 161,360 | 124,643 | 29 % | 33 % | |||||||||
Iponweb | 33,706 | — | N/A | N/A | 52,169 | — | N/A | N/A | |||||||||
Total (1) | $ 283,404 | $ 276,191 | 3 % | 10 % | $ 928,224 | $ 920,795 | 1 % | 10 % | |||||||||
(1) Refer to the Non-GAAP Financial Measures section of this filing for a definition of the Non-GAAP metric. |
(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo's Commerce Media Platform and is reported under the retail media segment. It is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions were accounted for on a gross basis. Most clients using Criteo's legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition. |
(3) Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar. |
CRITEO S.A. | ||||||||||||
Reconciliation of Adjusted EBITDA to Net Income | ||||||||||||
(U.S. dollars in thousands, unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2022 | 2021 | YoY Change | 2022 | 2021 | YoY Change | |||||||
Net income | $ 16,049 | $ 74,938 | (79) % | $ 10,875 | $ 137,647 | (92) % | ||||||
Adjustments: | ||||||||||||
Financial (Income) expense | 6,427 | (347) | NM | (17,053) | 1,044 | NM | ||||||
Provision for income taxes | 26,451 | (5,864) | NM | 31,186 | 16,169 | 93 % | ||||||
Equity awards compensation expense | 22,441 | 12,114 | 85 % | 65,035 | 44,955 | 45 % | ||||||
Pension service costs | 970 | 319 | NM | 1,756 | 1,324 | 33 % | ||||||
Depreciation and amortization expense | 27,450 | 21,756 | 26 % | 89,018 | 88,402 | 1 % | ||||||
Acquisition-related costs | 1,093 | 6,118 | (82) % | 12,584 | 11,256 | 12 % | ||||||
Loss contingency on regulatory matters | (699) | — | NM | 63,221 | — | NM | ||||||
Restructuring, integration and transformation costs (1) | 4,123 | 1,833 | NM | 10,677 | 21,698 | (51) % | ||||||
Total net adjustments | 88,256 | 35,929 | NM | 256,424 | 184,848 | 39 % | ||||||
Adjusted EBITDA (2) | $ 104,305 | $ 110,867 | (6) % | $ 267,299 | $ 322,495 | (17) % | ||||||
(1) For the three and nine months ended December 31, 2022 and December 31, 2021, respectively, the Company recognized restructuring, integration and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy: |
Three Months Ended | Twelve Months Ended | ||||||
December 31, | December 31, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
(Gain) from forfeitures of share-based compensation awards | — | 239 | — | (427) | |||
Facilities related costs | 450 | 1,328 | 1,452 | 16,020 | |||
Payroll related (gain) costs | 2,687 | (157) | 7,373 | 4,480 | |||
Integration and transformation costs | 986 | 423 | 1,852 | 1,625 | |||
Total restructuring, integration and transformation costs | $ 4,123 | $ 1,833 | $ 10,677 | $ 21,698 | |||
(2) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. | |||||||
CRITEO S.A. | ||||||||||||
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP | ||||||||||||
(U.S. dollars in thousands, unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2022 | 2021 | YoY | 2022 | 2021 | YoY | |||||||
Total Operating expenses | (197,950) | (178,607) | 10.8 % | (770,922) | (630,067) | 22.4 % | ||||||
Equity awards compensation expense | 22,441 | 12,114 | 85 % | 65,035 | 44,955 | 45 % | ||||||
Depreciation and Amortization expense | 15,797 | 7,145 | NM | 38,136 | 27,283 | 40 % | ||||||
Pension service costs | 970 | 319 | NM | 1,756 | 1,324 | 33 % | ||||||
Acquisition-related costs | 1,093 | 6,118 | (82) % | 12,584 | 11,256 | 12 % | ||||||
Loss contingency on regulatory matters | (699) | — | NM | 63,221 | — | NM | ||||||
Restructuring, integration and transformation costs | 4,123 | 1,833 | NM | 10,677 | 21,698 | (51) % | ||||||
Total Non GAAP Operating expenses (1) | $ (154,225) | $ (151,078) | 2 % | $ (579,513) | $ (523,551) | 11 % | ||||||
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. | ||||||||||||
CRITEO S.A. | ||||||||||||
Reconciliation of Adjusted Net Income to Net Income | ||||||||||||
(U.S. dollars in thousands except share and per share data, unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2022 | 2021 | YoY | 2022 | 2021 | YoY | |||||||
Net income | $ 16,049 | $ 74,938 | (79) % | $ 10,875 | $ 137,647 | (92) % | ||||||
Adjustments: | ||||||||||||
Equity awards compensation expense | 22,441 | 12,114 | 85 % | 65,035 | 44,955 | 45 % | ||||||
Amortization of acquisition-related intangible assets | 12,423 | 3,755 | NM | 23,276 | 12,929 | 80 % | ||||||
Acquisition-related costs | 1,093 | 6,118 | (82) % | 12,584 | 11,256 | 12 % | ||||||
Loss contingency on regulatory matters | (699) | — | NM | 63,221 | — | NM | ||||||
Restructuring, integration and transformation costs | 4,123 | 1,833 | NM | 10,677 | 21,698 | (51) % | ||||||
Tax impact of the above adjustments (1) | (3,535) | (6,557) | (46) % | (12,513) | (11,243) | 11 % | ||||||
Total net adjustments | 35,846 | 17,263 | NM | 162,280 | 79,595 | NM | ||||||
Adjusted net income(2) | $ 51,895 | $ 92,201 | (44) % | $ 173,155 | $ 217,242 | (20) % | ||||||
Weighted average shares outstanding | ||||||||||||
- Basic | 58,732,771 | 60,590,826 | 60,004,707 | 60,717,446 | ||||||||
- Diluted | 61,898,460 | 63,985,850 | 62,760,197 | 64,231,637 | ||||||||
Adjusted net income per share | ||||||||||||
- Basic | $ 0.88 | $ 1.52 | (42) % | $ 2.89 | $ 3.58 | (19) % | ||||||
- Diluted | $ 0.84 | $ 1.44 | (42) % | $ 2.76 | $ 3.38 | (18) % | ||||||
(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates. |
(2) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. |
CRITEO S.A. | ||||||||||||
Constant Currency Reconciliation | ||||||||||||
(U.S. dollars in thousands, unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
December 31, | December 31, | |||||||||||
2022 | 2021 | YoY Change | 2022 | 2021 | YoY Change | |||||||
Gross Profit as reported | $ 246,594 | $ 244,351 | 1 % | $ 795,200 | $ 781,944 | 2 % | ||||||
Other cost of revenue as reported | (36,810) | (31,840) | 16 % | (133,024) | (138,851) | (4) % | ||||||
Contribution ex-TAC as reported(2) | 283,404 | 276,191 | 3 % | 928,224 | 920,795 | 1 % | ||||||
Conversion impact U.S. dollar/other currencies | 21,462 | — | 84,202 | — | ||||||||
Contribution ex-TAC at constant currency | 304,866 | 276,191 | 10 % | 1,012,426 | 920,795 | 10 % | ||||||
Contribution ex-TAC(2)/Revenue as reported | 50 % | 42 % | 46 % | 41 % | ||||||||
Traffic acquisition costs as reported | (281,021) | (377,076) | (25) % | (1,088,779) | (1,333,440) | (18) % | ||||||
Conversion impact U.S. dollar/other currencies | (16,065) | — | (63,434) | — | ||||||||
Traffic acquisition costs at constant currency | (297,086) | (377,076) | (21) % | (1,152,213) | (1,333,440) | (14) % | ||||||
Revenue as reported | 564,425 | 653,267 | (14) % | 2,017,003 | 2,254,235 | (11) % | ||||||
Conversion impact U.S. dollar/other currencies | 37,527 | — | 147,636 | — | ||||||||
Revenue at constant currency | $ 601,952 | $ 653,267 | (8) % | $ 2,164,639 | $ 2,254,235 | (4) % | ||||||
(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) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. |
CRITEO S.A. | ||||
Information on Share Count | ||||
(unaudited) | ||||
Twelve Months Ended | ||||
2022 | 2021 | |||
Shares outstanding as at January 1, | 60,675,474 | 60,639,570 | ||
Weighted average number of shares issued during the period | (670,767) | 77,876 | ||
Basic number of shares - Basic EPS basis | 60,004,707 | 60,717,446 | ||
Dilutive effect of share options, warrants, employee warrants - Treasury method | 2,755,491 | 3,514,191 | ||
Diluted number of shares - Diluted EPS basis | 62,760,198 | 64,231,637 | ||
Shares issued as December 31, before Treasury stocks | 63,248,728 | 65,883,347 | ||
Treasury stock as of December 31, | (5,985,104) | (5,207,873) | ||
Shares outstanding as of December 31, after Treasury stocks | 57,263,624 | 60,675,474 | ||
Total dilutive effect of share options, warrants, employee warrants | 9,507,770 | 6,213,932 | ||
Fully diluted shares as at December 31, | 66,771,394 | 66,889,406 | ||
CRITEO S.A. | |||||||||||
Supplemental Financial Information and Operating Metrics | |||||||||||
(U.S. dollars in thousands except where stated, unaudited) | |||||||||||
YoY Change | QoQ | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | |
Clients | (0.7) % | (0.3) % | 21,600 | 21,673 | 21,711 | 21,597 | 21,745 | 21,747 | 21,332 | 20,626 | 21,460 |
Revenue | (14) % | 26 % | 564,425 | 446,921 | 495,090 | 510,567 | 653,267 | 508,580 | 551,311 | 541,077 | 661,282 |
Americas | (2) % | 40 % | 281,806 | 201,274 | 213,340 | 194,847 | 287,270 | 204,428 | 221,227 | 203,900 | 312,817 |
EMEA | (21) % | 23 % | 185,125 | 150,915 | 176,867 | 193,954 | 234,559 | 188,354 | 209,303 | 212,096 | 232,137 |
APAC | (26) % | 3 % | 97,494 | 94,732 | 104,883 | 121,766 | 131,438 | 115,798 | 120,781 | 125,081 | 116,328 |
Revenue | (14) % | 26 % | 564,425 | 446,921 | 495,090 | 510,567 | 653,267 | 508,580 | 551,311 | 541,077 | 661,282 |
Marketing Solutions | (19) % | 22 % | 470,918 | 387,288 | 440,423 | 463,888 | 577,962 | 458,622 | 487,465 | 483,190 | 543,262 |
Retail Media (2) | (21) % | 45 % | 59,801 | 41,170 | 54,667 | 46,679 | 75,305 | 49,958 | 63,846 | 57,887 | 118,020 |
Iponweb | N/A | 83 % | 33,706 | 18,463 | — | — | — | — | — | — | — |
TAC | (25) % | 20 % | (281,021) | (233,543) | (280,565) | (293,650) | (377,076) | (297,619) | (331,078) | (327,667) | (408,108) |
Marketing Solutions | (20) % | 21 % | (278,302) | (229,266) | (262,454) | (277,800) | (349,584) | (276,498) | (294,132) | (290,873) | (324,017) |
Retail Media (2) | (90) % | (36) % | (2,719) | (4,277) | (18,111) | (15,850) | (27,492) | (21,121) | (36,946) | (36,794) | (84,091) |
Iponweb | N/A | N/A | — | — | — | — | — | — | — | — | — |
Contribution ex-TAC (1) | 3 % | 33 % | 283,404 | 213,378 | 214,525 | 216,917 | 276,191 | 210,961 | 220,233 | 213,410 | 253,174 |
Marketing Solutions | (16) % | 22 % | 192,616 | 158,022 | 177,969 | 186,088 | 228,378 | 182,124 | 193,333 | 192,317 | 219,245 |
Retail Media (2) | 19 % | 55 % | 57,082 | 36,893 | 36,556 | 30,829 | 47,813 | 28,837 | 26,900 | 21,093 | 33,929 |
Iponweb | N/A | 83 % | 33,706 | 18,463 | — | — | — | — | — | — | — |
Cash flow from operating activities | 90 % | 201 % | 125,455 | 41,628 | 13,972 | 74,930 | 66,012 | 51,179 | 26,360 | 77,362 | 44,080 |
Capital expenditures | 43 % | (28) % | 14,522 | 20,307 | 15,452 | 5,564 | 10,145 | 15,957 | 13,128 | 13,780 | 22,302 |
Capital expenditures/Revenue | 1ppt | (2)ppt | 3 % | 5 % | 3 % | 1 % | 2 % | 3 % | 2 % | 3 % | 3 % |
Net cash position | (13) % | 10 % | 448,200 | 407,323 | 562,546 | 589,343 | 515,527 | 497,458 | 489,521 | 520,060 | 488,011 |
Headcount | 34 % | 5 % | 3,716 | 3,537 | 3,146 | 2,939 | 2,781 | 2,658 | 2,572 | 2,532 | 2,594 |
Days Sales Outstanding (days - end of month) | 6 days | (7) days | 71 | 78 | 76 | 74 | 65 | 70 | 66 | 64 | 56 |
(1) Refer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric. |
(2) The Retail Media Platform, introduced in June 2020, is a strategic building block of Criteo's Commerce Media Platform and is reported under the retail media segment. It is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions were accounted for on a gross basis. Most clients using Criteo's legacy Retail Media solutions transitioned to this platform by the end of 2022. During the transition period, Revenue declined but Contribution ex-TAC margin increased. Contribution ex-TAC was not impacted by this transition. |
SOURCE Criteo S.A.
