News

CRITEO REPORTS FOURTH QUARTER AND FISCAL YEAR 2022 RESULTS

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
Change

2022


2021


YoY
Change


(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

  • We renewed and extended our global partnership with Ascential and its world-class e-commerce businesses; we signed a three-year U.S. partnership with a major holding agency to accelerate the demand for both Retail Media and Marketing Solutions.
  • Retail Media Contribution ex-TAC grew 23% year-over-year at constant currency in Q4 and 33% in 20222.
  • Same-retailer Contribution ex-TAC3 retention for Retail Media was 122% and 130% in Q4 and 2022, respectively.
  • We expanded our platform adoption to 175 retailers and 1,800 brands in Retail Media, including new retailer wins in the grocery, agricultural retail, and health and beauty sectors.
  • Marketing Solutions Contribution ex-TAC was down 7% year-over-year at constant currency2 in Q4 and flat in 2022.
  • Criteo's activated media spend4, including Iponweb, was $3.3 billion in the last 12 months and $1.2 billion in Q4, growing 39% at constant currency2.
  • We deployed $136 million of capital for share repurchases in 2022, and we extended our share repurchase authorization from $280 million to $480 million in December 2022.

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.

  • Marketing Solutions revenue decreased 19%, or decreased 12% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 16%, or decreased 7% at constant currency, driven by a slowdown in Retail, anticipated signal loss impacts and the suspension of the Company's operations in Russia, partially offset by strength in Travel.
  • Retail Media revenue decreased 21%, or 18% at constant currency, reflecting the impact related to the ongoing client migration to the Company's platform. Retail Media Contribution ex-TAC increased 19%, or 23% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
  • Iponweb revenue reflects three months of contribution following the closing of the acquisition on August 1, 2022.

Net Income 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).










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.

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.

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.

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.

  • Marketing Solutions revenue decreased 12%, or decreased 5% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 10%, or was flat at constant currency, driven by solid growth for Commerce Audiences offset by lower Retargeting primarily due to anticipated signal loss impacts and the suspension of the Company's operations in Russia.
  • Retail Media revenue decreased 18%, or 16% at constant currency, reflecting the impact related to the ongoing client migration to the Company's platform. Retail Media Contribution ex-TAC increased 29%, or 33% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
  • Iponweb revenue reflects five months of contribution following the closing of the acquisition on August 1, 2022.

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:

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

First quarter 2023 guidance:

  • Contribution ex-TAC between $210 million and $216 million, or year-over-year growth at constant currency of +5% to +7%, including the contribution from our Iponweb acquisition
  • Adjusted EBITDA between $30 million and $32 million

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.

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

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

About Criteo

Criteo (NASDAQ: CRTO) is the global commerce media company that enables marketers and media owners to drive better commerce outcomes. Its industry leading Commerce Media Platform connects 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
December 31, 2021, respectively
 


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
outstanding at December 31, 2022 and December 31, 2021, respectively.


2,079


2,149

Treasury stock, 5,985,104 and  5,207,873 shares at cost as of December 31, 2022 and December 31,
2021, respectively.


(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
Criteo S.A.


$       15,400


$       73,765


(79) %


$         8,952


$    134,456


(93) %

Net income available to non-controlling
interests


$            649


$         1,173


(45) %


$         1,923


$         3,191


(40) %














Weighted average shares outstanding used in
computing per share amounts:













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
share:













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
assets


167


(2,729)


NM


(194)


1,965


NM

 - Interest accrued and non-cash financial
income and expenses


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
activities


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
assets


8,537


(7,032)


NM


(14,687)


(19,742)


(26) %

           - Increase / (Decrease) in other current
liabilities


2,316


38,807


(94) %


(17,862)


33,033


NM

           - Change in operating lease liabilities and
right of use assets


(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
equipment


(35,841)


(10,600)


NM


(84,796)


(54,983)


54 %

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


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
agreement




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
equivalents


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
cash at end of period


$    448,200


$    515,527


(13) %


$    448,200


$    515,527


(13) %














SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION













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
equipment


(35,841)


(10,600)


NM


(84,796)


(54,983)


54 %

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


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
Change


2022


2021


YoY
Change













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
Change


YoY
Change
at
Constant
Currency (3)


2022


2021


YoY
Change


YoY
Change
at
Constant
Currency (3)

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
Change


2022


2021


YoY
Change

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
Change


2022


2021


YoY
Change














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
Change

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.