EX-99.1 3 exhibit991q42018earnings.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
logoq1a11.jpg


CRITEO REPORTS FINANCIAL RESULTS
FOR THE FOURTH QUARTER AND FISCAL YEAR 2018


NEW YORK - February 13, 2019 - Criteo S.A. (NASDAQ: CRTO), the advertising platform for the open Internet, today announced financial results for the fourth quarter and fiscal year ended December 31, 2018.

Q4 2018
•
Revenue decreased 1% year-over-year, or increased 1% at constant currency1, to $670 million.
•
Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC2, decreased 2% year-over-year, or increased 0.1% at constant currency, to $272 million, or 41% of revenue.
•
Adjusted EBITDA2 decreased 13% year-over-year, or 12% at constant currency, to $105 million, or 39% of Revenue ex-TAC.
•
Cash flow from operating activities increased 8% year-over-year to $86 million.
•
Free Cash Flow2 was $40 million.
•
Net income decreased 20% year-over-year to $42 million.
•
Adjusted net income per diluted share2 decreased 31% year-over-year to $0.84.

Fiscal Year 2018
•
Revenue increased 0.2% year-over-year, or decreased 1% at constant currency, to $2,300 million.
•
Revenue ex-TAC increased 3% year-over-year, or 2% at constant currency, to $966 million, or 42% of revenue.
•
Adjusted EBITDA increased 4% year-over-year, or 0.1% at constant currency, to $321 million, or 33% of Revenue ex-TAC.
•
Cash flow from operating activities increased 6% year-over-year to $261 million.
•
Free Cash Flow was $135 million.
•
Net income decreased 1% year-over-year to $96 million.
•
Adjusted net income per diluted share decreased 8% year-over-year to $2.49.


"The recurring nature of our business reflects the great value our clients place in our performance", said JB Rudelle, CEO. "We are building on this trust to expand our client partnerships with new solutions".

"Our Q4 results mark an inflection point in our trajectory", commented Benoit Fouilland, CFO. "We expect to see positive momentum in 2019 driven by healthy fundamentals and our broader multi-solution platform".












___________________________________________________ 
1 Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 2017 average exchange rates for the relevant period to 2018 figures.
2 Revenue ex-TAC, Adjusted EBITDA, Adjusted net Income per diluted share and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
3 Same-client Revenue ex-TAC is the Revenue ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.

1



Q4 2018 Operating Highlights

•
Revenue ex-TAC from our new solutions represented over 13% of our total business, growing 54% year-over-year.
•
Same-client Revenue ex-TAC3 was flat year-over-year at constant currency despite continued headwinds over the period.
•
We grew clients 7% year-over-year, ending the quarter with close to 19,500 commerce and brand clients, while maintaining client retention at close to 90% for our all our solutions combined.
•
Our app business grew 54% year-over-year on a Revenue ex-TAC basis.
•
We had 13% of our live clients using at least two of our solutions, up from only 4% in the prior year.
•
Our header bidding technology is now connected to the vast majority of our direct publishers, with close to 3,500 large publishers now using Criteo Direct Bidder, compared to 2,600 at the end of Q3.


Revenue and Revenue ex-TAC

Q4 2018
Revenue decreased 1% year-over-year, or increased 1% at constant currency1, to $670 million (Q4 2017: $674 million).

Revenue ex-TAC decreased 2% year-over-year, or increased 0.1% at constant currency, to $272 million (Q4 2017: $277 million). This year-over-year growth at constant currency was largely driven by a strong Holiday season across the U.S. and Europe, and was well balanced between the contribution of new clients and our existing clients, despite external headwinds. This return to growth at constant currency marks an inflection point in our growth trajectory.

•
In the Americas, Revenue ex-TAC decreased 0.1% year-over-year, or increased 1% at constant currency, to $121 million and represented 45% of total Revenue ex-TAC.
•
In EMEA, Revenue ex-TAC decreased 7% year-over-year, or 4% at constant currency, to $93 million and represented 34% of total Revenue ex-TAC.
•
In Asia-Pacific, Revenue ex-TAC increased 5% year-over-year, or 6% at constant currency, to $58 million and represented 21% of total Revenue ex-TAC.

Revenue ex-TAC margin as a percentage of revenue decreased 50 basis points year-over-year to 41%.

Fiscal Year 2018
Revenue increased 0.2% year-over-year, or decreased 1% at constant currency, to $2,300 million (2017: $2,297 million).

Revenue ex-TAC increased 3% year-over-year, or 2% at constant currency, to $966 million (2017: $941 million). The year-over-year growth was primarily driven by the contribution of new clients, as the lower contribution of existing clients compared to 2017 was largely driven by significant external headwinds. Our growth in 2018 reflects the resilient and recurring nature of our business.

•
In the Americas, Revenue ex-TAC increased 1% year-over-year, or 2% at constant currency, to $374 million and represented 39% of total Revenue ex-TAC.
•
In EMEA, Revenue ex-TAC increased 3% year-over-year, and was flat at constant currency, to $368 million and represented 38% of total Revenue ex-TAC.
•
In Asia-Pacific, Revenue ex-TAC increased 6% year-over-year, or 5% at constant currency, to $223 million and represented 23% of total Revenue ex-TAC.

Revenue ex-TAC margin as a percentage of revenue increased 100 basis points year-over-year to 42%.

2



Net Income and Adjusted Net Income

Q4 2018
Net income decreased 20% year-over-year to $42 million (Q4 2017: $52 million). Net income available to shareholders of Criteo S.A. was $38 million, or $0.57 per share on a diluted basis (Q4 2017: $53 million, or $0.78 per share on a diluted basis).

Adjusted net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, decreased 31% year-over-year to $56 million, or $0.84 per share on a diluted basis (Q4 2017: $82 million, or $1.21 per share on a diluted basis).

Fiscal Year 2018
Net income decreased 1% year-over-year to $96 million (2017: $97 million). Net income available to shareholders of Criteo S.A. was $89 million, or $1.31 per share on a diluted basis (2017: $91 million, or $1.34 per share on a diluted basis).

Adjusted net income decreased 8% year-over-year to $169 million, or $2.49 per share on a diluted basis (2017: $183 million, or $2.70 per share on a diluted basis).


Adjusted EBITDA and Operating Expenses

Q4 2018
Adjusted EBITDA decreased 13%, or 12% at constant currency, to $105 million (Q4 2017: $120 million). This decrease was primarily driven by the Revenue ex-TAC performance across regions as well as slightly higher Non-GAAP operating expenses, in particular in General & Administrative.

Adjusted EBITDA margin as a percentage of Revenue ex-TAC was 39% (Q4 2017: 43%).

Operating expenses decreased 2% year-over-year to $171 million (Q4 2017: $175 million), reflecting a flat headcount over the period and lower equity award compensation expense. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring costs, depreciation and amortization and acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, increased 6% year-over-year to $149 million (Q4 2017: $141 million).

Fiscal Year 2018
Adjusted EBITDA increased 4%, or 0.1% at constant currency, to $321 million (2017: $310 million). This increase was primarily driven by the Revenue ex-TAC performance across regions.

Adjusted EBITDA margin as a percentage of Revenue ex-TAC was 33% (2017: 33%).

Operating expenses increased 1% year-over-year to $687 million (2017: $682 million), reflecting a flat headcount over the period and lower equity award compensation expense. Non-GAAP Operating Expenses increased 2% year-over-year to $581 million (2017: $566 million).



3


Cash Flow and Cash Position

Q4 2018
Cash flow from operating activities increased 8% year-over-year to $86 million (Q4 2017: $79 million).
Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, decreased 25% year-over-year to $40 million (Q4 2017: $54 million).

Total cash and cash equivalents decreased $50 million compared to the end of 2017 to $364 million. This is the net result of the free cash flow generation over the period, offset by our acquisitions of both Storetail and Manage, the completion of our $80 million share buyback program and a $21 million negative currency impact on the cash position over the period.


Fiscal Year 2018
Cash flow from operating activities increased 6% year-over-year to $261 million (2017: $245 million).

Free Cash Flow decreased 1% year-over-year to $135 million (2017: $137 million).


Successful completion of a $80 million Share Repurchase Program

Demonstrating our confidence in our ability to achieve our vision over the medium-term and to return to growth while continuing to generate healthy Free Cash Flow, we had announced on October 31, 2018, that our Board of Directors had authorized a share repurchase program of up to $80 million of our outstanding American Depositary Shares.

We successfully completed this $80 million program in the fourth quarter of 2018 and, in total, repurchased 3,499,258 shares at an average price of $22.86, including expenses, under the program.


Business Outlook

The following forward-looking statements reflect Criteo’s expectations as of February 13, 2019.

First Quarter 2019 Guidance:
•
We expect Revenue ex-TAC to be between $233 million and $235 million. This implies year-over-year growth of 1% to 2% at constant-currency.
•
We expect Adjusted EBITDA to be between $59 million and $61 million.

Fiscal Year 2019 Guidance:
•
We expect Revenue ex-TAC for fiscal year 2019 to grow between 3% and 6% at constant currency.
•
We expect Adjusted EBITDA margin for fiscal year 2019 to be approximately 30% of Revenue ex-TAC.

The above guidance for the first quarter ending March 31, 2019, and the fiscal year ending December 31, 2019, assumes the following average exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.88, a U.S. dollar-Japanese Yen rate of 109, a U.S. dollar-British pound rate of 0.78 and a U.S. dollar-Brazilian real rate of 3.75.

The above guidance assumes no acquisitions are completed during the first quarter ending March 31, 2019 and the fiscal year ending December 31, 2019.


4


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



Non-GAAP Financial Measures

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

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

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

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

5



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

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

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


Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending March 31, 2019 and the fiscal year ending December 31, 2019, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors"

6


and elsewhere in the Company’s SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2018, including the Risk Factors set forth therein and the exhibits thereto, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 4, 2018, and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed with the SEC on August 2, the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed with the SEC on November 5, 2018, as well as future filings and reports by the Company. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.


Conference Call Information

Criteo’s earnings conference call will take place today, February 13, 2019, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company’s website http://ir.criteo.com and will be available for replay.

Conference call details:
•
U.S. callers:             +1 855 209 8212
•
International callers:        +1 412 317 0788 or +33 1 76 74 05 02
Please ask to be joined into the "Criteo S.A." call.


About Criteo

Criteo (NASDAQ: CRTO) is the advertising platform for the open Internet, an ecosystem that favors neutrality, transparency and inclusiveness. 2,700 Criteo team members partner with over 19,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers. For more information, please visit www.criteo.com.


Contacts

Criteo Investor Relations
Edouard Lassalle, VP, Head of IR, e.lassalle@criteo.com
Friederike Edelmann, IR Director, f.edelmann@criteo.com

Criteo Public Relations
Isabelle Leung-Tack, VP, Global Communications, i.leungtack@criteo.com
Kenya Hayes, Director, Global Public Relations, k.hayes@criteo.com



Financial information to follow

7


CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)
 
 
December 31, 2017

 
December 31, 2018

Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
414,111

 
$
364,426

Trade receivables, net of allowances of $20.8 million and $25.9 million at December 31, 2017 and 2018, respectively.
 
484,101

 
473,901

Income taxes
 
8,882

 
19,370

Other taxes
 
58,346

 
53,338

Other current assets
 
26,327

 
22,816

Total current assets
 
991,767

 
933,851

Property, plant and equipment, net
 
161,738

 
184,013

Intangible assets, net
 
96,223

 
112,036

Goodwill
 
236,826

 
312,881

Non-current financial assets
 
19,525

 
20,460

Deferred tax assets
 
25,221

 
33,894

    Total non-current assets
 
539,533

 
663,284

Total assets
 
$
1,531,300

 
$
1,597,135

 
 
 
 
 
Liabilities and shareholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Trade payables
 
$
417,032

 
$
425,376

Contingencies
 
1,798

 
2,640

Income taxes
 
9,997

 
7,725

Financial liabilities - current portion
 
1,499

 
1,018

Other taxes
 
58,783

 
55,592

Employee - related payables
 
66,219

 
65,878

Other current liabilities
 
65,677

 
47,115

Total current liabilities
 
621,005

 
605,344

Deferred tax liabilities
 
2,497

 
10,770

Retirement benefit obligation
 
5,149

 
5,537

Financial liabilities - non-current portion
 
2,158

 
2,490

Other non-current liabilities
 
2,793

 
5,103

    Total non-current liabilities
 
12,597

 
23,900

Total liabilities
 
633,602

 
629,244

Commitments and contingencies
 
 
 
 
Shareholders' equity:
 
 
 
 
Common shares, €0.025 par value, 66,085,097 and 67,708,203 shares authorized, issued and outstanding at December 31, 2017 and 2018, respectively.
 
2,152

 
2,201

Treasury stock, 3,459,119 shares at cost as of December 31, 2018

—


(79,159
)
Additional paid-in capital
 
591,404

 
663,281

Accumulated other comprehensive income (loss)
 
(12,241
)
 
(30,522
)
Retained earnings
 
300,210

 
387,869

Equity - attributable to shareholders of Criteo S.A.
 
881,525

 
943,670

Non-controlling interests
 
16,173

 
24,221

Total equity
 
897,698

 
967,891

Total equity and liabilities
 
$
1,531,300

 
$
1,597,135


8


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,
 
 
 
 
2017

 
2018

 
YoY Change

 
2017

 
2018

 
YoY Change

 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
674,031

 
$
670,096

 
(1
)%
 
$
2,296,692

 
$
2,300,314

 
0.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition cost
 
(397,087
)
 
(398,238
)
 
0.3
 %
 
(1,355,556
)
 
(1,334,334
)
 
(2
)%
Other cost of revenue
 
(31,727
)
 
(38,807
)
 
22
 %
 
(121,641
)
 
(131,744
)
 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
 
245,217

 
233,051

 
(5
)%
 
819,495

 
834,236

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Research and development expenses
 
(46,933
)
 
(44,605
)
 
(5
)%
 
(173,925
)
 
(179,263
)
 
3
 %
Sales and operations expenses
 
(96,834
)
 
(93,806
)
 
(3
)%
 
(380,649
)
 
(372,707
)
 
(2
)%
General and administrative expenses
 
(30,934
)
 
(32,461
)
 
5
 %
 
(127,077
)
 
(135,159
)
 
6
 %
Total Operating expenses
 
(174,701
)
 
(170,872
)
 
(2
)%
 
(681,651
)
 
(687,129
)
 
1
 %
Income from operations
 
70,516

 
62,179

 
(12
)%
 
137,844

 
147,107

 
7
 %
Financial income (expense), net
 
(2,221
)
 
(1,746
)
 
(21
)%
 
(9,534
)
 
(5,084
)
 
(47
)%
Income before taxes
 
68,295

 
60,433

 
(12
)%
 
128,310

 
142,023

 
11
 %
Provision for income taxes
 
(15,927
)
 
(18,299
)
 
15
 %
 
(31,651
)
 
(46,144
)
 
46
 %
Net Income
 
$
52,368

 
$
42,134

 
(20
)%
 
$
96,659

 
$
95,879

 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to shareholders of Criteo S.A.
 
$
53,030

 
$
37,966

 
 
 
$
91,214

 
$
88,644

 
 
Net income available to non-controlling interests
 
$
(662
)
 
$
4,168

 
 
 
$
5,445

 
$
7,235

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding used in computing per share amounts:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
65,919,533

 
66,220,030

 
 
 
65,143,036

 
66,456,890

 
 
Diluted
 
67,770,156

 
67,043,794

 
 
 
67,851,971

 
67,662,904

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income allocated to shareholders per share:
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.80

 
$
0.57

 
 
 
$
1.40

 
$
1.33

 
 
Diluted
 
$
0.78

 
$
0.57

 
 
 
$
1.34

 
$
1.31

 
 




9


CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
 
 
Three Months Ended

 

Twelve Months Ended

 
 
 
December 31,

YoY Change


December 31,

YoY Change

 
 
2017


2018



2017


2018


 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
52,368

 
$
42,134

 
(20
)%
 
$
96,659

 
$
95,879

 
(1
)%
Non-cash and non-operating items
 
65,811

 
61,499

 
(7
)%
 
212,254

 
221,481

 
4
 %
           - Amortization and provisions
 
31,344

 
32,785

 
5
 %
 
104,025

 
111,825

 
7
 %
           - Equity awards compensation expense (1)
 
19,725

 
10,267

 
(48
)%
 
71,612

 
66,600

 
(7
)%
           - Net gain or (loss) on disposal of non-current assets
 
794

 
(869
)
 
NM

 
794

 
(869
)
 
NM

           - Interest accrued and non-cash financial income and expense
 
59

 
20

 
(66
)%
 
66

 
86

 
30
 %
           - Change in deferred taxes
 
7,300

 
1,184

 
(84
)%
 
(13,269
)
 
(8,157
)
 
(39
)%
           - Income tax for the period
 
8,628

 
17,115

 
98
 %
 
44,921

 
54,301

 
21
 %
           - Other (2)
 
(2,039
)
 
997

 
NM

 
4,105

 
(2,305
)
 
NM

Changes in working capital related to operating activities
 
(20,513
)
 
(7,162
)
 
(65
)%
 
(7,095
)
 
10,411

 
NM

           - (Increase)/decrease in trade receivables
 
(112,127
)
 
(113,019
)
 
1
 %
 
(76,907
)
 
1,358

 
NM

           - Increase in trade payables
 
64,199

 
85,646

 
33
 %
 
32,915

 
9,047

 
(73
)%
           - (Increase)/decrease in other current assets
 
(9,962
)
 
(1,576
)
 
(84
)%
 
(3,381
)
 
3,974

 
NM

           - Increase/(decrease) in other current liabilities (2)
 
37,377

 
21,787

 
(42
)%
 
40,278

 
(3,968
)
 
NM

Income taxes paid
 
(18,664
)
 
(10,871
)
 
(42
)%
 
(56,360
)
 
(67,045
)
 
19
 %
CASH FROM OPERATING ACTIVITIES
 
79,002

 
85,600

 
8
 %
 
245,458

 
260,726

 
6
 %
Acquisition of intangible assets, property, plant and equipment
 
(47,928
)
 
(30,064
)
 
(37
)%
 
(122,203
)
 
(116,984
)
 
(4
)%
Change in accounts payable related to intangible assets, property, plant and equipment
 
22,452

 
(15,344
)
 
NM

 
13,692

 
(8,494
)
 
NM

Disposal of (Payments for) business, net of cash acquired (disposed)
 
(15
)
 
(52,269
)
 
NM

 
1,110

 
(101,180
)
 
NM

Change in other non-current financial assets
 
31

 
(56
)
 
NM

 
1,148

 
(59
)
 
NM

CASH USED FOR INVESTING ACTIVITIES
 
(25,460
)
 
(97,733
)
 
NM

 
(106,253
)
 
(226,717
)
 
NM

Issuance of long-term borrowings
 
26

 
—

 
(100
)%
 
3,700

 
—

 
(100
)%
Repayment of borrowings (3)
 
(5,838
)
 
(243
)
 
(96
)%
 
(89,731
)
 
(964
)
 
(99
)%
Proceeds from capital increase
 
2,342

 
699

 
(70
)%
 
31,961

 
1,473

 
(95
)%
Change in other financial liabilities (2)
 
9,256

 
141

 
(98
)%
 
24,602

 
16,815

 
(32
)%
Change in treasury stock
 
—

 
(80,000
)
 
—
 %
 
—

 
(80,000
)
 
—
 %
CASH FROM (USED FOR) FINANCING ACTIVITIES
 
5,786

 
(79,403
)
 
NM

 
(29,468
)
 
(62,676
)
 
113
 %
 
 
 
 
 
 

 
 
 
 
 

CHANGE IN NET CASH AND CASH EQUIVALENTS
 
59,328

 
(91,536
)
 
NM

 
109,737

 
(28,667
)
 
NM

Net cash and cash equivalents at beginning of period
 
357,983

 
458,690

 
28
 %
 
270,317

 
414,111

 
53
 %
Effect of exchange rates changes on cash and cash equivalents (2)
 
(3,200
)
 
(2,728
)
 
(15
)%
 
34,057

 
(21,018
)
 
NM

Net cash and cash equivalents at end of period
 
$
414,111

 
$
364,426

 
(12
)%
 
$
414,111

 
$
364,426

 
(12
)%

(1) Of which $19.2 million and $9.8 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the quarter ended December 31, 2017 and 2018, respectively, and $69.9 million and $65.1 million for the twelve month period ended December 31, 2017 and 2018, respectively.

(2) During the quarter ended December 31, 2017 and 2018, respectively, and the twelve months ended December 31, 2017, and 2018, respectively, the Company reported the cash impact of the settlement of hedging derivatives related to financing activities in cash from (used for) financing activities in the unaudited consolidated statements of cash flows.

(3) Interest paid for the quarter ended December 31, 2017 and 2018 amounted to $0.8 million and $0.2 million, respectively and for the twelve months ended December 31, 2017 and 2018 amounted to $2.9 million and $1.4 million, respectively.




10


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,

YoY Change


December 31,

YoY Change

 
 
2017


2018



2017


2018


 
 
 
 
 
 
 
 
 
 
 
 
 
CASH FROM OPERATING ACTIVITIES
 
$
79,002

 
$
85,600

 
8
 %
 
$
245,458

 
$
260,726

 
6
 %
Acquisition of intangible assets, property, plant and equipment
 
(47,928
)
 
(30,064
)
 
(37
)%
 
(122,203
)
 
(116,984
)
 
(4
)%
Change in accounts payable related to intangible assets, property, plant and equipment
 
22,452

 
(15,344
)
 
NM

 
13,692

 
(8,494
)
 
NM

FREE CASH FLOW (1)
 
$
53,526

 
$
40,192

 
(25
)%
 
$
136,947

 
$
135,248

 
(1
)%


(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.




































11


CRITEO S.A.
Reconciliation of Revenue ex-TAC by Region to Revenue by Region
(U.S. dollars in thousands, unaudited)
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
December 31,
 
 
 
 
 
December 31,
 
 
 
 
 
Region
 
2017


2018

 
YoY Change
 
YoY Change at Constant Currency
 
2017


2018

 
YoY Change
 
YoY Change at Constant Currency
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
$
324,696

 
$
317,350

 
(2
)%
 
(1
)%
 
$
990,424

 
$
954,073

 
(4
)%
 
(3
)%
 
EMEA
 
221,019

 
220,904

 
(0.1
)%
 
4
 %
 
808,961

 
839,825

 
4
 %
 
1
 %
 
Asia-Pacific
 
128,316

 
131,842

 
3
 %
 
4
 %
 
497,307

 
506,416

 
2
 %
 
1
 %
 
Total
 
674,031

 
670,096

 
(1
)%
 
1
 %
 
2,296,692

 
2,300,314

 
0.2
 %
 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
(203,368
)
 
(196,168
)
 
(4
)%
 
(3
)%
 
(619,393
)
 
(579,597
)
 
(6
)%
 
(6
)%
 
EMEA
 
(120,662
)
 
(128,053
)
 
6
 %
 
10
 %
 
(450,297
)
 
(471,654
)
 
5
 %
 
2
 %
 
Asia-Pacific
 
(73,057
)
 
(74,017
)
 
1
 %
 
2
 %
 
(285,866
)
 
(283,083
)
 
(1
)%
 
(2
)%
 
Total
 
(397,087
)
 
(398,238
)
 
0.3
 %
 
2
 %
 
(1,355,556
)
 
(1,334,334
)
 
(2
)%
 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue ex-TAC (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas
 
121,328

 
121,182

 
(0.1
)%
 
1
 %
 
371,031

 
374,476

 
1
 %
 
2
 %
 
EMEA
 
100,357

 
92,851

 
(7
)%
 
(4
)%
 
358,664

 
368,171

 
3
 %
 
—
 %
 
Asia-Pacific
 
55,259

 
57,825

 
5
 %
 
6
 %
 
211,441

 
223,333

 
6
 %
 
5
 %
 
Total
 
$
276,944

 
$
271,858

 
(2
)%
 
0.1
 %
 
$
941,136

 
$
965,980

 
3
 %
 
2
 %


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








12


CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
 
 
Three Months Ended
 
 
 
Twelve Months Ended
 
 
 
 
December 31,
 
YoY
Change

 
December 31,
 
YoY
Change

 
 
2017


2018

 
 
2017


2018

 
Net income
 
$
52,368

 
$
42,134

 
(20
)%
 
$
96,659

 
$
95,879

 
(1
)%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Financial (income) expense, net
 
2,221

 
1,746

 
(21
)%
 
9,534

 
5,084

 
(47
)%
Provision for income taxes
 
15,927

 
18,299

 
15
 %
 
31,651

 
46,144

 
46
 %
Equity awards compensation expense
 
20,464

 
10,267

 
(50
)%
 
72,351

 
67,076

 
(7
)%
Research and development
 
6,355

 
5,005

 
(21
)%
 
21,093

 
21,232

 
1
 %
Sales and operations
 
8,377

 
5,793

 
(31
)%
 
31,386

 
29,244

 
(7
)%
General and administrative
 
5,732

 
(531
)
 
NM

 
19,872

 
16,600

 
(16
)%
Pension service costs
 
321

 
419

 
31
 %
 
1,231

 
1,691

 
37
 %
Research and development
 
162

 
204

 
26
 %
 
621

 
844

 
36
 %
Sales and operations
 
63

 
88

 
40
 %
 
247

 
325

 
32
 %
General and administrative
 
96

 
127

 
32
 %
 
363

 
522

 
44
 %
Depreciation and amortization expense
 
24,570

 
30,675

 
25
 %
 
90,796

 
103,500

 
14
 %
Cost of revenue
 
15,575

 
20,477

 
31
 %
 
53,988

 
67,347

 
25
 %
Research and development
 
2,369

 
3,412

 
44
 %
 
11,226

 
10,602

 
(6
)%
Sales and operations
 
4,856

 
4,831

 
(1
)%
 
19,844

 
18,245

 
(8
)%
General and administrative
 
1,770

 
1,955

 
10
 %
 
5,738

 
7,306

 
27
 %
Acquisition-related costs
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

General and administrative
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

Restructuring
 
4,057

 
—

 
(100
)%
 
7,356

 
(53
)
 
NM

Cost of revenue
 
—

 
—

 
—
 %
 
2,497

 
—

 
(100
)%
Research and development
 
2,911

 
—

 
(100
)%
 
2,911

 
(332
)
 
NM

Sales and operations
 
1,135

 
—

 
(100
)%
 
1,825

 
290

 
(84
)%
General and administrative
 
11

 
—

 
(100
)%
 
123

 
(11
)
 
NM

Total net adjustments
 
67,560

 
62,628

 
(7
)%
 
212,925

 
225,180

 
6
 %
Adjusted EBITDA(1)
 
$
119,928

 
$
104,762

 
(13
)%
 
$
309,584

 
$
321,059

 
4
 %

(1) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.





13


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,
 
YoY
Change

 
December 31,
 
YoY
Change

 
 
2017


2018

 
 
2017


2018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and Development expenses
 
$
(46,933
)
 
$
(44,605
)
 
(5
)%
 
$
(173,925
)
 
$
(179,263
)
 
3
 %
Equity awards compensation expense
 
6,355

 
5,005

 
(21
)%
 
21,093

 
21,232

 
1
 %
Depreciation and Amortization expense
 
2,369

 
3,412

 
44
 %
 
11,226

 
10,602

 
(6
)%
Pension service costs
 
162

 
204

 
26
 %
 
621

 
844

 
36
 %
Restructuring
 
2,911


—

 
(100
)%

2,911


(332
)
 
NM

Non GAAP - Research and Development expenses
 
(35,136
)
 
(35,984
)
 
2.4
 %
 
(138,074
)
 
(146,917
)
 
6
 %
Sales and Operations expenses
 
(96,834
)
 
(93,806
)
 
(3
)%
 
(380,649
)
 
(372,707
)
 
(2
)%
Equity awards compensation expense
 
8,377

 
5,793

 
(31
)%
 
31,386

 
29,244

 
(7
)%
Depreciation and Amortization expense
 
4,856

 
4,831

 
(1
)%
 
19,844

 
18,245

 
(8
)%
Pension service costs
 
63

 
88

 
40
 %
 
247

 
325

 
32
 %
Restructuring
 
1,135

 
—

 
(100
)%
 
1,825

 
290

 
(84
)%
Non GAAP - Sales and Operations expenses
 
(82,403
)
 
(83,094
)
 
1
 %
 
(327,347
)
 
(324,603
)
 
(1
)%
General and Administrative expenses
 
(30,934
)
 
(32,461
)
 
5
 %
 
(127,077
)
 
(135,159
)
 
6
 %
Equity awards compensation expense
 
5,732

 
(531
)
 
NM

 
19,872

 
16,600

 
(16
)%
Depreciation and Amortization expense
 
1,770

 
1,955

 
10
 %
 
5,738

 
7,306

 
27
 %
Pension service costs
 
96

 
127

 
32
 %
 
363

 
522

 
44
 %
Acquisition related costs
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

Restructuring
 
11

 
—

 
(100
)%
 
123

 
(11
)
 
NM

Non GAAP - General and Operations expenses
 
(23,325
)
 
(29,688
)
 
27
 %
 
(100,975
)
 
(109,004
)
 
8
 %
Total Operating expenses
 
(174,701
)
 
(170,872
)
 
(2
)%
 
(681,651
)
 
(687,129
)
 
1
 %
Equity awards compensation expense
 
20,464

 
10,267

 
(50
)%
 
72,351

 
67,076

 
(7
)%
Depreciation and Amortization expense
 
8,995

 
10,198

 
13
 %
 
36,808

 
36,153

 
(2
)%
Pension service costs
 
321

 
419

 
31
 %
 
1,231

 
1,691

 
37
 %
Acquisition-related costs
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

Restructuring
 
4,057

 
—

 
(100
)%
 
4,859

 
(53
)
 
NM

Total Non GAAP Operating expenses (1)
 
$
(140,864
)
 
$
(148,766
)
 
6
 %
 
$
(566,396
)
 
$
(580,524
)
 
2
 %

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









14


CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)

 
 
Three Months Ended
 
 
 
Twelve Months Ended
 
 
 
 
December 31,
 
YoY
Change

 
December 31,
 
YoY
Change

 
 
2017


2018

 
 
2017


2018

 
Equity awards compensation expense
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
$
6,355

 
$
5,005

 
(21
)%
 
$
21,093

 
$
21,232

 
1
 %
Sales and operations
 
8,377

 
5,793

 
(31
)%
 
31,386

 
29,244

 
(7
)%
General and administrative
 
5,732

 
(531
)
 
NM

 
19,872

 
16,600

 
(16
)%
Total equity awards compensation expense
 
20,464

 
10,267

 
(50
)%
 
72,351

 
67,076

 
(7
)%
 
 
 
 
 
 

 
 
 
 
 

Pension service costs
 
 
 
 
 

 
 
 
 
 

Research and development
 
162

 
204

 
26
 %
 
621

 
844

 
36
 %
Sales and operations
 
63

 
88

 
40
 %
 
247

 
325

 
32
 %
General and administrative
 
96

 
127

 
32
 %
 
363

 
522

 
44
 %
Total pension service costs
 
321

 
419

 
31
 %
 
1,231

 
1,691

 
37
 %
 
 
 
 
 
 

 
 
 
 
 

Depreciation and amortization expense
 
 
 
 
 

 
 
 
 
 

Cost of revenue
 
15,575

 
20,477

 
31
 %
 
53,988

 
67,347

 
25
 %
Research and development
 
2,369

 
3,412

 
44
 %
 
11,226

 
10,602

 
(6
)%
Sales and operations
 
4,856

 
4,831

 
(1
)%
 
19,844

 
18,245

 
(8
)%
General and administrative
 
1,770

 
1,955

 
10
 %
 
5,738

 
7,306

 
27
 %
Total depreciation and amortization expense
 
24,570

 
30,675

 
25
 %
 
90,796

 
103,500

 
14
 %
 
 
 
 
 
 

 
 
 
 
 

Acquisition-related costs
 
 
 
 
 

 
 
 
 
 

General and administrative
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

Total acquisition-related costs
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring
 

 

 

 

 

 

Cost of revenue
 
—

 
—

 
—
 %
 
2,497

 
—

 
(100
)%
Research and development
 
2,911

 
—

 
(100
)%
 
2,911

 
(332
)
 
NM

Sales and operations
 
1,135

 
—

 
(100
)%
 
1,825

 
290

 
(84
)%
General and administrative
 
11

 
—

 
(100
)%
 
123

 
(11
)
 
NM

Total restructuring
 
$
4,057

 
$
—

 
(100
)%
 
$
7,356

 
$
(53
)
 
NM
















15


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,
 
YoY
Change

 
December 31,
 
YoY
Change

 
 
2017


2018

 
 
2017


2018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
52,368

 
$
42,134

 
(20
)%
 
$
96,659

 
$
95,879

 
(1
)%
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
Equity awards compensation expense
 
20,464

 
10,267

 
(50
)%
 
72,351

 
67,076

 
(7
)%
Amortization of acquisition-related intangible assets
 
3,852

 
4,996

 
30
 %
 
17,731

 
15,821

 
(11
)%
Acquisition-related costs
 
—

 
1,222

 
—
 %
 
6

 
1,738

 
NM

Restructuring costs
 
4,057

 
—

 
(100
)%
 
7,356

 
(53
)
 
NM

Tax impact of the above adjustments
 
1,088

 
(2,218
)
 
NM

 
(10,792
)
 
(11,723
)
 
9
 %
Total net adjustments
 
29,461

 
14,267

 
(52
)%
 
86,652

 
72,859

 
(16
)%
Adjusted net income(1)
 
$
81,829

 
$
56,401

 
(31
)%
 
$
183,311

 
$
168,738

 
(8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
65,919,533

 
66,220,030

 
 
 
65,143,036

 
66,456,890

 
 
 - Diluted
 
67,770,156

 
67,043,794

 
 
 
67,851,971

 
67,662,904

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income per share
 
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
$
1.24

 
$
0.85

 
(31
)%
 
$
2.81

 
$
2.54

 
(10
)%
 - Diluted
 
$
1.21

 
$
0.84

 
(31
)%
 
$
2.70

 
$
2.49

 
(8
)%


(1) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.













16


CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands, unaudited)
 
 
Three Months Ended
 
 
 
Twelve Months Ended
 
 
 
 
December 31,
 
 
 
December 31,
 
 
 
 
2017


2018

 
YoY Change
 
2017


2018

 
YoY Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue as reported
 
$
674,031

 
$
670,096

 
(1
)%
 
$
2,296,692

 
$
2,300,314

 
0.2
 %
Conversion impact U.S. dollar/other currencies
 
 
 
12,007

 
 
 
 
 
(19,118
)
 
 
Revenue at constant currency(1)
 
674,031

 
682,103

 
1
 %
 
2,296,692

 
2,281,196

 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Traffic acquisition costs as reported
 
(397,087
)
 
(398,238
)
 
0.3
 %
 
(1,355,556
)
 
(1,334,334
)
 
(2
)%
Conversion impact U.S. dollar/other currencies
 
 
 
(6,643
)
 
 
 
 
 
10,433

 
 
Traffic Acquisition Costs at constant currency(1)
 
(397,087
)
 
(404,881
)
 
2
 %
 
(1,355,556
)
 
(1,323,901
)
 
(2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue ex-TAC as reported(2)
 
276,944

 
271,858

 
(2
)%
 
941,136

 
965,980

 
3
 %
Conversion impact U.S. dollar/other currencies
 
 
 
5,362

 
 
 
 
 
(8,686
)
 
 
Revenue ex-TAC at constant currency(2)
 
276,944

 
277,220

 
0.1
 %
 
941,136

 
957,294

 
2
 %
Revenue ex-TAC(2)/Revenue as reported
 
41
%
 
41
%
 
 
 
41
%
 
42
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other cost of revenue as reported
 
(31,727
)
 
(38,807
)
 
22
 %
 
(121,641
)
 
(131,744
)
 
8
 %
Conversion impact U.S. dollar/other currencies
 
 
 
(237
)
 
 
 
 
 
(114
)
 
 
Other cost of revenue at constant currency(1)
 
(31,727
)
 
(39,044
)
 
23
 %
 
(121,641
)
 
(131,858
)
 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA(3)
 
119,928

 
104,762

 
(13
)%
 
309,584

 
321,059

 
4
 %
Conversion impact U.S. dollar/other currencies
 
 
 
1,305

 
 
 
 
 
(11,271
)
 
 
Adjusted EBITDA(3) at constant currency(1)
 
$
119,928

 
$
106,067

 
(12
)%
 
$
309,584

 
$
309,788

 
0.1
 %
Adjusted EBITDA(3)/Revenue ex-TAC(2)

43
%

39
%




33
%

33
%



Adjusted EBITDA(3) at constant currency(1)/Revenue ex-TAC(2) at constant currency(1)

43
%

38
%




33
%

32
%




(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and Board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.

(2) Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Revenue ex-TAC by Region to Revenue by Region" for a reconciliation of Revenue ex-TAC to revenue.

(3) Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.




17


CRITEO S.A.
Information on Share Count
(unaudited)

 
 
Twelve Months Ended
 
 
December 31,
 
 
2017


2018

Shares outstanding as of January 1,
 
63,978,204

 
66,085,097

Weighted average number of shares issued during the period
 
1,164,832

 
371,793

Basic number of shares - Basic EPS basis
 
65,143,036

 
66,456,890

Dilutive effect of share options, warrants, employee warrants - Treasury method
 
2,708,935

 
1,206,014

Diluted number of shares - Diluted EPS basis
 
67,851,971

 
67,662,904

 
 
 
 
 
Shares outstanding as of December 31, before Treasury stocks
 
66,085,097

 
67,708,203

Treasury stock as of December 31,
 
—

 
(3,459,119
)
Shares outstanding as of December 31, after Treasury stocks
 
66,085,097

 
64,249,084

Total dilutive effect of share options, warrants, employee warrants
 
7,591,493

 
8,259,272

Fully diluted shares as of December 31,
 
73,676,590

 
72,508,356



































18




CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
 
 
Q1
2017
Q2
2017
Q3
2017
Q4
2017
Q1
2018
Q2
2018
Q3
2018
Q4
2018
YoY
Change
QoQ Change
 
 
 
 
 
 
 



 
 
 
Clients
15,423
16,370
17,299
18,118
18,528
18,396
19,213
19,419
7%
1%
 
 
 
 
 
 
 



 
 
 
Revenue
516,667
542,022
563,973
674,031
564,164
537,185
528,869
670,096
(1)%
27%
 
Americas
208,013
229,392
228,326
324,696
212,695
212,781
211,247
317,350
(2)%
50%
 
EMEA
189,092
191,682
207,168
221,019
222,611
201,080
195,230
220,904
(0.1)%
13%
 
APAC
119,562
120,948
128,479
128,316
128,858
123,324
122,392
131,842
3%
8%
 
 
 
 
 
 
 



 
 
 
TAC
(306,693)
(322,200)
(329,576)
(397,087)
(323,746)
(306,963)
(305,387)
(398,238)
0.3%
30%
 
Americas
(128,867)
(145,289)
(141,869)
(203,368)
(131,521)
(125,502)
(126,406)
(196,168)
(4)%
55%
 
EMEA
(107,583)
(106,605)
(115,446)
(120,662)
(119,893)
(112,577)
(111,131)
(128,053)
6%
15%
 
APAC
(70,243)
(70,306)
(72,261)
(73,057)
(72,332)
(68,884)
(67,850)
(74,017)
1%
9%
 
 
 
 
 
 
 



 
 
 
Revenue ex-TAC
209,974
219,822
234,397
276,944
240,418
230,222
223,482
271,858
(2)%
22%
 
Americas
79,146
84,103
86,457
121,328
81,174
87,279
84,841
121,182
(0.1)%
43%
 
EMEA
81,509
85,077
91,722
100,357
102,718
88,503
84,099
92,851
(7)%
10%
 
APAC
49,319
50,642
56,218
55,259
56,526
54,440
54,542
57,825
5%
6.0%
 
 
 
 
 
 
 



 
 
 
Adjusted EBITDA
56,454
54,086
79,116
119,928
77,932
68,774
69,591
104,762
(13)%
51%
 
 
 
 
 
 
 



 
 
 
Cash flow from operating activities
44,238
60,491
61,727
79,002
84,527
40,341
50,256
85,600
8%
70%
 
 
 
 
 
 
 



 
 
 
Capital expenditures
28,206
27,055
27,773
25,476
32,567
17,847
29,656
45,408
78%
53%
 
 
 
 
 
 
 



 
 
 
Capital expenditures / Revenue
5%
5%
5%
4%
6%
3%
6%
7%
75%
17%
 
 
 
 
 
 
 



 
 
 
Net cash position
303,813
308,185
357,983
414,111
483,874
480,285
458,690
364,426
(12)%
(21)%
 
 
 
 
 
 
 



 
 
 
Headcount
2,582
2,690
2,712
2,764
2,675
2,678
2,737
2,744
(1)%
0.3%
 
 
 
 
 
 
 



 
 
 
Days Sales Outstanding (days - end of month)
56
57
56
57
60
61
60
58
N.A.
N.A.
 


19