Deployed $125 Million to Repurchase Shares in 2023 and Increases Share Buyback Authorization by $150 Million
Targeting Mid-Single-Digit Growth in 2024
NEW YORK, Feb. 7, 2024 /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, 2023.
Fourth Quarter and Fiscal Year 2023 Financial Highlights:
The following table summarizes our consolidated financial results for the three months and twelve months ended December 31, 2023:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY Change
2023
2022
YoY Change
(in millions, except EPS data)
GAAP Results
Revenue
$566
$564
0.3 %
$1,949
$2,017
(3) %
Gross Profit
$277
$247
12 %
$863
$795
9 %
Net Income
$62
$16
287 %
$55
$11
402 %
Gross Profit margin
49 %
44 %
5ppt
44 %
39 %
5ppt
Diluted EPS
$1.02
$0.25
308 %
$0.88
$0.14
529 %
Cash from operating activities
$161
$125
29 %
$224
$256
(12) %
Cash and cash equivalents
$336
$348
(3) %
$336
$348
(3) %
Non-GAAP Results1
Contribution ex-TAC
$316
$283
12 %
$1,023
$928
10 %
Contribution ex-TAC margin
56 %
50 %
6ppt
52 %
46 %
6ppt
Adjusted EBITDA
$139
$104
33 %
$302
$267
13 %
Adjusted diluted EPS
$1.52
$0.84
81 %
$3.18
$2.76
15 %
Free Cash Flow (FCF)
$142
$111
28 %
$110
$200
(45) %
FCF / Adjusted EBITDA
102 %
106 %
(4)ppt
36 %
75 %
(39)ppt
"We achieved double-digit growth for the second consecutive year, with a historic milestone of crossing $1 billion in Contribution ex-TAC for the first time and Retail Media now surpassing $200 million in annual revenue," said Megan Clarken, Chief Executive Officer of Criteo. "As we step into 2024, we look forward to harnessing the opportunities that lie ahead, and our commitment remains steadfast towards sustainable, profitable growth to drive shareholder value."
Operating Highlights
Criteo's activated media spend2 was $1.3 billion in Q4 and $4.1 billion in the last 12 months, growing 30% year-over-year at constant currency3.
Our focus on efficiencies delivered over $70 million in cost savings and an adjusted EBITDA margin of 30% in 2023.
Retail Media Contribution ex-TAC grew 29% year-over-year at constant currency3 in Q4 and 26% in 2023.
Same-retailer Contribution ex-TAC4 retention for Retail Media was 121% in both Q4 and 2023.
We expanded our platform adoption to 2,600 brands and 220 retailers, including Albertsons and PcComponentes.
Marketing Solutions Contribution ex-TAC was up 6% year-over-year at constant currency3 in Q4.
We deployed $125 million of capital for share repurchases in 2023, and our Board of Directors authorized a $150 million increase to the Company's existing share repurchase program in February 2024.
We amended our syndicated credit facility to a €407 million ($450 million) sustainability-linked credit facility.
The Science Based Targets Initiative approved Criteo's greenhouse gas (GHG) emissions reduction targets, in line with the Paris Agreement's goal to limit the global average temperature increase to 1.5° Celsius.
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
2 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.
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.
4 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.
Financial Summary
Revenue for Q4 2023 was $566 million, gross profit was $277 million and Contribution ex-TAC was $316 million. Net income for Q4 was $62 million, or $1.02 per share on a diluted basis. Adjusted EBITDA for Q4 was $139 million, resulting in an adjusted diluted EPS of $1.52. As reported, revenue for Q4 was flat, gross profit increased 12% and Contribution ex-TAC increased by 12%. At constant currency, revenue for Q4 was flat and Contribution ex-TAC increased by 10%.
Revenue for the fiscal year 2023 was $1.9 billion, gross profit was $863 million and Contribution ex-TAC was $1.0 billion. As reported, revenue for 2023 decreased by 3%, gross profit increased 9% and Contribution ex-TAC increased by 10%. At constant currency, revenue for 2023 decreased by 3% and Contribution ex-TAC increased by 11%. Net income for fiscal 2023 was $55 million, or $0.88 per share on a diluted basis. Fiscal year 2023 Adjusted EBITDA was $302 million, resulting in an adjusted diluted EPS of $3.18. Cash flow from operating activities was $161 million in Q4 and Free Cash Flow was $142 million in Q4. As of December 31, 2023, we had $359 million in cash and marketable securities on our balance sheet.
Sarah Glickman, Chief Financial Officer, said, "In 2023, we delivered an adjusted EBITDA margin of 30%, above guidance, and we deployed $125 million of capital for share repurchases to drive shareholder value. Our record fourth quarter performance reflects building momentum for our Commerce Media Platform and our strong focus on cost efficiencies, setting the stage for continued growth and robust profitability in 2024."
Fourth Quarter 2023 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue was flat year-over-year in Q4 2023, and flat at constant currency, to $566 million (Q4 2022: $564 million). Gross profit increased by 12% year-over-year in Q4 2023 to $277 million (Q4 2022: $247 million). Gross profit as a percentage of revenue, or gross profit margin, was 49% (Q4 2022: 44%). Contribution ex-TAC in the fourth quarter increased 12% year-over-year, or increased 10% at constant currency, to $316 million (Q4 2022: $283 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 56% (Q4 2022: 50%), up 600 basis points year-over-year, largely driven by Retail Media and Marketing Solutions.
Marketing Solutions revenue decreased 3%, or 3% at constant currency, and Marketing Solutions Contribution ex-TAC increased 8%, or 6% at constant currency, driven by the continued traction of Commerce Audiences as more clients adopt full funnel activation.
Retail Media revenue increased 28%, or 26% at constant currency, reflecting continued strength in Retail Media onsite. Retail Media Contribution ex-TAC increased 30%, or 29% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
Iponweb revenue increased 3%, or 2% at constant currency, to $35 million.
Net Income and Adjusted Net Income
Net income was $62 million in Q4 2023 (Q4 2022: net income of $16 million). Net income allocated to shareholders of Criteo was $61 million, or $1.02 per share on a diluted basis (Q4 2022: net income available to shareholders of $15 million, or $0.25 per share on a diluted basis).
Adjusted net income, a non-GAAP financial measure, was $91 million, or $1.52 per share on a diluted basis (Q4 2022: $52 million, or $0.84 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $139 million, representing an increase of 33% year-over-year (Q4 2022: $104 million). This reflects higher Contribution ex-TAC over the period and planned cost reduction actions. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 44% (Q4 2022: 37%).
Operating expenses decreased by 5% year-over-year to $188 million (Q4 2022: $198 million), mostly driven by cost reduction actions. Non-GAAP operating expenses decreased by 5% to $147 million (Q4 2022: $154 million).
Fiscal Year 2023 Results
Revenue, Gross Profit and Contribution ex-TAC
Revenue decreased by 3% year-over-year, or 3% at constant currency, to $1,949 million (FY 2022: $2,017 million). Gross profit increased by 9% year-over-year to $863 million (FY 2022: $795 million). Gross profit as a percentage of revenue, or gross profit margin, was 44% (FY 2022: 39%). Contribution ex-TAC increased 10% year-over-year, or increased 11% at constant currency, to $1,023 million (FY 2022: $928 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 52% (FY 2022: 46%), up 600 basis points year-over-year, largely driven by Retail Media and Iponweb.
Marketing Solutions revenue decreased 8%, or 8% at constant currency, and Marketing Solutions Contribution ex-TAC decreased 3%, or 2% at constant currency, driven by lower Retargeting, partially offset by solid growth for Commerce Audiences.
Retail Media revenue increased 3%, or 3% at constant currency, reflecting the impact related to the client migration to the Company's platform. Retail Media Contribution ex-TAC increased 26%, or 26% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.
Iponweb revenue increased 135%, or 133% at constant currency, to $122 million following the closing of the acquisition on August 1, 2022.
Net Income and Adjusted Net Income
Net income was $55 million (FY 2022: $11 million). Net income available to shareholders of Criteo was $53 million, or $0.88 per share on a diluted basis (FY 2022: $9 million, or $0.14 per share on a diluted basis).
Adjusted net income was $191 million, or $3.18 per share on a diluted basis (FY 2022: $173 million, or $2.76 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA was $302 million, representing an increase of 13% year-over-year (FY 2022: $267 million). This reflects higher Contribution ex-TAC and planned cost reduction actions. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 30% (FY 2022: 29%).
Operating expenses increased 2% year-over-year to $786 million (FY 2022: $771 million), mostly driven by equity awards compensation expense and operating costs from Iponweb, partially offset by cost reduction actions. Non-GAAP operating expenses increased by 5% or $28 million to $607 million (FY 2022: $580 million).
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased to $161 million in Q4 2023 (Q4 2022: $125 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 $142 million in Q4 2023 (Q4 2022: $111 million).
Cash and cash equivalents, and marketable securities, decreased $14 million compared to December 31, 2022 to $359 million, after spending $125 million on share repurchases in 2023.
As of December 31, 2023, the Company had total financial liquidity of approximately $837 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.
Sustainability-Linked Revolving Credit Facility
A key pillar of our sustainability strategy is reducing our carbon footprint, and we committed to reducing our greenhouse gas (GHG) emissions by 2030 in line with the 1.5°C scenario of the Paris Agreement. Criteo recently became the first AdTech company to have its GHG emissions reduction targets approved by the Science Based Targets initiative ("SBTi").
On November 17, 2023, we updated certain terms of our €407 million ($450 million) syndicated credit facility to a €407 million ($450 million) sustainability-linked credit facility, the framework for which was provided for in the initial credit facility agreement. Certain terms and conditions of the amended credit facility are now linked to our sustainability goals to increase the representation of women in tech roles and reduce our GHG emissions, while the rest of the credit facility agreement remains unchanged.
2024 Business Outlook
The following forward-looking statements reflect Criteo's expectations as of February 7, 2024.
Fiscal year 2024 guidance:
Mid-single-digit growth in Contribution ex-TAC at constant currency
Adjusted EBITDA margin of approximately 29% to 30% of Contribution ex-TAC
First quarter 2024 guidance:
Contribution ex-TAC between $243 million and $247 million, or year-over-year growth at constant-currency of +10% to +12%
Adjusted EBITDA between $50 million and $54 million
The above guidance for the first quarter and fiscal year ending December 31, 2024 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.909, a U.S. dollar-Japanese Yen rate of 145, a U.S. dollar-British pound rate of 0.791, a U.S. dollar-Korean Won rate of 1,300 and a U.S. dollar-Brazilian real rate of 4.95.
The above guidance assumes that no additional acquisitions are completed during the first quarter of 2024 or the fiscal year ended December 31, 2024.
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.
Extension of Share Repurchase Authorization
Criteo's Board of Directors has authorized a $150 million extension of its previously authorized share repurchase program of up to $480 million of the Company's outstanding American Depository Shares to an increased amount of up to $630 million. The Company intends to use repurchased shares under this extended program to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders, as well as to fund potential acquisitions in the future.
Under the terms of the authorization, the stock purchases may be made from time to time in compliance with applicable state and federal securities laws and applicable provisions of French corporate law. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability, as determined by Criteo's management team. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.
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, 2024 and the year ending December 31, 2024, 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 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, 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 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 24, 2023, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, macro-economic conditions including inflation and rising interest rates in the U.S. have impacted Criteo's business, financial condition, cash flow and results of operations.
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 7, 2024, at 8:00AM ET, 2:00PM 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 thousands of marketers and 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.
Trade receivables, net of allowances of $ 43.3 million and $ 47.8 million at
December 31, 2023 and December 31, 2022, respectively
775,589
708,949
Income taxes
2,065
23,609
Other taxes
109,306
78,274
Other current assets
48,291
51,866
Restricted cash - current
75,000
25,000
Marketable securities - current portion
5,970
25,098
Total current assets
1,352,562
1,260,996
Property, plant and equipment, net
126,494
131,207
Intangible assets, net
180,888
175,983
Goodwill
524,197
515,140
Right of Use Asset - operating lease
112,487
102,176
Restricted cash - non current
-
75,000
Marketable securities - non current portion
16,575
-
Non-current financial assets
5,294
5,928
Other non-current assets
60,742
50,818
Deferred tax assets
52,680
31,646
Total non-current assets
1,079,357
1,087,898
Total assets
$ 2,431,919
$ 2,348,894
Liabilities and shareholders' equity
Current liabilities:
Trade payables
$ 838,522
$ 742,918
Contingencies - current portion
1,467
65,759
Income taxes
17,213
13,037
Financial liabilities - current portion
3,389
219
Lease liability - operating - current portion
35,398
31,003
Other taxes
66,659
58,031
Employee - related payables
113,287
85,569
Other current liabilities
104,552
83,457
Total current liabilities
1,180,487
1,079,993
Deferred tax liabilities
1,083
3,463
Defined benefit plans
4,123
3,708
Financial liabilities - non current portion
77
74
Lease liability - operating - non current portion
83,051
77,536
Contingencies - non current portion
32,625
33,788
Other non-current liabilities
19,082
69,226
Total non-current liabilities
140,041
187,795
Total liabilities
1,320,528
1,267,788
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 61,165,663 and 63,248,728 shares
authorized, issued and outstanding at December 31, 2023 and December 31,
2022 , respectively.
2,023
2,079
Treasury stock, 5,400,572 and 5,985,104 shares at cost as of December 31,
2023 and December 31, 2022 , respectively.
(161,788)
(174,293)
Additional paid-in capital
769,240
734,492
Accumulated other comprehensive income (loss)
(85,326)
(91,890)
Retained earnings
555,456
577,653
Equity - attributable to shareholders of Criteo S.A.
1,079,605
1,048,041
Non-controlling interests
31,786
33,065
Total equity
1,111,391
1,081,106
Total equity and liabilities
$ 2,431,919
$ 2,348,894
CRITEO S.A. Consolidated Statement of Operations (U.S. dollars in thousands, except share and per share data, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY change
2023
2022
YoY change
Revenue
$ 566,302
$ 564,425
- %
$ 1,949,445
$ 2,017,003
(3) %
Cost of revenue
Traffic acquisition cost
(249,926)
(281,021)
(11) %
(926,839)
(1,088,779)
(15) %
Other cost of revenue
(39,750)
(36,810)
8 %
(159,562)
(133,024)
20 %
Gross profit
276,626
246,594
12 %
863,044
795,200
9 %
Operating expenses:
Research and development expenses
(48,402)
(69,348)
(30) %
(242,289)
(187,596)
29 %
Sales and operations expenses
(97,687)
(99,633)
(2) %
(406,012)
(377,996)
7 %
General and administrative expenses
(42,219)
(28,969)
46 %
(137,525)
(205,330)
(33) %
Total Operating expenses
(188,308)
(197,950)
(5) %
(785,826)
(770,922)
2 %
Income (loss) from operations
88,318
48,644
82 %
77,218
24,278
218 %
Financial and Other income (expense)
(4,498)
(6,144)
(27) %
(2,490)
17,783
(114) %
Income (loss) before taxes
83,820
42,500
97 %
74,728
42,061
78 %
Provision for income tax (expense) benefit
(21,769)
(26,451)
(18) %
(20,084)
(31,186)
(36) %
Net income (loss)
$ 62,051
$ 16,049
287 %
$ 54,644
$ 10,875
402 %
Net income (loss) available to shareholders of Criteo S.A.
$ 61,017
$ 15,400
296 %
$ 53,259
$ 8,952
495 %
Net income (loss) available to non-controlling interests
$ 1,034
$ 649
59 %
$ 1,385
$ 1,923
(28) %
Weighted average shares outstanding used in computing per share amounts:
Basic
56,107,042
58,732,771
(4) %
56,170,658
60,004,707
(6) %
Diluted
59,687,020
61,898,460
(4) %
60,231,627
62,760,198
(4) %
Net income (loss) allocated to shareholders per share:
Basic
$ 1.09
$ 0.26
319 %
$ 0.95
$ 0.15
533 %
Diluted
$ 1.02
$ 0.25
308 %
$ 0.88
$ 0.14
529 %
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY
Change
2023
2022
YoY
Change
Net income (loss)
$ 62,051
$ 16,049
287 %
$ 54,644
$ 10,875
NM
Non-cash and non-operating items
60,663
62,986
(4) %
103,369
185,029
(44) %
- Amortization and provisions
16,048
15,611
3 %
72,336
150,261
(52) %
- Payment for contingent liability on regulatory matters
-
-
NM
(43,334)
-
NM
- Equity awards compensation expense (1)
20,832
22,440
(7) %
97,185
65,034
49 %
- Net (gain) or loss on disposal of non-current assets
974
167
483 %
(7,929)
(194)
NM
- Interest accrued and non-cash financial income and expenses
-
1,985
(100) %
-
(259)
- %
- Change in uncertain tax positions
(566)
412
(237) %
(880)
412
NM
- Net change in fair value of Earn-out
845
771
10 %
2,344
771
NM
- Change in deferred taxes
1,154
19,653
(94) %
(23,588)
3,602
NM
- Change in income taxes
22,431
1,947
NM
4,424
(10,952)
NM
- Other
(1,055)
-
NM
2,811
(23,646)
NM
Changes in working capital related to operating activities
38,626
46,420
(17) %
66,233
60,081
10 %
- (Increase) / Decrease in trade receivables
(135,234)
(117,309)
15 %
(56,344)
(41,910)
34 %
- Increase / (Decrease) in trade payables
159,127
153,318
4 %
87,937
133,792
(34) %
- (Increase) / Decrease in other current assets
(10,447)
8,537
(222) %
(8,479)
(14,687)
(42) %
- Increase / (Decrease) in other current liabilities
25,889
2,316
NM
43,815
(17,862)
NM
- Change in operating lease liabilities and right of use assets
(709)
(442)
60 %
(696)
748
NM
CASH FROM (USED FOR) OPERATING ACTIVITIES
161,340
125,455
29 %
224,246
255,985
(12) %
Acquisition of intangible assets, property, plant and equipment
(14,663)
(35,841)
(59) %
(92,501)
(84,796)
9 %
Change in accounts payable related to intangible assets, property, plant and equipment
(5,061)
21,319
(124) %
(21,810)
28,951
NM
Payment for business, net of cash acquired
132
(2,574)
(105) %
(6,825)
(138,027)
(95) %
Proceeds from disposition of investment
(778)
-
NM
8,847
-
NM
Change in other non-current financial assets
15,857
(15,299)
(204) %
3,577
27,753
(87) %
CASH FROM (USED FOR) INVESTING ACTIVITIES
(4,513)
(32,395)
(86) %
(108,712)
(166,119)
(35) %
Proceeds from borrowings under line-of-credit agreement
-
-
NM
-
78,513
NM
Repayment of borrowings
-
-
NM
-
(78,513)
NM
Change in other financial liabilities
235
(372)
(163) %
235
(265)
NM
Proceeds from exercise of stock options
(3)
411
(101) %
1,945
1,028
89 %
Repurchase of treasury stocks
(22,135)
(76,523)
(71) %
(125,489)
(135,685)
(8) %
Cash payment for contingent consideration
-
-
NM
(22,025)
-
NM
Other
(493)
(364)
35 %
(1,920)
21,878
NM
CASH FROM (USED FOR) FINANCING ACTIVITIES
(22,396)
(76,848)
(71) %
(147,254)
(113,044)
30 %
Effect of exchange rates changes on cash and cash equivalents
6,969
24,665
(72) %
(5,223)
(44,149)
(88) %
Net increase (decrease) in cash and cash equivalents
141,400
40,877
246 %
(36,943)
(67,327)
(45) %
Net cash and cash equivalents at beginning of period
269,857
407,323
(34) %
448,200
515,526
(13) %
Net cash and cash equivalents and restricted cash at end of period
$ 411,257
$ 448,200
(8) %
$ 411,257
$ 448,200
(8) %
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for taxes, net of refunds
$ 1,250
$ (4,439)
(128) %
$ (40,127)
$ (38,124)
5 %
Cash paid for interest
$ (424)
$ (339)
25 %
$ (1,539)
$ (1,298)
19 %
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $20.3 million and $22.1 million of equity awards compensation expense for the quarters ended December 31, 2023 and 2022, respectively, and $95.3 million and $63.2 million of equity awards compensation for the twelve months ended December 31, 2023 and 2022, 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,
2023
2022
YoY
Change
2023
2022
YoY
Change
CASH FROM (USED FOR) OPERATING ACTIVITIES
$ 161,340
$ 125,455
29 %
$ 224,246
$ 255,985
(12) %
Acquisition of intangible assets, property, plant and equipment
(14,663)
(35,841)
(59) %
(92,501)
(84,796)
9 %
Change in accounts payable related to intangible assets, property, plant and equipment
(5,061)
21,319
(124) %
(21,810)
28,951
NM
FREE CASH FLOW (1)
$ 141,616
$ 110,933
28 %
$ 109,935
$ 200,140
(45) %
(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,
2023
2022
YoY Change
2023
2022
YoY Change
Gross Profit
276,626
246,594
12 %
863,044
795,200
9 %
Other Cost of Revenue
39,750
36,810
8 %
159,562
133,024
20 %
Contribution ex-TAC (1)
$ 316,376
$ 283,404
12 %
$ 1,022,606
$ 928,224
10 %
(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
2023
2022
YoY Change
YoY Change at Constant Currency (3)
2023
2022
YoY Change
YoY Change at Constant Currency (3)
Revenue
Marketing Solutions
$ 455,030
$ 470,918
(3) %
(3) %
$ 1,617,973
$ 1,762,517
(8) %
(8) %
Retail Media (2)
76,583
59,801
28 %
26 %
209,007
202,317
3 %
3 %
Iponweb
34,689
33,706
3 %
2 %
122,465
52,169
135 %
133 %
Total
566,302
564,425
0.3 %
0.3 %
1,949,445
2,017,003
(3) %
(3) %
Contribution ex-TAC
Marketing Solutions
207,533
192,616
8 %
6 %
696,681
714,695
(3) %
(2) %
Retail Media (2)
74,154
57,082
30 %
29 %
203,460
161,360
26 %
26 %
Iponweb
34,689
33,706
3 %
2 %
122,465
52,169
135 %
133 %
Total (1)
$ 316,376
$ 283,404
12 %
10 %
$ 1,022,606
$ 928,224
10 %
11 %
(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 (Loss)
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY
Change
2023
2022
YoY
Change
Net income (loss)
$ 62,051
$ 16,049
287 %
$ 54,644
$ 10,875
402 %
Adjustments:
Financial (Income) expense
4,497
6,427
(30) %
2,805
(17,053)
(116) %
Provision for income taxes
21,769
26,451
(18) %
20,084
31,186
(36) %
Equity awards compensation expense
21,003
22,441
(6) %
99,222
65,035
53 %
Pension service costs
(131)
970
(114) %
401
1,756
(77) %
Depreciation and amortization expense
23,079
27,450
(16) %
99,653
89,018
12 %
Acquisition-related costs
613
1,093
(44) %
1,894
12,584
(85) %
Net loss contingency on regulatory matters
35
(699)
(105) %
(21,632)
63,221
(134) %
Restructuring, integration and transformation costs
5,729
4,123
39 %
44,727
10,677
319 %
Total net adjustments
76,594
88,256
(13) %
247,154
256,424
(4) %
Adjusted EBITDA (1)
$ 138,645
$ 104,305
33 %
$ 301,798
$ 267,299
13 %
(1) 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,
2023
2022
YoY Change
2023
2022
YoY Change
Research and Development expenses
$ (48,402)
$ (69,348)
(30) %
$ (242,289)
$ (187,596)
29 %
Equity awards compensation expense
10,465
15,348
(32) %
55,078
36,514
51 %
Depreciation and Amortization expense
10,258
12,792
(20) %
38,485
22,474
71 %
Pension service costs
(18)
483
(104) %
263
891
(70) %
Acquisition-related costs
(3)
(2)
50 %
504
165
205 %
Restructuring, integration and transformation costs
1,030
633
63 %
9,853
1,618
509 %
Non GAAP - Research and Development expenses
(26,670)
(40,094)
(33) %
(138,106)
(125,934)
10 %
Sales and Operations expenses
(97,687)
(99,633)
(2) %
(406,012)
(377,996)
7 %
Equity awards compensation expense
4,819
4,505
7 %
21,633
14,200
52 %
Depreciation and Amortization expense
3,140
3,930
(20) %
13,267
14,808
(10) %
Pension service costs
(132)
220
(160) %
(49)
339
(114) %
Acquisition-related costs
-
-
NM
-
-
NM
Restructuring, integration and transformation costs
2,913
408
614 %
19,923
4,316
362 %
Non GAAP - Sales and Operations expenses
(86,947)
(90,570)
(4) %
(351,238)
(344,333)
2 %
General and Administrative expenses
(42,219)
(28,969)
46 %
(137,525)
(205,330)
(33) %
Equity awards compensation expense
5,719
2,588
121 %
22,511
14,321
57 %
Depreciation and Amortization expense
477
(925)
(152) %
2,127
854
149 %
Pension service costs
19
267
(93) %
187
526
(64) %
Acquisition-related costs
616
1,095
(44) %
1,390
12,419
(89) %
Restructuring, integration and transformation costs
1,786
3,082
(42) %
14,951
4,743
215 %
Net loss contingency on regulatory matters
35
(699)
(105) %
(21,632)
63,221
(134) %
Non GAAP - General and Administrative expenses
(33,567)
(23,561)
42 %
(117,991)
(109,246)
8 %
Total Operating expenses
(188,308)
(197,950)
(5) %
(785,826)
(770,922)
2 %
Equity awards compensation expense
21,003
22,441
(6) %
99,222
65,035
53 %
Depreciation and Amortization expense
13,875
15,797
(12) %
53,879
38,136
41 %
Pension service costs
(131)
970
(114) %
401
1,756
(77) %
Acquisition-related costs
613
1,093
(44) %
1,894
12,584
(85) %
Restructuring, integration and transformation costs
5,729
4,123
39 %
44,727
10,677
319 %
Net loss contingency on regulatory matters
35
(699)
(105) %
(21,632)
63,221
(134) %
Total Non GAAP Operating expenses (1)
(147,184)
$ (154,225)
(5) %
(607,335)
(579,513)
5 %
(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 (Loss)
(U.S. dollars in thousands except share and per share data, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY Change
2023
2022
YoY Change
Net income (loss)
$ 62,051
$ 16,049
287 %
$ 54,644
$ 10,875
402 %
Adjustments:
Equity awards compensation expense
21,003
22,441
(6) %
99,222
65,035
53 %
Amortization of acquisition-related intangible assets
8,943
12,423
(28) %
34,980
23,276
50 %
Acquisition-related costs
613
1,093
(44) %
1,894
12,584
(85) %
Net loss contingency on regulatory matters
35
(699)
(105) %
(21,632)
63,221
(134) %
Restructuring, integration and transformation costs
5,729
4,123
39 %
44,727
10,677
319 %
Tax impact of the above adjustments (1)
(7,469)
(3,535)
111 %
(22,536)
(12,513)
80 %
Total net adjustments
28,854
35,846
(20) %
136,655
162,280
(16) %
Adjusted net income(2)
$ 90,905
$ 51,895
75 %
$ 191,299
$ 173,155
10 %
Weighted average shares outstanding
- Basic
56,107,042
58,732,771
56,170,658
60,004,707
- Diluted
59,687,020
61,898,460
60,231,627
62,760,198
Adjusted net income per share
- Basic
$ 1.62
$ 0.88
84 %
$ 3.41
$ 2.89
18 %
- Diluted
$ 1.52
$ 0.84
81 %
$ 3.18
$ 2.76
15 %
(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(1)
(U.S. dollars in thousands, unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
YoY
Change
2023
2022
YoY
Change
Gross Profit as reported
$ 276,626
$ 246,594
12 %
$ 863,044
$ 795,200
9 %
Other cost of revenue as reported
(39,750)
(36,810)
8 %
(159,562)
(133,024)
20 %
Contribution ex-TAC as reported(2)
316,376
283,404
12 %
1,022,606
928,224
10 %
Conversion impact U.S. dollar/other currencies
(4,174)
-
3,112
-
Contribution ex-TAC at constant currency
312,202
283,404
10 %
1,025,718
928,224
11 %
Contribution ex-TAC(2)/Revenue as reported
56 %
50 %
52 %
46 %
Traffic acquisition costs as reported
(249,926)
(281,021)
(11) %
(926,839)
(1,088,779)
(15) %
Conversion impact U.S. dollar/other currencies
(3,965)
-
(5,815)
-
Traffic acquisition costs at constant currency
(253,891)
(281,021)
(10) %
(932,654)
(1,088,779)
(14) %
Revenue as reported
566,302
564,425
0.3 %
1,949,445
2,017,003
(3) %
Conversion impact U.S. dollar/other currencies
(209)
-
8,927
-
Revenue at constant currency
$ 566,093
$ 564,425
0.3 %
$ 1,958,372
$ 2,017,003
(3) %
(1) 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.
(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
2023
2022
Shares outstanding as at January 1,
57,263,624
60,675,474
Weighted average number of shares issued during the period
Shares issued as at December 31, before Treasury stocks
61,165,663
63,248,728
Treasury stocks as of December 31,
(5,400,572)
(5,985,104)
Shares outstanding as of December 31, after Treasury stocks
55,765,091
57,263,624
Total dilutive effect of share options, warrants, employee warrants
8,471,113
9,507,770
Fully diluted shares as at December 31,
64,236,204
66,771,394
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated, unaudited)
YoY
Change
QoQ
Change
Q4
2023
Q3
2023
Q2
2023
Q1
2023
Q4
2022
Q3
2022
Q2
2022
Q1
2022
Q4
2021
Clients
(4) %
(1) %
18,197
18,423
18,646
18,679
18,990
19,008
18,911
18,764
NA
Revenue
0.3 %
21 %
566,302
469,193
468,934
445,016
564,425
446,921
495,090
510,567
653,267
Americas
(0.4) %
31 %
280,597
213,607
204,755
188,288
281,806
201,274
213,340
194,847
287,270
EMEA
2 %
15 %
189,291
164,890
158,215
160,214
185,125
150,915
176,867
193,954
234,559
APAC
(1) %
6 %
96,414
90,696
105,964
96,514
97,494
94,732
104,883
121,766
131,438
Revenue
0.3 %
21 %
566,302
469,193
468,934
445,016
564,425
446,921
495,090
510,567
653,267
Marketing Solutions
(3) %
18 %
455,030
385,762
395,274
381,907
470,918
387,288
440,423
463,888
577,962
Retail Media (2)
28 %
54 %
76,583
49,813
44,590
38,021
59,801
41,170
54,667
46,679
75,305
Iponweb
3 %
3 %
34,689
33,618
29,070
25,088
33,706
18,463
-
-
-
TAC
(11) %
12 %
(249,926)
(223,798)
(228,717)
(224,398)
(281,021)
(233,543)
(280,565)
(293,650)
(377,076)
Marketing Solutions
(11) %
11 %
(247,497)
(222,421)
(227,645)
(223,729)
(278,302)
(229,266)
(262,454)
(277,800)
(349,584)
Retail Media (2)
(11) %
76 %
(2,429)
(1,377)
(1,072)
(669)
(2,719)
(4,277)
(18,111)
(15,850)
(27,492)
Iponweb
NM
NM
-
-
-
-
-
-
-
-
-
Contribution ex-TAC (1)
12 %
29 %
316,376
245,395
240,217
220,618
283,404
213,378
214,525
216,917
276,191
Marketing Solutions
8 %
27 %
207,533
163,341
167,629
158,178
192,616
158,022
177,969
186,088
228,378
Retail Media (2)
30 %
53 %
74,154
48,436
43,518
37,352
57,082
36,893
36,556
30,829
47,813
Iponweb
3 %
3 %
34,689
33,618
29,070
25,088
33,706
18,463
-
-
-
Cash flow from operating activities
29 %
723 %
161,340
19,614
1,328
41,964
125,455
41,628
13,972
74,930
66,012
Capital expenditures
36 %
24 %
19,724
15,849
45,519
33,219
14,522
20,307
15,452
5,564
10,145
Net cash position
(8) %
52 %
411,257
269,857
298,183
380,663
448,200
407,323
562,546
589,343
515,527
Headcount
(4) %
2 %
3,563
3,487
3,514
3,636
3,716
3,537
3,146
2,939
2,781
Days Sales Outstanding (days - end of month) (3)
(13) days
(3) days
58
61
69
74
71
78
76
74
65
(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.
(3) From September 2023, we have included Iponweb in our calculation of Days Sales Outstanding. Days Sales Outstanding excluding Iponweb would have been 71 days for the same period.