PR Newswire | May 5, 2021 07:01AM EDT

05/05 06:00 CDT

Criteo Reports Strong First Quarter 2021 Financial ResultsQ1 Revenue ex-TAC and Adjusted EBITDA Above GuidanceCriteo Announces Investor Day for June 3, 2021 NEW YORK, May 5, 2021

NEW YORK, May 5, 2021 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO), the global technology company powering the world's marketers with trusted and impactful advertising, today announced financial results for the first quarter ended March 31, 2021 that exceeded the Company's quarterly guidance.

First Quarter 2021 Financial Highlights:

The following table summarizes our consolidated financial results for the three months ended March 31, 2021 and 2020:

Three Months Ended

March 31,

2021 2020 YoY Change

(in millions, except EPS data)

GAAP Results

Revenue $ 541 $ 503 7 %

Net Income $ 23 $ 16 43 %

Diluted EPS $ 0.35 $ 0.25 40 %

Cash from operating activities$ 77 $ 57 36 %

Net cash position $ 520 $ 437 19 %



Non-GAAP Results^1

Revenue ex-TAC $ 213 $ 206 4 %

Revenue ex-TAC margin 39 % 41 % (2) %

Adjusted EBITDA $ 76 $ 59 28 %

Adjusted diluted EPS $ 0.67 $ 0.52 29 %

Free Cash Flow (FCF) $ 64 $ 45 41 %

FCF / Adjusted EBITDA 84 % 76 % 8 %

Megan Clarken, Chief Executive Officer of Criteo, said, "Our commitments to deliver measurable results for our customers, our growth investments and our consistent focus on execution and productivity enabled us to deliver strong top line and margin."

Q1 2021 Operating Highlights

* New solutions grew 60% year-over-year at constant currency2 to 21% of total Revenue ex-TAC. * Retail Media revenue grew 69% year-over-year at constant currency2 and Retail Media Revenue ex-TAC grew 122% at constant currency2. Same-client revenue3 for Retail Media grew 61% and same-client Revenue ex-TAC3 for Retail Media increased 89% year-over-year. * Criteo launched its contextual advertising solution, a first-of-its-kind product that connects first-party commerce data with real-time contextual signals, paving the way for marketers to continue to drive and measure incremental revenue in a post-cookie world. * Same-client revenue3 increased 8% year-over-year, accelerating vs. Q4 2020, and same-client Revenue ex-TAC3 increased 3% year-over-year at constant currency2. * We added over 120 net new live clients in Q1 2021 and closed the quarter with 20,626 clients4.

___________________________________________________

1 Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA at constant currency, Adjusted EBITDA margin, Adjusted diluted EPS, Free Cash Flow and growth at constant currency are not measures calculated in accordance with U.S. GAAP.2Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2020 average exchange rates for the relevant period to 2021 figures.3Same-client revenue or Revenue ex-TAC is the revenue or 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.4Our client metric, which is a lagging indicator counting all clients that have been live over the preceding 12 months, in Q1 2021 reflected the annualized impact of client churn that peaked in Q2 2020 when COVID started to impact the global economy.

Financial Summary

Revenue for Q1 2021 was $541 million and Revenue ex-TAC was $213 million. Adjusted EBITDA for the quarter was $76 million, resulting in an adjusted diluted EPS of $0.67. At constant currency, Q1 2021 Revenue increased by 4% and Revenue ex-TAC increased by 0.5%. Excluding the estimated $18 million incremental impact of the pandemic, we estimate that Revenue ex-TAC increased about 9% in Q1 2021. Free Cash Flow was $64 million in Q1 2021, up 41% year-over-year. Free Cash Flow conversion was 84% of Adjusted EBITDA in Q1 2021, representing the highest quarterly level for the past 21 quarters. We had $566 million in cash and marketable securities on our balance sheet at the end of Q1 2021.

Sarah Glickman, Chief Financial Officer, said, "We are on track to achieve about 50% growth from our new solutions in 2021, and excited to deliver value to newly signed customers in Retail Media and for our newly launched Contextual advertising product."

Revenueand Revenue ex-TAC

Revenue increased by 7% year-over-year in Q1 2021, or 4% at constant currency, to $541 million (Q1 2020: $503 million). Revenue ex-TAC in the quarter increased 4% year-over-year, or 0.5% at constant currency, to $213 million (Q1 2020: $206 million), after an approximately $18 million net negative impact from the COVID-19 disruption incremental to 2020, or approximately 9 points of year-over-over growth at constant currency. Good performance of retargeting, driven by our retail clients, stellar performance of Retail Media and continued growth of our Audience Targeting and Omnichannel solutions offset Q1 2021 COVID-19 pandemic impact, in particular on our travel clients. Revenue ex-TAC as a percentage of revenue, or Revenue ex-TAC margin, was 39% (Q1 2020: 41%).

* In the Americas, Revenue increased 6% year-over-year, or 8% at constant currency, to $204 million and represented 38% of total Revenue. Revenue ex-TAC increased 6% year-over-year, or 8% at constant currency, to $76 million and represented 36% of total Revenue ex-TAC. * In EMEA, Revenue increased 12% year-over-year, or 4% at constant currency, to $212 million and represented 39% of total Revenue. Revenue ex-TAC increased 5% year-over-year, or decreased 2% at constant currency, to $85 million and represented 40% of total Revenue ex-TAC. * In Asia-Pacific, Revenue increased 3% year-over-year, or declined 1% at constant currency, to $125 million and represented 23% of total Revenue. Revenue ex-TAC declined 2% year-over-year, or 5% at constant currency, to $52 million and represented 24% of total Revenue ex-TAC.

Net Income and Adjusted Net Income

Net income increased 43% year-over-year in Q1 2021 to $23 million (Q1 2020: $16 million). Net income margin as a percentage of revenue was 4% (Q1 2020: 3%). In the quarter, we incurred $12 million in restructuring related and transformation costs. Net income available to shareholders of Criteo S.A. increased 45% year-over-year to $22 million, or $0.35 per share on a diluted basis (Q1 2020: $15 million, or $0.25 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, restructuring related and transformation costs and the tax impact of these adjustments, increased 35% year-over-year to $43 million, or $0.67 per share on a diluted basis (Q1 2020: $32 million, or $0.52 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA increased 28% year-over-year, or 21% at constant currency, to $76 million (Q1 2020: $59 million), driven by the Revenue ex-TAC performance over the period and effective cost discipline balanced with investments in our growth areas. Adjusted EBITDA as a percentage of Revenue ex-TAC, or Adjusted EBITDA margin, was 36% (Q1 2020: 29%).

Operating expenses decreased by 3% or $4 million, to $144 million (Q1 2020: $148 million), mostly driven by lower headcount-related expense and disciplined expense management across the Company. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP Operating Expenses, decreased 6% or $8 million, to $118 million (Q1 2020: $126 million), largely driven by lower headcount and effective cost discipline, after investing in the growth areas of the Company.

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities increased 36% year-over-year to $77 million (Q1 2020: $57 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 41% to $64 million (Q1 2020: $45 million), or 84% of Adjusted EBITDA (Q1 2020: 76%), driven by our Adjusted EBITDA performance over the period and positive working capital.

Cash and cash equivalents increased $32 million compared to December 31, 2020 to $520 million, after spending $5 million on share repurchases in the first quarter 2021.

As of March 31, 2021, the Company had total financial liquidity of approximately $1 billion, including its cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.

Business Outlook

The following forward-looking statements reflect Criteo's expectations as of May 5, 2021.

Second quarter 2021 guidance:

* We expect Revenue ex-TAC to be approximately $208 million, translating into constant-currency growth of about 14% year-over-year. * We expect Adjusted EBITDA to be approximately $60 million.

Fiscal year 2021 guidance:

* We maintain our target of low to mid-single digit growth in Revenue ex-TAC at constant-currency. * We maintain our expectation of an Adjusted EBITDA margin above 30% of Revenue ex-TAC.

The above guidance for the second quarter and the fiscal year ending December 31, 2021 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.847, a U.S. dollar-Japanese Yen rate of 108, a U.S. dollar-British pound rate of 0.746, a U.S. dollar-Korean Won rate of 1,150 and a U.S. dollar-Brazilian real rate of 5.70.

The above guidance assumes no acquisitions are completed during the second quarter ending June 30, 2021 and fiscal year ended December 31, 2021.

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. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.

Investor Day 2021

Criteo will hold a virtual investor day on Thursday, June 3rd, 2021. More details will be provided ahead of the event, which will be webcast live, on the Company's Investor Relations website http://ir.criteo.com.

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"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC by Solution, Revenue 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.

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, Revenue ex-TAC by Solution, 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, Revenue ex-TAC by Solution 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 and restructuring related and transformation costs.

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 and restructuring related and transformation costs, 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, restructuring related and transformation costs 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 by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, 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 the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. 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, Revenue ex-TAC by Solution to revenue by solution, 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, Revenue ex-TAC by Solution, 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 June 30, 2021 and the year ended December 31, 2021, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the scope and impact of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, 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, 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 Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on February 26, 2021, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have a significant impact on Criteo's business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the virus.

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, May 5, 2021, at 8:00AM ET, 2:00PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will be available for replay.

* 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 global technology company powering the world's marketers with trusted and impactful advertising. 2,500 Criteo team members partner with over 20,000 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 RelationsEdouard Lassalle, SVP, Market Relations & Capital Markets, e.lassalle@criteo.comClemence Vermersch, Director, Investor Relations, c.vermersch@criteo.com

Criteo Public RelationsJessica Meyers, Director, Public Relations, Americas, j.meyers@criteo.com

Financial information to follow

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



March 31, December 31, 2020 2021

Assets

Current assets:

Cash and cash equivalents $520,060 $ 488,011

Trade receivables, net of allowances of $38.7 million and $39.9 million at March 31,416,910 474,055 2021 and December 31, 2020, respectively

Income taxes 12,750 11,092

Other taxes 69,692 69,987

Other current assets 22,494 21,405

Marketable Securities - current portion 17,586 -

Total current assets 1,059,492 1,064,550

Property, plant and equipment, net 168,036 189,505

Intangible assets, net 79,440 79,744

Goodwill 322,821 325,805

Right of Use Asset - operating lease 96,266 114,012

Marketable securities - non current portion 28,281 41,809

Non-current financial assets 14,788 18,109

Deferred tax assets 13,511 19,876

Total non-current assets 723,143 788,860

Total assets $1,782,635$ 1,853,410



Liabilities and shareholders' equity

Current liabilities:

Trade payables $347,209 $ 367,025

Contingencies 1,773 2,250

Income taxes 1,201 2,626

Financial liabilities - current portion 2,114 2,889

Lease liability - operating - current 44,501 48,388 portion

Other taxes 56,192 58,491

Employee - related payables 71,450 85,272

Other current liabilities 32,693 33,390

Total current liabilities 557,133 600,331

Deferred tax liabilities 4,066 5,297

Retirement benefit obligation 5,621 6,167

Financial liabilities - non-current portion 371 386

Lease liability - operating - non-current 61,874 83,007 portion

Other non-current liabilities 9,807 5,535

Total non-current liabilities 81,739 100,392

Total liabilities 638,872 700,723

Commitments and contingencies

Shareholders' equity:

Common shares, (eu)0.025 par value, 66,391,906 and 66,272,106 shares authorized, issued and outstanding at March 2,164 2,161 31, 2021 and December 31, 2020, respectively.

Treasury stock, 5,597,601 and 5,632,536 shares at cost as of March 31, 2021 and (87,263) (85,570) December 31, 2020, respectively.

Additional paid-in capital 702,022 693,164

Accumulated other comprehensive income (17,825) 16,028 (loss)

Retained earnings 510,528 491,359

Equity - attributable to shareholders of 1,109,626 1,117,142 Criteo S.A.

Non-controlling interests 34,137 35,545

Total equity 1,143,763 1,152,687

Total equity and liabilities $1,782,635$ 1,853,410

CRITEO S.A. Consolidated Statement of Income (U.S. dollars in thousands, except share and per share data, unaudited)



Three Months Ended

March 31,

YoY 2021 2020 Change



Revenue $541,077 $503,376 7 %



Cost of revenue

Traffic acquisition cost (327,667) (297,364) 10 %

Other cost of revenue (34,712) (33,806) 3 %



Gross profit 178,698 172,206 4 %



Operating expenses:

Research and development expenses (31,697) (37,515) (16)%

Sales and operations expenses (79,354) (84,974) (7) %

General and administrative expenses (33,428) (25,915) 29 %

Total Operating expenses (144,479) (148,404) (3) %

Income from operations 34,219 23,802 44 %

Financial expense (718) (334) NM

Income before taxes 33,501 23,468 43 %

Provision for income taxes (10,051) (7,040) 43 %

Net Income $23,450 $16,428 43 %



Net income available to shareholders of $22,406 $15,459 45 %Criteo S.A.

Net income available to non-controlling $1,044 $969 8 %interests



Weighted average shares outstanding used in computing per share amounts:

Basic 60,741,67461,691,001

Diluted 64,077,40962,125,582



Net income allocated to shareholders per share:

Basic $0.37 $0.25 48 %

Diluted $0.35 $0.25 40 %

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



Three Months Ended

March 31,

YoY 2021 2020 Change

Net income $23,450 $16,428 43 %

Non-cash and non-operating items 30,017 32,828 (9) %

- Amortization and provisions 17,225 27,044 (36)%

- Equity awards compensation 7,215 8,502 (15)%expense ^(1)

- Net gain or (loss) on disposal of3,945 2,266 74 %non-current assets

- Change in deferred taxes 4,998 (2,678) NM

- Change in income taxes (3,379) (2,329) 45 %

- Other 13 23 (43)%

Changes in working capital related to 23,895 7,487 NM operating activities

- (Increase) / Decrease in trade 47,226 99,388 (52)%receivables

- Increase / (Decrease) in trade (10,640) (81,679) (87)%payables

- (Increase) / Decrease in other (5,050) (10,398) (51)%current assets

- Increase / (Decrease) in other (4,527) (945) NM current liabilities

- Change in operating lease (3,114) 1,121 NM liabilities and right of use assets

CASH FROM OPERATING ACTIVITIES 77,362 56,743 36 %

Acquisition of intangible assets, property, (11,953) (11,258) 6 %plant and equipment

Change in accounts payable related to intangible assets, property, plant and (1,827) (479) NM equipment

Change in other non-current financial assets (3,252) 889 NM

CASH USED FOR INVESTING ACTIVITIES (17,032) (10,848) 57 %

Repayment of borrowings (182) (170) 7 %

Proceeds from capital increase 2,074 4 NM

Repurchase of treasury stocks (4,930) (18,241) (73)%

Change in other financial liabilities (378) (354) 7 %

CASH USED FOR FINANCING ACTIVITIES (3,416) (18,761) (82)%

Effect of exchange rates changes on cash and (24,865) (9,391) NM cash equivalents

Net increase (decrease) in cash and cash 32,049 17,743 81 %equivalents

Net cash and cash equivalents at beginning of 488,011 418,763 17 %period

Net cash and cash equivalents at end of period$520,060$436,506 19 %



SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for taxes, net of refunds $(8,432)$(12,047)(30)%

Cash paid for interest $(367) $(349) 5 %



^(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $6.8 million and $8.1 million of equity awards compensation expense for the quarter ended March 31, 2021 and 2020, respectively

CRITEO S.A. Reconciliation of Cash from Operating Activities to Free Cash Flow (U.S. dollars in thousands, unaudited)



Three Months Ended

March 31,

YoY 2021 2020 Change



CASH FROM OPERATING ACTIVITIES $77,362$56,74336 %

Acquisition of intangible assets, property, (11,953)(11,258)6 % plant and equipment

Change in accounts payable related to intangible assets, property, plant and (1,827) (479) NM equipment

FREE CASH FLOW ^(1) $63,582$45,00641 %



^(1) Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change inaccounts payable related to intangible assets, property, plant and equipment.

CRITEO S.A. Reconciliation of Revenue ex-TAC to Revenue (U.S. dollars in thousands, unaudited)



Three Months Ended

March 31,

YoY YoY Change Region 2021 2020 Change at Constant Currency

Revenue

Americas $203,900$191,7456 % 8 %

EMEA 212,096 190,114 12 % 4 %

Asia-Pacific 125,081 121,517 3 % (1) %

Total 541,077 503,376 7 % 4 %



Traffic acquisition costs ^ (1)

Americas (127,628)(120,022)6 % 7 %

EMEA (126,648)(108,397)17 % 9 %

Asia-Pacific (73,391) (68,945) 6 % 2 %

Total (327,667)(297,364)10 % 7 %



Revenue ex-TAC ^(1)

Americas 76,272 71,723 6 % 8 %

EMEA 85,448 81,717 5 % (2) %

Asia-Pacific 51,690 52,572 (2) % (5) %

Total $213,410$206,0124 % 0.5 %

Three Months Ended

March 31,

YoY YoY Change Solution 2021 2020 Change at Constant Currency

Revenue

Marketing Solutions $483,190$469,7733 % (0.5) %

Retail Media ^(2) 57,887 33,603 72 % 69 %

Total 541,077 503,376 7 % 4 %



Traffic acquisition costs ^ (1)

Marketing Solutions (290,873)(273,057)7 % 3 %

Retail Media ^(2) (36,794) (24,307) 51 % 49 %

Total (327,667)(297,364)10 % 7 %



Revenue ex-TAC ^(1)

Marketing Solutions 192,317 196,716 (2) % (5) %

Retail Media ^(2) 21,093 9,296 127 % 122 %

Total $213,410$206,0124 % 0.5 %



^(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, TrafficAcquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TACby Solution 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 and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution provide useful information to investors and others in understanding and evaluating our results of operations in the same manner asour management and board of directors. Our use of Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution 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 addressthe impact of TAC differently; (b) other companies may report Revenue, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution, orsimilarly titled measures but define the regions, and product families 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, Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC bySolution to revenue by solution.



^(2) Criteo operates as one operating segment. From January 1,2021 we have disaggregated revenues between Marketing Solutions and Retail Media. A strategic building block of Criteo's Commerce Media Platform, the Retail Media Platform, introduced in June 2020, 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 are accounted for on a gross basis. Over time, we expect most clientsusing Criteo's legacy Retail Media solutions to transition to this platform. Asnew clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by this transition.

CRITEO S.A. Reconciliation of Adjusted EBITDA to Net Income (U.S. dollars in thousands, unaudited)



Three Months Ended

March 31,

YoY 2021 2020 Change

Net income $23,450$16,42843 %

Adjustments:

Financial expense 718 334 NM

Provision for income taxes 10,051 7,040 43 %

Equity awards compensation expense 7,882 8,503 (7) %

Research and development 2,496 2,370 5 %

Sales and operations 2,369 3,618 (35)%

General and administrative 3,017 2,515 20 %

Pension service costs 338 538 (37)%

Research and development 175 269 (35)%

Sales and operations 53 95 (44)%

General and administrative 110 174 (37)%

Depreciation and amortization expense 21,854 24,138 (9) %

Cost of revenue 15,244 12,771 19 %

Research and development ^(1) 1,753 5,650 (69)%

Sales and operations 3,954 4,340 (9) %

General and administrative 903 1,377 (34)%

Restructuring related and transformation costs 11,636 2,209 NM ^(2)

Research and development 1,436 995 44 %

Sales and operations 7,367 1,021 NM

General and administrative 2,833 193 NM

Total net adjustments 52,479 42,762 23 %

Adjusted EBITDA ^(3) $75,929$59,19028 %



^(1) For the Three Months Ended March 31, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($3.3 million in Research and development).



^(2) For the Three Months Ended March 2021, and March 2020, respectively, theCompany recognized restructuring related and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy:



Three Months Ended

March 31,

2021 2020

(Gain) from forfeitures of share-based (666) - compensation awards

Facilities and impairment related costs 6,616 987

Payroll related costs 5,152 1,222

Consulting costs related to 534 - transformation

Total restructuring related and 11,636 2,209 transformation costs



For the Three Months Ended March 31, 2021 and March 31, 2020, respectively, the cash outflows related to restructuring related and transformation costs were $6.1 million, and $4.5 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to facilities and other consulting fees.



^(3) 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, and restructuring related and transformation costs. Adjusted EBITDA isnot 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, andrestructuring related and transformation costs in calculating Adjusted EBITDAcan 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. Becauseof these and other limitations, you should consider Adjusted EBITDA alongsideour U.S. GAAP financial results, including net income.

CRITEO S.A. Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP (U.S. dollars in thousands, unaudited)



Three Months Ended

March 31,

2021 2020 YoY Change

Research and Development $ (31,697) $ (37,515) (16) %expenses

Equity awards compensation 2,496 2,370 5 %expense

Depreciation and Amortization1,753 5,650 (69) %expense

Pension service costs 175 269 (35) %

Restructuring related and 1,436 995 44 %transformation costs

Non GAAP - Research and (25,837) (28,231) (8) %Development expenses

Sales and Operations expenses(79,354) (84,974) (7) %

Equity awards compensation 2,369 3,618 (35) %expense

Depreciation and Amortization3,954 4,340 (9) %expense

Pension service costs 53 95 (44) %

Restructuring related and 7,367 1,021 NM transformation costs

Non GAAP - Sales and (65,611) (75,900) (14) %Operations expenses

General and Administrative (33,428) (25,915) 29 %expenses

Equity awards compensation 3,017 2,515 20 %expense

Depreciation and Amortization903 1,377 (34) %expense

Pension service costs 110 174 (37) %

Restructuring related and 2,833 193 NM transformation costs

Non GAAP - General and (26,565) (21,656) 23 %Administrative expenses

Total Operating expenses (144,479) (148,404) (3) %

Equity awards compensation 7,882 8,503 (7) %expense

Depreciation and Amortization6,610 11,367 (42) %expense

Pension service costs 338 538 (37) %

Restructuring related and 11,636 2,209 NM transformation costs

Total Non GAAP Operating $ (118,013) $ (125,787) (6) %expenses ^(1)



^(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, and restructuring related and transformation costs. 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.

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



Three Months Ended

March 31,

2021 2020 YoY Change

Equity awards compensation expense

Research and development $2,496 $2,3705 %

Sales and operations 2,369 3,618 (35) %

General and administrative 3,017 2,515 20 %

Total equity awards compensation expense 7,882 8,503 (7) %



Pension service costs

Research and development 175 269 (35) %

Sales and operations 53 95 (44) %

General and administrative 110 174 (37) %

Total pension service costs 338 538 (37) %



Depreciation and amortization expense

Cost of revenue 15,244 12,771 19 %

Research and development 1,753 5,650 (69) %

Sales and operations 3,954 4,340 (9) %

General and administrative 903 1,377 (34) %

Total depreciation and amortization expense 21,854 24,138 (9) %



Restructuring related and transformation costs

Research and development 1,436 995 44 %

Sales and operations 7,367 1,021 NM

General and administrative 2,833 193 NM

Total restructuring related and $11,636$2,209NM transformation costs

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

March 31,

2021 2020 YoY Change



Net income $ 23,450 $ 16,428 43 %

Adjustments:

Equity awards compensation 7,882 8,503 (7) %expense

Amortization of acquisition-related intangible 2,935 6,848 (57) %assets ^(1)

Restructuring related and 11,636 2,209 NM transformation costs

Tax impact of the above (2,751) (1,960) 40 %adjustments

Total net adjustments 19,702 15,600 26 %

Adjusted net income ^(2) $ 43,152 $ 32,028 35 %



Weighted average shares outstanding

- Basic 60,741,674 61,691,001

- Diluted 64,077,409 62,125,582



Adjusted net income per share

- Basic $ 0.71 $ 0.52 37 %

- Diluted $ 0.67 $ 0.52 29 %



^(1) For the Three Months Ended March 31, 2020, the Company recognized an accelerated amortization for Manage technology due to a revised useful life in 2019 ($3.3 million in Research and development).



^(2) 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 related and transformation costs, 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, generatefuture 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, restructuring related and transformation costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a usefulmeasure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors andothers in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.

CRITEO S.A. Constant Currency Reconciliation (U.S. dollars in thousands, unaudited)



Three Months Ended

March 31,

YoY 2021 2020 Change



Revenue as reported $541,077 $503,376 7 %

Conversion impact U.S. dollar/other (16,747) currencies

Revenue at constant currency^(1) 524,330 503,376 4 %



Traffic acquisition costs as reported(327,667) (297,364) 10 %

Conversion impact U.S. dollar/other 10,317 currencies

Traffic Acquisition Costs at constant(317,350) (297,364) 7 %currency^(1)



Revenue ex-TAC as reported^(2) 213,410 206,012 4 %

Conversion impact U.S. dollar/other (6,430) currencies

Revenue ex-TAC at constant currency^ 206,980 206,012 0.5 %(2)

Revenue ex-TAC^(2)/Revenue as 39 %41 % reported



Other cost of revenue as reported (34,712) (33,806) 3 %

Conversion impact U.S. dollar/other 322 currencies

Other cost of revenue at constant (34,390) (33,806) 2 %currency^(1)



Adjusted EBITDA^(3) 75,929 59,190 28 %

Conversion impact U.S. dollar/other (4,591) currencies

Adjusted EBITDA^(3) at constant $71,338 $59,190 21 %currency^(1)

Adjusted EBITDA^(3)/Revenue ex-TAC^ 36 %29 % (2)



^(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 analyzesbusiness 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 withthe 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 to Revenue" for a reconciliation of Revenue Ex-TAC to revenue.



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

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



Three Months Ended

2021 2020

Shares outstanding as at January 1, 60,639,570 62,293,508

Weighted average number of shares issued during 102,104 (602,507) the period

Basic number of shares - Basic EPS basis 60,741,674 61,691,001

Dilutive effect of share options, warrants, 3,335,736 434,581 employee warrants - Treasury method

Diluted number of shares - Diluted EPS basis 64,077,410 62,125,582



Shares issued as March 31, before Treasury stocks66,391,906 66,202,881

Treasury stock as of March 31, (5,597,601)(4,533,650)

Shares outstanding as of March 31, after Treasury 60,794,305 61,669,231 stocks

Total dilutive effect of share options, warrants, 7,458,737 6,982,753 employee warrants

Fully diluted shares as at March 31, 68,253,042 68,651,984

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



YoY QoQ Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Change Change 2021 2020 2020 2020 2020 2019 2019 2019 2019



Clients 1% (4)% 20,626 21,460 20,565 20,359 20,360 20,247 19,971 19,733 19,373



Revenue 7% (18)% 541,077 661,282 470,345 437,614 503,376 652,640 522,606 528,147 558,123

Americas 6% (35)% 203,900 312,817 204,618 185,674 191,745 306,250 213,937 213,974 217,993

EMEA 12% (9)% 212,096 232,137 167,800 159,621 190,114 216,639 185,556 194,359 209,643

APAC 3% 8% 125,081 116,328 97,927 92,319 121,517 129,751 123,113 119,814 130,487



Revenue 7% (18)% 541,077 661,282 470,345 437,614 503,376 N.A N.A N.A N.A

Marketing 3% (11)% 483,190 543,262 412,126 381,270 469,773 N.A N.A N.A N.A Solutions

Retail Media72% (51)% 57,887 118,020 58,219 56,344 33,603 N.A N.A N.A N.A



TAC 10% (20)% (327,667)(408,108)(284,401)(257,698)(297,364)(386,388)(301,901)(304,229)(322,429)

Americas 6% (37)% (127,628)(203,341)(130,756)(115,317)(120,022)(189,092)(129,047)(129,491)(131,545)

EMEA 17% (8)% (126,648)(137,384)(97,272) (90,153) (108,397)(124,939)(103,899)(107,401)(117,291)

APAC 6% 9% (73,391) (67,383) (56,373) (52,228) (68,945) (72,357) (68,955) (67,337) (73,593)



TAC 10% (20)% (327,667)(408,108)(284,401)(257,698)(297,364)N.A N.A N.A N.A

Marketing 7% (10)% (290,873)(324,017)(243,616)(218,990)(273,057)N.A N.A N.A N.A Solutions

Retail Media51% (56)% (36,794) (84,091) (40,785) (38,708) (24,307) N.A N.A N.A N.A



Revenue 4% (16)% 213,410 253,174 185,944 179,916 206,012 266,252 220,705 223,918 235,694 ex-TAC ^(1)

Americas 6% (30)% 76,272 109,476 73,862 70,357 71,723 117,158 84,890 84,483 86,448

EMEA 5% (10)% 85,448 94,753 70,528 69,468 81,717 91,700 81,657 86,958 92,352

APAC (2)% 6% 51,690 48,945 41,554 40,091 52,572 57,394 54,158 52,477 56,894



Revenue 4% (16)% 213,410 253,174 185,944 179,916 206,012 N.A N.A N.A N.A ex-TAC ^(1)

Marketing (2)% (12)% 192,317 219,245 168,510 162,280 196,716 N.A N.A N.A N.A Solutions

Retail Media127% (38)% 21,093 33,929 17,434 17,636 9,296 N.A N.A N.A N.A



Cash flow from 36% 76% 77,362 44,080 51,156 33,377 56,743 59,359 43,289 52,964 67,220 operating activities



Capital 17% (38)% 13,780 22,302 12,898 18,532 11,737 17,520 23,944 32,792 23,684 expenditures



Capital expendituresN.A N.A 3% 3% 3% 4% 2% 3% 5% 6% 4% /Revenue



Net cash 19% 7% 520,060 488,011 626,744 578,181 436,506 418,763 409,178 422,053 395,771 position



Headcount (6)% (2)% 2,532 2,594 2,636 2,685 2,701 2,755 2,794 2,873 2,813



Days Sales Outstanding N.A N.A 64 56 62 61 62 52 57 58 59 (days - end of month)



^(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution 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 and solution can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC, Traffic Acquisition Costs, Revenue ex-TAC by Region, and Revenue ex-TAC by Solution 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, Traffic Acquisition Costs, Revenue ex-TAC by Region and Revenue ex-TAC by Solution 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, Revenue ex-TAC by Region and Revenue ex-TAC by Solution, or similarly titled measures but define the regions, and product families 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, Revenue ex-TAC by Region and Revenue ex-TAC by Solution alongside our other U.S. GAAP financial results, including revenue. The above tables provide a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region and Revenue ex-TAC by Solution to revenue by solution.

View original content: http://www.prnewswire.com/news-releases/criteo-reports-strong-first-quarter-2021-financial-results-301284133.html

SOURCE Criteo S.A.