Criteo Reports Strong Results For The Second Quarter 2017
NEW YORK, Aug. 2, 2017 /PRNewswire/ -- Criteo S.A. (NASDAQ: CRTO), the commerce marketing technology company, today announced financial results for the second quarter ended June 30, 2017.
-- Revenue increased 33% (or 35% at constant currency(1)) to $542 million.
-- Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC,(2) grew
32% (or 34% at constant currency) to $220 million, or 41% of revenue.
-- Adjusted EBITDA(2) grew 38% (or 42% at constant currency) to $54
million, or 25% of Revenue ex-TAC.
-- Cash flow from operating activities increased 214% to $60 million.
-- Free Cash Flow(2) increased $37 million to $33 million.
-- Net Income decreased 44% to $8 million, driven by the accounting impact
of the HookLogic, Inc. ("HookLogic") acquisition and restructuring costs
in China in the second quarter.
-- Adjusted Net Income per diluted share(2) increased 18% to $0.39.
"We are building the highest performing and open commerce marketing ecosystem for retailers and brands, allowing them to compete with large ecommerce companies," said Eric Eichmann, CEO. "Our unique solution opens up a large opportunity for us."
"We delivered accelerating profitable growth and increased cash flow, while investing in the business," said Benoit Fouilland, CFO. "This attractive combination continues to differentiate our business model ."
Operating Highlights
-- The year-over-year growth in same-client Revenue ex-TAC accelerated from
the prior quarter to 17% at constant currency, the result of better
technology and a broader supply network.
-- We added a total of 950 net clients, ending the quarter with more than
16,000 commerce and brand clients, while maintaining a 90% client
retention across the business.
-- Criteo User Device Graph, continued to grow in scale and efficiency,
with 76% of Revenue ex-TAC generated from users matched in the graph.
-- Criteo Direct Bidder, our next generation header bidding technology, is
now connected to over 450 publishers globally, helping increase their
average yield by 20% to 40%.
-- We are testing several new product initiatives with promising results,
including app installs, CRM onboarding for brands and retailers, and
Store-to-web retargeting campaigns.
Revenue and Revenue ex-TAC
Revenue grew 33%, or 35% at constant currency, to $542 million (Q2 2016: $407 million).
Revenue ex-TAC grew 32%, or 34% at constant currency, to $220 million (Q2 2016: $166 million). This increase was primarily driven by continued innovation, both in the core technology and in new products, a broader and improved access to publisher inventory, and the addition of new clients across regions, categories and products.
-- In the Americas, Revenue ex-TAC grew 40%, or 39% at constant currency,
to $84 million and represented 38% of total Revenue ex-TAC.
-- In EMEA, Revenue ex-TAC grew 27%, or 32% at constant currency, to $85
million and represented 39% of total Revenue ex-TAC.
-- In Asia-Pacific, Revenue ex-TAC grew 29%, or 32% at constant currency,
to $51 million and represented 23% of total Revenue ex-TAC.
Revenue ex-TAC margin as a percentage of revenue was 41%, in line with prior quarters.
Net Income and Adjusted Net Income
Net income decreased 44% to $8 million (Q2 2016: $13 million). Net income available to shareholders of Criteo S.A. was $6 million, or $0.09 per share on a diluted basis (Q2 2016: $12 million, or $0.19 per share on a diluted basis). Net income in the period was impacted by restructuring costs of $3.3 million related to the refocus of our Chinese efforts on the export business. Net income in the period was also impacted by the acquisition of HookLogic, including the one-time grant of equity awards in connection with the acquisition, the amortization of intangible assets recognized following the purchase price accounting, and increased financial expense related to the funding of 30% of the purchase price. Excluding the impact of non-cash accounting effects related to HookLogic, net income increased 7% to $14 million.
Adjusted Net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, increased 20% to $26 million, or $0.39 per share on a diluted basis (Q2 2016: $22 million, or $0.33 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA grew 38%, or 42% at constant currency, to $54 million (Q2 2016: $39 million). This increase in Adjusted EBITDA was primarily driven by the strong Revenue ex-TAC performance across all regions, as well as continued operating leverage across the organization.
Adjusted EBITDA margin as a percentage of Revenue ex-TAC was 25% (Q2 2016: 24%).
Operating expenses increased 36% to $174 million (Q2 2016: $128 million), including approximately $1 million of restructuring costs in China. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring costs, depreciation and amortization and acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, increased 28% to $148 million (Q2 2016: $116 million). This increase is primarily related to the year-over-year growth in headcount in Research and Development (38%), Sales and Operations (27%) and General and Administrative (25%), as we continued to grow the entire organization.
Cash Flow and Cash Position
Cash flow from operating activities increased 214% to $60 million (Q2 2016: $19 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, grew by $37 million to $33 million (Q2 2016: $(3) million).
Total cash and cash equivalents were $308 million as of June 30, 2017 (December 31, 2016: $270 million).
Business Outlook
The following forward-looking statements reflect Criteo's expectations as of August 2, 2017.
Third Quarter 2017 Guidance:
-- We expect Revenue ex-TAC to be between $227 million and $230 million.
-- We expect Adjusted EBITDA to be between $69 million and $72 million.
Fiscal Year 2017 Guidance:
-- We expect Revenue ex-TAC growth to be between 28% and 31% at constant
currency.
-- We expect Adjusted EBITDA margin as a percentage of Revenue ex-TAC to
increase between 0 basis points and 50 basis points.
The above guidance for the third quarter ending September 30, 2017, and the fiscal year ending December 31, 2017, assumes the following exchange rates for the nine months to September 30, 2017 and the fiscal year ending December 31, 2017 for the main currencies impacting our business: a U.S. dollar-euro rate of 0.91, a U.S. dollar-Japanese Yen of 113, a U.S. dollar-British pound rate of 0.79 and a U.S. dollar-Brazilian real rate of 3.22.
The above guidance assumes no acquisitions are completed during the third quarter ending September 30, 2017 and the fiscal year ending December 31, 2017.
Reconciliation of Revenue ex-TAC and Adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future U.S. GAAP financial results.
Non-GAAP Financial Measures
This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission (the "SEC"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.
Revenue ex-TAC is our revenue excluding Traffic Acquisition Costs ("TAC") generated over the applicable measurement period and Revenue ex-TAC by Region reflects our Revenue ex-TAC by our geographies. Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our business and across our geographies. Accordingly, we believe that Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin provide useful information to investors and the market generally in understanding and evaluating our operating results in the same manner as our management and board of directors.
Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short? and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted Net Income per diluted share are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted Net Income per diluted share can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted Net Income per diluted share provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.
Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow is a key measure used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow permits a more complete and comprehensive analysis of our available cash flows.
Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.
Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Revenue ex-TAC to Revenue, Revenue ex-TAC by Region to Revenue by Region, Adjusted EBITDA to Net Income, Adjusted Net Income to Net Income, Free Cash Flow to cash flow from operating activities, and Non-GAAP Operating Expenses to Operating Expenses, in each case, the most comparable U.S. GAAP measure. Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider such non-GAAP measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and (2) other companies may report Revenue ex-TAC, Revenue ex-TAC by Region, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-GAAP Operating Expenses or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including projected financial results for the quarter ending September 30, 2017 and the fiscal year ending December 31, 2017, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters, 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 March 1, 2017, as well as future filings and reports by the Company. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.
Conference Call Information
Criteo's earnings conference call will take place today, August 2, 2017, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will be available for replay.
Conference call details:
-- U.S. callers: +1 855 209 8212
-- International callers: +1 412 317 0788 or +33 1 76 74 05 02
Please ask to be joined into the "Criteo S.A." call.
About Criteo
Criteo (NASDAQ: CRTO), the leader in commerce marketing, is building the highest performing and open commerce marketing ecosystem to drive profits and sales for retailers and brands. 2,700 Criteo team members partner with 16,000 customers and thousands of publishers across the globe to deliver performance at scale by connecting shoppers to the things they need and love. Designed for commerce, Criteo Commerce Marketing Ecosystem sees over $550 billion in annual commerce sales data.
For more information, please visit www.criteo.com.
(___________________________________________________
)(1 )Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 2016 average exchange rates for the relevant period to 2017 figures.
(2 )Revenue ex-TAC, Adjusted EBITDA, Adjusted Net Income per diluted share and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
Financial information to follow
CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands) (unaudited)
December 31, 2016 June 30, 2017
----------------- -------------
Assets
Current assets:
Cash and cash equivalents $270,317 $308,185
Trade receivables, net of allowances 397,244 370,052
Income taxes 2,741 6,872
Other taxes 52,942 46,514
Other current assets 19,340 28,270
------ ------
Total current assets 742,584 759,893
------- -------
Property, plant and equipment, net 108,581 131,346
Intangible assets, net 102,944 104,045
Goodwill 209,418 235,337
Non-current financial assets 17,029 18,824
Deferred tax assets 30,630 48,700
Total non-current assets 468,602 538,252
------- -------
Total assets $1,211,186 $1,298,145
========== ==========
Liabilities and shareholders' equity
Current liabilities:
Trade payables $365,788 $351,408
Contingencies 654 1,392
Income taxes 14,454 11,898
Financial liabilities -current
portion 7,969 5,851
Other taxes 44,831 45,606
Employee - related payables 55,874 64,467
Other current liabilities 30,221 37,906
------ ------
Total current liabilities 519,791 518,528
------- -------
Deferred tax liabilities 686 28,088
Retirement benefit obligation 3,221 3,405
Financial liabilities -non current
portion 77,611 2,621
Other non-current liabilities - 2,824
--- -----
Total non-current liabilities 81,518 36,938
------ ------
Total liabilities 601,309 555,466
------- -------
Commitments and contingencies
Shareholders' equity:
Common shares, EUR0.025 per value,
63,978,204 and 65,291,977 shares
authorized, issued and outstanding
at December 31, 2016 and June 30,
2017, respectively. 2,093 2,128
Additional paid-in capital 488,277 540,998
Accumulated other comprehensive
income (loss) (88,593) (42,615)
Retained earnings 198,355 228,141
Equity -attributable to
shareholders of Criteo S.A. 600,132 728,652
------- -------
Non-controlling interests 9,745 14,027
-----
Total equity 609,877 742,679
------- -------
Total equity and liabilities $1,211,186 $1,298,145
========== ==========
CRITEO S.A.
Consolidated Statement of Income
(U.S. dollars in thousands, except share and per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 YoY 2016 2017 YoY
Change Change
------ ------
Revenue $407,201 $542,022 33% $808,454 $1,058,688 31%
Cost of revenue
Traffic acquisition cost (240,969) (322,200) 34% (479,724) (628,893) 31%
Other cost of revenue (20,279) (32,808) 62% (38,618) (59,963) 55%
Gross profit 145,953 187,014 28% 290,112 369,832 27%
======= ======= === ======= ======= ===
Operating expenses:
Research and development expenses (30,235) (43,611) 44% (57,396) (83,132) 45%
Sales and operations expenses (69,225) (97,900) 41% (133,698) (188,631) 41%
General and administrative expenses (28,610) (32,239) 13% (53,347) (63,754) 20%
------- -------
Total Operating expenses (128,070) (173,750) 36% (244,441) (335,517) 37%
-------- -------- --- -------- -------- ---
Income from operations 17,883 13,264 (26)% 45,671 34,315 (25)%
------ ------ ------ ------
Financial income (expense) (94) (2,094) 2,128% (1,412) (4,427) 214%
--- ------ ------ ------
Income before taxes 17,789 11,170 (37)% 44,259 29,888 (32)%
------ ------ ---- ------ ------ ----
Provision for income taxes (4,450) (3,665) (18)% (12,394) (7,866) (37)%
------ ------ ------- ------
Net Income $13,339 $7,505 (44)% $31,865 $22,022 (31)%
======= ====== ==== ======= ======= ====
Net income available to shareholders of Criteo S.A $12,200 $5,970 $29,330 $18,411
======= ====== ======= =======
Net income available to non-controlling interests $1,139 $1,535 $2,535 $3,611
====== ====== ====== ======
Weighted average shares outstanding used in computing
per share amounts:
Basic 63,246,785 65,027,985 62,928,221 64,611,237
Diluted 65,625,097 68,131,274 65,232,938 67,709,789
Net income allocated to shareholders per share:
Basic $0.19 $0.09 $0.47 $0.28
===== ===== ===== =====
Diluted $0.19 $0.09 $0.45 $0.27
===== ===== ===== =====
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
---- ---- ---- ----
Net income $13,339 $7,505 $31,865 $22,022
------- ------ ------- -------
Non-cash and non-operating items 30,121 42,974 59,626 84,448
------ ------ ------ ------
- Amortization and provisions 16,345 24,376 29,525 46,692
-Equity awards compensation expense (1) 7,695 14,918 16,065 29,858
- Interest accrued and non-cash
financial income and expense 1,586 15 1,598 32
- Change in deferred taxes (3,285) (5,536) (4,424) (12,405)
- Income tax for the period 7,780 9,201 16,862 20,271
----- ----- ------ ------
Changes in working capital related to
operating activities (10,297) 25,860 (27,436) 25,790
------- ------ ------- ------
-(Increase)/decrease in trade receivables (7,126) (23,358) (2,368) 36,211
-Increase/(decrease) in trade payables (1,244) 48,776 (15,149) (26,254)
-(Increase)/decrease in other current
assets (5,969) (3,493) (15,777) 2,580
-Increase/(decrease) in other current
liabilities 4,042 3,935 5,858 13,253
----- ----- ----- ------
Income taxes paid (13,889) (15,848) (25,874) (27,531)
------- ------- ------- -------
CASH FROM OPERATING ACTIVITIES 19,274 60,491 38,181 104,729
------ ------ ------ -------
Acquisition of intangible assets,
property, plant and equipment (25,564) (30,008) (39,178) (53,275)
Change in accounts payable related to
intangible assets, property, plant and
equipment 3,178 2,953 4,685 (1,986)
Payments for acquired business, net of
cash acquired (5,074) 1,089 (5,074) 1,052
Change in other non-current financial
assets (207) 1,668 574 1,274
---- ----- --- -----
CASH USED FOR INVESTING ACTIVITIES (27,667) (24,298) (38,993) (52,935)
------- ------- ------- -------
Issuance of long-term borrowings 2,295 1,454 3,059 1,454
Repayment of borrowings (3,944) (77,168) (5,448) (79,221)
Proceeds from capital increase 10,106 11,517 15,582 24,454
Change in other financial liabilities (171) 145 (171) 264
---- --- ---- ---
CASH FROM (USED FOR) FINANCING ACTIVITIES 8,286 (64,052) 13,022 (53,049)
----- ------- ------ -------
CHANGE IN NET CASH AND CASH EQUIVALENTS (107) (27,859) 12,210 (1,255)
---- ------- ------ ------
Net cash and cash equivalents at beginning
of period 386,110 303,813 353,537 270,317
Effect of exchange rates changes on cash
and cash equivalents (8,596) 32,231 11,660 39,123
------ ------ ------ ------
Net cash and cash equivalents at end of
period $377,407 $308,185 $377,407 $308,185
-------- -------- -------- --------
(1) Of which $7.2 million and $14.7
million of equity awards
compensation expense consisted of
share-based compensation expense
according to ASC 718 Compensation -
stock compensation for the quarter
ended June 30, 2016 and 2017,
respectively, and $15.5 million and
$29.3 million for the six month
period ended June 30, 2016 and 2017,
respectively.
CRITEO S.A.
Reconciliation of Cash from Operating Activities to Free Cash Flow
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
---- ----
CASH FROM OPERATING
ACTIVITIES $19,274 $60,491 $38,181 $104,729
------- ------- ------- --------
Acquisition of intangible
assets, property, plant
and equipment (25,564) (30,008) (39,178) (53,275)
Change in accounts payable
related to intangible
assets, property, plant
and equipment 3,178 2,953 4,685 (1,986)
----- ----- ----- ------
FREE CASH FLOW (1) $(3,112) $33,436 $3,688 $49,468
------- ------- ------ -------
(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 Revenue ex-TAC by Region to Revenue by Region
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
Region 2016 2017 YoY YoY 2016 2017 YoY YoY
Change Change at Change Change at
Constant Constant
Currency Currency
--------
Revenue
Americas $156,522 $229,392 47% 46% $303,695 $437,405 44% 42%
EMEA 153,899 191,682 25% 30% 313,305 380,774 22% 27%
Asia-Pacific 96,780 120,948 25% 27% 191,454 240,509 26% 26%
Total 407,201 542,022 33% 35% 808,454 1,058,688 31% 33%
=== === === ===
Traffic acquisition costs
Americas (96,560) (145,289) 50% 50% (187,488) (274,156) 46% 45%
EMEA (86,820) (106,605) 23% 28% (178,006) (214,189) 20% 26%
Asia-Pacific (57,589) (70,306) 22% 25% (114,230) (140,548) 23% 23%
Total (240,969) (322,200) 34% 36% (479,724) (628,893) 31% 33%
=== === === ===
Revenue ex-TAC (1)
Americas 59,962 84,103 40% 39% 116,207 163,249 40% 39%
EMEA 67,079 85,077 27% 32% 135,299 166,585 23% 28%
Asia-Pacific 39,191 50,642 29% 32% 77,224 99,961 29% 30%
Total $166,232 $219,822 32% 34% $328,730 $429,795 31% 32%
=== === === ===
(1) We define Revenue ex-TAC as our
revenue excluding traffic
acquisition costs generated over the
applicable measurement period.
Revenue ex-TAC and Revenue, Traffic
Acquisition Costs and Revenue ex-
TAC by Region are not measures
calculated in accordance with U.S.
GAAP. We have included Revenue ex-
TAC and Revenue, Traffic Acquisition
Costs and Revenue ex-TAC by Region
in this Form 8-K because they are
key measures used by our management
and board of directors to evaluate
operating performance, generate
future operating plans and make
strategic decisions regarding the
allocation of capital. In
particular, we believe that the
elimination of TAC from revenue and
review of these measures by region
can provide useful measures for
period-to-period comparisons of
our business. Accordingly, we
believe that Revenue ex-TAC and
Revenue, Traffic Acquisition Costs
and Revenue ex-TAC by Region
provide useful information to
investors and others in
understanding and evaluating our
results of operations in the same
manner as our management and board
of directors. Our use of Revenue ex-
TAC and Revenue, Traffic Acquisition
Costs and Revenue ex-TAC by Region
has limitations as an analytical
tool, and you should not consider
them in isolation or as a substitute
for analysis of our financial
results as reported under U.S. GAAP.
Some of these limitations are: (a)
other companies, including companies
in our industry which have similar
business arrangements, may address
the impact of TAC differently; (b)
other companies may report Revenue,
Traffic Acquisition Costs and
Revenue ex-TAC by Region or
similarly titled measures but define
the regions differently, which
reduces their effectiveness as a
comparative measure; and (c) other
companies may report Revenue ex-TAC
or similarly titled measures but
calculate them differently, which
reduces their usefulness as a
comparative measure. Because of
these and other limitations, you
should consider Revenue ex-TAC and
Revenue, Traffic Acquisition Costs
and Revenue ex-TAC by Region
alongside our other U.S. GAAP
financial results, including
revenue. The above table provides a
reconciliation of Revenue ex-TAC to
revenue and Revenue ex-TAC by
Region to revenue by region.
CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------
2016 2017 2016 2017
---- ---- ---- ----
Net income $13,339 $7,505 $31,865 $22,022
Adjustments:
Financial (income) expense 94 2,094 1,412 4,427
--- ----- ----- -----
Provision for income taxes 4,450 3,665 12,394 7,866
----- ----- ------ -----
Equity awards compensation expense 7,695 14,918 16,065 29,858
----- ------ ------ ------
Research and development 2,179 4,461 4,581 8,377
Sales and operations 2,488 6,401 5,878 13,111
General and administrative 3,028 4,056 5,606 8,370
----- ----- ----- -----
Pension service costs 131 299 260 589
--- --- --- ---
Research and development 53 151 105 297
Sales and operations 35 60 69 119
General and administrative 43 88 86 173
--- --- --- ---
Depreciation and amortization expense 13,300 22,306 25,817 42,473
------ ------ ------ ------
Cost of revenue 9,220 13,003 17,439 24,094
Research and development 1,457 3,092 3,465 6,036
Sales and operations 2,019 4,925 3,791 9,886
General and administrative 604 1,286 1,122 2,457
--- ----- ----- -----
Acquisition-related costs 148 - 148 6
--- --- --- ---
General and administrative 148 - 148 6
--- --- --- ---
Acquisition-related deferred price
consideration 44 - 85 -
--- --- --- ---
Research and development 44 - 85 -
Restructuring - 3,299 - 3,299
--- ----- --- -----
Cost of revenue - 2,497 - 2,497
Sales and operations - 690 - 690
General and administrative - 112 - 112
--- --- --- ---
Total net adjustments 25,862 46,581 56,181 88,518
------ ------ ------ ------
Adjusted EBITDA(1) $39,201 $54,086 $88,046 $110,540
------- ------- ------- --------
(1) We define Adjusted EBITDA as our
consolidated earnings before
financial income (expense), income
taxes, depreciation and
amortization, adjusted to eliminate
the impact of equity awards
compensation expense, pension
service costs, restructuring costs,
acquisition-related costs and
deferred price consideration.
Adjusted EBITDA is not a measure
calculated in accordance with U.S.
GAAP. We have included Adjusted
EBITDA because it is a key measure
used by our management and board of
directors to understand and evaluate
our core operating performance and
trends, to prepare and approve our
annual budget and to develop short-
term and long-term operational
plans. In particular, we believe
that the elimination of equity
awards compensation expense, pension
service costs, restructuring costs,
acquisition-related costs and
deferred price consideration in
calculating Adjusted EBITDA can
provide a useful measure for period-
to-period comparisons of our
business. Accordingly, we believe
that Adjusted EBITDA provides useful
information to investors and others
in understanding and evaluating our
results of operations in the same
manner as our management and board
of directors. Our use of Adjusted
EBITDA has limitations as an
analytical tool, and you should not
consider it in isolation or as a
substitute for analysis of our
financial results as reported under
U.S. GAAP. Some of these limitations
are: (a) although depreciation and
amortization are non-cash charges,
the assets being depreciated and
amortized may have to be replaced in
the future, and Adjusted EBITDA does
not reflect cash capital expenditure
requirements for such replacements
or for new capital expenditure
requirements; (b) Adjusted EBITDA
does not reflect changes in, or cash
requirements for, our working
capital needs; (c) Adjusted EBITDA
does not reflect the potentially
dilutive impact of equity-based
compensation; (d) Adjusted EBITDA
does not reflect tax payments that
may represent a reduction in cash
available to us; and (e) other
companies, including companies in
our industry, may calculate Adjusted
EBITDA or similarly titled measures
differently, which reduces their
usefulness as a comparative measure.
Because of these and other
limitations, you should consider
Adjusted EBITDA alongside our U.S.
GAAP financial results, including
net income.
CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
---- ---- ---- ----
Research and Development expenses $(30,235) $(43,611) $(57,396) $(83,132)
Equity awards compensation expense 2,179 4,461 4,581 8,377
Depreciation and Amortization expense 1,457 3,092 3,465 6,036
Pension service costs 53 151 105 297
Acquisition-related deferred price consideration 44 - 85 -
--- --- --- ---
Non GAAP - Research and Development expenses (26,502) (35,907) (49,160) (68,422)
------- ------- ------- -------
Sales and Operations expenses (69,225) (97,900) (133,698) (188,631)
Equity awards compensation expense 2,488 6,401 5,878 13,111
Depreciation and Amortization expense 2,019 4,925 3,791 9,886
Pension service costs 35 60 69 119
Restructuring - 690 - 690
--- --- --- ---
Non GAAP - Sales and Operations expenses (64,683) (85,824) (123,960) (164,825)
------- ------- -------- --------
General and Administrative expenses (28,610) (32,239) (53,347) (63,754)
Equity awards compensation expense 3,028 4,056 5,606 8,370
Depreciation and Amortization expense 604 1,286 1,122 2,457
Pension service costs 43 88 86 173
Acquisition-related costs
148 - 148 6
Restructuring - 112 - 112
--- --- --- ---
Non GAAP - General and Operations expenses (24,787) (26,697) (46,385) (52,636)
------- ------- ------- -------
Total Operating expenses (128,070) (173,750) (244,441) (335,517)
-------- -------- -------- --------
Equity awards compensation expense 7,695 14,918 16,065 29,858
Depreciation and Amortization expense 4,080 9,303 8,378 18,379
Pension service costs 131 299 260 589
Acquisition-related costs 148 - 148 6
Acquisition-related deferred price consideration 44 - 85 -
Restructuring - 802 - 802
--- --- --- ---
Total Non GAAP Operating expenses (1) $(115,972) $(148,428) $(219,505) $(285,883)
--------- --------- --------- ---------
(1) We define Non-GAAP Operating
Expenses as our consolidated
operating expenses adjusted to
eliminate the impact of
depreciation and amortization,
equity awards compensation expense,
pension service costs,
restructuring costs, acquisition-
related costs and deferred price
consideration. The Company uses
Non-GAAP Operating Expenses to
understand and compare operating
results across accounting periods,
for internal budgeting and
forecasting purposes, for short-
term and long-term operational
plans, and to assess and measure
our financial performance and the
ability of our operations to
generate cash. We believe Non-GAAP
Operating Expenses reflects our
ongoing operating expenses in a
manner that allows for meaningful
period-to-period comparisons and
analysis of trends in our business.
As a result, we believe that Non-
GAAP Operating Expenses provides
useful information to investors in
understanding and evaluating our
core operating performance and
trends in the same manner as our
management and in comparing
financial results across periods.
In addition, Non-GAAP Operating
Expenses is a key component in
calculating Adjusted EBITDA, which
is one of the key measures we use
to provide our quarterly and annual
business outlook to the investment
community.
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 2016 2017
---- ---- ---- ----
Equity awards compensation expense
Research and development $2,179 $4,461 $4,581 $8,377
Sales and operations 2,488 6,401 5,878 13,111
General and administrative 3,028 4,056 5,606 8,370
----- -----
Total equity awards compensation expense 7,695 14,918 16,065 29,858
===== ====== ====== ======
Pension service costs
Research and development 53 151 105 297
Sales and operations 35 60 69 119
General and administrative 43 88 86 173
Total pension service costs 131 299 260 589
=== === === ===
Depreciation and amortization expense
Cost of revenue 9,220 13,003 17,439 24,094
Research and development 1,457 3,092 3,465 6,036
Sales and operations 2,019 4,925 3,791 9,886
General and administrative 604 1,286 1,122 2,457
Total depreciation and amortization expense 13,300 22,306 25,817 42,473
====== ====== ====== ======
Acquisition-related costs
General and administrative 148 - 148 6
Total acquisition-related costs 148 - 148 6
=== === === ===
Acquisition-related deferred price
consideration
Research and development 44 - 85 -
Total acquisition-related deferred price
consideration 44 - 85 -
=== === === ===
Restructuring
Cost of revenue - 2,497 - 2,497
Sales and operations - 690 - 690
General and administrative - 112 - 112
Total restructuring $ - $3,299 $ - $3,299
=== === ====== === === ======
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 Six Months Ended
June 30, June 30,
2016 2017 2016 2017
---- ---- ---- ----
Net income $13,339 $7,505 $31,865 $22,022
Adjustments:
Equity awards compensation
expense 7,695 14,918 16,065 29,858
Amortization of acquisition-
related intangible assets 825 4,777 2,202 9,451
Acquisition-related costs 148 - 148 6
Acquisition-related deferred
price consideration 44 - 85 -
Restructuring costs - 3,299 - 3,299
Tax impact of the above
adjustments (159) (4,255) (387) (7,571)
Total net adjustments 8,553 18,739 18,113 35,043
------ ------ ------
Adjusted net income(1) $21,892 $26,244 $49,978 $57,065
======= ======= ======= =======
Weighted average shares
outstanding
- Basic 63,246,785 65,027,985 62,928,221 64,611,237
- Diluted 65,625,097 68,131,274 65,232,938 67,709,789
Adjusted net income per share
- Basic $0.35 $0.40 $0.79 $0.88
===== ===== ===== =====
- Diluted $0.33 $0.39 $0.77 $0.84
===== ===== ===== =====
(1) We define Adjusted Net Income as
our net income adjusted to
eliminate the impact of equity
awards compensation expense,
amortization of acquisition-
related intangible assets,
restructuring costs, acquisition-
related costs and deferred price
consideration and the tax impact of
the foregoing adjustments. Adjusted
Net Income is not a measure
calculated in accordance with U.S.
GAAP. We have included Adjusted Net
Income because it is a key measure
used by our management and board of
directors to evaluate operating
performance, generate future
operating plans and make strategic
decisions regarding the allocation
of capital. In particular, we
believe that the elimination of
equity awards compensation expense,
amortization of acquisition-
related intangible assets,
acquisition-related costs and
deferred price consideration,
restructuring costs and the tax
impact of the foregoing adjustments
in calculating Adjusted Net Income
can provide a useful measure for
period-to-period comparisons of
our business. Accordingly, we
believe that Adjusted Net Income
provides useful information to
investors and others in
understanding and evaluating our
results of operations in the same
manner as our management and board
of directors. Our use of Adjusted
Net Income has limitations as an
analytical tool, and you should not
consider it in isolation or as a
substitute for analysis of our
financial results as reported under
U.S. GAAP. Some of these
limitations are: (a) Adjusted Net
Income does not reflect the
potentially dilutive impact of
equity-based compensation or the
impact of certain acquisition
related costs; and (b) other
companies, including companies in
our industry, may calculate
Adjusted Net Income or similarly
titled measures differently, which
reduces their usefulness as a
comparative measure. Because of
these and other limitations, you
should consider Adjusted Net Income
alongside our other U.S. GAAP-
based financial results, including
net income.
CRITEO S.A.
Constant Currency Reconciliation
(U.S. dollars in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2017 YoY 2016 2017 YoY
Change Change
---- ---- ------- ---- ---- -------
Revenue as reported $407,201 $542,022 33% $808,454 $1,058,688 31%
Conversion impact U.S.
dollar/other
currencies 8,882 12,614
Revenue at constant
currency(1) 407,201 550,904 35% 808,454 1,071,302 33%
------- ------- --- ------- --------- ---
Traffic acquisition
costs as reported (240,969) (322,200) 34% (479,724) (628,893) 31%
Conversion impact U.S.
dollar/other
currencies (5,142) (7,373)
Traffic Acquisition
Costs at constant
currency(1) (240,969) (327,342) 36% (479,724) (636,266) 33%
-------- -------- --- -------- -------- ---
Revenue ex-TAC as
reported(2) 166,232 219,822 32% 328,730 429,795 31%
Conversion impact U.S.
dollar/other
currencies 3,740 5,241
Revenue ex-TAC at
constant currency(2) 166,232 223,562 34% 328,730 435,036 32%
------- ------- --- ------- ------- ---
Revenue ex-
TAC(2)/Revenue as
reported 41% 41% 41% 41%
Other cost of revenue as
reported (20,279) (32,808) 62% (38,618) (59,963) 55%
Conversion impact U.S.
dollar/other
currencies (610) (827)
Other cost of revenue at
constant currency(1) (20,279) (33,418) 65% (38,618) (60,790) 57%
------- ------- --- ------- ------- ---
Adjusted EBITDA(3) 39,201 54,086 38% 88,046 110,540 26%
Conversion impact U.S.
dollar/other
currencies 1,435 2,603
----- -----
Adjusted EBITDA(3) at
constant currency(1) $39,201 $55,521 42% $88,046 $113,143 29%
------- ------- --- ------- -------- ---
(1) Information herein with respect
to results presented on a constant
currency basis is computed by
applying prior period average
exchange rates to current period
results. We have included results on
a constant currency basis because it
is a key measure used by our
management and board of directors to
evaluate operating performance.
Management reviews and analyzes
business results excluding the
effect of foreign currency
translation because they believe
this better represents our
underlying business trends. The
table above reconciles the actual
results presented in this section
with the results presented on a
constant currency basis.
(2) Revenue ex-TAC is not a measure
calculated in accordance with U.S.
GAAP. See the table entitled
"Reconciliation of Revenue ex-TAC
by Region to Revenue by Region" for
a reconciliation of Revenue Ex-TAC
to revenue.
(3) Adjusted EBITDA is not a measure
calculated in accordance with U.S.
GAAP. See the table entitled
"Reconciliation of Adjusted EBITDA
to Net Income" for a reconciliation
of Adjusted EBITDA to net income.
CRITEO S.A.
Information on Share Count
(unaudited)
Six Months Ended
June 30,
2016 2017
---- ----
Shares
outstanding as
at January 1, 62,470,881 63,978,204
Weighted
average number
of shares
issued during
the period 457,340 633,033
Basic number of
shares -Basic
EPS basis 62,928,221 64,611,237
--------------- ---------- ----------
Dilutive effect
of share
options,
warrants,
employee
warrants -
Treasury
method 2,304,717 3,098,552
Diluted number
of shares -
Diluted EPS
basis 65,232,938 67,709,789
-------------- ========== ==========
Shares
outstanding as
of June 30, 63,562,863 65,291,977
--------------- ---------- ----------
Total dilutive
effect of
share options,
warrants,
employee
warrants 8,198,113 8,487,128
Fully diluted
shares as of
June 30, 71,760,976 73,779,105
------------- ========== ==========
CRITEO S.A.
Supplemental Financial Information and Operating Metrics
(U.S. dollars in thousands except where stated)
(unaudited)
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 YoY QoQ
2015 2015 2016 2016 2016 2016 2017 2017 Change Change
---- ---- ---- ---- ---- ---- ---- ---- ------
Clients 9,290 10,198 10,962 11,874 12,882 14,468 15,423 16,370 38% 6%
Revenue 332,674 397,018 401,253 407,201 423,867 566,825 516,667 542,022 33% 5%
Americas 124,024 170,133 147,174 156,522 160,739 266,438 208,013 229,392 47% 10%
EMEA 137,185 144,905 159,405 153,899 157,921 189,298 189,092 191,682 25% 1%
APAC 71,465 81,980 94,674 96,780 105,207 111,089 119,562 120,948 25% 1%
TAC (198,970) (237,056) (238,755) (240,969) (247,310) (341,877) (306,693) (322,200) 34% 5%
Americas (75,684) (104,646) (90,929) (96,560) (97,239) (167,046) (128,867) (145,289) 50% 13%
EMEA (79,710) (82,905) (91,185) (86,820) (87,092) (108,567) (107,583) (106,605) 23% (1)%
APAC (43,576) (49,505) (56,641) (57,589) (62,979) (66,264) (70,243) (70,306) 22% -%
Revenue ex-TAC 133,704 159,962 162,498 166,232 176,557 224,948 209,974 219,822 32% 5%
Americas 48,340 65,487 56,245 59,962 63,500 99,391 79,146 84,103 40% 6%
EMEA 57,475 62,000 68,220 67,079 70,829 80,731 81,509 85,077 27% 4%
APAC 27,889 32,475 38,033 39,191 42,228 44,826 49,319 50,642 29% 3%
Cash flow from
operating
activities 17,500 66,706 18,907 19,274 43,631 71,658 44,238 60,491 214% 37%
Capital expenditures 24,066 19,205 12,109 22,386 19,907 22,981 28,206 27,055 21% (4)%
Net cash position 314,644 353,537 386,110 377,407 407,158 270,318 303,813 308,185 (18)% 1%
Days Sales Outstanding (days - end of month)(1) 56 57 56 53 56 57
----------------------------------- --- --- --- --- --- ---
(1) Due to the conversion from
IFRS (euros) to U.S. GAAP
(U.S. dollars), the Days Sales
Outstanding for historic
quarters has not been
recalculated and is not
available.
View original content:http://www.prnewswire.com/news-releases/criteo-reports-strong-results-for-the-second-quarter-2017-300497571.html
SOURCE Criteo S.A.
