Press Releases

Criteo Reports Record Results For The First Quarter 2018

NEW YORK – May 2, 2018 – Criteo S.A. (NASDAQ: CRTO), the leading commerce marketing technology company, today announced financial results for the first quarter ended March 31, 2018.

  • Revenue increased 9% (or 3% at constant currency1) to $564 million.
  • Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC2, grew 14% (or 8% at constant currency) to $240 million, or 42.6% of revenue.
  • Adjusted EBITDA2 grew 38% (or 22% at constant currency) to $78 million, or 32.4% of Revenue ex-TAC.
  • Cash flow from operating activities increased 91% to $85 million.
  • Free Cash Flow2 increased 224% to $52 million.
  • Net income increased 45% to $21 million.
  • Adjusted net income per diluted share2 increased 30% to $0.60.

“I am pleased with our execution and results in the first quarter, which track quite well with our upcoming priorities for the year.” said JB Rudelle, CEO.

“We delivered another quarter of healthy growth, increased profitability and cash flow,” said Benoit Fouilland, CFO. “These results once again highlight the strengths and scalability of our business model.”

Operating Highlights

  • We ended the quarter with more than 18,500 commerce and brand clients, a 20% increase year-over-year, while maintaining client retention at close to 90% for all products.
  • With about 1.4 billion individual users in our Identity Graph worldwide, we already operate one of the largest user graphs in the industry.
  • Criteo Direct Bidder, our header bidding technology, is now connected to 2,000 large publishers.
  • We drove stable growth in same-client Revenue ex-TAC3 despite some user coverage limitations.

 Revenue and Revenue ex-TAC

 Revenue grew 9%, or 3% at constant currency, to $564 million (Q1 2017: $517 million). Revenue ex-TAC grew 14%, or 8% at constant currency, to $240 million (Q1 2017: $210 million). This increase was primarily driven by continued innovation, a broader product portfolio, improved access to publisher inventory and new clients across regions. Revenue ex-TAC margin as a percentage of revenue was 42.6%, above the prior year.

  • In the Americas, Revenue ex-TAC grew 3%, or 3% at constant currency, to $81 million and represented 34% of total Revenue ex-TAC.
  • In EMEA, Revenue ex-TAC grew 26%, or 11% at constant currency, to $103 million and represented 43% of total Revenue ex-TAC.
  • In Asia-Pacific, Revenue ex-TAC grew 15%, or 10% at constant currency, to $57 million and represented 24% of total Revenue ex-TAC.

___________________________________________________

1 Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 2017 average exchange rates for the relevant period to 2018 figures.

2 Revenue ex-TAC, Adjusted EBITDA, Adjusted net Income per diluted share and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.

3 Same-client Revenue ex-TAC  is the Revenue ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.

Net Income and Adjusted Net Income

Net income increased 45% to $21 million (Q1 2017: $15 million). Net income available to shareholders of Criteo S.A. was $20 million, or $0.29 per share on a diluted basis (Q1 2017: $12 million, or $0.18 per share on a diluted basis). Adjusted net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, increased 31% to $41 million, or $0.60 per share on a diluted basis (Q1 2017: $31 million, or $0.46 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

 Adjusted EBITDA grew 38%, or 22% at constant currency, to $78 million (Q1 2017: $56 million). This increase in Adjusted EBITDA was primarily driven by sustained Revenue ex-TAC performance across all regions, as well as proceeds from a disposal and temporary savings in expenses. Adjusted EBITDA margin as a percentage of Revenue ex-TAC was 32.4% (Q1 2017: 26.9%), a 550-basis point improvement year-over-year.

Operating expenses increased 9% to $176 million (Q1 2017: $162 million). 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 7% to $148 million (Q1 2017: $137 million).

Cash Flow and Cash Position

 Cash flow from operating activities increased 91% to $85 million (Q1 2017: $44 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 224% to $52 million (Q1 2017: $16 million).

Business Outlook

The following forward-looking statements reflect Criteo’s expectations as of May 2, 2018.

Second Quarter 2018 Guidance:

  • We expect Revenue ex-TAC to be between $226 million and $230 million.
  • We expect Adjusted EBITDA to be between $53 million and $57 million.

Fiscal Year 2018 Guidance:

  • We expect Revenue ex-TAC growth for fiscal year 2018 to be between 3% and 8% at constant currency.
  • We expect Adjusted EBITDA margin for fiscal 2018 to be between 28% and 30% of Revenue ex-TAC.

The above guidance for the quarter ending June 30, 2018 and the fiscal year ending December 31, 2018, assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.813, a U.S. dollar-Japanese Yen rate of 108, a U.S. dollar-British pound rate of 0.72 and a U.S. dollar-Brazilian real rate of 3.32.

The above guidance assumes no acquisitions are completed during the quarter ending June 30, 2018, and the fiscal year ending December 31, 2018.

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 June 30, 2018 and the fiscal year ending December 31, 2018, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially.

Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in the Company’s SEC filings and reports, including the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2018, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 that will be filed with the SEC, 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, May 2, 2018, 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:

  • 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 over 18,000 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 $600 billion in annual commerce sales data.

For more information, please visit www.criteo.com.

Contacts

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

Criteo Public Relations
Emma Ferns, Global PR director, e.ferns@criteo.com

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