Criteo S.A 8-K/A, filed Aug 5, 2022
Criteo S.A. (CRTO)
8-K/A
2022-08-05
For: 2022-08-03
View Original
Added on
April 08, 2026
About this 8-K/A
Criteo S.A filed this 8-K/A on August 5, 2022, reporting on events of August 3, 2022.
Items reported
- Item 2.02: Financial results
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in its charter)
| Not Applicable | ||||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
+33 17 585 0939
Registrant’s telephone number, including area code
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
| American Depositary Shares, each representing one ordinary share, nominal value €0.025 per share | CRTO | Nasdaq Global Select Market | |||||||||
| Ordinary Shares, nominal value €0.025 per share* | Nasdaq Global Select Market | ||||||||||
*Not for trading, but only in connection with the registration of the American Depositary Shares.
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
EXPLANATORY NOTE
This Form 8-K/A of Criteo S.A. (“Criteo” or the “Company”) relates to the Form 8-K filed on August 3, 2022 (the “Original Report”). In the Original Report, among other things, the Company furnished a press release (the “Press Release”) announcing its financial results for the three and six months ended June 30, 2022. This amendment describes changes from the Original Report due to a subsequent event that occurred on August 3, 2022, as described below. Except as set forth below, this Form 8-K/A does not otherwise update or change any disclosure contained in the Original Report.
| ITEM 2.02 | Results of Operations and Financial Condition | ||||
As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, in November 2018, Privacy International filed a complaint with certain data protection authorities, including France’s Commission Nationale de l’Informatique et des Libertés (“CNIL”), against Criteo and a number of other similarly situated advertising technology companies, arguing that certain of these companies’ practices were not in compliance with the European Union’s General Data Protection Regulation (“GDPR”). In January 2020, CNIL opened a formal investigation into Criteo in response to this complaint, and on June 23, 2021 CNIL notified the Company of the appointment of an investigator (“rapporteur”) for the ongoing investigation. The investigation also covers another complaint against the Company received in November 2018 by CNIL from the European Center for Digital Rights (“NOYB”).
On August 3, 2022, the assigned rapporteur issued a report that claimed certain GDPR violations, in particular relating to the Company’s contractual relationships with its advertisers and publishers with respect to consent collection oversight. The report includes a proposed financial sanction against the Company of €60.0 million ($65.4 million). Under the CNIL sanction procedures, Criteo has the right to respond in writing to the report, both with respect to the GDPR findings and the value of the sanction, following which there will be a formal hearing before the CNIL Sanction Committee. The CNIL Sanction Committee will then issue a draft decision that will be submitted for consultation to other European data protection authorities as part of the cooperation mechanism mandated by GDPR. Any final decision on resolution and potential financial penalties would likely not occur until 2023.
Pursuant to U.S. generally accepted accounting principles (“GAAP”), the Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated, and these accruals are reviewed and adjusted each quarter based on the information available at that time.
Given the receipt of this report, which included a proposed sanction penalty of €60.0 million ($65.4 million), we have accounted for the proposed penalty as a provision for loss contingency, which is reflected in our financial statements for the period ended as of June 30, 2022 as general and administrative expenses. Such amount could be lower or higher based on the final resolution and merits of the claims made in the report.
The Company has revised its financial statements and other disclosures contained in the Press Release to reflect the establishment of the accrual. These revisions affected the Company’s net income, earnings per share, and liabilities, for the three and six months ended June 30, 2022. The Company’s non-GAAP results for the three and six months ended June 30, 2022 remain unchanged. Amended financial statements giving effect to the accrual are reflected herein and replace those included in the Press Release. These revisions have no effect on the Company’s previously issued guidance for the third quarter 2022 or the fiscal year 2022.
The information furnished with this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
This Form 8-K/A contains references to non-GAAP financial information. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures is included below. The reconciliations included below supersede the non-GAAP reconciliations included in the Press Release.
Summary of Changes
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| June 30, 2022 | June 30, 2022 | ||||||||||||||||||||||||||||||||||
| Revised | Original | Change | Revised | Original | Change | ||||||||||||||||||||||||||||||
| (in millions, except EPS data) | |||||||||||||||||||||||||||||||||||
| GAAP Results | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 495 | $ | 495 | — | % | $ | 1,006 | $ | 1,006 | — | % | |||||||||||||||||||||||
| Gross Profit | $ | 185 | $ | 185 | — | % | $ | 369 | $ | 369 | — | % | |||||||||||||||||||||||
| Net Income (loss) | $ | (33) | $ | 18 | $ | (51) | $ | (12) | $ | 39 | $ | (51) | |||||||||||||||||||||||
| Gross Profit margin | 37 | % | 37 | % | — | % | 37 | % | 37 | % | — | % | |||||||||||||||||||||||
| Diluted EPS | $ | (0.54) | $ | 0.27 | $ | (0.81) | $ | (0.21) | $ | 0.60 | $ | (0.81) | |||||||||||||||||||||||
| Cash from operating activities | $ | 14 | $ | 14 | — | % | $ | 89 | $ | 89 | — | % | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 563 | $ | 563 | — | % | $ | 563 | $ | 563 | — | % | |||||||||||||||||||||||
Non-GAAP Results1 | |||||||||||||||||||||||||||||||||||
| Contribution ex-TAC | $ | 215 | $ | 215 | — | % | $ | 431 | $ | 431 | — | % | |||||||||||||||||||||||
| Contribution ex-TAC margin | 43 | % | 43 | % | — | % | 43 | % | 43 | % | — | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 50 | $ | 50 | — | % | $ | 113 | $ | 113 | — | % | |||||||||||||||||||||||
| Adjusted diluted EPS | $ | 0.37 | $ | 0.58 | $ | (0.21) | $ | 0.90 | $ | 1.11 | $ | (0.21) | |||||||||||||||||||||||
| Free Cash Flow (FCF) | $ | (1) | $ | (1) | — | % | $ | 68 | $ | 68 | — | % | |||||||||||||||||||||||
| FCF / Adjusted EBITDA | (3) | % | (3) | % | — | % | 60 | % | 60 | % | — | % | |||||||||||||||||||||||
___________________________________________________
1 Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS and Free Cash Flow are not measures calculated in accordance with U.S. GAAP.
CRITEO S.A.
Consolidated Statement of Financial Position
(U.S. dollars in thousands, unaudited)
| June 30, 2022 | December 31, 2021 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 562,546 | $ | 515,527 | ||||||||||
Trade receivables, net of allowances of $50.5 million and $45.4 million at June 30, 2022 and December 31, 2021, respectively | 490,643 | 581,988 | ||||||||||||
| Income taxes | 19,888 | 8,784 | ||||||||||||
| Other taxes | 68,608 | 73,388 | ||||||||||||
| Other current assets | 39,240 | 34,182 | ||||||||||||
| Marketable securities - current portion | 10,000 | 50,299 | ||||||||||||
| Total current assets | 1,190,925 | 1,264,168 | ||||||||||||
| Property, plant and equipment, net | 124,133 | 139,961 | ||||||||||||
| Intangible assets, net | 78,018 | 82,627 | ||||||||||||
| Goodwill | 322,972 | 329,699 | ||||||||||||
| Right of Use Asset - operating lease | 108,563 | 120,257 | ||||||||||||
| Marketable securities - non current portion | — | 5,000 | ||||||||||||
| Non-current financial assets | 4,908 | 6,436 | ||||||||||||
| Deferred tax assets | 41,325 | 35,443 | ||||||||||||
| Total non-current assets | 679,919 | 719,423 | ||||||||||||
| Total assets | $ | 1,870,844 | $ | 1,983,591 | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Trade payables | $ | 400,058 | $ | 430,245 | ||||||||||
| Contingencies | 64,731 | 3,059 | ||||||||||||
| Income taxes | 3,791 | 6,641 | ||||||||||||
| Financial liabilities - current portion | 255 | 642 | ||||||||||||
| Lease liability - operating - current portion | 32,110 | 34,066 | ||||||||||||
| Other taxes | 50,589 | 60,236 | ||||||||||||
| Employee - related payables | 70,435 | 98,136 | ||||||||||||
| Other current liabilities | 44,390 | 39,523 | ||||||||||||
| Total current liabilities | 666,359 | 672,548 | ||||||||||||
| Deferred tax liabilities | 2,907 | 3,053 | ||||||||||||
| Defined benefit plans | 3,213 | 5,531 | ||||||||||||
| Financial liabilities - non current portion | 334 | 360 | ||||||||||||
| Lease liability - operating - non current portion | 82,984 | 93,893 | ||||||||||||
| Other non-current liabilities | 4,859 | 9,886 | ||||||||||||
| Total non-current liabilities | 94,297 | 112,723 | ||||||||||||
| Total liabilities | 760,656 | 785,271 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Shareholders' equity: | ||||||||||||||
Common shares, €0.025 par value, 65,794,032 and 65,883,347 shares authorized, issued and outstanding at June 30, 2022 and December 31, 2021, respectively. | 2,147 | 2,149 | ||||||||||||
Treasury stock, 5,265,393 and 5,207,873 shares at cost as of June 30, 2022 and December 31, 2021, respectively. | (148,509) | (131,560) | ||||||||||||
| Additional paid-in capital | 750,774 | 731,248 | ||||||||||||
| Accumulated other comprehensive income (loss) | (102,931) | (40,294) | ||||||||||||
| Retained earnings | 577,552 | 601,588 | ||||||||||||
| Equity - attributable to shareholders of Criteo S.A. | 1,079,033 | 1,163,131 | ||||||||||||
| Non-controlling interests | 31,155 | 35,189 | ||||||||||||
| Total equity | 1,110,188 | 1,198,320 | ||||||||||||
| Total equity and liabilities | $ | 1,870,844 | $ | 1,983,591 | ||||||||||
CRITEO S.A.
Consolidated Statement of Income
(U.S. dollars in thousands, except share and per share data, unaudited)
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, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 495,090 | $ | 551,311 | $ | 1,005,657 | $ | 1,092,388 | ||||||||||||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||||||||||||||
| Traffic acquisition cost | (280,565) | (331,078) | (574,215) | (658,745) | ||||||||||||||||||||||||||||||||||
| Other cost of revenue | (29,550) | (37,364) | (62,443) | (72,076) | ||||||||||||||||||||||||||||||||||
| Gross profit | 184,975 | 182,869 | 368,999 | 361,567 | ||||||||||||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||||
| Research and development expenses | (41,496) | (41,915) | (75,523) | (73,612) | ||||||||||||||||||||||||||||||||||
| Sales and operations expenses | (99,313) | (80,751) | (188,312) | (160,105) | ||||||||||||||||||||||||||||||||||
| General and administrative expenses | (100,672) | (40,474) | (134,008) | (73,902) | ||||||||||||||||||||||||||||||||||
| Total Operating expenses | (241,481) | (163,140) | (397,843) | (307,619) | ||||||||||||||||||||||||||||||||||
| Income from operations | (56,506) | 19,729 | (28,844) | 53,948 | ||||||||||||||||||||||||||||||||||
| Financial and Other income (expense) | 16,412 | (519) | 20,442 | (1,237) | ||||||||||||||||||||||||||||||||||
| Income before taxes | (40,094) | 19,210 | (8,402) | 52,711 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | 7,121 | (4,181) | (3,293) | (14,232) | ||||||||||||||||||||||||||||||||||
| Net Income (loss) | $ | (32,973) | $ | 15,029 | $ | (11,695) | $ | 38,479 | ||||||||||||||||||||||||||||||
| Net income (loss) available to shareholders of Criteo S.A. | $ | (33,614) | $ | 14,804 | $ | (13,027) | $ | 37,210 | ||||||||||||||||||||||||||||||
| Net income available to non-controlling interests | $ | 641 | $ | 225 | $ | 1,332 | $ | 1,269 | ||||||||||||||||||||||||||||||
| Weighted average shares outstanding used in computing per share amounts: | ||||||||||||||||||||||||||||||||||||||
| Basic | 60,240,344 | 60,663,301 | 60,488,429 | 60,702,780 | ||||||||||||||||||||||||||||||||||
| Diluted | 62,303,670 | 64,665,212 | 62,957,718 | 64,371,603 | ||||||||||||||||||||||||||||||||||
| Net income (loss) allocated to shareholders per share: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | (0.56) | $ | 0.24 | $ | (0.22) | $ | 0.61 | ||||||||||||||||||||||||||||||
| Diluted | $ | (0.54) | $ | 0.23 | $ | (0.21) | $ | 0.58 | ||||||||||||||||||||||||||||||
CRITEO S.A.
Consolidated Statement of Cash Flows
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (32,973) | $ | 15,029 | $ | (11,695) | $ | 38,479 | ||||||||||||||||||||||||||||||
| Non-cash and non-operating items | 63,501 | 35,888 | 98,227 | 65,905 | ||||||||||||||||||||||||||||||||||
| - Amortization and provisions | 87,891 | 25,161 | 114,502 | 42,386 | ||||||||||||||||||||||||||||||||||
- Equity awards compensation expense (1) | 12,021 | 11,670 | 21,510 | 18,885 | ||||||||||||||||||||||||||||||||||
| - Net gain or (loss) on disposal of non-current assets | (705) | 14 | (696) | 3,959 | ||||||||||||||||||||||||||||||||||
| - Change in deferred taxes | (9,982) | (2,693) | (7,114) | 2,305 | ||||||||||||||||||||||||||||||||||
| - Change in income taxes | (14,246) | 1,724 | (14,678) | (1,655) | ||||||||||||||||||||||||||||||||||
| - Other | (11,478) | 12 | (15,297) | 25 | ||||||||||||||||||||||||||||||||||
| Changes in working capital related to operating activities | (16,556) | (24,557) | 2,370 | (662) | ||||||||||||||||||||||||||||||||||
| - (Increase) / Decrease in trade receivables | (27,262) | (21,031) | 65,476 | 26,195 | ||||||||||||||||||||||||||||||||||
| - Increase / (Decrease) in trade payables | 32,695 | (9,266) | (16,977) | (19,906) | ||||||||||||||||||||||||||||||||||
| - (Increase) / Decrease in other current assets | 4,352 | (137) | (14,595) | (5,187) | ||||||||||||||||||||||||||||||||||
| - Increase / (Decrease) in other current liabilities | (28,131) | 3,458 | (31,313) | (1,069) | ||||||||||||||||||||||||||||||||||
| - Change in operating lease liabilities and right of use assets | 1,790 | 2,419 | (221) | (695) | ||||||||||||||||||||||||||||||||||
| CASH FROM OPERATING ACTIVITIES | 13,972 | 26,360 | 88,902 | 103,722 | ||||||||||||||||||||||||||||||||||
| Acquisition of intangible assets, property, plant and equipment | (21,937) | (15,663) | (32,794) | (27,616) | ||||||||||||||||||||||||||||||||||
| Change in accounts payable related to intangible assets, property, plant and equipment | 6,485 | 2,535 | 11,778 | 708 | ||||||||||||||||||||||||||||||||||
| Payment for businesses, net of cash acquired | — | (9,598) | — | (9,598) | ||||||||||||||||||||||||||||||||||
| Change in other non-current financial assets | 21,822 | (17,056) | 44,311 | (20,308) | ||||||||||||||||||||||||||||||||||
| CASH USED FOR (FROM) INVESTING ACTIVITIES | 6,370 | (39,782) | 23,295 | (56,814) | ||||||||||||||||||||||||||||||||||
| Proceeds from borrowings under line-of-credit agreement | — | — | 78,513 | — | ||||||||||||||||||||||||||||||||||
| Repayment of borrowings | — | (1,090) | (78,513) | (1,272) | ||||||||||||||||||||||||||||||||||
| Proceeds from exercise of stock options | 80 | 7,501 | 351 | 9,575 | ||||||||||||||||||||||||||||||||||
| Repurchase of treasury stocks | (21,030) | (29,999) | (29,334) | (34,929) | ||||||||||||||||||||||||||||||||||
| Change in other financial liabilities | 7,808 | (370) | 14,474 | (748) | ||||||||||||||||||||||||||||||||||
| CASH USED FOR FINANCING ACTIVITIES | (13,142) | (23,958) | (14,509) | (27,374) | ||||||||||||||||||||||||||||||||||
| Effect of exchange rates changes on cash and cash equivalents | (33,996) | 6,841 | (50,669) | (18,024) | ||||||||||||||||||||||||||||||||||
| Net increase in cash and cash equivalents | (26,796) | (30,539) | 47,019 | 1,510 | ||||||||||||||||||||||||||||||||||
| Net cash and cash equivalents at beginning of period | 589,342 | 520,060 | 515,527 | 488,011 | ||||||||||||||||||||||||||||||||||
| Net cash and cash equivalents at end of period | $ | 562,546 | $ | 489,521 | $ | 562,546 | $ | 489,521 | ||||||||||||||||||||||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||||||||||||||||||||||||||
| Cash paid for taxes, net of refunds | $ | (17,107) | $ | (5,150) | $ | (25,085) | $ | (13,582) | ||||||||||||||||||||||||||||||
| Cash paid for interest | $ | (261) | $ | (369) | $ | (626) | $ | (736) | ||||||||||||||||||||||||||||||
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $11.5 million and $11.2 million of equity awards
compensation expense for the quarter ended June 30, 2022 and 2021, respectively, and $20.6 million and $18.0 million of equity awards compensation for the six months ended June, 30, 2022 and 2021, respectively.
CRITEO S.A.
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
Reconciliation of Adjusted EBITDA to Net Income
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (32,973) | $ | 15,029 | $ | (11,695) | $ | 38,479 | ||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Financial (Income) expense | (15,924) | 519 | (19,954) | 1,237 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | (7,121) | 4,181 | 3,293 | 14,232 | ||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,020 | 11,669 | 21,510 | 19,551 | ||||||||||||||||||||||||||||||||||
| Research and development | 5,578 | 4,218 | 9,545 | 6,714 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 2,550 | 3,636 | 5,118 | 6,005 | ||||||||||||||||||||||||||||||||||
| General and administrative | 3,892 | 3,815 | 6,847 | 6,832 | ||||||||||||||||||||||||||||||||||
| Pension service costs | 264 | 337 | 539 | 675 | ||||||||||||||||||||||||||||||||||
| Research and development | 136 | 175 | 278 | 350 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 39 | 53 | 79 | 106 | ||||||||||||||||||||||||||||||||||
| General and administrative | 89 | 109 | 182 | 219 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization expense | 20,141 | 22,491 | 42,285 | 44,345 | ||||||||||||||||||||||||||||||||||
| Cost of revenue (data center equipment) | 12,625 | 15,744 | 27,257 | 30,988 | ||||||||||||||||||||||||||||||||||
| Research and development | 3,181 | 2,207 | 6,474 | 3,960 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 3,729 | 3,702 | 7,338 | 7,656 | ||||||||||||||||||||||||||||||||||
| General and administrative | 606 | 838 | 1,216 | 1,741 | ||||||||||||||||||||||||||||||||||
| Acquisition-related costs | 1,977 | 3,047 | 4,521 | 3,047 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 178 | — | 178 | — | ||||||||||||||||||||||||||||||||||
| General and administrative | 1,799 | 3,047 | 4,343 | 3,047 | ||||||||||||||||||||||||||||||||||
Loss contingency on regulatory matter (3) | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
| General and administrative | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
Restructuring related and transformation (gain) costs (1) | 5,925 | 9,996 | 6,635 | 21,632 | ||||||||||||||||||||||||||||||||||
| Cost of revenue | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Research and development | 1,029 | 4,831 | 1,038 | 6,267 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 4,076 | 1,551 | 4,532 | 8,918 | ||||||||||||||||||||||||||||||||||
| General and administrative | 820 | 3,614 | 1,065 | 6,447 | ||||||||||||||||||||||||||||||||||
| Total net adjustments | 82,966 | 52,240 | 124,513 | 104,719 | ||||||||||||||||||||||||||||||||||
Adjusted EBITDA (2) | $ | 49,993 | $ | 67,269 | $ | 112,818 | $ | 143,198 | ||||||||||||||||||||||||||||||
(1) For the three months and the six months ended June 2022, and June 2021, respectively, the Company recognized restructuring related and transformation costs following its new organizational structure implemented to support its Commerce Media Platform strategy:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (Gain) from forfeitures of share-based compensation awards | — | — | — | (666) | |||||||||||||||||||
| Facilities related (gain) costs | 753 | 9,721 | 1,286 | 16,337 | |||||||||||||||||||
| Payroll related (gain) costs | 4,992 | (181) | 4,992 | 4,971 | |||||||||||||||||||
| Consulting costs related to transformation | 180 | 456 | 357 | 990 | |||||||||||||||||||
| Total restructuring related and transformation (gain) costs | $ | 5,925 | $ | 9,996 | $ | 6,635 | $ | 21,632 | |||||||||||||||
For the three months ended and the six months ended June 30, 2022 and June 30, 2021, respectively, the cash outflows related to restructuring related and transformation costs were $2.3 million, and $10.3 million and 3.1 million, and $16.5 million respectively, and were mainly comprised of payroll costs, broker and termination penalties related to real-estate facilities and other consulting fees.
(2) 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, depreciation and amortization expense, restructuring related and transformation costs and certain other non-recurring items impacting net income (loss). 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 related and transformation costs and certain other non-recurring items impacting net income (loss) 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 other U.S. GAAP financial results, including net income. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.
(3) The Company recorded a provision for a loss contingency on a regulatory matter with France's Commission Nationale de l'Informatique et des Libertés ("CNIL"). Refer to Note 14 of our financial statement notes in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 for more information. We consider that the loss contingency relating to one regulatory matter is non-recurring and is not reflective of the underlying past and future trends in our business.
CRITEO S.A.
Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP
(U.S. dollars in thousands, unaudited)
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, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Research and Development expenses | $ | (41,496) | $ | (41,915) | $ | (75,523) | $ | (73,612) | ||||||||||||||||||||||||||||||
| Equity awards compensation expense | 5,578 | 4,218 | 9,545 | 6,714 | ||||||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 3,181 | 2,207 | 6,474 | 3,960 | ||||||||||||||||||||||||||||||||||
| Pension service costs | 136 | 175 | 278 | 350 | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 1,029 | 4,831 | 1,038 | 6,267 | ||||||||||||||||||||||||||||||||||
| Non GAAP - Research and Development expenses | (31,572) | (30,484) | (58,188) | (56,321) | ||||||||||||||||||||||||||||||||||
| Sales and Operations expenses | (99,313) | (80,751) | (188,312) | (160,105) | ||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 2,550 | 3,636 | 5,118 | 6,005 | ||||||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 3,729 | 3,702 | 7,338 | 7,656 | ||||||||||||||||||||||||||||||||||
| Pension service costs | 39 | 53 | 79 | 106 | ||||||||||||||||||||||||||||||||||
| Acquisition-related costs | 178 | — | 178 | — | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 4,076 | 1,551 | 4,532 | 8,918 | ||||||||||||||||||||||||||||||||||
| Non GAAP - Sales and Operations expenses | (88,741) | (71,809) | (171,067) | (137,420) | ||||||||||||||||||||||||||||||||||
| General and Administrative expenses | (100,672) | (40,474) | (134,008) | (73,902) | ||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 3,892 | 3,815 | 6,847 | 6,832 | ||||||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 606 | 838 | 1,216 | 1,741 | ||||||||||||||||||||||||||||||||||
| Pension service costs | 89 | 109 | 182 | 219 | ||||||||||||||||||||||||||||||||||
| Acquisition-related costs | 1,799 | 3,047 | 4,343 | 3,047 | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 820 | 3,614 | 1,065 | 6,447 | ||||||||||||||||||||||||||||||||||
Loss contingency on regulatory matter (2) | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
| Non GAAP - General and Administrative expenses | (27,782) | (29,051) | (54,671) | (55,616) | ||||||||||||||||||||||||||||||||||
| Total Operating expenses | (241,481) | (163,140) | (397,843) | (307,619) | ||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,020 | 11,669 | 21,510 | 19,551 | ||||||||||||||||||||||||||||||||||
| Depreciation and Amortization expense | 7,516 | 6,747 | 15,028 | 13,357 | ||||||||||||||||||||||||||||||||||
| Pension service costs | 264 | 337 | 539 | 675 | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 1,977 | 3,047 | 4,521 | 3,047 | ||||||||||||||||||||||||||||||||||
| Loss contingency on regulatory matter | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 5,925 | 9,996 | 6,635 | 21,632 | ||||||||||||||||||||||||||||||||||
Total Non GAAP Operating expenses (1) | $ | (148,095) | $ | (131,344) | $ | (283,926) | $ | (249,357) | ||||||||||||||||||||||||||||||
(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, acquisition-related costs, restructuring related and transformation costs and certain other non-recurring items impacting net income (loss). 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.
(2) The Company recorded a provision for a loss contingency on a regulatory matter with France's Commission Nationale de l'Informatique et des Libertés ("CNIL"). Refer to Note 14 of our financial statement notes in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 for more information. We consider that the loss contingency relating to one regulatory matter is non-recurring and is not reflective of the underlying past and future trends in our business.
CRITEO S.A.
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
Detailed Information on Selected Items
(U.S. dollars in thousands, unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | ||||||||||||||||||||||||||||||||||||||
| Research and development | $ | 5,578 | $ | 4,218 | $ | 9,545 | $ | 6,714 | ||||||||||||||||||||||||||||||
| Sales and operations | 2,550 | 3,636 | 5,118 | 6,005 | ||||||||||||||||||||||||||||||||||
| General and administrative | 3,892 | 3,815 | 6,847 | 6,832 | ||||||||||||||||||||||||||||||||||
| Total equity awards compensation expense | 12,020 | 11,669 | 21,510 | 19,551 | ||||||||||||||||||||||||||||||||||
| Pension service costs | ||||||||||||||||||||||||||||||||||||||
| Research and development | 136 | 175 | 278 | 350 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 39 | 53 | 79 | 106 | ||||||||||||||||||||||||||||||||||
| General and administrative | 89 | 109 | 182 | 219 | ||||||||||||||||||||||||||||||||||
| Total pension service costs | 264 | 337 | 539 | 675 | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||||||||||||||
| Cost of revenue (data center equipment) | 12,625 | 15,744 | 27,257 | 30,988 | ||||||||||||||||||||||||||||||||||
| Research and development | 3,181 | 2,207 | 6,474 | 3,960 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 3,729 | 3,702 | 7,338 | 7,656 | ||||||||||||||||||||||||||||||||||
| General and administrative | 606 | 838 | 1,216 | 1,741 | ||||||||||||||||||||||||||||||||||
| Total depreciation and amortization expense | 20,141 | 22,491 | 42,285 | 44,345 | ||||||||||||||||||||||||||||||||||
| Acquisition-related costs | ||||||||||||||||||||||||||||||||||||||
| Research and development | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Sales and operations | 178 | — | 178 | — | ||||||||||||||||||||||||||||||||||
| General and administrative | 1,799 | 3,047 | 4,343 | 3,047 | ||||||||||||||||||||||||||||||||||
| Total acquisition-related costs | 1,977 | 3,047 | 4,521 | 3,047 | ||||||||||||||||||||||||||||||||||
| Loss contingency on regulatory matter | ||||||||||||||||||||||||||||||||||||||
| General and administrative | 65,684 | 65,684 | — | |||||||||||||||||||||||||||||||||||
| Total loss contingency on regulatory matter | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | ||||||||||||||||||||||||||||||||||||||
| Research and development | 1,029 | 4,831 | 1,038 | 6,267 | ||||||||||||||||||||||||||||||||||
| Sales and operations | 4,076 | 1,551 | 4,532 | 8,918 | ||||||||||||||||||||||||||||||||||
| General and administrative | 820 | 3,614 | 1,065 | 6,447 | ||||||||||||||||||||||||||||||||||
| Total restructuring related and transformation (gain) costs | $ | 5,925 | $ | 9,996 | $ | 6,635 | $ | 21,632 | ||||||||||||||||||||||||||||||
CRITEO S.A.
Reconciliation of Adjusted Net Income to Net Income
(U.S. dollars in thousands except share and per share data, unaudited)
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, | |||||||||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | (32,973) | $ | 15,029 | $ | (11,695) | $ | 38,479 | ||||||||||||||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||||
| Equity awards compensation expense | 12,020 | 11,669 | 21,510 | 19,551 | ||||||||||||||||||||||||||||||||||
| Amortization of acquisition-related intangible assets | 3,614 | 2,936 | 7,322 | 5,871 | ||||||||||||||||||||||||||||||||||
| Acquisition-related costs | 1,977 | 3,047 | 4,521 | 3,047 | ||||||||||||||||||||||||||||||||||
Loss contingency on regulatory matter (3) | 65,684 | — | 65,684 | — | ||||||||||||||||||||||||||||||||||
| Restructuring related and transformation (gain) costs | 5,925 | 9,996 | 6,635 | 21,632 | ||||||||||||||||||||||||||||||||||
Tax impact of the above adjustments (1) | (33,220) | (1,821) | (37,176) | (4,572) | ||||||||||||||||||||||||||||||||||
| Total net adjustments | 56,000 | 25,827 | 68,496 | 45,529 | ||||||||||||||||||||||||||||||||||
Adjusted net income (2) | $ | 23,027 | $ | 40,856 | $ | 56,801 | $ | 84,008 | ||||||||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||||||||||||||
| - Basic | 60,240,344 | 60,663,301 | 60,488,429 | 60,702,780 | ||||||||||||||||||||||||||||||||||
| - Diluted | 62,303,670 | 64,665,212 | 62,957,718 | 64,371,603 | ||||||||||||||||||||||||||||||||||
| Adjusted net income per share | ||||||||||||||||||||||||||||||||||||||
| - Basic | $ | 0.38 | $ | 0.67 | $ | 0.94 | $ | 1.38 | ||||||||||||||||||||||||||||||
| - Diluted | $ | 0.37 | $ | 0.63 | $ | 0.90 | $ | 1.31 | ||||||||||||||||||||||||||||||
(1) We consider the nature of the adjustment to determine its tax treatment in the various tax jurisdictions we operate in. The tax impact is calculated by applying the actual tax rate for the entity and period to which the adjustment relates.
(2) 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, acquisition-related costs, 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, 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, restructuring related and transformation 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 financial results, including net income.
(3) The Company recorded a provision for a loss contingency on a regulatory matter with France's Commission Nationale de l'Informatique et des Libertés ("CNIL"). Refer to Note 14 of our financial statement notes in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 for more information. We consider that the loss contingency relating to one regulatory matter is non-recurring and is not reflective of the underlying past and future trends in our business.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Criteo S.A. | ||||||||
| Date: August 5, 2022 | By: | /s/ Sarah Glickman | ||||||
| Name: | Sarah Glickman | |||||||
| Title: | Chief Financial Officer | |||||||