NEW YORK – May 5, 2015 – Criteo S.A. (NASDAQ: CRTO), the performance marketing technology company, today announced its financial results for the first quarter ended March 31, 2015.
- Revenue in the first quarter 2015 increased 71% (or 59% at constant currency[1]) to €262 million, compared with €153 million in the first quarter 2014.
- Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, in the first quarter 2015 grew 68% (or 55% at constant currency) to €105 million, compared with €63 million in the first quarter 2014.
- Net income in the first quarter 2015 increased to €12 million, compared with €4 million in the first quarter 2014.
- Adjusted EBITDA for the first quarter 2015 was €28 million, an increase of 94% (or 89% at constant currency), compared with €15 million in the first quarter 2014.
- Cash flow from operating activities in the first quarter 2015 increased to €36 million, compared with €11 million in the first quarter 2014.
- Free Cash Flow for the first quarter 2015 was €25 million, compared with €8 million in the first quarter 2014.
Executive Quotes
“Our successful execution for six quarters as a public company validates our unique approach”, said JB Rudelle, Criteo’s co-founder & CEO. “We are excited about the huge opportunity we see ahead of us.”
“Our investments are clearly paying off,” said Benoit Fouilland, Chief Financial Officer. “In 2015, we intend to continue to invest to maximize our growth potential.”
Operating Highlights
- 84% of our client base used our multi-screen solution in March 2015.
- Our Q1 “State of Mobile Commerce” report revealed that mobile devices contributed to 34% of global ecommerce transactions, a 4 percentage point improvement compared with the prior quarter.
- Our latest generation of the Criteo Engine, optimized to maximize the value of conversions, had been rolled out to 22% of our client base at the end of the first quarter.
- Our business in the Americas grew 101% year-over-year at constant currency in the first quarter, driven by continued strong performance in the United States.
- We set a new record in client additions with over 640 net clients added in the first quarter.
Revenue ex-TAC
Revenue ex-TAC grew 68% in the first quarter, or 55% at constant currency, to €105 million, compared with €63 million in the first quarter 2014. This year-over-year performance was primarily driven by the continuous roll-out of our improved technology on all devices, the steady growth of our client base across all geographies and client segments, and our continued success in broadening our publisher relationships.
- In the Americas, Revenue ex-TAC in the first quarter grew by 138% year-over-year, or 101% at constant currency, to €35 million. The Americas represented over 33% of our global Revenue ex-TAC in the first quarter.
- In EMEA, Revenue ex-TAC in the first quarter increased by 36% year-over-year, or 34% at constant currency, to €48 million. EMEA represented approximately 46% of our global Revenue ex-TAC in the first quarter.
- In Asia-Pacific, Revenue ex-TAC in the first quarter increased by 74% year-over-year, or 61% at constant currency, to €22 million. Asia-Pacific represented approximately 21% of our global Revenue ex-TAC in the first quarter.
Revenue ex-TAC margin in the first quarter was 40.2%, consistent with prior quarters.
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA for the first quarter was €28 million, an increase of 94%, or 89% at constant currency, compared with €15 million in the first quarter 2014. This year-over-year increase in Adjusted EBITDA is primarily the result of the strong revenue ex-TAC performance in the quarter. In addition, slightly lower than expected hosting costs this quarter, due to a temporary shift in our data center expansion program, contributed to the increase in Adjusted EBITDA.
Adjusted EBITDA margin (as a percentage of revenue) in the first quarter was 10.7%, representing a 1.2 percentage point improvement compared with 9.5% in the first quarter 2014.
Operating expenses in the first quarter increased by 61% to €79 million, compared with the first quarter 2014. Our operating expenses in the first quarter, excluding the impact of share-based compensation, pension costs, depreciation and amortization and acquisition-related deferred price consideration, which we refer to as Non-IFRS Operating Expenses, were €71 million, an increase of 61% compared with the first quarter of 2014. This increase principally related to headcount growth, in particular in Research & Development and Sales & Operations, which increased by 48% and 69% year-over-year respectively, as we continued to scale the Criteo organization. We intend to continue to invest significantly in Research & Development and Sales & Operations in the current year to support our current and anticipated future growth. In addition, our Non-IFRS General & Administrative Expenses for the first quarter, expressed as a percentage of revenue, decreased by 1.7 percentage point year-over-year.
Net Income and Adjusted Net Income
Net income for the first quarter 2015 was €12 million, representing a €8 million increase compared with €4 million in the first quarter 2014. Net income available to shareholders of Criteo S.A. for the first quarter 2015 was €11million, or €0.176per diluted share, compared with €3 million, or €0.055 per diluted share, in the first quarter 2014.
Adjusted Net Income for the first quarter 2015, or our net income adjusted to eliminate the impact of share-based compensation expense, amortization of acquisition-related intangible assets and acquisition-related deferred price consideration and the tax impact of these adjustments, was €18 million, representing a €11 million increase compared with €8million in the first quarter 2014.
Cash Flow and Cash Position
- Our cash flow from operating activities in the first quarter 2015 increased by €25million to €36 million, compared with €11 million in the first quarter 2014.
- Our Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment, net of proceeds from disposal, was €25million in the first quarter 2015, an increase of €17million, compared with €8million in the first quarter 2014.
- Total cash, cash equivalents and short-term investments were €294million as of March 31, 2015. This represented an increase of €4 million compared with December 31, 2014, primarily resulting from €25 million in Free Cash Flow generation and €2 million in proceeds from capital increases over the period, partly offset by the cash consideration paid for the acquisition of DataPop, Inc. in February 2015.
Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of May 5, 2015.
Second Quarter 2015 Guidance:
- Revenue ex-TAC for the second quarter ending June 30, 2015 is expected to be between €105million and €107 million.
- Adjusted EBITDA for the second quarter ending June 30, 2015 is expected to be between €18 million and €21 million.
Fiscal Year 2015 Guidance:
- We increase our Revenue ex-TAC outlook for the fiscal year ending December 31, 2015 to between €454 million and €460million.
- We increase our Adjusted EBITDA outlook for the fiscal year ending December 31, 2015 to between €120 million and €127 million.
The above guidance assumes no additional acquisitions are completed during the second quarter or the fiscal year 2015.
Non-IFRS Financial Measures
This press release and its attachments include the following financial measures defined as non-IFRS financial measures by the U.S. Securities and Exchange Commission (SEC): Revenue ex-TAC, Revenue ex-TAC by Region, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-IFRS Operating Expenses, Revenue ex-TAC margin and Adjusted EBITDA margin. These measures are not calculated in accordance with the International Financial Reporting Standards, as issued by the International Accounting Standards Board (IFRS).
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 core geographies. Revenue ex-TAC and Revenue ex-TAC by region 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 core business and across our core geographies. Accordingly, we believe that Revenue ex-TAC and Revenue ex-TAC by Region 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 income (loss) from operations before interest, taxes, depreciation and amortization, adjusted to eliminate the impact of share-based compensation expense, pension service costs and acquisition-related deferred price consideration. Adjusted EBITDA 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‑ and long-term operational plans. In particular, we believe that by eliminating non-cash compensation expense, pension costs and acquisition-related deferred price consideration, Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.
Adjusted Net Income is our net income adjusted to eliminate the impact of share-based compensation expense, amortization of acquisition-related intangible assets, acquisition-related deferred price consideration, and the tax impact of these adjustments. Adjusted Net Income 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 by eliminating share-based compensation expense, amortization of acquisition-related intangible assets and acquisition-related deferred price consideration and the tax impact of these adjustments, Adjusted Net Income can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted Net Income provides 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.
Please refer to 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 geography, Adjusted EBITDA to net income, Adjusted Net Income to net income and Free Cash Flow to cash flow from operating activities, the most comparable IFRS measurements. Our use of non-IFRS financial measures has limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under IFRS. 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 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 other IFRS-based financial performance measures, such as revenue, net income and our other financial results.
With respect to our expectations under “Business Outlook” above, reconciliation of Revenue ex-TAC and Adjusted EBITDA guidance to the closest corresponding IFRS 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-IFRS measures; in particular, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future IFRS financial results.
These measures may be different than non-IFRS financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. Explanations of the Company’s non-IFRS financial measures, and reconciliations of these financial measures to the IFRS financial measures the Company considers most comparable, are included in the accompanying tables below.
Forward-Looking Statements Disclosure
This press release contains forward-looking statements, including projected financial results for the quarter ending June 30, 2015 and the fiscal year ending December 31, 2015, 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: recent growth rates not being indicative of future growth, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, the investments in new business opportunities and the timing of these investments, the impact of competition, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, uncertainty regarding international growth and expansion, 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 20-F filed with the SEC on March 27, 2015, as well as future filings and reports by the Company. 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 will hold a conference call today, May 5, 2015, at 8:00am ET, 2:00pm CET, to discuss Criteo’s first quarter 2015 operating and financial results, as well as other forward-looking information about Criteo’s business.
Conference call details are:
- U.S. callers: +1 646 254 3388, Conference ID: 3320390
- International callers: +33 1 76 77 22 29, Conference ID: 3320390
The conference call will also be webcast simultaneously at ir.criteo.com.
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[1] Variations at constant currency exclude the impact of foreign currency fluctuations and are computed by applying the 2014 average exchange rates to 2015 figures.
Contacts:
Criteo Investor Relations: Edouard Lassalle, Head of IR, e.lassalle@criteo.com
Friederike Edelmann, f.edelmann@criteo.com
Criteo Public Relations: Emma Ferns, Global PR Director, e.ferns@criteo.com
