Criteo Reports Strong Fourth Quarter and Fiscal Year 2021 Results

2021 Activated Media Spend Up 19% to $2.7 Billion

Delivered Strong Revenue Growth and Double Digit Growth in Contribution ex-TAC in 2021

2021 Operating Cash Flow Up 19% to $221 Million and Free Cash Flow Up 40% to $168 Million

Extends Share Repurchase Authorization from $175 Million to $280 Million

Targeting Double Digit Growth in Fiscal 2022, Excluding the Contemplated Acquisition of IPONWEB

NEW YORK – February 9, 2022 – Criteo S.A. (NASDAQ: CRTO) (“Criteo” or the “Company”), the global technology company that provides the world’s leading Commerce Media Platform, today announced financial results for the fourth quarter and fiscal year ended December 31, 2021 that exceeded the Company’s guidance.

Fourth Quarter and Fiscal Year 2021 Financial Highlights:

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

“We delivered double-digit growth in 2021, positioning us for a successful 2022 and beyond. Our impressive performance demonstrates the tremendous progress we have made on our transformation,” said Megan Clarken, Chief Executive Officer. “In 2022, we are accelerating our strategy around commerce media to enable our customers to drive meaningful commerce outcomes.” 

Operating Highlights

• Retail Media Contribution ex-TAC grew 58% year-over-year at constant currency² in 2021 and 41% in Q4, and same-retailer Contribution ex-TAC³ for Retail Media increased 23% year-over-year in Q4.
• Marketing Solutions Contribution ex-TAC grew 6% year-over-year at constant currency² in 2021 and 7% in Q4.
• Criteo’s media spend activated⁴ by the Commerce Media Platform for marketers and media owners was $2.7 billion in 2021, growing 19% at constant currency² and close to $850 million in Q4.
• We signed a three-year global partnership with GroupM to accelerate the demand and supply growth of our Retail Media business.
• We added Nordstrom and Michaels to our Retail Media Platform in Q4 and successfully launched our first retailer customers in APAC and Latin America.
• Same-client contribution ex-TAC² increased 9% year-over-year at constant currency² in Q4.
• We had 685 million Daily Active Users (DAUs), over 60% of which on the web are addressable through media owners we have direct access to, as we continue to build Criteo’s first-party media network.
• We executed a purchase agreement to acquire the business of IPONWEB Holding Limited (“IPONWEB”), a market-leading AdTech platform company, for $380 million, which we believe will further distinguish Criteo as the commerce media partner of choice on the open internet for the post third-party identifier world.

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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.
² Constant currency measures exclude the impact of foreign currency fluctuations and is computed by applying the 2020 average exchange rates for the relevant period to 2021 figures.
³ Same-client profitability or Contribution ex-TAC is the profitability or Contribution 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.
⁴ Activated media spend is defined as the sum of our Marketing Solutions revenue and the media spend activated on behalf of our Retail Media clients.
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New Reporting Segment Structure

We are now reporting results for two reportable segments: Marketing Solutions and Retail Media. We have included a table which presents the operating results of our segments in this press release.

Change in Naming of Non-GAAP Financial Measure

We have renamed Revenue ex-TAC, a non-GAAP financial measure, to Contribution ex-TAC. The change was made as the Company considers that Contribution ex-TAC is a non-GAAP financial measure of profitability, closest to Gross Profit, and not revenue. No changes were made in the calculation methodology.

Financial Summary

Revenue for Q4 2021 was $653 million, gross profit was $244 million and Contribution ex-TAC was $276 million. Net income for Q4 was $75 million, or $1.15 per share on a diluted basis. Adjusted EBITDA for Q4 was $111 million, resulting in an adjusted diluted EPS of $1.44. At constant currency, Revenue for Q4 increased by 1%, gross profit increased 14% and Contribution ex-TAC increased by 11%. Revenue for the fiscal year 2021 was $2,254 million, gross profit was $782 million and Contribution ex-TAC was $921 million, up 8%, 13% and 11% respectively at constant currency. Net income for Fiscal 2021 was $138 million, or $2.09 per share on a diluted basis. Fiscal year 2021 Adjusted EBITDA was $322 million, resulting in an adjusted diluted EPS of  $3.38. Cash flow from operating activities was $66 million in Q4 and $221 million in 2021, and Q4 Free Cash Flow was $56 million, up 40% in 2021 to $168 million, representing a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021. As of December 31, 2021, we had $571 million in cash and marketable securities on our balance sheet.

Sarah Glickman, Chief Financial Officer, said, “We delivered strong top line performance and record adjusted EBITDA margin and free cash flow in 2021 while investing for future growth. Looking ahead, we are confident about our growth trajectory and expect to grow Contribution ex-TAC by double digits again in 2022 as we continue to scale and execute on our Commerce Media Platform strategy. We expect to continue to return cash to shareholders with the extension of our share repurchase program in 2022.”

Fourth Quarter 2021 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue decreased by 1% year-over-year in Q4 2021, or increased by 1% at constant currency, to $653 million (Q4 2020: $661 million). Gross profit increased by 12% year-over-year in Q4 2021, or 14% at constant currency, to $244 million (Q4 2020: $218 million). Gross profit as a percentage of revenue, or gross profit margin, was 37% (Q4 2020: 33%). Contribution ex-TAC in the fourth quarter increased 9% year-over-year, or 11% at constant currency, to $276 million (Q4 2020: $253 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 42% (Q4 2020: 38%), up 400 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.

• Marketing Solutions revenue grew 6% (or 9% at constant currency) and Marketing Solutions Contribution ex-TAC grew 4% (or 7% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
• Retail Media revenue decreased 36% (or 36% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform (“RMP”). Retail Media Contribution ex-TAC increased 41% (or 41% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.

Net Income and Adjusted Net Income

Net income grew 60% to $75 million in Q4 2021 (Q4 2020: $47 million). Net income margin as a percentage of revenue was 11% (Q4 2020: 7%). Net income available to shareholders of Criteo S.A. was $74 million, or $1.15 per share on a diluted basis (Q4 2020: $45 million, or $0.73 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, restructuring related and transformation costs and the tax impact of these adjustments, was $92 million, or $1.44 per share on a diluted basis (Q4 2020: $61 million, or $0.98 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA increased 7% year-over-year, or 10% at constant currency, to $111 million (Q4 2020: $103 million), driven by the Contribution ex-TAC performance over the period and effective cost management balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 40% (Q4 2020: 41%).

Operating expenses increased 18% year-over-year to $179 million (Q4 2020: $151 million), reflecting investments in our growth areas, including Product, Sales and R&D, and higher equity award compensation expense balanced with disciplined and effective expense management. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, acquisition-related costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP operating expenses, increased by 16% or $21 million, to $151 million (Q4 2020: $130 million).

Fiscal Year 2021 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue increased 9% year-over-year (8% at constant currency), to $2,254 million (FY 2020: $2,073 million). Gross profit increased by 14% year-over-year in 2021, or 13% at constant currency, to $782 million (FY 2020: $688 million). Gross profit as a percentage of revenue, or gross profit margin, was 35% (FY 2020: 33%). Contribution ex-TAC increased 12% year-over-year (11% at constant currency), to $921 million (FY 2020: $825 million). Contribution ex-TAC as a percentage of revenue, or Contribution ex-TAC margin, was 41% (FY 2020: 40%), up 100 basis points year-over-year, largely driven by Retail Media and the acceleration of our client transition to the Retail Media Platform.

• Marketing Solutions revenue grew 11% (or 10% at constant currency) and Marketing Solutions Contribution ex-TAC grew 7% (or 6% at constant currency), driven by healthy demand from Retail clients, both on our retargeting and audience targeting solutions, partially offset by anticipated identity and privacy changes.
• Retail Media revenue decreased 7% (or 8% at constant currency) reflecting the impact related to the ongoing client migration to our Retail Media Platform (“RMP”). Retail Media Contribution ex-TAC increased 59% (or 58% on a constant currency basis), driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the RMP.

Net Income and Adjusted Net Income

Net income increased 84% year-over-year to $138 million (FY 2020: $75 million). Net income margin as a percentage of revenue was 6% (FY 2020: 4%). In the course of the fiscal year 2021, we incurred $22 million in restructuring-related and transformation costs. Net income available to shareholders of Criteo S.A. increased 88% year-over-year to $134 million, or $2.09 per share on a diluted basis (FY 2020: $72 million, or $1.16 per share on a diluted basis).

Adjusted net income increased 62% year-over-year to $217 million, or $3.38 per share on a diluted basis (FY 2020: $134 million, or $2.17 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA increased 28% year-over-year, or 26% at constant currency, to $322 million (FY 2020: $251 million), driven by the Contribution ex-TAC performance over the period and effective cost management, balanced with growth investments. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 35% (FY 2020: 30%).

Operating expenses increased 9% or $51 million, to $630 million (FY 2020: $579 million), mostly driven by higher headcount-related expense, including equity awards compensation expense, partially offset by disciplined expense management across the Company. Non-GAAP operating expenses increased 6% or $31 million, to $524 million (FY 2020: $493 million), largely driven by higher headcount balanced with effective cost discipline across the Company.

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities increased 50% year-over-year to $66 million in Q4 2021 (Q4 2020: $44 million) and grew 19% to $221 million in 2021 (fiscal year 2020: $185 million).

Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, increased 157% to $56 million in Q4 2021 (Q4 2020: $22 million), and grew 40% in 2021 to $168 million (fiscal year 2020: $120 million), driving a Free Cash Flow conversion rate of 52% of Adjusted EBITDA in 2021 (fiscal year 2020: 48%).

Cash and cash equivalents increased $28 million compared to December 31, 2020 to $516 million, and to $571 million including marketable securities, up $41 million in 2021, after spending $100 million on share repurchases in 2021.

As of December 31, 2021, the Company had total financial liquidity close to $1.1 billion, or close to $700 million after giving effect to the completion of the contemplated acquisition of IPONWEB, including the Company’s cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.

IPONWEB Acquisition

As previously announced, on December 22, 2021, Criteo executed the purchase agreement to acquire IPONWEB, a market-leading AdTech company with world-class media trading capabilities, for $380 million in a combination of cash and Criteo treasury shares. The closing of the transaction is expected by the end of the first quarter of 2022, subject to customary closing conditions.

With this strategic acquisition, Criteo is expected to accelerate its Commerce Media Platform vision to offer better control to its enterprise marketers – and their agency partners – by leveraging IPONWEB’s well-established DSP and SSP solutions. The acquisition is also expected to expand our media owner monetization opportunities and to provide critical services for first-party data management across the ecosystem. Together with IPONWEB, Criteo believes it will distinguish itself as the commerce media partner of choice on the open internet for the post third-party cookie and identifier world.

2022 Business Outlook

The following forward-looking statements reflect Criteo’s expectations as of February 9, 2022. Our financial guidance for the first quarter and fiscal year 2022 excludes the contemplated acquisition of IPONWEB.

Fiscal year 2022 guidance:

• We expect Contribution ex-TAC to grow by 10% to 12% at constant currency.
• We expect an Adjusted EBITDA margin of approximately 32% of Contribution ex-TAC.

First quarter 2022 guidance:

• We expect Contribution ex-TAC between $216 million and $220 million, or year-over-year growth at constant-currency of +5% to +7%.
• We expect Adjusted EBITDA between $52 million and $56 million.

The above guidance for the first quarter and fiscal year ending December 31, 2022 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.862, a U.S. dollar-Japanese Yen rate of 115, a U.S. dollar-British pound rate of 0.741, a U.S. dollar-Korean Won rate of 1,180 and a U.S. dollar-Brazilian real rate of 5.40.

The above guidance does not include the previously announced acquisition of IPONWEB, which is expected to close by the end of Q1 2022, and assumes that no additional acquisitions are completed during the first quarter of 2022 or the fiscal year ended December 31, 2022.

Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.

Extension of Share Repurchase Authorization from $175 million to $280 million

Criteo continues to execute on its strategic plan and Company transformation, investing in the growth of the business and leveraging its strong balance sheet position.

Criteo today announces that the board of directors has authorized the extension of its current share repurchase program of up to $175 million of the Company’s outstanding American Depositary Shares to an increased amount of up to $280 million. The Company intends to use repurchased shares under this extended program to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders, as well as to fund potential acquisitions in the future.

Under the terms of the authorization, the stock purchases may be made from time to time on the Nasdaq Global Select Market in compliance with applicable state and federal securities laws and applicable provisions of French corporate law. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability, as determined by Criteo’s management team. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.

Non-GAAP Financial Measures

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission (“SEC”): Contribution ex-TAC, Contribution ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted diluted EPS, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.

Contribution ex-TAC is a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from gross revenue and reconciled to gross profit through the exclusion of other cost of revenue. Contribution ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Contribution ex-TAC 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. In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business.

Accordingly, we believe that Contribution ex-TAC 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.

Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs and restructuring related and transformation costs.

Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs and restructuring related and transformation costs, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted diluted EPS are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted diluted EPS can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted diluted EPS provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow Conversion is defined as free cash flow divided by Adjusted EBITDA. Free Cash Flow and Free Cash Flow Conversion are key measures used by our management and board of directors to evaluate the Company’s ability to generate cash. Accordingly, we believe that Free Cash Flow and Free Cash Flow Conversion permit a more complete and comprehensive analysis of our available cash flows.

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, and restructuring related and transformation costs. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.

Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Contribution ex-TAC to gross profit, Contribution ex-TAC margin, 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 Contribution ex-TAC, 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 March 31, 2022 and the year ended December 31, 2022, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to innovate and respond to changes in technology, uncertainty regarding the scope and impact of the COVID-19 pandemic on our employees, operations, revenue and cash flows, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, including without limitation uncertainty regarding the timing and scope of proposed changes to and enhancements of the Chrome browser announced by Google, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, including the successful completion of our acquisition of IPONWEB, uncertainty regarding international growth and expansion (including related to changes in a specific country’s or region’s political or economic conditions), the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, the impact of consumer resistance to the collection and sharing of data, our ability to access data through third parties, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Contribution ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption “Risk Factors” and elsewhere in the Company’s SEC filings and reports, including the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2021, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, the COVID-19 pandemic continues to have an impact on Criteo’s business, financial condition, cash flow and results of operations. There are significant uncertainties about the duration and the extent of the impact of the COVID-19 pandemic.

Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

Conference Call Information

Criteo’s senior management team will discuss the Company’s earnings on a call that will take place today, February 9, 2022, 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 subsequently be available for replay.

• 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” call.

About Criteo

Criteo (NASDAQ: CRTO) is the global technology company that provides the world’s leading Commerce Media Platform. 2,800 Criteo team members partner with 22,000 marketers and thousands of media owners around the globe to activate the world’s largest set of commerce data to drive better commerce outcomes. By powering trusted and impactful advertising, Criteo brings richer experiences to every consumer while supporting a fair and open internet that enables discovery, innovation and choice. For more information, please visit www.criteo.com.

Contacts

Criteo Investor Relations

Edouard Lassalle, SVP, Capital Markets & Investor Relations, e.lassalle@criteo.com

Melanie Dambre, Director, Investor Relations, m.dambre@criteo.com

Criteo Public Relations

Maribel Henriquez, Senior Communications Manager, m.henriquez@criteo.com

Download the PDF for financial information