CRITEO REPORTS RECORD THIRD QUARTER 2024 RESULTS

Expects to Return a Record $180 Million of Capital to Shareholders in 2024Hosting Retail Media Investor Update on November 18, 2024

NEW YORK, Oct. 30, 2024 /PRNewswire/ -- Criteo S.A. (NASDAQ:CRTO) ("Criteo" or the "Company"), the commerce media company, today announced financial results for the third quarter ended September 30, 2024.

Third Quarter 2024 Financial Highlights:

The following table summarizes our consolidated financial results for the three months and nine months ended September 30, 2024:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

YoY Change

2024

2023

YoY Change

(in millions, except EPS data)

GAAP Results

Revenue

$459

$469

(2) %

$1,380

$1,383

— %

Gross Profit

$232

$205

13 %

$682

$586

16 %

Net Income (loss)

$6

$7

(7) %

$43

$(7)

677 %

Gross Profit margin

51 %

44 %

7ppt

49 %

42 %

7 ppt

Diluted EPS

$0.11

$0.12

(8) %

$0.69

$(0.14)

593 %

Cash from operating activities

$58

$20

193 %

$89

$63

41 %

Cash and cash equivalents

$209

$195

7 %

$209

$195

7 %

Non-GAAP Results1

Contribution ex-TAC

$266

$245

8 %

$787

$706

11 %

Adjusted EBITDA

$82

$68

20 %

$246

$163

51 %

Adjusted diluted EPS

$0.96

$0.71

35 %

$2.84

$1.66

71 %

Free Cash Flow (FCF)

$39

$4

925 %

$35

$(32)

212 %

FCF / Adjusted EBITDA

47 %

6 %

41ppt

14 %

(19) %

33 ppt

"We are pleased to report another strong quarter with robust growth and solid progress across our strategic initiatives," said Megan Clarken, Chief Executive Officer of Criteo. "Our momentum is a testament to our team's hard work and the trust our clients place in us. We remain focused on executing our plan to create the world's leading Commerce Media Platform and drive shareholder value."

Operating Highlights

Retail Media Contribution ex-TAC grew 23% year-over-year at constant currency2 and same-retailer Contribution ex-TAC3 retention for Retail Media was 120%.

We expanded our platform adoption to 3,100 brands and 225 retailers and marketplaces, including JCPenney, Office Depot & ODP Business Solutions, Metro AG, Flaschenpost and Rohlik.

Kinective Media by United Airlines chose Criteo to help power and scale its offsite monetization.

Performance Media4 Contribution ex-TAC was up 5% year-over-year at constant currency.

Criteo's activated media spend5 was $4.3 billion in the last 12 months and $1.1 billion in Q3 2024, down (2)% year-over-year at constant currency2.

We deployed $157 million of capital for share repurchases in the first nine months of 2024, and we expect to return $180 million of capital to shareholders in 2024.

Criteo was named a Leader in IDC MarketScape's 2024 worldwide retail media network service providers vendor assessment.

1 Contribution ex-TAC, 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 prior year monthly exchange rates to transactions denominated in settlement or billing currencies other than the US dollar.

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

4 Beginning with the first quarter of 2024, Criteo changed its segment reporting structure to two reportable segments: Retail Media and Performance Media. See the Form 8-K filed with the SEC on March 4, 2024 for more details.

5 Activated media spend is defined as the media spend activated on behalf of our Retail Media clients and our Performance Media clients.

Financial Summary

Revenue for Q3 2024 was $459 million, gross profit was $232 million and Contribution ex-TAC was $266 million. Net income for Q3 was $6 million, or $0.11 per share on a diluted basis. Adjusted EBITDA for Q3 was $82 million, resulting in an adjusted diluted EPS of $0.96. As reported, revenue for Q3 decreased by (2)%, gross profit increased 13% and Contribution ex-TAC increased by 8%. At constant currency, revenue for Q3 decreased by (2)% and Contribution ex-TAC increased by 9%. Cash flow from operating activities was $58 million in Q3 and Free Cash Flow was $39 million in Q3. As of September 30, 2024, we had $237 million in cash and marketable securities on our balance sheet.

Sarah Glickman, Chief Financial Officer, said, "We delivered strong operating leverage enabled by top-line growth and disciplined cost management in Q3. We enter the holiday season with confidence to deliver double-digit growth and margin expansion for the year while continuing to invest in our transformation."

Third Quarter 2024 Results

Revenue, Gross Profit and Contribution ex-TAC

Revenue decreased by (2)% year-over-year in Q3 2024, or (2)% at constant currency, to $459 million (Q3 2023: $469 million). Gross profit increased by 13% year-over-year in Q3 2024 to $232 million (Q3 2023: $205 million). Gross profit as a percentage of revenue, or gross profit margin, was 51% (Q3 2023: 44%). Contribution ex-TAC in the third quarter increased 8% year-over-year, or increased 9% at constant currency, to $266 million (Q3 2023: $245 million).

Retail Media revenue increased 22%, or 22% at constant currency, reflecting continued strength in Retail Media onsite. Retail Media Contribution ex-TAC increased 23%, or 23% at constant currency, driven by continued strength in Retail Media onsite, new client integrations and growing network effects of the platform.

Performance Media revenue decreased (5)%, or (5)% at constant currency, and Performance Media Contribution ex-TAC increased 5%, or 5% at constant currency, driven by the continued traction of Commerce Audiences as more clients adopt full funnel activation and resilient Retargeting, partially offset by lower AdTech services and supply.

Net Income (Loss) and Adjusted Net Income

Net income was $6 million in Q3 2024 (Q3 2023: net income of $7 million). Net income allocated to shareholders of Criteo was $6 million, or $0.11 per share on a diluted basis (Q3 2023: net income available to shareholders of $7 million, or $0.12 per share on a diluted basis).

Adjusted net income, a non-GAAP financial measure, was $56 million, or $0.96 per share on a diluted basis (Q3 2023: $43 million, or $0.71 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA was $82 million, representing an increase of 20% year-over-year (Q3 2023: $68 million). This primarily reflects higher Contribution ex-TAC over the period and effective cost management. Adjusted EBITDA as a percentage of Contribution ex-TAC, or Adjusted EBITDA margin, was 31% (Q3 2023: 28%).

Operating expenses increased by 15% year-over-year to $222 million (Q3 2023: $194 million), mostly driven by planned growth investments. Non-GAAP operating expenses increased by 7% year-over-year to $158 million (Q3 2023: $148 million).

Cash Flow, Cash and Financial Liquidity Position

Cash flow from operating activities was $58 million in Q3 2024 (Q3 2023: $20 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, was $39 million in Q3 2024 (Q3 2023: $4 million). On a trailing 12-month basis, Free Cash Flow was $177 million.

Cash and cash equivalents, and marketable securities, were $237 million, a $(122) million decrease compared to December 31, 2023, after spending $157 million on share repurchases in the nine months ended September 30, 2024.

As of September 30, 2024, the Company had total financial liquidity of approximately $711 million, including its cash position, marketable securities, revolving credit facility and treasury shares reserved for M&A.

2024 Business Outlook

The following forward-looking statements reflect Criteo's expectations as of October 30, 2024.

Fiscal year 2024 guidance:

We now expect Contribution ex-TAC to grow +10% to 11% at constant currency.

We now expect an Adjusted EBITDA margin of approximately 32% to 33% of Contribution ex-TAC.

Fourth quarter 2024 guidance:

We expect Contribution ex-TAC between $327 million and $333 million, or year-over-year growth at constant-currency of +3% to +5%.

We expect Adjusted EBITDA between $114 million and $120 million.

The guidance for the fourth quarter and fiscal year ending December 31, 2024 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.915, a U.S. dollar-Japanese Yen rate of 151, a U.S. dollar-British pound rate of 0.778, a U.S. dollar-Korean Won rate of 1,353 and a U.S. dollar-Brazilian real rate of 5.34.

The guidance assumes that no additional acquisitions are completed during the fourth quarter of 2024.

Reconciliations of Contribution ex-TAC, Adjusted EBITDA and Adjusted EBITDA margin guidance to the closest corresponding U.S. GAAP measures are 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.

Retail Media Investor Update

Criteo will webcast its Retail Media investor presentation on November 18, 2024, starting at 8:30 AM ET, 2:30 PM CET. The event will be an opportunity for the Company to provide an update on its Retail Media business and opportunities ahead. It will be accessible via live webcast or on-demand via our Investor site post-event.

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, 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 revenue and reconciled to gross profit through the exclusion of other costs 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, certain restructuring, integration and transformation costs, and certain acquisition 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 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 assets, certain restructuring, integration and transformation costs, certain acquisition 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 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 equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, and certain acquisition and integration 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, 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, Contribution ex-TAC margin, 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 year ending December 31, 2024, 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 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, 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 23, 2024, and in subsequent Quarterly Reports on Form 10-Q as well as future filings and reports by the Company. Importantly, at this time, macro-economic conditions including inflation and fluctuating interest rates in the U.S. have impacted Criteo's business, financial condition, cash flow and results of operations.

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, October 30, 2024, at 8:00 AM ET, 1:00 PM CET. The conference call will be webcast live on the Company's website at https://criteo.investorroom.com/ and will subsequently be available for replay.

United States:    +1 800 836 8184

International:    +1 646 357 8785

France    080-094-5120

Please ask to be joined into the "Criteo" call.

About Criteo

Criteo (NASDAQ:CRTO) is the global commerce media company that enables marketers and media owners to drive better commerce outcomes. Its industry leading Commerce Media Platform connects thousands of marketers and media owners to deliver richer consumer experiences from product discovery to purchase. By powering trusted and impactful advertising, Criteo supports an open internet that encourages discovery, innovation, and choice. For more information, please visit www.criteo.com. 

Contacts

Criteo Investor RelationsMelanie Dambre,

Criteo Public RelationsJessica Meyers,

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands, unaudited)

September 30, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents

$                         208,740

$                         336,341

Trade receivables, net of allowances of $ 35.1 million and $ 43.3 million at September 30, 2024 and December 31, 2023, respectively

646,283

775,589

Income taxes

9,785

2,065

Other taxes

132,370

109,306

Other current assets

44,879

48,291

Restricted cash

75,250

75,000

Marketable securities - current portion

23,010

5,970

Total current assets

1,140,317

1,352,562

Property, plant and equipment, net

116,866

126,494

Intangible assets, net

170,359

180,888

Goodwill

526,569

524,197

Right of Use Asset - operating lease

110,350

112,487

Marketable securities - non current portion

5,598

16,575

Non-current financial assets

4,957

5,294

Other non-current assets

62,216

60,742

Deferred tax assets

71,128

52,680

    Total non-current assets

1,068,043

1,079,357

Total assets

$                     2,208,360

$                     2,431,919

Liabilities and shareholders' equity

Current liabilities:

Trade payables

$                         629,997

$                         838,522

Contingencies - current portion

1,604

1,467

Income taxes

15,490

17,213

Financial liabilities - current portion

4,753

3,389

Lease liability - operating - current portion

26,159

35,398

Other taxes

83,401

66,659

Employee - related payables

104,095

113,287

Other current liabilities

109,118

104,552

Total current liabilities

974,617

1,180,487

Deferred tax liabilities

3,182

1,083

Defined benefit plans

4,938

4,123

Financial liabilities - non current portion

320

77

Lease liability - operating - non current portion

87,321

83,051

Contingencies - non current portion

31,939

32,625

Other non-current liabilities

20,536

19,082

    Total non-current liabilities

148,236

140,041

Total liabilities

1,122,853

1,320,528

Commitments and contingencies

Shareholders' equity:

Common shares, €0.025 par value, 59,180,216 and 61,165,663 shares authorized, issued and outstanding at September 30, 2024  and December 31, 2023, respectively.

1,970

2,023

Treasury stock, 4,399,179 and 5,400,572 shares at cost as of September 30, 2024  and December 31, 2023 , respectively.

(152,997)

(161,788)

Additional paid-in capital

728,707

769,240

Accumulated other comprehensive income (loss)

(83,345)

(85,326)

Retained earnings

557,072

555,456

Equity - attributable to shareholders of Criteo S.A.

1,051,407

1,079,605

Non-controlling interests

34,100

31,786

Total equity

1,085,507

1,111,391

Total equity and liabilities

$                     2,208,360

$                     2,431,919

 

CRITEO S.A.Consolidated Statement of Operations(U.S. dollars in thousands, except share and per share data, unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Revenue

$    458,892

$    469,193

$ 1,380,254

$ 1,383,143

Cost of revenue

Traffic acquisition cost

(192,789)

(223,798)

(593,170)

(676,913)

Other cost of revenue

(34,171)

(40,268)

(105,084)

(119,812)

Gross profit

231,932

205,127

682,000

586,418

Operating expenses:

Research and development expenses

(85,285)

(62,522)

(211,782)

(193,887)

Sales and operations expenses

(90,823)

(94,572)

(278,734)

(308,325)

General and administrative expenses

(46,222)

(36,599)

(134,590)

(95,306)

Total Operating expenses

(222,330)

(193,693)

(625,106)

(597,518)

Income (loss) from operations

9,602

11,434

56,894

(11,100)

Financial and Other income

(8)

(2,967)

889

2,008

Income (loss) before taxes

9,594

8,467

57,783

(9,092)

Provision for income tax (expense) benefit

(3,450)

(1,832)

(15,014)

1,685

Net income (loss)

$         6,144

$         6,635

$       42,769

$       (7,407)

Net income (loss) available to shareholders of Criteo S.A.

$         6,245

$         6,927

$       40,476

$       (7,758)

Net income (loss) available to non-controlling interests

$          (101)

$          (292)

$         2,293

$            351

Weighted average shares outstanding used in computing per