10-Q 1 crto-20220630.htm 10-Q crto-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from _________ to _________
Commission file number: 001-36153
Criteo S.A.
(Exact name of registrant as specified in its charter)
France
Not Applicable
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
32 Rue BlancheParisFrance75009
(Address of principal executive offices) (Zip Code)

+33 1 75 85 09 39
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of each exchange on which registered
American Depositary Shares, each representing one Ordinary Share,
nominal value €0.025 per share
CRTONasdaq 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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No 







Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
Non-accelerated Filer
Smaller reporting company
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. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes        No x
          As of July 31, 2022, the registrant had 60,609,940 ordinary shares, nominal value €0.025 per share, outstanding.




TABLE OF CONTENTS












General
    Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q ("Form 10-Q") to the "Company," "Criteo," "we," "us," "our" or similar words or phrases are to Criteo S.A. and its subsidiaries, taken together. In this Form 10-Q, references to "$" and "US$" are to United States dollars. Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or "U.S. GAAP."
Trademarks
    “Criteo,” the Criteo logo and other trademarks or service marks of Criteo appearing in this Form 10-Q are the property of Criteo. Trade names, trademarks and service marks of other companies appearing in this Form 10-Q are the property of their respective holders.
Special Note Regarding Forward-Looking Statements
    This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than present and historical facts and conditions contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. When used in this Form 10-Q, the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is designed to,” “may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of these and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
the ongoing effect of the COVID-19 pandemic and potential effect of inflation and rising interest rates in the U.S., including the macroeconomic effects, on our business, operations, and financial results;
the ability of the Criteo Artificial Intelligence (AI) Engine to accurately predict engagement by a user;
our ability to predict and adapt to changes in widely adopted industry platforms and other new technologies, including without limitation the proposed changes to and enhancements of the Chrome browser announced by Google;
our ability to continue to collect and utilize data about user behavior and interaction with advertisers and publishers;
our ability to acquire an adequate supply of advertising inventory from publishers on terms that are favorable to us;
our ability to meet the challenges of a growing and international company in a rapidly developing and changing industry, including our ability to forecast accurately;
our ability to maintain an adequate rate of revenue growth and sustain profitability;
our ability to manage our international operations and expansion and the integration of our acquisitions;
the effects of increased competition in our market;
our ability to adapt to regulatory, legislative or self-regulatory developments regarding internet privacy matters;
our ability to protect users’ information and adequately address privacy concerns;
our ability to enhance our brand;
the invasion of Ukraine by Russia and the effect of resulting sanctions on our business;
our ability to enter new marketing channels and new geographies;
our ability to effectively scale our technology platform;
our ability to attract and retain qualified employees and key personnel;
our ability to maintain, protect and enhance our brand and intellectual property; and
failures in our systems or infrastructure.




    You should also refer to Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021, and to Part II, Item 1A "Risk Factors" of our subsequent quarterly reports on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
    You should read this Form 10-Q and the documents that we reference in this Form 10-Q and have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary factors.
     This Form 10-Q may contain market data and industry forecasts that were obtained from industry publications. These data and forecasts involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified any third-party information. While we believe the market position, market opportunity and market size information included in this Form 10-Q is generally reliable, such information is inherently imprecise.




PART I
Item 1. Financial Statements
CRITEO S.A. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
NotesJune 30, 2022December 31, 2021
(in thousands)
Assets
Current assets:
    Cash and cash equivalents3$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
4490,643 581,988 
    Income taxes19,888 8,784 
    Other taxes 68,608 73,388 
    Other current assets539,240 34,182 
    Marketable securities - current portion310,000 50,299 
    Total current assets1,190,925 1,264,168 
Property, plant and equipment, net124,133 139,961 
Intangible assets, net78,018 82,627 
Goodwill322,972 329,699 
Right of use assets - operating lease 7108,563 120,257 
Marketable securities - non current portion3 5,000 
Non-current financial assets4,908 6,436 
Deferred tax assets41,325 35,443 
    Total non-current assets679,919 719,423 
Total assets$1,870,844 $1,983,591 
Liabilities and shareholders' equity
Current liabilities:
    Trade payables$400,058 $430,245 
    Contingencies1464,731 3,059 
    Income taxes3,791 6,641 
    Financial liabilities - current portion3255 642 
    Lease liability - operating - current portion732,110 34,066 
    Other taxes50,589 60,236 
    Employee - related payables70,435 98,136 
    Other current liabilities644,390 39,523 
    Total current liabilities666,359 672,548 
Deferred tax liabilities2,907 3,053 
Defined benefit plans83,213 5,531 
Financial liabilities - non current portion3334 360 
Lease liability - operating - non current portion 782,984 93,893 
Other non-current liabilities4,859 9,886 
    Total non-current liabilities94,297 112,723 
Total liabilities760,656 785,271 
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 capital750,774 731,248 
Accumulated other comprehensive income (loss)(102,931)(40,294)
Retained earnings577,552 601,588 
Equity-attributable to shareholders of Criteo S.A.1,079,033 1,163,131 
Non-controlling interests31,155 35,189 
Total equity1,110,188 1,198,320 
Total equity and liabilities$1,870,844 $1,983,591 

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
2


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months EndedSix Months Ended
NotesJune 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
(in thousands, except share per data)
Revenue9$495,090 $551,311 $1,005,657 $1,092,388 
Cost of revenue:
Traffic acquisition costs(280,565)(331,078)(574,215)(658,745)
Other cost of revenue(29,550)(37,364)(62,443)(72,076)
Gross profit184,975 182,869 368,999 361,567 
Operating expenses:
Research and development expenses(41,496)(41,915)(75,523)(73,612)
Sales and operations expenses(99,313)(80,751)(188,312)(160,105)
General and administrative expenses(100,672)(40,474)(134,008)(73,902)
Total operating expenses(241,481)(163,140)(397,843)(307,619)
Income from operations(56,506)19,729 (28,844)53,948 
Financial and Other income (expense)1116,412 (519)20,442 (1,237)
Income before taxes(40,094)19,210 (8,402)52,711 
Provision for income taxes127,121 (4,181)(3,293)(14,232)
Net income (loss)$(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 $1,269 
Weighted average shares outstanding used in computing per share amounts:
Basic1360,240,34460,663,30160,488,42960,702,780
Diluted1362,303,67064,665,21262,957,71864,371,603
Net income (loss) allocated to shareholders per share:
Basic13$(0.56)$0.24 $(0.22)$0.61 
Diluted13$(0.54)$0.23 $(0.21)$0.58 
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

3


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months EndedSix Months Ended
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
(in thousands)
Net income (loss)$(32,973)$15,029 $(11,695)$38,479 
Foreign currency translation differences, net of taxes(51,510)10,443 (70,728)(26,540)
Actuarial (losses) gains on employee benefits, net of taxes1,449 29 2,535 658 
Other comprehensive income (loss)$(50,061)$10,472 $(68,193)$(25,882)
Total comprehensive income (loss)$(83,034)$25,501 $(79,888)$12,597 
Attributable to shareholders of Criteo S.A.$(80,044)$25,191 $(75,664)$13,745 
Attributable to non-controlling interests$(2,990)$310 $(4,224)$(1,148)
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
4


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
Share capitalTreasury
Stock
Additional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equity
Common sharesShares
(in thousands, except share amounts )
Balance at December 31, 202066,272,106$2,161(5,632,536)$(85,570)$693,164$16,027$491,359$1,117,142$35,545$1,152,687
Net income22,40622,4061,04423,450
Other comprehensive income (loss)(33,852)(33,852)(2,502)(36,354)
Issuance of ordinary shares119,80032,1482,1512,151
Change in treasury stocks34,935(1,693)(3,237)(4,930)(4,930)
Share-Based Compensation6,7106,710506,760
Other changes in equity
Balance at March 31, 202166,391,906$2,164(5,597,601)$(87,263)$702,022$(17,825)$510,528$1,109,626$34,137$1,143,763
Net income 14,80414,80422515,029
Other comprehensive income (loss)10,38710,3878510,472
Issuance of ordinary shares305,45497,5687,5777,577
Change in treasury stocks(482,407)(24,560)(5,439)(29,999)(29,999)
Share-Based Compensation11,17211,1725511,227
Other changes in equity
Balance at June 30, 202166,697,360$2,173(6,080,008)(111,823)$720,762$(7,438)$519,893$1,123,567$34,502$1,158,069

Share capitalTreasury StockAdditional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equity
Common sharesShares
(in thousands, except share amounts )
Balance at December 31, 202165,883,347$2,149(5,207,873)$(131,560)$731,248$(40,294)$601,588$1,163,131$35,189$1,198,320
Net income20,58720,58769121,278
Other comprehensive income (loss)(16,207)(16,207)(1,925)(18,132)
Issuance of ordinary shares22,0471319320320
Change in treasury stocks(*)
(119,771)(5,770)(2,534)(8,304)(8,304)
Share-Based Compensation8,9488,948939,041
Other changes in equity
Balance at March 31, 202265,905,394$2,150(5,327,644)$(137,330)$740,515$(56,501)$619,641$1,168,475$34,048$1,202,523
Net income(33,614)(33,614)641(32,973)
Other comprehensive income (loss)(46,430)(46,430)(3,631)(50,061)
Issuance of ordinary shares(111,362)110110110
Change in treasury stocks(*)
(3)62,251(11,179)(1,342)(8,509)(21,033)(21,033)
Share-Based Compensation11,45211,4529711,549
Other changes in equity39347373
Balance at June 30, 202265,794,032$2,147(5,265,393)$(148,509)$750,774$(102,931)$577,552$1,079,033$31,155$1,110,188
(*) On February 3, 2022, Criteo's board of directors authorized an extension of the share repurchase program to up to $280.0 million of the Company's outstanding American Depositary Shares. The change in treasury stocks is comprised of 1,117,873 shares repurchased at an average price of $26.2 offset by 940,543 treasury shares used for RSUs vesting.
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
5


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
2022
June 30,
2021
(in thousands)
Net income (loss)$(11,695)$38,479 
Non-cash and non-operating items98,227 65,905 
    - Amortization and provisions114,502 42,386 
 - Net gain or (loss) on disposal of non-current assets(696)3,959 
    - Equity awards compensation expense (1)
21,510 18,885 
    - Change in deferred taxes(7,114)2,305 
    - Change in income taxes(14,678)(1,655)
    - Other (2)
(15,297)25 
Changes in working capital related to operating activities2,370 (662)
    - (Increase) / Decrease in trade receivables65,476 26,195 
    - Increase / (Decrease) in trade payables(16,977)(19,906)
    - (Increase) / Decrease in other current assets(14,595)(5,187)
    - Increase/ (Decrease) in other current liabilities(31,313)(1,069)
    - Change in operating lease liabilities and right of use assets(221)(695)
Cash from operating activities88,902 103,722 
Acquisition of intangible assets, property, plant and equipment(32,794)(27,616)
Change in accounts payable related to intangible assets, property, plant and equipment11,778 708 
Payment for a business, net of cash acquired (9,598)
Change in other non-current financial assets44,311 (20,308)
Cash (used for) from investing activities23,295 (56,814)
Proceeds from borrowings under line-of-credit agreement78,513  
Repayment of borrowings(78,513)(1,272)
Proceeds from exercise of stock options351 9,575 
Repurchase of treasury stocks(29,334)(34,929)
Change in other financial liabilities(860)(748)
Other (2)
15,334  
Cash used for financing activities(14,509)(27,374)
Effect of exchange rates changes on cash and cash equivalents(50,669)(18,024)
Net increase in cash and cash equivalents47,019 1,510 
Net cash and cash equivalents at beginning of period515,527 488,011 
Net cash and cash equivalents at end of period$562,546 $489,521 
Supplemental disclosures of cash flow information
Cash paid for taxes, net of refunds(25,085)(13,582)
Cash paid for interest(626)(736)
(1) Of which $20.6 million and $18.0 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the six months ended June 30, 2022 and 2021, respectively.
(2) Primarily consists of realized gains in FX hedges.

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
6


CRITEO S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Criteo S.A. was initially incorporated as a société par actions simplifiée, or S.A.S., under the laws of the French Republic on November 3, 2005, for a period of 99 years and subsequently converted to a société anonyme, or S.A.
We are a global technology company that enables marketers and media owners to drive better commerce outcomes through the world’s leading Commerce Media Platform. We bring richer experiences to every consumer by supporting a fair and open internet that enables discovery, innovation, and choice — powered by trusted and impactful advertising from the world’s marketers and media owners.

We are leading the way of commerce media — a new approach to advertising that combines commerce data and machine learning to target consumers throughout their shopping journey and help marketers and media owners drive commerce outcomes (sales, leads, advertising revenue).

Our strategy is to help marketers and media owners activate 1st-party, privacy-safe data and drive better commerce outcomes through our Commerce Media Platform, a suite of products:
that offer marketers (brands, retailers, and agencies) the ability to easily reach consumers anywhere throughout their shopping journey and measure their advertising campaigns
that offer media owners (publishers and retailers) the ability to monetize their advertising and promotions inventory for commerce anywhere where consumers spend their time
sitting on top of a dataset and technology that power our entire offering.


In these notes, Criteo S.A. is referred to as the "Parent" company and together with its subsidiaries, collectively, as "Criteo," the "Company," the "Group," or "we".






























7


Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements included herein (the "Unaudited Condensed Consolidated Financial Statements") have been prepared by Criteo pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.

Conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in the condensed consolidated financial statements and accompanying notes. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. Our actual results may differ from these estimates. U.S. GAAP requires us to make estimates and judgments in several areas, including, but not limited to: (1) revenue recognition criteria, (2) allowances for credit losses, (3) research tax credits, (4) income taxes, including (i) recognition of deferred tax assets arising from the subsidiaries projected taxable profit for future years, (ii) evaluation of uncertain tax positions associated with our transfer pricing policy and (iii) recognition of income tax position in respect with tax reforms recently enacted in countries we operate, (5) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (6) assumptions used in the valuation of goodwill, intangible assets and right of use assets - operating lease, and (7) assumptions used in the valuation model to determine the fair value of share-based compensation plan.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
8


Accounting Pronouncements Adopted in 2022

Effective January 1, 2022, we have adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (ASU 2021-10), which improves the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity's financial statements. The impacts on our annual consolidated financial statements will be limited as a result of adoption of this standard.

Recent Accounting Pronouncements
Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s Consolidated Financial Statements upon adoption.

9


Note 2. Segment information
Reportable segments
The Company reports segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments: Marketing Solutions and Retail Media.

Criteo's Marketing Solutions segment allows commerce companies to address multiple marketing goals by engaging their consumers with personalized ads across the web, mobile and offline store environments.

Criteo's Retail Media segment allows retailers to generate advertising revenues from consumer brands, and/or to drive sales for themselves, by monetizing their data and audiences through personalized ads, either on their own digital property or on the open Internet, that address multiple marketing goals.

Segment operating results, Contribution ex-TAC, is Criteo's segment profitability measure and reflects our gross profit plus other costs of revenue.

The following table shows revenue by reportable segment:
Three Months EndedSix Months Ended
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
(in thousands)
Marketing Solutions$440,423 487,465 $904,311 970,655 
Retail Media54,667 63,846 101,346 121,733 
Total Revenue$495,090 $551,311 $1,005,657 $1,092,388 
The following table shows Contribution ex-TAC by reportable segment and its reconciliation to the Company’s Consolidated Statements of Operation:
Three Months EndedSix Months Ended
June 30,
2022
June 30,
2021
June 30,
2022
June 30,
2021
(in thousands)
Contribution ex-TAC
Marketing Solutions$177,969 $193,333 $364,057 $385,650 
Retail Media36,556 26,900 67,385 47,993 
$214,525 $220,233 $431,442 $433,643 
Other costs of sales(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)$53,948 
Financial and Other Income (Expense)16,412 (519)20,442 (1,237)
Income before tax$(40,094)$19,210 $(8,402)$52,711 
The Company's chief operating decision maker, or CODM, does not review any other financial information for our two segments, other than Contribution ex-TAC, at the reportable segment level.
10



Note 3. Financial Instruments
Financial assets
The maximum exposure to credit risk at the end of each reported period is represented by the carrying amount of financial assets and summarized in the following table:
June 30, 2022December 31, 2021
(in thousands)
Trade receivables, net of allowances490,643 581,988 
Other taxes68,608 73,388 
Other current assets39,240 34,182 
Non-current financial assets4,908 6,436 
Marketable securities10,000 55,299 
Total$613,399 $751,293 

For our financial assets, other than trade receivables, net of allowances, the fair value approximates the carrying amount, given the nature of the financial assets and the maturity of the expected cash flows.

Financial Liabilities
June 30, 2022December 31, 2021
(in thousands)
Trade payables $400,058 $430,245 
Other taxes50,589 60,236 
Employee-related payables 70,435 98,136 
Other current liabilities44,390 39,523 
Financial liabilities589 1,002 
Total$566,061 $629,142 

The fair value of financial liabilities approximates the carrying amount, given the nature of the financial liabilities and the maturity of the expected cash outflows.

Fair Value Measurements     
We measure the fair value of our cash equivalents and marketable securities, which include interest-bearing bank deposits, as level 2 measurements because they are valued using observable market data.
Financial assets or liabilities include derivative financial instruments used to manage our exposure to the risk of exchange rate fluctuations. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.


11



Derivative Financial Instruments
Derivatives consist of foreign currency forward contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. We recognize gains and losses on these contracts in financial income (expense), and their position on the balance sheet is based on their fair value at the end of each respective period. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.
June 30, 2022December 31, 2021
(in thousands)
Derivative Assets:
Included in other current assets $2,658 $60 
Derivative Liabilities:
Included in financial liabilities - current portion$ $ 

The fair value of derivative financial instruments approximates the notional amount, given the nature of the derivative financial instruments and the maturity of the expected cash flows.

Cash and Cash Equivalents
The following table presents for each reporting period, the breakdown of cash and cash equivalents:
June 30, 2022December 31, 2021
(in thousands)
Cash equivalents$48,312 $137,228 
Cash on hand514,234 378,299 
Total cash and cash equivalents$562,546 $515,527 

Cash equivalents are investments in interest–bearing bank deposits which meet ASC 230—Statement of Cash flows criteria: short-term, highly liquid investments, for which the risks of changes in value are considered to be insignificant. Interest-bearing bank deposits are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.
For our cash and cash equivalents, the fair value approximates the carrying amount, given the nature of the cash and cash equivalents and the maturity of the expected cash flows.






12



Marketable Securities

The following table presents for each reporting period, the breakdown of the fair value of marketable securities:
June 30, 2022December 31, 2021
(in thousands)
Securities Available-for-sale
Term Deposits$ $22,652 
Securities Held-to-maturity
Term Deposits$10,000 $32,647 
Total$10,000 $55,299 

The gross unrealized gains on our marketable securities were not material as of June 30, 2022.
Term deposits are considered a level 2 financial instrument as they are measured using valuation techniques based on observable market data.
The following table classifies our marketable securities by contractual maturities:

Held-to-maturityAvailable-for-sale
June 30, 2022
(in thousands)
Due in one year$10,000 $ 
Due in one to five years$ $ 
Total$10,000 $ 

13



Note 4. Trade Receivables
The following table shows the breakdown in trade receivables net book value for the presented periods:
June 30, 2022December 31, 2021
(in thousands)
Trade accounts receivables$541,131 $627,379 
(Less) Allowance for credit losses(50,488)(45,391)
Net book value at end of period$490,643 $581,988 
Changes in allowance for credit accounts are summarized below:
 2022 2021
(in thousands)
Balance at January 1$(45,391)$(39,899)
Allowance for credit losses(11,551)(6,617)
Reversal of provision4,474 3,469 
Currency translation adjustment1,980 454 
Balance at June 30$(50,488)$(42,593)
We write off accounts receivable balances once the receivables are no longer deemed collectible.

During the six month period ended June 30, 2022, and June 30, 2021, the Company recovered $4.5 million, and $1.7 million, respectively, previously reserved for, and accounted for this as a reversal of provision.
As of June 30, 2022 and December 31, 2021 no customer accounted for 10% or more of trade receivables.

14



Note 5. Other Current Assets
The following table shows the breakdown in other current assets net book value for the presented periods:
June 30, 2022December 31, 2021
(in thousands)
Prepayments to suppliers$8,231 $9,640 
Other debtors2,224 9,259 
Prepaid expenses26,127 15,283 
Derivative instruments2,658  
Net book value at end of period$39,240 $34,182 
Prepaid expenses mainly consist of cash paid related to SaaS arrangements.

15


Note 6. Other Current Liabilities
Other current liabilities are presented in the following table:
June 30, 2022December 31, 2021
(in thousands)
Current liabilities to clients$16,978 $16,423 
Rebates15,091 17,423 
Accounts payable relating to capital expenditures9,501 4,507 
Other creditors2,136 1,088 
Deferred revenue684 82 
Total$44,390 $39,523 

16


Note 7. Leases
The components of lease expense are as follows:
Three Months Ended
June 30, 2022June 30, 2021
OfficesData CentersTotalOfficesData CentersTotal
(in thousands)
Lease expense$4,343 $5,029 $9,372 $6,874 $6,460 $13,334 
Short term lease expense204 2 206 125 7 132 
Variable lease expense25 86 111 100 129 229 
Sublease income(263) (263)(288) (288)
Total operating lease expense$4,309 $5,117 $9,426 $6,811 $6,596 $13,407 

Six Months Ended
June 30, 2022June 30, 2021
OfficesData CentersTotalOfficesData CentersTotal
(in thousands)
Lease expense$8,752 $10,236 $18,988 $13,417 $12,858 $26,275 
Short term lease expense355 5 360 201 14 215 
Variable lease expense75 91 166 244 202 446 
Sublease income(435)(