10-Q 1 crto-20220930.htm 10-Q crto-20220930
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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 September 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 October 31, 2022, the registrant had 60,210,797 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
2


CRITEO S.A. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
NotesSeptember 30, 2022December 31, 2021
(in thousands)
Assets
Current assets:
    Cash and cash equivalents4$307,323 $515,527 
    Trade receivables, net of allowances of $57.6 million and $45.4 million at September 30, 2022 and December 31, 2021, respectively
5576,082 581,988 
    Income taxes1316,474 8,784 
    Other taxes 75,795 73,388 
    Other current assets634,347 34,182 
    Restricted cash - current 425,000  
    Marketable securities - current portion410,000 50,299 
    Total current assets1,045,021 1,264,168 
Property, plant and equipment, net114,493 139,961 
Intangible assets, net77,464 82,627 
Goodwill2597,781 329,699 
Right of use assets - operating lease 8101,982 120,257 
Restricted cash - non-current475,000  
Marketable securities - non-current portion4 5,000 
Non-current financial assets6,864 6,436 
Other non-current assets54,478  
Deferred tax assets49,487 35,443 
    Total non-current assets1,077,549 719,423 
Total assets$2,122,570 $1,983,591 
Liabilities and shareholders' equity
Current liabilities:
    Trade payables$576,762 $430,245 
    Contingencies - current portion1560,038 3,059 
    Income taxes135,602 6,641 
    Financial liabilities - current portion4 642 
    Lease liability - operating - current portion830,469 34,066 
    Other taxes56,894 60,236 
    Employee - related payables72,897 98,136 
    Other current liabilities760,810 39,523 
    Total current liabilities863,472 672,548 
Deferred tax liabilities2,842 3,053 
Defined benefit plans92,836 5,531 
Financial liabilities - non-current portion4270 360 
Lease liability - operating - non-current portion 877,901 93,893 
Contingencies - non-current portion1532,731  
Other non-current liabilities765,618 9,886 
    Total non-current liabilities182,198 112,723 
Total liabilities1,045,670 785,271 
Commitments and contingencies
Shareholders' equity:
Common shares, 0.025 par value, 64,985,388 and 65,883,347 shares authorized, issued and outstanding at September 30, 2022, and December 31, 2021, respectively.
2,125 2,149 
Treasury stock, 5,049,409 and 5,207,873 shares at cost as of September 30, 2022 and December 31, 2021, respectively.
(152,889)(131,560)
Additional paid-in capital760,666 731,248 
Accumulated other comprehensive income (loss)(131,651)(40,294)
Retained earnings569,218 601,588 
Equity-attributable to shareholders of Criteo S.A.1,047,469 1,163,131 
Non-controlling interests29,431 35,189 
Total equity1,076,900 1,198,320 
Total equity and liabilities$2,122,570 $1,983,591 

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
3


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months EndedNine Months Ended
NotesSeptember 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands, except share per data)
Revenue10$446,921 $508,580 $1,452,578 $1,600,968 
Cost of revenue:
Traffic acquisition costs(233,543)(297,619)(807,758)(956,364)
Other cost of revenue(33,771)(34,935)(96,214)(107,011)
Gross profit179,607 176,026 548,606 537,593 
Operating expenses:
Research and development expenses(42,725)(33,345)(118,248)(106,957)
Sales and operations expenses(90,051)(75,619)(278,363)(235,724)
General and administrative expenses(42,353)(34,877)(176,361)(108,779)
Total operating expenses(175,129)(143,841)(572,972)(451,460)
Income (loss) from operations4,478 32,185 (24,366)86,133 
Financial and Other income (expense)123,485 (154)23,927 (1,391)
Income (loss) before taxes7,963 32,031 (439)84,742 
Provision for income taxes13(1,442)(7,801)(4,735)(22,033)
Net income (loss)$6,521 $24,230 $(5,174)$62,709 
Net income (loss) available to shareholders of Criteo S.A.$6,579 $23,481 $(6,448)$60,691 
Net income (loss) available to non-controlling interests$(58)$749 $1,274 $2,018 
Weighted average shares outstanding used in computing per share amounts:
Basic1460,318,11460,873,59460,431,59760,759,613
Diluted1463,235,81164,197,68663,050,35564,313,526
Net income (loss) allocated to shareholders per share:
Basic14$0.11 $0.39 $(0.11)$1.00 
Diluted14$0.10 $0.37 $(0.10)$0.94 
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

4


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Net income (loss)$6,521 $24,230 $(5,174)$62,709 
Foreign currency translation differences, net of taxes(30,896)(18,394)(101,624)(44,934)
Actuarial gains on employee benefits, net of taxes409 25 2,944 683 
Other comprehensive income (loss)$(30,487)$(18,369)$(98,680)$(44,251)
Total comprehensive income (loss)$(23,966)$5,861 $(103,854)$18,458 
Attributable to shareholders of Criteo S.A.$(22,142)$5,569 $(97,806)$19,314 
Attributable to non-controlling interests$(1,824)$292 $(6,048)$(856)
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
5


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 income (loss)22,40622,4061,04423,450
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 (loss)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
Net income (loss)23,48123,48174924,230
Other comprehensive income (loss)(17,911)(17,911)(458)(18,369)
Issuance of ordinary shares(382,341)1612,16712,18312,183
Change in treasury stocks(27)535,481(10,567)(18,036)(9,054)(37,684)(37,684)
Share-Based Compensation12,72012,72010312,823
Other changes in equity
Balance at September 30, 202166,315,019$2,162(5,544,527)(122,390)$727,613$(25,349)$534,320$1,116,356$34,896$1,151,252
(*) From January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost issued by the Financial Accounting Standards Board (FASB).
(**) Deferred consideration in the context of Storetail Marketing SAS acquisition in 2018.
6


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 income (loss)20,58720,58769121,278
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 (loss)(33,613)(33,613)641(32,972)
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 equity39337272
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
Net income (loss)6,5796,579(58)6,521
Other comprehensive income (loss)(28,720)(28,720)(1,767)(30,487)
Issuance of ordinary shares(808,644)111
Change in treasury stocks(*)
(23)215,984(4,380)(10,530)(14,913)(29,846)(29,846)
Share-Based Compensation20,42220,42210120,523
Other changes in equity
Balance at September 30, 202264,985,388$2,125(5,049,409)$(152,889)$760,666$(131,651)$569,218$1,047,469$29,431$1,076,900
(*) 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 2,195,411 shares repurchased at an average price of $26.7 offset by 1,401,489 treasury shares used for RSUs and LUSs vesting, 952,386 shares retired.

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
7


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
2022
September 30,
2021
(in thousands)
Net income (loss)$(5,174)$62,709 
Non-cash and non-operating items122,043 103,573 
    - Amortization and provisions134,650 67,919 
 - Net gain or (loss) on disposal of non-current assets(361)4,694 
    - Equity awards compensation expense (1)
42,594 32,174 
    - Interest accrued and non-cash financial income and expenses(2,244) 
    - Change in deferred taxes(16,051)4,568 
    - Change in income taxes(12,899)(5,820)
    - Other (2)
(23,646)38 
Changes in working capital related to operating activities13,661 (11,381)
    - (Increase) / Decrease in trade receivables75,399 16,654 
    - Increase / (Decrease) in trade payables(19,526)(5,693)
    - (Increase) / Decrease in other current assets(23,224)(12,710)
    - Increase/ (Decrease) in other current liabilities(20,178)(5,774)
    - Change in operating lease liabilities and right of use assets1,190 (3,858)
Cash from operating activities130,530 154,901 
Acquisition of intangible assets, property, plant and equipment(48,955)(44,383)
Change in accounts payable related to intangible assets, property, plant and equipment7,632 1,518 
Payment for a business, net of cash acquired(135,453)(9,527)
Change in other non-current financial assets43,052 (13,803)
Cash (used for) from investing activities(133,724)(66,195)
Proceeds from borrowings under line-of-credit agreement78,513  
Repayment of borrowings(78,513)(1,262)
Proceeds from exercise of stock options617 21,688 
Repurchase of treasury stocks(59,162)(72,611)
Change in other financial liabilities107 (3,636)
Other (2)
22,242  
Cash used for financing activities(36,196)(55,821)
Effect of exchange rates changes on cash and cash equivalents(68,813)(23,438)
Net increase (decrease) in cash and cash equivalents(108,203)9,447 
Net cash and cash equivalents at beginning of period515,526 488,011 
Net cash and cash equivalents and restricted cash at end of period$407,323 $497,458 
Supplemental disclosures of cash flow information
Cash paid for taxes, net of refunds(33,685)(23,285)
Cash paid for interest(959)(1,139)
(1) Of which $41.1 million and $30.8 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the nine months ended September 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.
8


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".






























9


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.
10


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.

Note 2. Business acquisitions
On August 1, 2022, the Company, Iponweb Holding Limited, Exezars Limited (a subsidiary of Iponweb Holding Limited and collectively with Iponweb Holding Limited, the “Sellers”), Mr. Ljubisa Bogunovic, in his capacity as trustee of the “IW General Management Trust” and Mr. Boris Mouzykantskii, founder and Chief Executive Officer of Iponweb Holding Limited (the “Founder”) entered into an amended and restated Framework Purchase Agreement (the “FPA”), amending and restating the previously disclosed framework purchase agreement, dated December 22, 2021, which provided for the acquisition of the business of Iponweb Holding Limited (the "Iponweb business"), a market-leading AdTech company with world-class media trading capabilities, by the Company (the “Iponweb Acquisition”).

This business combination is composed of an asset purchase of Iponweb intellectual property and other intangible rights and a share purchase of 100% of the share capital and voting rights of nine Iponweb operational legal entities.
Purchase price. The purchase price, as per ASC 805, was $287.6 million (subject to post-close purchase price adjustments) for the Iponweb business, out of which $61.2 million represents the fair value of the contingent consideration and is payable based upon the achievement of certain net revenue targets by the Iponweb business for the 2022 and 2023 fiscal years. The FPA also provides for contingent consideration payable in cash to the Sellers in an amount up to $100 million, conditioned upon the achievement of certain net revenue targets by the Iponweb business for the 2022 and 2023 fiscal years.
Separate compensation arrangement. The Company transferred Treasury shares with a fair value of $70.2 million to Iponweb's Sellers, subject to lock-up conditions. As these shares are subject to a lock-up period that expires in three installments on each of the first three anniversaries of the Iponweb Acquisition, unless the Founder's employment agreement is terminated under certain circumstances during the pendency of such lock-up period, the $70.2 million fair value was not included in the purchase price consideration above and will be accounted for separately from the business combination as a stock compensation expense. See Note 11 for further discussion.

Financing. The acquisition was financed by available cash resources, and in connection with the Acquisition, the Company drew down €50.0 million ($51.1 million) for a one-month period on its then-current revolving credit facility (repaid prior to quarter end) to provide additional liquidity.
Assets acquired and liabilities assumed. The transaction was accounted for as a business acquisition. The purchase price allocation is in progress and we expect to complete this analysis within one year from the Acquisition Date.
On the Acquisition Date, assets acquired and liabilities assumed by major asset class before purchase price allocation are as follow:
11


Estimated fair values
(in millions)
Cash and cash equivalents93.3 
Trade receivables113.3 
    Other current assets1.0 
Other non-current assets56.1 
Trade Payables(192.5)
Other current liabilities(13.7)
Other non-current liabilities (52.2)
Net assets acquired
$5.3 
In the Iponweb business's opening balance sheet, Criteo recognized an $18.0 million liability related to the Iponweb business's uncertain tax positions in accordance with ASC 740. The Company also recognized a $32.7 million provision in connection with the Iponweb business, accounted for under ASC 450 Contingencies. As part of the Acquisition, the Sellers agreed to indemnify Criteo for losses related to certain liabilities, up to an amount of $50.0 million. As such, we have recognized an indemnification asset of $50.0 million which is recorded as part of "Other non-current assets" on the consolidated statement of financial position.

Preliminary goodwill. The Company is assessing the fair value estimate of assets acquired and liabilities assumed as part of the Iponweb Acquisition, based on facts and circumstances that existed as of the Acquisition Date. This measurement period will not exceed one year from the Acquisition Date. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The preliminary goodwill of $282.3 million is primarily attributable to synergies expected to be realized from leveraging our technological capabilities and from the existence of an assembled workforce.
Our fair value estimate of assets acquired and liabilities assumed is pending the completion of certain items including the final determination of the purchase price and the final assessment of the fair value of the assets acquired and liabilities assumed, including those related to intangible assets. Accordingly, there could be material adjustments to our consolidated financial statements, including changes in our amortization expense related to the valuation of intangible assets and their respective useful lives, among other adjustments.
Acquisition costs. Acquisition related costs of $7.1 million and $11.5 million were recorded within general and administrative expenses on the consolidated statements of comprehensive income for the three and nine months ended September 30, 2022, respectively.
Impact on profit and loss. The Company's consolidated statements of operations for the nine months ended September 30, 2022 includes Iponweb's revenues of $18.5 million and pretax income (loss) of $0.5 million for the period from the Acquisition Date to September 30, 2022.
On a pro-forma basis, assuming the Acquisition occurred on January 1, 2021, Criteo's consolidated pro-forma revenue and net income or loss would have been as follows:
Pro Forma Consolidated Statement of Operations Data
Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Revenue$473,859 $532,986 $1,512,605 $1,670,941 
Net Income (loss)6,709 25,510 (4,079)$66,720 


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The historical consolidated financial information has been adjusted in the pro forma combined financial statements to give the effect to pro forma events that are directly attributable to the business combination and are reasonably estimable. The pro forma information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the Acquisition had taken place at the beginning the Company's fiscal year 2021.

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Note 3. 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. As a result of the Iponweb Acquisition, the Company reassessed its operating and reportable segments in accordance with ASC 280, Segment Reporting. Effective August 1, 2022, the Company reports its results of operations through the following three segments: Marketing Solutions, Retail Media and Iponweb.

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

Retail Media: This 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.

Iponweb: This segment specializes in building real-time advertising technology and trading infrastructure, delivering advanced media buying, selling, and packaging capabilities for media owners, agencies, performance advertisers, and 3rd-party ad tech platforms.


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 EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Marketing Solutions$387,288 458,622 $1,291,599 1,429,277 
Retail Media41,170 49,958 142,516 171,691 
Iponweb18,463  18,463  
Total Revenue$446,921 $508,580 $1,452,578 $1,600,968 
The following table shows Contribution ex-TAC by reportable segment and its reconciliation to the Company’s Consolidated Statements of Operation:
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Three Months EndedNine Months Ended
September 30,
2022
September 30,
2021
September 30,
2022
September 30,
2021
(in thousands)
Contribution ex-TAC
Marketing Solutions$158,022 $182,124 $522,079 $567,774 
Retail Media36,893 28,837 104,278 76,830 
Iponweb18,463  18,463 
$213,378 $210,961 $644,820 $644,604 
Other costs of sales(33,771)(34,935)(96,214)(107,011)
Gross profit$179,607 $176,026 $548,606 $537,593 
Operating expenses
Research and development expenses(42,725)(33,345)(118,248)(106,957)
Sales and operations expenses(90,051)(75,619)(278,363)(235,724)
General and administrative expenses(42,353)(34,877)(176,361)(108,779)
Total Operating expenses(175,129)(143,841)(572,972)(451,460)
Income (loss) from operations$4,478 $32,185 $(24,366)$86,133 
Financial and Other Income (Expense)3,485 (154)23,927 (1,391)
Income (loss) before tax$7,963 $32,031 $(439)$84,742 
The Company's chief operating decision maker, or CODM, does not review any other financial information for our three segments, other than Contribution ex-TAC, at the reportable segment level.
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Note 4. 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:
September 30, 2022December 31, 2021
(in thousands)
Trade receivables, net of allowances576,082 581,988 
Other taxes75,795 73,388 
Other current assets34,347 34,182 
Non-current financial assets6,864 6,436 
Restricted cash100,000  
Marketable securities10,000 55,299 
Total$803,088 $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
September 30, 2022December 31, 2021
(in thousands)
Trade payables $576,762 $430,245 
Other taxes56,894 60,236 
Employee-related payables 72,897 98,136 
Other current liabilities