10-Q 1 crto-20220331.htm 10-Q crto-20220331
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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 March 31, 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 April 30, 2022, the registrant had 60,355,304 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, including its macroeconomic effects, on our business, operations, and financial results, and the effect of governmental restrictions and regulations on our operations and processes;
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 any 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)
NotesMarch 31, 2022December 31, 2021
(in thousands)
Assets
Current assets:
    Cash and cash equivalents3$589,343 $515,527 
    Trade receivables, net of allowances of $48.7 million and $45.4 million at March 31, 2022 and December 31, 2021, respectively
4479,636 581,988 
    Income taxes10,131 8,784 
    Other taxes 72,869 73,388 
    Other current assets545,460 34,182 
    Marketable securities - current portion331,387 50,299 
    Total current assets1,228,826 1,264,168 
Property, plant and equipment, net129,164 139,961 
Intangible assets, net79,441 82,627 
Goodwill328,125 329,699 
Right of use assets - operating lease 7110,784 120,257 
Marketable securities - non current portion3 5,000 
Non-current financial assets6,855 6,436 
Deferred tax assets32,145 35,443 
    Total non-current assets686,514 719,423 
Total assets$1,915,340 $1,983,591 
Liabilities and shareholders' equity
Current liabilities:
    Trade payables$374,601 $430,245 
    Contingencies142,864 3,059 
    Income taxes7,450 6,641 
    Financial liabilities - current portion33,481 642 
    Lease liability - operating - current portion731,373 34,066 
    Other taxes58,780 60,236 
    Employee - related payables93,817 98,136 
    Other current liabilities640,149 39,523 
    Total current liabilities612,515 672,548 
Deferred tax liabilities2,942 3,053 
Defined benefit plans84,638 5,531 
Financial liabilities - non current portion3354 360 
Lease liability - operating - non current portion 784,692 93,893 
Other non-current liabilities7,676 9,886 
    Total non-current liabilities100,302 112,723 
Total liabilities712,817 785,271 
Commitments and contingencies
Shareholders' equity:
Common shares, 0.025 par value, 65,905,394 and 65,883,347 shares authorized, issued and outstanding at March 31, 2022, and December 31, 2021, respectively.
2,150 2,149 
Treasury stock, 5,327,644 and 5,632,536 shares at cost as of March 31, 2022 and December 31, 2021, respectively.
(137,330)(131,560)
Additional paid-in capital740,515 731,248 
Accumulated other comprehensive income (loss)(56,501)(40,294)
Retained earnings619,641 601,588 
Equity-attributable to shareholders of Criteo S.A.1,168,475 1,163,131 
Non-controlling interests34,048 35,189 
Total equity1,202,523 1,198,320 
Total equity and liabilities$1,915,340 $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 Ended
NotesMarch 31,
2022
March 31,
2021
(in thousands, except share per data)
Revenue9$510,567 $541,077 
Cost of revenue:
Traffic acquisition costs(293,650)(327,667)
Other cost of revenue(32,893)(34,712)
Gross profit184,024 178,698 
Operating expenses:
Research and development expenses(34,027)(31,697)
Sales and operations expenses(88,999)(79,354)
General and administrative expenses(33,336)(33,428)
Total operating expenses(156,362)(144,479)
Income from operations27,662 34,219 
Financial and Other income (expense)114,030 (718)
Income before taxes31,692 33,501 
Provision for income taxes12(10,414)(10,051)
Net income$21,278 $23,450 
Net income available to shareholders of Criteo S.A.$20,587 $22,406 
Net income available to non-controlling interests$691 $1,044 
Weighted average shares outstanding used in computing per share amounts:
Basic1360,738,29960,741,674
Diluted1363,613,55064,077,409
Net income allocated to shareholders per share:
Basic13$0.34 $0.37 
Diluted13$0.32 $0.35 
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 Ended
March 31,
2022
March 31,
2021
(in thousands)
Net income$21,278 $23,450 
Foreign currency translation differences, net of taxes(19,218)(36,983)
Actuarial (losses) gains on employee benefits, net of taxes1,086 629 
Other comprehensive income (loss)$(18,132)$(36,354)
Total comprehensive income$3,146 $(12,904)
Attributable to shareholders of Criteo S.A.$4,380 $(11,446)
Attributable to non-controlling interests$(1,234)$(1,458)
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

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
(*) 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 303,342 shares repurchased at an average price of $27.4 offset by 183,571 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)
Three Months Ended
March 31,
2022
March 31,
2021
(in thousands)
Net income$21,278 $23,450 
Non-cash and non-operating items34,726 30,017 
    - Amortization and provisions26,611 17,225 
 - Net gain or (loss) on disposal of non-current assets9 3,945 
    - Equity awards compensation expense (1)
9,489 7,215 
    - Change in deferred taxes2,868 4,998 
    - Change in income taxes(432)(3,379)
    - Other(3,819)13 
Changes in working capital related to operating activities18,926 23,895 
    - (Increase) / Decrease in trade receivables92,738 47,226 
    - Increase / (Decrease) in trade payables(49,672)(10,640)
    - (Increase) / Decrease in other current assets(18,947)(5,050)
    - Increase/ (Decrease) in other current liabilities(3,182)(4,527)
    - Change in operating lease liabilities and right of use assets(2,011)(3,114)
Cash from operating activities74,930 77,362 
Acquisition of intangible assets, property, plant and equipment(10,857)(11,953)
Change in accounts payable related to intangible assets, property, plant and equipment5,293 (1,827)
Change in other non-current financial assets22,489 (3,252)
Cash (used for) from investing activities16,925 (17,032)
Proceeds from borrowings under line-of-credit agreement78,513  
Repayment of borrowings(78,513)(182)
Proceeds from exercise of stock options271 2,074 
Repurchase of treasury stocks(8,304)(4,930)
Change in other financial liabilities6,666 (378)
Cash (used for) from financing activities(1,367)(3,416)
Effect of exchange rates changes on cash and cash equivalents(16,672)(24,865)
Net increase in cash and cash equivalents73,816 32,049 
Net cash and cash equivalents at beginning of period515,527 488,011 
Net cash and cash equivalents at end of period$589,343 $520,060 
Supplemental disclosures of cash flow information
Cash paid for taxes, net of refunds(7,978)(8,432)
Cash paid for interest(365)(367)
(1) Of which $9.0 million and $6.8 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the three months ended March 31, 2022 and 2021, respectively.

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).

We 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. We have enhanced our disclosures as a result of this pronouncement.

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 Ended
March 31,
2022
March 31,
2021
(in thousands)
Marketing Solutions$463,888 483,190 
Retail Media46,679 57,887 
Total Revenue$510,567 $541,077 
The following table shows Contribution ex-TAC by reportable segment and its reconciliation to the Company’s Consolidated Statements of Operation:
Three Months Ended
March 31,
2022
March 31,
2021
(in thousands)
Contribution ex-TAC
Marketing Solutions$186,088 $192,317 
Retail Media30,829 21,093 
$216,917 $213,410 
Other costs of sales(32,893)(34,712)
Gross profit$184,024 $178,698 
Operating expenses
Research and development expenses(34,027)(31,697)
Sales and operations expenses(88,999)(79,354)
General and administrative expenses(33,336)(33,428)
Total Operating expenses(156,362)(144,479)
Income from operations$27,662 $34,219 
Financial and Other Income (Expense)4,030 (718)
Income before tax$31,692 $33,501 
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:
March 31, 2022December 31, 2021
(in thousands)
Trade receivables, net of allowances479,636 581,988 
Other taxes72,869 73,388 
Other current assets45,460 34,182 
Non-current financial assets6,855 6,436 
Marketable securities31,387 55,299 
Total$636,207 $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
March 31, 2022December 31, 2021
(in thousands)
Trade payables $374,601 $430,245 
Other taxes58,780 60,236 
Employee-related payables 93,817 98,136 
Other current liabilities40,149 39,523 
Financial liabilities3,835 1,002 
Total$571,182 $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.
March 31, 2022December 31, 2021
(in thousands)
Derivative Assets:
Included in other current assets $ $60 
Derivative Liabilities:
Included in financial liabilities - current portion$3,287 $ 

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:
March 31, 2022December 31, 2021
(in thousands)
Cash equivalents$78,782 $137,228 
Cash on hand510,561 378,299 
Total cash and cash equivalents$589,343 $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:
March 31, 2022December 31, 2021
(in thousands)
Securities Available-for-sale
Term Deposits$21,385 $22,652 
Securities Held-to-maturity
Term Deposits$10,000 $32,647 
Total$31,385 $55,299 

The gross unrealized gains on our marketable securities were not material as of March 31, 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
March 31, 2022
(in thousands)
Due in one year$10,000 $21,385 
Due in one to five years$ $ 
Total$10,000 $21,385 

13



Note 4. Trade Receivables
The following table shows the breakdown in trade receivables net book value for the presented periods:
March 31, 2022December 31, 2021
(in thousands)
Trade accounts receivables$528,294 $627,379 
(Less) Allowance for credit losses(48,658)(45,391)
Net book value at end of period$479,636 $581,988 
Changes in allowance for credit accounts are summarized below:
 2022 2021
(in thousands)
Balance at January 1$(45,391)$(16,068)
Allowance for credit losses(7,291)(2,759)
Reversal of provision2,633 3,306 
Currency translation adjustment1,391 658 
Balance at March 31$(48,658)$(38,694)
We write off accounts receivable balances once the receivables are no longer deemed collectible. In the first quarter of 2022, Criteo recorded a bad debt reserve of $2.7 million associated with the adverse economic impacts of the Russian invasion of Ukraine.

During the three month period ended March 31, 2022, and March 31, 2021, the Company recovered $0.6 million, and $0.5 million, respectively, previously reserved for, and accounted for this as a reversal of provision.
As of March 31, 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:
March 31, 2022December 31, 2021
(in thousands)
Prepayments to suppliers$12,840 $9,640 
Other debtors4,272 9,259 
Prepaid expenses28,348 15,283 
Net book value at end of period$45,460 $34,182 
Prepaid expenses mainly consist of costs related to SaaS arrangements.

15


Note 6. Other Current Liabilities
Other current liabilities are presented in the following table:
March 31, 2022December 31, 2021
(in thousands)
Current liabilities to clients$16,214 $16,423 
Rebates16,714 17,423 
Accounts payable relating to capital expenditures4,251 4,507 
Other creditors1,911 1,088 
Deferred revenue1,059 82 
Total$40,149 $39,523 

16


Note 7. Leases
The components of lease expense are as follows:
Three Months Ended
March 31, 2022March 31, 2021
OfficesData CentersTotalOfficesData CentersTotal
(in thousands)
Lease expense$4,409 $5,207 $9,616 $6,543 $6,398 $12,941 
Short term lease expense151 3 154 76 7 83 
Variable lease expense50 5 55 144 73 217 
Sublease income(172)(172)(188) (188)
Total operating lease expense$4,438 $5,215 $9,653 $6,575 $6,478 $13,053 

As of March 31, 2022, we have additional operating leases, that have not yet commenced which will result in additional operating lease liabilities and right of use assets:
OfficesData Centers
(in thousands)
Additional operating lease liabilities$ $13,523 
Additional right of use assets$ $13,523 
These operating leases will commence during the fiscal year ending December 31, 2022.

17


Note 8. Employee Benefits

Defined Benefit Plans
According to the French law and the Syntec Collective Agreement, French employees are entitled to compensation paid on retirement.
The following table summarizes the changes in the projected benefit obligation:
Projected benefit obligation
(in thousands)
Projected benefit obligation present value at January 1, 2021
$6,167 
Service cost
1,324 
 Interest cost
51 
Actuarial losses (gains)
(1,543)
Currency translation adjustment
(468)
Projected benefit obligation present value at December 31, 2021
$5,531 
Service cost
276 
 Interest cost
19 
Actuarial losses (gains)
(1,086)
Currency translation adjustment
(102)
Projected benefit obligation present value at March, 31, 2022
$4,638 
The Company does not hold any plan assets for any of the periods presented.
The main assumptions used for the purposes of the actuarial valuations are listed below:
Three Months EndedYear ended
March 31, 2022December 31, 2021
Discount rate (Corp AA)
2.25%
1.40%
Expected rate of salary increase
5%
5%
Expected rate of social charges
49% - 50%
49% - 50%
Expected staff turnover
% - 17.8%
% - 17.8%
Estimated retirement age
Progressive tableProgressive table
Life table
TH-TF 2000-2002 shiftedTH-TF 2000-2002 shifted


18


Defined Contribution Plans
The total expense represents contributions payable to these plans by us at specified rates.
In some countries, the Group’s employees are eligible for pension payments and similar financial benefits. The Group provides these benefits via defined contribution plans. Under defined contribution plans, the Group has no obligation other than to pay the agreed contributions, with the corresponding expense charged to income for the year. The main contributions concern France, the United States (for 401k plans), and the United Kingdom.
Three Months Ended
March 31,
2022
March 31,
2021
(in thousands)
Defined contributions plans included in personnel expenses
$(3,858)$(5,553)



Note 9. Revenue

Disaggregation of revenue
The following table presents our disaggregated revenues:
Marketing SolutionsRetail MediaTotal
For the three months ended (in thousands)
March 31, 2022$463,888 $46,679 $510,567 
March 31, 2021$483,190 $57,887 $541,077 


19


Note 10. Share-Based Compensation
Criteo's board of directors ("board of directors") has been authorized by the general meeting of the shareholders to grant employee warrants (Bons de Souscription de Parts de Créateur d’Entreprise or "BSPCEs"), share options (Options de Souscription d'Actions or "OSAs"), restricted share units ("RSUs") and non-employee warrants (Bons de Souscription d'Actions or "BSAs").
During the three months ended March 31, 2022, there was one grant of RSUs under the Employee Share Option Plan 14 as defined in Note 20 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.
On February 24, 2022, 348,134 RSUs were granted to Criteo employees subject to continued employment and 378,387 PSUs were granted to members of the management subject to continued employment.
There have been no changes in the vesting and method of valuation of the BSPCEs, OSAs, RSUs, or BSAs from what was disclosed in Note 19 to the consolidated financial statements 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.

Change in number of outstanding BSPCE / OSA / RSU / BSA
OSA/BSPCE RSU/PSUBSATotal
Balance at January 1, 2022570,801 5,299,356 343,775 6,213,932 
Granted 726,521  726,521 
Exercised (OSA/BSPCE/BSA)(22,047)  (22,047)
Vested (RSU) (184,443) (184,443)
Forfeited(23,420)(339,704) (363,124)
Expired    
Balance at March 31, 2022525,334 5,501,730 343,775 6,370,839 

Breakdown of the Closing Balance
OSA/BSPCERSU BSA
Number outstanding525,334 5,501,730 343,775 
Weighted-average exercise price19.41 NA15.12 
Number vested256,600  278,790 
Weighted-average exercise price25.21 NA15.75 
Weighted-average remaining contractual life of options outstanding, in years5.54NA5.54



20


Reconciliation with the Unaudited Consolidated Statements of Income
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
R&DS&OG&ATotalR&DS&OG&ATotal
RSUs$(3,968)$(2,611)$(2,404)$(8,983)$(2,496)$(1,649)$(2,288)$(6,433)
Share options / BSPCE 45 (103)(58) (105)(222)(327)
Total share-based compensation(3,968)(2,566)(2,507)(9,041)(2,496)(1,754)(2,510)(6,760)
BSAs  (448)(448)  (455)(455)
Total equity awards compensation expense$(3,968)$(2,566)$(2,955)$(9,489)$(2,496)$(1,754)$(2,965)$(7,215)
    



21


Note 11. Financial and Other Income and Expenses
The condensed consolidated statements of income line item “Financial income (expense)” can be broken down as follows:
Three Months Ended
March 31,
2022
March 31,
2021
(in thousands)
Financial income from cash equivalents$133 $128 
Interest and fees(547)(540)
Interest on debt(530)(417)
Fees(17)(123)
Foreign exchange gain (loss)4,463 (798)
Other financial expense(19)492 
Total Financial and Other income (expense)$4,030 $(718)
The $4.0 million financial and other income and the $0.7 million financial and other expenses for the three months ended March 31, 2022 and March 31, 2021, respectively, were driven by the recognition of a positive impact of foreign exchange reevaluations net of related hedging and the up-front fees amortization, the non-utilization costs, the financial expense relating to our available Revolving Credit Facility ("RCF") financing.
At March 31, 2022, our exposure to foreign currency risk was centralized at Criteo S.A. and hedged using foreign currency swaps or forward purchases or sales of foreign currencies.



22


Note 12. Income Taxes
Breakdown of Income Taxes
The tax provision for interim periods is determined using an estimate of our annual effective tax rate (“AETR”), adjusted for discrete items arising in the period. To calculate our estimated AETR, we estimate our income before taxes and the related tax expense or benefit for the full fiscal year (total of expected current and deferred tax provisions), excluding the effect of significant unusual or infrequently occurring items or comprehensive income items not recognized in the statement of income. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate does change, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors including our ability to accurately predict our income (loss) before provision for income taxes in multiple jurisdictions and the changes in foreign exchange rates. Our effective tax rate in the future will depend on the portion of our profits earned within and outside of France.
The condensed consolidated statements of income line item “Provision for income taxes” can be broken down as follows:
Three Months Ended
March 31, 2022March 31, 2021
(in thousands)
Current income tax$(7,546)$(5,053)
Net change in deferred taxes(2,868)(4,998)
Provision for income taxes$(10,414)$(10,051)

For the three months ended March 31, 2022 and March 31, 2021, we used an annual estimated tax rate of 33% and 30%, respectively, to calculate the provision for income taxes.
Current tax assets and liabilities
The total amount of current tax assets and liabilities consists mainly of prepayments of income taxes and credits of Criteo S.A., Criteo Corp., and Criteo GmbH.
23


Note 13. Earnings Per Share
Basic Earnings Per Share
We calculate basic earnings per share by dividing the net income for the period attributable to shareholders of the Parent by the weighted average number of shares outstanding.
Three Months Ended
March 31, 2022March 31, 2021
Net income attributable to shareholders of Criteo S.A.$20,587 $22,406 
Weighted average number of shares outstanding60,738,299 60,741,674 
Basic earnings per share$0.34 $0.37 
Diluted Earnings Per Share
We calculate diluted earnings per share by dividing the net income attributable to shareholders of the Parent by the weighted average number of shares outstanding plus any potentially dilutive shares not yet issued from share-based compensation plans (see Note 10). There were no other potentially dilutive instruments outstanding as of March 31, 2022 and March 31, 2021. Consequently, all potential dilutive effects from shares are considered.
For each period presented, a contract to issue a certain number of shares (i.e, share option, non-employee warrant, employee warrant ("BSPCE")) is assessed as potentially dilutive if it is “in the money” (i.e., the exercise or settlement price is lower than the average market price).
Three Months Ended
March 31, 2022March 31, 2021
Net income attributable to shareholders of Criteo S.A.$20,587 $22,406 
Weighted average number of shares outstanding of Criteo S.A.60,738,299 60,741,674 
Dilutive effect of :
Restricted share awards ("RSUs")2,591,530 2,972,382 
Share options and BSPCE179,089 296,071 
Share warrants104,632 67,282 
Weighted average number of shares outstanding used to determine diluted earnings per share63,613,550 64,077,409 
Diluted earnings per share$0.32 $0.35 
The weighted average number of securities that were anti-dilutive for diluted EPS for the periods presented but which could potentially dilute EPS in the future are as follows:
Three Months Ended
March 31, 2022March 31, 2021
Restricted share awards58,840 332,300 
Share options and BSPCE