Company Quick10K Filing
Criteo
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 66 $1,188
10-Q 2019-10-31 Quarter: 2019-09-30
10-Q 2019-08-02 Quarter: 2019-06-30
10-Q 2019-05-09 Quarter: 2019-03-31
10-K 2019-03-01 Annual: 2018-12-31
10-Q 2018-11-05 Quarter: 2018-09-30
10-Q 2018-08-02 Quarter: 2018-06-30
10-Q 2018-05-04 Quarter: 2018-03-31
10-K 2018-03-01 Annual: 2017-12-31
10-Q 2017-11-08 Quarter: 2017-09-30
10-Q 2017-08-08 Quarter: 2017-06-30
10-Q 2017-05-10 Quarter: 2017-03-31
10-K 2017-03-01 Annual: 2016-12-31
10-Q 2016-11-07 Quarter: 2016-09-30
10-Q 2016-08-05 Quarter: 2016-06-30
10-Q 2016-05-04 Quarter: 2016-03-31
10-K 2016-02-29 Annual: 2015-12-31
20-F 2015-03-27 Annual: 2014-12-31
20-F 2014-03-06 Annual: 2013-12-31
8-K 2020-02-11 Earnings, Exhibits
8-K 2019-12-11 Officers, Exhibits
8-K 2019-10-30 Earnings, Officers, Exhibits
8-K 2019-10-24 Officers
8-K 2019-07-31 Earnings, Officers, Other Events, Exhibits
8-K 2019-06-19 Officers, Regulation FD, Exhibits
8-K 2019-05-17 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2019-05-08 Regulation FD, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-03-01 Officers, Regulation FD, Exhibits
8-K 2019-02-13 Earnings, Amend Bylaw, Exhibits
8-K 2018-10-31 Earnings, Other Events, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-07-02 Officers
8-K 2018-07-02 Officers, Shareholder Vote
8-K 2018-06-25 Officers, Exhibits
8-K 2018-05-02 Earnings, Exhibits
8-K 2018-04-25 Officers, Exhibits
8-K 2018-02-14 Earnings, Exhibits
CRTO 2019-09-30
Part I
Item 1. Financial Statements.
Note 1. Summary of Significant Accounting Policies
Note 2. Significant Events and Transactions of The Period
Note 3. Financial Instruments
Note 4. Trade Receivables
Note 5. Other Current Assets
Note 6. Intangible Assets and Goodwill
Note 7. Other Current Liabilities
Note 8. Leases
Note 9. Revenue
Note 10. Share-Based Compensation
Note 11. Financial Income and Expenses
Note 12. Income Taxes
Note 13. Earnings per Share
Note 14. Commitments and Contingencies
Note 15. Breakdown of Revenue and Non-Current Assets By Geographical Areas
Note 16. Related Parties
Note 17. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-31.1 exhibit311ceo10qq32019.htm
EX-31.2 exhibit312cfo10qq32019.htm
EX-32.1 exhibit321ceocfo10qq32.htm

Criteo Earnings 2019-09-30

CRTO 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
GRPN 2,031 1,439 1,133 2,504 1,270 17 134 1,432 51% 10.6 1%
CCO 1,689 6,428 8,643 2,696 0 -202 600 6,595 0% 11.0 -3%
CRTO 1,188 1,750 725 2,285 828 90 151 766 36% 5.1 5%
QUOT 1,002 588 283 413 175 -29 15 749 42% 50.3 -5%
NCMI 519 1,104 1,214 435 170 60 144 1,401 39% 9.7 5%
FLNT 395 302 89 274 89 8 28 429 32% 15.1 3%
TLRA 348 222 167 65 54 -6 -4 290 84% -71.0 -3%
MEET 277 275 69 200 0 9 25 284 0% 11.1 3%
MDCA 180 1,799 1,928 1,460 488 -88 24 1,067 33% 44.4 -5%
SRAX 53 22 13 5 3 1 3 50 61% 15.1 7%

Document
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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, 2019
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 Blanche
Paris
France
75009
(Address of principal executive offices)
 
 
(Zip Code)

+33 1 40 40 22 90
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act
Title of each class
 
Trading Symbol(s)
Name of each exchange on which registered
 
American Depositary Shares, each representing one Ordinary Share,
nominal value €0.025 per share
 
CRTO
Nasdaq 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 and post 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 not elected 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, 2019, the registrant had 64,077,759 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 ability of the Criteo 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;
our ability to continue to collect and utilize data about user behavior and interaction with advertisers;
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;
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, 2018, and to Part II, Item 1A "Risk Factors" of this 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)
 
Notes
December 31, 2018

 
September 30, 2019

 
 
(in thousands)
Assets
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
3
$
364,426

 
$
409,178

    Trade receivables, net of allowances of $25.9 million and $15.8 million at December 31, 2018 and September 30, 2019, respectively
4
473,901

 
356,699

    Income taxes
 
19,370

 
22,412

    Other taxes
 
53,338

 
52,810

    Other current assets
5
22,816

 
18,165

    Total current assets
 
933,851

 
859,264

Property, plant and equipment, net
 
184,013

 
197,522

Intangible assets, net
6
112,036

 
95,701

Goodwill
6
312,881

 
314,872

Right of use assets - operating lease
8

 
169,921

Non-current financial assets
 
20,460

 
21,251

Deferred tax assets
 
33,894

 
43,357

    Total non-current assets
 
663,284

 
842,624

Total assets
 
$
1,597,135

 
$
1,701,888

Liabilities and shareholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
    Trade payables
 
$
425,376

 
$
322,284

    Contingencies
14
2,640

 
4,183

    Income taxes
 
7,725

 
2,751

    Financial liabilities - current portion
3
1,018

 
2,827

    Operating lease liabilities - current portion
8

 
49,367

    Other taxes
 
55,592

 
48,313

    Employee - related payables
 
65,878

 
59,824

    Other current liabilities
7
47,115

 
38,868

    Total current liabilities
 
605,344

 
528,417

Deferred tax liabilities
 
10,770

 
8,208

Retirement benefit obligation
 
5,537

 
8,740

Financial liabilities - non current portion
3
2,490

 
937

Operating lease liabilities - non current portion
8

 
135,841

Other non-current liabilities
 
5,103

 
5,340

    Total non-current liabilities
 
23,900

 
159,066

Total liabilities
 
629,244

 
687,483

Commitments and contingencies
 


 


Shareholders' equity:
 
 
 
 
Common shares, €0.025 par value, 67,708,203 and 66,173,983 shares authorized, issued and outstanding at December 31, 2018 and September 30, 2019, respectively.
 
2,201

 
2,157

Treasury stock, 3,459,119 and 1,807,251 shares at cost as of December 31, 2018 and September 30, 2019, respectively.
 
(79,159
)
 
(38,774
)
Additional paid-in capital
 
663,281

 
663,439

Accumulated other comprehensive (loss)
 
(30,522
)
 
(58,382
)
Retained earnings
 
387,869

 
414,594

Equity-attributable to shareholders of Criteo S.A.
 
943,670

 
983,034

Non-controlling interests
 
24,221

 
31,371

Total equity
 
967,891

 
1,014,405

Total equity and liabilities
 
$
1,597,135

 
$
1,701,888

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
 
Nine Months Ended
 
Notes
 
September 30, 2018

 
September 30, 2019

 
September 30, 2018
 
September 30, 2019

 
 
(in thousands, except share per data)
 
 
 
 
 
 
 
 
 
 
Revenue
9
 
$
528,869

 
$
522,606

 
$
1,630,218

 
$
1,608,876

 
 
 
 
 
 
 
 
 
 
Cost of revenue:
 
 
 
 
 
 
 
 
 
Traffic acquisition costs
 
 
(305,387
)
 
(301,901
)
 
(936,096
)
 
(928,559
)
Other cost of revenue
 
 
(32,921
)
 
(31,101
)
 
(92,937
)
 
(86,205
)
 
 
 
 
 
 
 
 
 
 
Gross profit
 
 
190,561

 
189,604

 
601,185

 
594,112

 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Research and development expenses
 
 
(41,796
)
 
(41,414
)
 
(134,658
)
 
(132,006
)
Sales and operations expenses
 
 
(90,526
)
 
(85,985
)
 
(278,901
)
 
(277,397
)
General and administrative expenses
 
 
(32,463
)
 
(32,835
)
 
(102,698
)
 
(102,372
)
Total operating expenses
 
 
(164,785
)
 
(160,234
)
 
(516,257
)
 
(511,775
)
Income from operations
 
 
25,776

 
29,370

 
84,928

 
82,337

Financial income (expense)
11
 
(1,007
)
 
(900
)
 
(3,338
)
 
(4,228
)
Income before taxes
 
 
24,769

 
28,470

 
81,590

 
78,109

Provision for income taxes
12
 
(6,821
)
 
(7,913
)
 
(27,845
)
 
(23,614
)
Net income
 
 
$
17,948

 
$
20,557

 
$
53,745

 
$
54,495

 
 
 
 
 
 
 
 
 
 
Net income available to shareholders of Criteo S.A.
 
 
$
17,143

 
$
18,778

 
$
50,678

 
$
48,721

Net income available to non-controlling interests
 
 
$
805

 
$
1,779

 
$
3,067

 
$
5,774

 
 
 
 
 
 
 
 
 
 
Net income allocated to shareholders of Criteo S.A. per share:
 
 
 
 
 
 
 
 
 
Basic
13
 
$
0.26

 
$
0.29

 
$
0.76

 
$
0.75

Diluted
13
 
$
0.25

 
$
0.28

 
$
0.75

 
$
0.74

 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding used in computing per share amounts:
 
 
 
 
 
 
 
 
 
Basic
13
 
67,075,453

 
64,868,545

 
66,531,371

 
64,600,869

Diluted
13
 
68,625,673

 
66,067,045

 
67,864,802

 
65,916,219

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
Nine Months Ended
 
 
September 30, 2018

 
September 30, 2019

September 30, 2018

 
September 30, 2019

 
 
(in thousands)
 
 
 
 
 
 
 
 
Net income
 
$
17,948

 
$
20,557

$
53,745

 
$
54,495

Foreign currency translation differences, net of taxes
 
(5,539
)
 
(24,202
)
(14,210
)
 
(25,096
)
Actuarial (losses) gains on employee benefits, net of taxes
 
23

 
(689
)
436

 
(2,327
)
Other comprehensive income (loss)
 
$
(5,516
)
 
$
(24,891
)
$
(13,774
)
 
$
(27,423
)
Total comprehensive income (loss)
 
$
12,432

 
$
(4,334
)
$
39,971

 
$
27,072

Attributable to shareholders of Criteo S.A.
 
$
12,076

 
$
(6,015
)
$
37,127

 
$
20,827

Attributable to non-controlling interests
 
$
356

 
$
1,681

$
2,844

 
$
6,245

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

4


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
 
Share capital
Treasury
Stock
Additional paid-in capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Equity - attributable to shareholders of Criteo S.A.
Non controlling interest
Total equity
 
Common shares
 
Shares
 
 
 
(in thousands, except share amounts )
Balance at December 31, 2017
66,085,097
$2,152
$591,404
$(12,241)
$300,210
$881,525
$16,173
$897,698
Net income
19,809
19,809
1,281
21,090
Other comprehensive income (loss)
24,947
24,947
937
25,884
Issuance of ordinary shares
163,254
1
597
598
598
Change in treasury stocks
Share-Based Compensation
18,284
18,284
112
18,396
Other changes in equity
4
(4)
4
1
5
5
Balance at March 31, 2018
66,248,351
$2,157
$610,281
$12,710
$320,020
$945,168
$18,503
$963,671
Net income
13,726
13,726
981
14,707
Other comprehensive income (loss)
(33,432)
(33,432)
(710)
(34,142)
Issuance of ordinary shares
612,694
3
820
823
823
Change in treasury stocks
Share-Based Compensation
19,676
19,676
142
19,818
Other changes in equity
17
(5)
(21)
(9)
(9)
Balance at June 30, 2018
66,861,045
$2,177
$630,772
$(20,722)
$333,725
$945,952
$18,916
$964,868
Net income
17,143
17,143
805
17,948
Other comprehensive income (loss)
(5,066)
(5,066)
(450)
(5,516)
Issuance of ordinary shares
369,991
423
423
423
Change in treasury stocks
Share-Based Compensation
16,944
16,944
109
17,053
Other changes in equity
5
4,135
4,140
4,140
Balance at September 30, 2018
67,231,036
$2,182
$648,139
$(25,788)
$355,003
$979,536
$19,380
$998,916

5


 
Share capital
Treasury
Stock
Additional paid-in capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings
Equity - attributable to shareholders of Criteo S.A.
Non controlling interest
Total equity
 
Common shares
 
Shares
 
 
 
(in thousands, except share amounts )
Balance at December 31, 2018
67,708,203
$2,201
(3,459,119)
$(79,159)
$663,281
$(30,522)
$387,869
$943,670
$24,221
$967,891
Net income
19,120
19,120
2,281
21,401
Other comprehensive income (loss)
(11,347)
(11,347)
(198)
(11,545)
Issuance of ordinary shares
28,596
1
372
373
373
Change in treasury stocks
(1,594,288)
(45)
1,786,715
40,080
(36,091)
(3,944)
Share-Based Compensation
13,533
13,533
(11)
13,522
Other changes in equity

(1)
155
154
154
Balance at March 31, 2019
66,142,511
$2,157
(1,672,404)
$(39,079)
$641,094
$(41,869)
$403,200
$965,503
$26,293
$991,796
Net income
10,823
10,823
1,714
12,537
Other comprehensive income (loss)
8,246
8,246
767
9,013
Issuance of ordinary shares
19,012
252
252
252
Change in treasury stocks
553,435
12,515
(12,515)
Share-Based Compensation
11,254
11,254
108
11,362
Other changes in equity
(28)
330
(299)
3
3
Balance at June 30, 2019
66,161,523
$2,157
(1,118,969)
$(26,564)
$652,572
$(33,293)
$401,209
$996,081
$28,882
$1,024,963
Net income
18,778
18,778
1,779
20,557
Other comprehensive income (loss)
(24,793)
(24,793)
(98)
(24,891)
Issuance of ordinary shares
12,460
132
132
132
Change in treasury stocks
(688,282)
(12,210)
(296)
(5,393)
(17,899)
(17,899)
Share-Based Compensation
10,735
10,735
81
10,816
Effect of change in Consolidation scope
727
727
Other changes in equity
Balance at September 30, 2019
66,173,983
$2,157
(1,807,251)
$(38,774)
$663,439
$(58,382)
$414,594
$983,034
$31,371
$1,014,405
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

6


CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 
Three Months Ended
Nine Months Ended
 
 
September 30, 2018

 
September 30, 2019

September 30, 2018

 
September 30, 2019

 
(in thousands)
Net income
 
$
17,948

 
$
20,557

$
53,745

 
$
54,495

Non-cash and non-operating items
 
28,379

 
18,776

103,808

 
72,735

    - Amortization and provisions
 
27,891

 
19,455

79,040

 
57,381

    - Equity awards compensation expense (1)
 
17,262

 
11,165

56,333

 
36,760

    - Change in deferred taxes
 
(1,806
)
 
(2,710
)
(9,341
)
 
(1,374
)
    - Change in income taxes
 
(14,988
)
 
(9,309
)
(18,988
)
 
(19,939
)
    - Other (2)
 
20

 
175

(3,236
)
 
(93
)
Changes in working capital related to operating activities
 
3,929

 
3,956

17,573

 
36,243

    - Decrease in trade receivables
 
12,931

 
14,821

114,377

 
120,164

    - Increase/(Decrease) in trade payables
 
13,091

 
(4,415
)
(76,599
)
 
(77,895
)
    - (Increase)/Decrease in other current assets
 
(8,229
)
 
638

5,550

 
2,150

    - (Decrease) in other current liabilities (2)
 
(13,864
)
 
(10,177
)
(25,755
)
 
(4,726
)
    - Change in operating lease liabilities and right of use assets
 

 
3,089


 
(3,450
)
CASH FROM OPERATING ACTIVITIES
 
50,256

 
43,289

175,126

 
163,473

Acquisition of intangible assets, property, plant and equipment
 
(60,627
)
 
(27,239
)
(86,920
)
 
(69,343
)
Change in accounts payable related to intangible assets, property, plant and equipment
 
30,971

 
3,295

6,850

 
(11,077
)
(Payment for) disposal of a business, net of cash acquired (disposed)
 
(38,100
)
 
106

(48,911
)
 
(4,582
)
Change in other non-current financial assets
 
(45
)
 
(165
)
(3
)
 
(1,349
)
CASH USED FOR INVESTING ACTIVITIES
 
(67,801
)
 
(24,003
)
(128,984
)
 
(86,351
)
Repayment of borrowings
 
(248
)
 
(167
)
(721
)
 
(506
)
Net payments related to equity award activities
 
212

 
725

774

 
638

Change in treasury stocks
 


(17,603
)


(17,603
)
Change in other financial liabilities (2)
 
(136
)
 
(928
)
16,674

 
(1,167
)
CASH FROM (USED FOR) FINANCING ACTIVITIES
 
(172
)
 
(17,973
)
16,727

 
(18,638
)
Effect of exchange rates changes on cash and cash equivalents (2)
 
(3,878
)
 
(14,188
)
(18,290
)
 
(13,732
)
Net increase (decrease) in cash and cash equivalents
 
(21,595
)
 
(12,875
)
44,579

 
44,752

Net cash and cash equivalents at beginning of period
 
480,285

 
422,053

414,111

 
364,426

Net cash and cash equivalents at end of period
 
$
458,690

 
$
409,178

$
458,690

 
$
409,178

 
 
 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
 
 
 
 
 
 
Cash paid for taxes, net of refunds
 
(23,614
)
 
(19,932
)
(56,174
)
 
(44,927
)
Cash paid for interest, net of amounts capitalized
 
(422
)
 
(337
)
(1,262
)
 
(1,095
)
(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $17.1 million and $10.8 million of equity awards compensation expense for the quarter ended September 30, 2018 and 2019, respectively, and $55.3 million and $35.7 million of equity awards compensation for the nine months ended September 30, 2018 and 2019, respectively.
(2) During the quarter ended September 30, 2018, and the nine months ended September 30, 2018, respectively, the Company reported the cash impact of the settlement of hedging derivatives related to financing activities in cash from (used for) financing activities in the unaudited consolidated statements of cash flows.
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

7


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

We are a global technology company building the leading advertising platform for the open Internet. We strive to deliver impactful business results at scale to commerce companies and consumer brands by meeting their marketing goals at their targeted return on investment. Using shopping data, predictive technology and large consumer reach, we help our clients drive Awareness, Consideration and Conversion for their products and services1, and help retailers generate advertising revenues from brands. Our data is pooled among our clients and offers deep insights into consumer intent and purchasing habits. To drive measurable results for clients, we activate our data assets through proprietary artificial intelligence ("AI") technology to engage consumers in real time through the pricing and delivery of highly relevant digital advertisements ("ads"), across devices and environments. By pricing our offering on a range of pricing models and measuring our value based on clear, well-defined performance metrics, we make the return on investment transparent and easy to measure for advertisers.
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".




































___________________________________________________ 
1 Driving Awareness for a brand means exposing its brand name to consumers who have not been in touch with the brand before, thereby creating brand awareness from such consumers. Driving Consideration for an advertiser's products or services means attracting prospective new consumers to consider engaging with and/or buying this advertiser's products or services. Driving Conversion for an advertisers' products or services means triggering a purchase by consumers who have already engaged with this advertisers products or services in the past.


8


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 S.A. 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 filed on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 1, 2019. 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 doubtful accounts, (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 of the tax reform in France voted in December 2018, (5) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (6) assumptions used in the valuation of goodwill and intangible assets, 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, 2018, except for the accounting pronouncements adopted below.


Accounting Pronouncements adopted in 2019

Effective January 1, 2019, we have adopted the Financial Accounting Standards Board, ("FASB") Accounting Standards Update ("ASU") 842 No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet for operating leases with terms of more than 12 months, in addition to those currently recorded. In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which included an option not to restate comparative periods in transition and use the effective date of ASC 842, Leases, as the date of the initial application of transition, which we elected. Prior periods have not been adjusted and continue to be accounted for in accordance with ASC 840. As a result of adopting ASU 842, we recognized total operating lease liabilities of $223.5 million and operating right-of-use assets of $204.3 million as of January 1, 2019. The adoption of ASC 842 had an immaterial impact on our condensed consolidated statements of income and our condensed consolidated statement of cash flows for the three month and the nine month period ended September 30, 2019. Refer to Note 8. Leases, for additional information and required disclosures.
Effective January 1, 2019, we have adopted ASU 2018 - 07, Improvements to Non-Employee Sharebased Payment Accounting. The amendments in this ASU expands Topic 718 to include share base payments for goods or services to non employees. The adoption of ASU 2018-07 did not have a material impact on our financial position or results of operations.
 

9


Recently Issued Accounting Pronouncements not yet adopted
In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (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. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This will result in earlier recognition of credit losses. We will adopt ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings. We are currently assessing the impact of the adoption of ASU 2016-13 on the Company's consolidated financial statements. The adoption of the standard is expected to mainly impact our process for estimating the allowance for doubtful accounts; however, the impact on the consolidated financial statements is not expected to be material.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer’s Accounting for Implementation Costs incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU was issued to clarify the accounting for implementation costs incurred for SaaS agreements. Previously the guidance only referred to development of internal use software and the accounting for SaaS agreements was not clarified. This ASU states that the implementation costs should be capitalized. We will adopt ASU 2018-15 effective January 1, 2020. We are currently evaluating the impact on our financial position, results of operations, and statement of cash flows.


10


Note 2. Significant Events and Transactions of the Period

Change in estimated useful life of servers and other data center equipment

During the first quarter of 2019, we revised our estimate of the useful life of all servers and other equipment used in our data centers from 3 to 5 years. This change in estimate was determined based on a revised commissioning plan which extends the period equipment from 3 to 5 years prior to disposal. This resulted in an increase in income from operations of $31.3 million, increase in net income of $26.7 million, or $0.41 per share, from that which would have been reported had the previous expected useful life of 3 years been used for the nine month period ended September 30, 2019. The impact on the three month period ended September 30, 2019 was an increase in income from operations of $10.3 million, an increase in net income of $8.8 million, or $0.13 per share.

Restructuring

As part of a new organization structure designed to best support its multi-product platform strategy and accelerate execution, the Company incurred net restructuring costs of $0.3 million and $2.9 million for the three months and nine month period ended September 30, 2019, respectively, comprising of costs for termination of facilities and payroll expenses, offset by gains from forfeitures of share-based compensation expense.

 
Three Months Ended
 
Nine Months Ended
 
September 30, 2019
 
(in thousands)
Gain from forfeitures of share-based compensation expense
$
606

 
$
3,284

Depreciation and amortization (expense)

 
(1,228
)
Payroll costs and Facilities related costs
(909
)
 
(4,977
)
Total restructuring costs
(303
)
 
(2,921
)


For the three month period ended September 30, 2019, $(0.2) million was included in Research and Development expenses, and $(0.1) million in Sales and Operations expenses. For the nine month periods ended September 30, 2019, $(0.3) million was included in Research and Development expenses, $(2.2) million in Sales and Operations expenses, and $(0.4) million in General and Administrative expenses.

As of September 30, 2019, $2.0 million is remaining as Restructuring liability.





11


Share repurchase program
On October 25, 2018 Criteo's Board of Directors authorized a share repurchase program of up to $80.0 million of the Company’s outstanding American Depositary Shares. As of December 31, 2018, 3.5 million shares were held as treasury shares. We completed this share repurchase program in 2018.
On February 8, 2019, the Board of Directors authorized the reduction of capital resulting in the formal retirement of 1.6 million treasury shares.
On July 26, 2019, Criteo's Board of Directors authorized a share repurchase program of up to $80.0 million of the Company's outstanding American Depositary Shares. As of September 30, 2019, 0.9 million shares were held as treasury shares as part of the share repurchase program authorized on July 26, 2019.
As of September 30, 2019, we have 1.8 million treasury shares remaining which may be used to satisfy the company's obligations under its employee equity plans upon RSU vestings in lieu of issuing new shares, and for M&A.
 
Number of Treasury Shares
 
Amount
(in thousands of dollars)
Balance at January 1, 2018

 
$

Treasury Shares Repurchased to potentially use for M&A
1,751,147

 
40,000

Treasury Shares Repurchased for RSU Vesting
1,748,111

 
40,000

Treasury Shares Issued for RSU Vesting
(40,139
)
 
(841
)
Balance at December 31, 2018
3,459,119

 
$
79,159

Treasury Shares Retired
(1,594,288
)
 
$
(36,137
)
Treasury Shares Repurchased to use for M&A or RSU Vesting
914,908

 
17,603

Treasury Shares Issued for RSU Vesting
(972,488
)
 
(21,851
)
Balance at September 30, 2019
1,807,251

 
$
38,774





12


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:
 
December 31, 2018

 
September 30, 2019

 
(in thousands)
Trade receivables, net of allowance
473,901

 
356,699

Other taxes
53,338

 
52,810

Other current assets
22,816

 
18,165

Non-current financial assets
20,460

 
21,251

Total
$
570,515

 
$
448,925



Credit Risk
We maintain an allowance for estimated credit losses. During the period ended December 31, 2018 and the nine-month period ended September 30, 2019, our net change in allowance for doubtful accounts was $5.1 million and $(10.1) million, respectively.
For our financial assets, the fair value approximates the carrying amount, given the nature of the financial assets and the maturity of the expected cash flows.
Trade Receivables
Credit risk is defined as an unexpected loss in cash and earnings if the client is unable to pay its obligations in due time. We perform internal ongoing credit risk evaluations of our clients. When a possible risk exposure is identified, we require prepayments.
As of December 31, 2018 and September 30, 2019, no customer accounted for 10% or more of trade receivables.
Financial Liabilities
 
December 31, 2018
 
September 30, 2019
 
 
 
 
 
(in thousands)
Trade payables
$
425,376

 
$
322,284

Other taxes
55,592

 
48,313

Employee-related payables
65,878

 
59,824

Other current liabilities
47,115

 
38,868

Financial liabilities
3,508

 
3,764

Total
$
597,469

 
$
473,053


For our financial liabilities, the fair value approximates the carrying amount, given the nature of the financial liabilities and the maturity of the expected cash flows.
We are party to several loan agreements and a revolving credit facility, or RCF, with third-party financial institutions. There have been no significant changes from what was disclosed in Note 13 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

13



Fair Value Measurements     
We measure the fair value of our cash equivalents, 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.

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.

 
December 31, 2018

 
September 30, 2019

 
 
 
 
 
(in thousands)
Derivative Assets:
 
 
 
Included in other current assets
$
1,703

 
$

 
 
 
 
Derivative Liabilities:
 
 
 
Included in financial liabilities - current portion
$