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 powering the world's marketers with trusted and impactful advertising. We operate at the intersection of ecommerce, digital marketing and media monetization. We enable brands' and retailers' growth by providing best-in-class marketing and monetization services on the open Internet. We do this by activating commerce data through artificial intelligence ("AI") technology, reaching consumers on an extensive scale across all stages of the consumer journey, and generating advertising revenues from consumer brands for large retailers. Our vision is to build the world's leading Commerce Media Platform to deliver measurable business outcomes at scale for global brands, agencies and retailers across multiple marketing goals. Our data is pooled among our clients and publishers and offers deep insights into consumer intent and purchasing habits. To drive trusted and impactful advertising, we activate our data assets in a privacy-by-design way through proprietary AI technology to engage consumers in real time with highly relevant digital advertisements ("ads") across devices and environments.
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".
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 on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021. 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.
The severity, magnitude, duration and after-effects of the COVID-19 pandemic on general economic conditions increase uncertainty associated with these estimates, in particular those related to allowance for credit losses, assumptions used in the valuation of goodwill and estimates relating to income taxes.
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, 2020, except for the update to our existing accounting policy described below:
Revenue Recognition
Principal vs Agent:
For certain customer arrangements, related to transactions using our Retail Media Platform, a new self-service solution providing transparency, measurement and control to our brand and retailer customers, we act as agent, because we (i) do not control the advertising inventory before it is transferred to our clients, (ii) do not have inventory risks because we do not purchase the inventory upfront and (iii) have limited discretion in establishing prices as we charge a platform fee based on a percentage of the digital advertising inventory purchased through the use of the platform. Therefore, based on these and other factors, we report the revenue earned and related costs incurred by the Retail Media Platform solution on a net basis.
Accounting Pronouncements Adopted in 2021
Effective January 1, 2021, we have adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. The adoption of this new standard did not have a material impact on our consolidated financial statements.
Effective January 1, 2021, we have adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General. The purpose of this update is to modify disclosure requirements for Defined Benefit Plans. It removes requirements to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year among others. It adds disclosure requirements for the items such as an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The adoption of this new standard did not have a material impact on our consolidated financial statements.
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. Significant Events and Transactions of the Period
Restructuring
On February 1, 2021, the Company announced a plan to restructure its workforce across functions and regions to better align with the Company's evolution. We expect the plan will be completed by the end of 2021. The Company recorded $5.2 million of restructuring charges for severance related to this plan in the period ended March 31, 2021. For the three months ended March 31, 2021, $4.0 million was included in Sales and Operations expenses, $1.1 million was included in General and Administrative expenses and $0.1 million was included in Research and Development expenses.
The following table presents the breakdown of restructuring liability as of March 31, 2021, presented as part of employees related payables on the balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Restructuring liability - January 1, 2021
|
$
|
510
|
|
|
|
Restructuring costs
|
5,152
|
|
|
|
Amount paid
|
(84)
|
|
|
|
Restructuring liability - March 31, 2021
|
5,578
|
|
|
|
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, 2021
|
|
December 31, 2020
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
Trade receivables, net of allowances
|
|
416,910
|
|
|
474,055
|
|
|
Other taxes
|
|
69,692
|
|
|
69,987
|
|
|
Other current assets
|
|
22,494
|
|
|
21,405
|
|
|
Non-current financial assets
|
|
14,788
|
|
|
18,109
|
|
|
Marketable Securities
|
|
45,867
|
|
|
41,809
|
|
|
Total
|
|
$
|
569,751
|
|
|
$
|
625,365
|
|
|
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, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
(in thousands)
|
Trade payables
|
|
$
|
347,209
|
|
|
$
|
367,025
|
|
Other taxes
|
|
56,192
|
|
|
58,491
|
|
Employee-related payables
|
|
71,450
|
|
|
85,272
|
|
Other current liabilities
|
|
32,693
|
|
|
33,390
|
|
Financial liabilities
|
|
2,485
|
|
|
3,275
|
|
Total
|
|
$
|
510,029
|
|
|
$
|
547,453
|
|
The fair value of financial liabilities approximates the carrying amount, given the nature of the financial liabilities and the maturity of the expected cash flows.
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.
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, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities:
|
|
|
|
|
Included in financial liabilities - current portion
|
|
$
|
394
|
|
|
$
|
925
|
|
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, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
(in thousands)
|
Cash equivalents
|
|
$
|
154,885
|
|
|
$
|
162,457
|
|
Cash on hand
|
|
365,175
|
|
|
325,554
|
|
Total cash and cash equivalents
|
|
$
|
520,060
|
|
|
$
|
488,011
|
|
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.
Marketable Securities
The following table presents for each reporting period, the breakdown of the fair value of marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
|
|
|
|
(in thousands)
|
Securities Available-for-sale
|
|
|
|
|
Term Deposits
|
|
$
|
23,281
|
|
|
$
|
24,538
|
|
Securities Held-to-maturity
|
|
|
|
|
Term Deposits
|
|
$
|
22,586
|
|
|
$
|
17,271
|
|
Total
|
|
$
|
45,867
|
|
|
$
|
41,809
|
|
The gross unrealized gains on our marketable securities were not material as of March 31, 2021.
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-maturity
|
Available-for-sale
|
|
|
March 31, 2021
|
|
|
|
|
|
|
(in thousands)
|
Due in one year
|
|
$
|
17,586
|
|
$
|
—
|
|
Due in one to five years
|
|
$
|
5,000
|
|
$
|
23,281
|
|
Total
|
|
$
|
22,586
|
|
$
|
23,281
|
|
Note 4. Trade Receivables
The following table shows the breakdown in trade receivables net book value for the presented periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
|
|
(in thousands)
|
Trade accounts receivables
|
$
|
455,604
|
|
|
$
|
513,954
|
|
(Less) Allowance for credit losses
|
(38,694)
|
|
|
(39,899)
|
|
Net book value at end of period
|
$
|
416,910
|
|
|
$
|
474,055
|
|
Changes in allowance for credit accounts are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
(in thousands)
|
Balance at January 1
|
$
|
(39,899)
|
|
|
$
|
(16,068)
|
|
Allowance for credit losses through retained earnings (*)
|
—
|
|
|
(3,498)
|
|
Allowance for credit losses
|
(2,759)
|
|
|
(6,997)
|
|
Reversal of provision
|
3,306
|
|
|
2,989
|
|
Currency translation adjustment
|
658
|
|
|
490
|
|
Balance at March 31
|
$
|
(38,694)
|
|
|
$
|
(23,084)
|
|
(*) On 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). 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 results in earlier recognition of credit losses. We adopted ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings.
We write off accounts receivable balances once the receivables are no longer deemed collectible. During the three month period ended March 31, 2021, and March 31, 2020, the Company recovered $0.5 million, and $0.6 million, respectively, previously written off, and accounted for as a reversal of provision.
As of March 31, 2021 and December 31, 2020 no customer accounted for 10% or more of trade receivables.
Note 5. Other Current Assets
The following table shows the breakdown in other current assets net book value for the presented periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
|
|
(in thousands)
|
Prepayments to suppliers
|
$
|
4,362
|
|
|
$
|
5,613
|
|
Other debtors
|
3,725
|
|
|
5,991
|
|
Prepaid expenses
|
14,407
|
|
|
9,801
|
|
|
|
|
|
Net book value at end of period
|
$
|
22,494
|
|
|
$
|
21,405
|
|
Prepaid expenses mainly consist of costs related to SaaS arrangements and office rental advance payments.
Note 6. Other Current Liabilities
Other current liabilities are presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
|
|
(in thousands)
|
Clients' prepayments
|
$
|
11,575
|
|
|
$
|
12,234
|
|
Credit notes
|
15,529
|
|
|
14,433
|
|
Accounts payable relating to capital expenditures
|
2,366
|
|
|
4,721
|
|
Other creditors
|
2,235
|
|
|
1,918
|
|
Deferred revenue
|
988
|
|
|
84
|
|
Total
|
$
|
32,693
|
|
|
$
|
33,390
|
|
Note 7. Leases
The components of lease expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31, 2021
|
|
March 31, 2020
|
|
Offices
|
|
Data Centers
|
|
Total
|
|
Offices
|
|
Data Centers
|
|
Total
|
|
(in thousands)
|
Lease expense
|
$
|
6,543
|
|
|
$
|
6,398
|
|
|
$
|
12,941
|
|
|
$
|
6,314
|
|
|
$
|
6,536
|
|
|
$
|
12,850
|
|
Short term lease expense
|
76
|
|
|
7
|
|
|
83
|
|
|
286
|
|
|
56
|
|
|
342
|
|
Variable lease expense
|
144
|
|
|
73
|
|
|
217
|
|
|
9
|
|
|
516
|
|
|
525
|
|
Sublease income
|
(188)
|
|
|
—
|
|
|
(188)
|
|
|
(202)
|
|
|
—
|
|
|
(202)
|
|
Total operating lease expense
|
$
|
6,575
|
|
|
$
|
6,478
|
|
|
$
|
13,053
|
|
|
$
|
6,407
|
|
|
$
|
7,108
|
|
|
$
|
13,515
|
|
As of March 31, 2021, we have additional operating leases, that have not yet commenced which will result in additional operating lease liabilities and right of use assets:
|
|
|
|
|
|
|
|
|
|
|
|
Offices
|
Data Centers
|
|
(in thousands)
|
Additional operating lease liabilities
|
$
|
—
|
|
$
|
7,893
|
|
|
|
Additional right of use assets
|
$
|
—
|
|
$
|
7,893
|
|
|
|
These operating leases will commence during the year ending December 31, 2021.
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, 2020
|
$
|
8,485
|
|
Service cost
|
2,232
|
|
Interest cost
|
95
|
|
Actuarial losses (gains)
|
(5,214)
|
|
|
|
Currency translation adjustment
|
569
|
|
Projected benefit obligation present value at December 31, 2020
|
$
|
6,167
|
|
Service cost
|
337
|
|
Interest cost
|
13
|
|
Actuarial losses (gains)
|
(629)
|
|
|
|
Currency translation adjustment
|
(267)
|
|
Projected benefit obligation present value at March 31, 2021
|
$
|
5,621
|
|
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 ended
|
|
Year ended
|
|
March 31,
2021
|
|
December 31, 2020
|
Discount rate (Corp AA)
|
1.25%
|
|
0.85%
|
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 table
|
|
Progressive table
|
Life table
|
TH-TF 2000-2002 shifted
|
|
TH-TF 2000-2002 shifted
|
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,
2021
|
|
March 31,
2020
|
|
(in thousands)
|
Defined contributions plans included in personnel expenses
|
$
|
(5,553)
|
|
|
$
|
(3,429)
|
|
Note 9. Revenue
Disaggregation of revenue
The following table presents our disaggregated revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing Solutions
|
|
Retail Media
|
|
Total
|
For the three months ended
|
(in thousands)
|
|
|
|
|
|
|
March 31, 2021
|
$
|
483,190
|
|
|
$
|
57,887
|
|
|
$
|
541,077
|
|
March 31, 2020
|
$
|
469,773
|
|
|
$
|
33,603
|
|
|
$
|
503,376
|
|
Note 10. Share-Based Compensation
The 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, 2021, there was one grant of RSUs under the Employee Share Option Plan 13 as defined in Note 19 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.
On February 25, 2021, 96,450 RSUs were granted to Criteo employees subject to continued employment and 235,850 RSUs and 235,848 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, 2020, filed with the SEC on February 26, 2021.
Change in number of outstanding BSPCE / OSA / RSU / BSA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSA/BSPCE
|
|
RSU/PSU
|
|
BSA
|
|
Total
|
Balance at January 1, 2021
|
2,102,158
|
|
|
4,954,091
|
|
|
343,775
|
|
|
7,400,024
|
|
Granted
|
—
|
|
|
568,148
|
|
|
—
|
|
|
568,148
|
|
Exercised (OSA/BSPCE/BSA)
|
(101,710)
|
|
|
—
|
|
|
—
|
|
|
(101,710)
|
|
Vested (RSU)
|
—
|
|
|
(181,505)
|
|
|
—
|
|
|
(181,505)
|
|
Forfeited
|
(9,564)
|
|
|
(215,956)
|
|
|
—
|
|
|
(225,520)
|
|
Expired
|
(700)
|
|
|
—
|
|
|
—
|
|
|
(700)
|
|
Balance at March 31, 2021
|
1,990,184
|
|
|
5,124,778
|
|
|
343,775
|
|
|
7,458,737
|
|
Breakdown of the Closing Balance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OSA/BSPCE
|
|
RSU
|
|
BSA
|
|
|
|
|
|
|
Number outstanding
|
1,990,184
|
|
|
5,124,778
|
|
|
343,775
|
|
Weighted-average exercise price
|
€
|
23.33
|
|
|
NA
|
|
€
|
15.12
|
|
Number vested
|
1,527,511
|
|
|
—
|
|
|
221,562
|
|
Weighted-average exercise price
|
€
|
26.23
|
|
|
NA
|
|
€
|
17.00
|
|
Weighted-average remaining contractual life of options outstanding, in years
|
5.50
|
|
NA
|
|
6.54
|
Reconciliation with the Unaudited Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
March 31, 2021
|
|
March 31, 2020
|
|
(in thousands)
|
|
R&D
|
|
S&O
|
|
G&A
|
|
Total
|
|
R&D
|
|
S&O
|
|
G&A
|
|
Total
|
RSUs
|
$
|
(2,496)
|
|
|
$
|
(1,649)
|
|
|
$
|
(2,288)
|
|
|
$
|
(6,433)
|
|
|
$
|
(2,369)
|
|
|
$
|
(3,619)
|
|
|
$
|
(1,988)
|
|
|
$
|
(7,976)
|
|
Share options / BSPCE
|
—
|
|
|
(105)
|
|
|
(222)
|
|
|
(327)
|
|
|
—
|
|
|
(61)
|
|
|
(94)
|
|
|
(155)
|
|
Total share-based compensation
|
(2,496)
|
|
|
(1,754)
|
|
|
(2,510)
|
|
|
(6,760)
|
|
|
(2,369)
|
|
|
(3,680)
|
|
|
(2,082)
|
|
|
(8,131)
|
|
BSAs
|
—
|
|
|
—
|
|
|
(455)
|
|
|
(455)
|
|
|
—
|
|
|
—
|
|
|
(371)
|
|
|
(371)
|
|
Total equity awards compensation expense
|
$
|
(2,496)
|
|
|
$
|
(1,754)
|
|
|
$
|
(2,965)
|
|
|
$
|
(7,215)
|
|
|
$
|
(2,369)
|
|
|
$
|
(3,680)
|
|
|
$
|
(2,453)
|
|
|
$
|
(8,502)
|
|
Note 11. Financial 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,
2021
|
|
March 31,
2020
|
|
(in thousands)
|
|
|
|
|
Financial income from cash equivalents
|
$
|
128
|
|
|
$
|
382
|
|
Interest and fees
|
(540)
|
|
|
(432)
|
|
Interest on debt
|
(417)
|
|
|
(380)
|
|
Fees
|
(123)
|
|
|
(52)
|
|
Foreign exchange gain (loss)
|
(798)
|
|
|
(1,628)
|
|
Other financial expense
|
492
|
|
|
1,344
|
|
Total financial expense
|
$
|
(718)
|
|
|
$
|
(334)
|
|
The $0.7 million and the $0.3 million financial expenses for the three months ended March 31, 2021 and March 31, 2020, respectively, were driven by the up-front fees amortization, the non-utilization costs and the financial expense relating to our available Revolving Credit Facility (RCF) financing and the recognition of a negative impact of foreign exchange reevaluations net of related hedging. At March 31, 2021, 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.
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, 2021
|
|
March 31, 2020
|
|
(in thousands)
|
Current income tax
|
$
|
(5,053)
|
|
|
$
|
(9,718)
|
|
Net change in deferred taxes
|
(4,998)
|
|
|
2,678
|
|
Provision for income taxes
|
$
|
(10,051)
|
|
|
$
|
(7,040)
|
|
For the three months ended March 31, 2021 and March 31, 2020, we used an annual estimated tax rate of 30% to calculate the provision for income taxes. The effective tax rate was 30% for the three months ended March 31, 2021 and 2020, respectively.
Current tax assets and liabilities
The total amount of current tax assets consists mainly of prepayments of income taxes and credits of Criteo S.A, Criteo Corp., and Criteo GmbH and Criteo K.K.
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, 2021
|
|
March 31, 2020
|
Net income attributable to shareholders of Criteo S.A.
|
|
|
|
|
$
|
22,406
|
|
|
$
|
15,459
|
|
Weighted average number of shares outstanding
|
|
|
|
|
60,741,674
|
|
|
61,691,001
|
|
Basic earnings per share
|
|
|
|
|
$
|
0.37
|
|
|
$
|
0.25
|
|
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, 2020 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, 2021
|
|
March 31, 2020
|
Net income attributable to shareholders of Criteo S.A.
|
|
|
|
|
$
|
22,406
|
|
|
$
|
15,459
|
|
Weighted average number of shares outstanding of Criteo S.A.
|
|
|
|
|
60,741,674
|
|
|
61,691,001
|
|
Dilutive effect of :
|
|
|
|
|
|
|
|
Restricted share awards ("RSUs")
|
|
|
|
|
2,972,382
|
|
|
264,309
|
|
Share options and BSPCE
|
|
|
|
|
296,071
|
|
|
153,786
|
|
Share warrants
|
|
|
|
|
67,282
|
|
|
16,486
|
|
Weighted average number of shares outstanding used to determine diluted earnings per share
|
|
|
|
|
64,077,409
|
|
|
62,125,582
|
|
Diluted earnings per share
|
|
|
|
|
$
|
0.35
|
|
|
$
|
0.25
|
|
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, 2021
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
Restricted share awards
|
|
|
|
|
332,300
|
|
|
2,241,223
|
|
Share options and BSPCE
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Weighted average number of anti-dilutive securities excluded from diluted earnings per share
|
|
|
|
|
332,300
|
|
|
2,241,223
|
|
Note 14. Commitments and contingencies
Commitments
Revolving Credit Facilities "RCF", Credit Line Facilities and Bank Overdrafts
We are party to an RCF with a syndicate of banks which allows us to draw up to €350.0 million ($410.4 million).
We are also party to short-term credit lines and overdraft facilities with HSBC plc, BNP Paribas and LCL with an authorization to draw up to a maximum of €21.5 million ($25.2 million) in the aggregate under the short-term credit lines and overdraft facilities. As of March 31, 2021, we had not drawn on any of these facilities. Any loans or overdrafts under these short-term facilities bear interest based on the one month EURIBOR rate or three month EURIBOR rate. As these facilities are exclusively short-term credit and overdraft facilities, our banks have the ability to terminate such facilities on short notice.
Contingencies
Changes in provisions during the presented periods are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for employee-related litigation
|
|
Other provisions
|
|
Total
|
|
(in thousands)
|
Balance at January 1, 2021
|
$
|
1,179
|
|
|
$
|
1,071
|
|
|
$
|
2,250
|
|
Increase
|
265
|
|
|
—
|
|
|
265
|
|
Provision used
|
(247)
|
|
|
—
|
|
|
(247)
|
|
Provision released not used*
|
(400)
|
|
|
—
|
|
|
(400)
|
|
Currency translation adjustments
|
(47)
|
|
|
(48)
|
|
|
(95)
|
|
|
|
|
|
|
|
Balance at March 31, 2021
|
$
|
750
|
|
|
$
|
1,023
|
|
|
$
|
1,773
|
|
- of which current
|
750
|
|
|
1,023
|
|
|
1,773
|
|
*Due to changes in management's best estimates of the future outflow
The amount of the provisions represents management’s best estimate of the future outflow.
Note 15. Breakdown of Revenue and Non-Current Assets by Geographical Areas
The Company operates in the following three geographical markets:
• Americas (North and South America);
• EMEA (Europe, Middle-East and Africa); and
• Asia-Pacific.
The following tables disclose our consolidated revenue for each geographical area for each of the reported periods. Revenue by geographical area is based on the location of advertisers’ campaigns.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
EMEA
|
|
Asia-Pacific
|
|
Total
|
For the three months ended:
|
(in thousands)
|
|
|
|
|
|
|
|
|
March 31, 2021
|
$
|
203,900
|
|
|
$
|
212,096
|
|
|
$
|
125,081
|
|
|
$
|
541,077
|
|
March 31, 2020
|
$
|
191,745
|
|
|
$
|
190,114
|
|
|
$
|
121,517
|
|
|
$
|
503,376
|
|
Revenue generated in France amounted to $37.7 million and $32.0 million for the three month ended March 31, 2021 and March 31, 2020, respectively.
Revenue generated in other significant countries where we operate is presented in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
|
March 31, 2021
|
|
March 31, 2020
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
|
$
|
184,084
|
|
|
$
|
173,027
|
|
EMEA
|
|
|
|
|
|
|
|
|
Germany
|
|
|
|
|
|
$
|
53,596
|
|
|
$
|
50,618
|
|
United Kingdom
|
|
|
|
|
|
$
|
23,292
|
|
|
$
|
20,820
|
|
Asia-Pacific
|
|
|
|
|
|
|
|
|
Japan
|
|
|
|
|
|
$
|
84,212
|
|
|
$
|
84,637
|
|
Other Information
For each reported period, non-current assets (corresponding to the net book value of tangible and intangible assets, excluding right of use assets related to lease agreements) are presented in the table below. The geographical information includes results from the locations of legal entities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Of which
|
|
|
|
|
|
Of which
|
|
|
|
Holding
|
|
Americas
|
|
United States
|
|
EMEA
|
|
Asia-Pacific
|
|
Japan
|
|
Total
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
$
|
123,930
|
|
|
$
|
85,900
|
|
|
$
|
85,408
|
|
|
$
|
8,040
|
|
|
$
|
29,606
|
|
|
$
|
19,580
|
|
|
$
|
247,476
|
|
December 31, 2020
|
$
|
135,516
|
|
|
$
|
93,389
|
|
|
$
|
93,030
|
|
|
$
|
8,746
|
|
|
$
|
31,598
|
|
|
$
|
20,532
|
|
|
$
|
269,249
|
|
Note 16. Related Parties
There were no significant related-party transactions during the period nor any change in the nature of the transactions as described in Note 24 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020 except as follows:
The Executive Officers as of March 31, 2021 were:
•Megan Clarken - Chief Executive Officer
•Sarah Glickman - Chief Financial Officer and Principal Accounting Officer
•Ryan Damon - General Counsel and Corporate Secretary
Note 17. Subsequent Events
The Company evaluated all subsequent events that occurred after March 31, 2021 through the date of issuance of the unaudited condensed consolidated financial statements and determined there are no significant events that require adjustments or disclosure.