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Criteo Reports Results For The Second Quarter 2019 And Announces A New $80 Million Share Repurchase Program

NEW YORK, July 31, 2019 /PRNewswire/ -- Criteo S.A. (CRTO), the advertising platform for the open Internet, today announced financial results for the second quarter ended June 30, 2019.

  • Revenue decreased 2% year-over-year, and increased 1% at constant currency1, to $528 million.
  • Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC2, decreased 3% year-over-year, and increased 0.3% at constant currency, to $224 million (or $225 million at the Q2 guidance exchange rates), or 42% of revenue.
  • Net income decreased 15% year-over-year to $13 million.
  • Adjusted EBITDA2 declined 18% year-over-year, or 16% at constant currency, to $56 million, or 25% of Revenue ex-TAC.
  • Cash flow from operating activities increased 31% year-over-year to $53 million.
  • Free Cash Flow2 reached $20 million and the cash position increased to $422 million as of June 30, 2019.
  • Adjusted Net Income per diluted share2 was $0.47.
  • We maintain our 2019 outlook for both Revenue ex-TAC growth and Adjusted EBITDA margin.
  • Our Board of Directors has authorized a share repurchase program of up to $80 million of outstanding American Depositary Shares.

"In a challenging landscape, we achieved important milestones in our transformation in Q2," said JB Rudelle, CEO. "I feel good about our strategic direction and our ability to deliver on our plans."

"We maintain our 2019 outlook for both topline growth and profitability margin, and are strongly committed to delivering healthy profitability over time," said Benoit Fouilland, CFO.

Operating Highlights

  • Revenue ex-TAC from new products, which includes all solutions outside of retargeting, represented 10% of total, growing 61% year-over-year.
  • We added 360 net new clients in Q2, the highest level since Q2 2018, and maintained client retention at close to 90% for all products.
  • Revenue ex-TAC from mobile apps grew 21% year-over-year.
  • Same-client revenue3 decreased 1.9% year-over-year at constant currency and same-client Revenue ex-TAC3 decreased 2.9% year-over-year at constant currency.
  • Our header-bidding technology now connects to over 3,800 web publishers and 200 app developers providing direct access to quality inventory.
  • We just launched our self-registration feature for small and medium clients starting with three key markets: the U.S., U.K. and Australia.
  • We took effective measures to further reduce employee attrition.

Revenue and Revenue ex-TAC

Revenue declined 2% year-over-year, and increased 1% at constant currency, to $528 million (Q2 2018: $537 million). Revenue ex-TAC decreased 3% year-over-year, and increased 0.3% at constant currency, to $224 million (Q2 2018: $230 million). The increase at constant currency was primarily driven by our business with new clients, in particular in the midmarket, offsetting a slight decline in our business with existing clients, despite continued adoption of our new solutions across our existing client base. Revenue ex-TAC margin was 42.4% of revenue (Q2 2018: 42.9%).

  • In the Americas, Revenue grew 1% year-over-year, or 1% at constant currency, to $214 million and represented 40% of total Revenue. Revenue ex-TAC declined 3% year-over-year, or 3% at constant currency, to $84 million and represented 38% of total Revenue ex-TAC.
  • In EMEA, Revenue declined 3% year-over-year, and increased 3% at constant currency, to $194 million and represented 37% of total Revenue. Revenue ex-TAC declined 2% year-over-year, and grew 4% at constant currency, to $87 million and represented 39% of total Revenue ex-TAC.
  • In Asia-Pacific, Revenue declined 3% year-over-year, or 1% at constant currency, to $120 million and represented 23% of total Revenue. Revenue ex-TAC declined 4% year-over-year, or 2% at constant currency, to $52 million and represented 23% of total Revenue ex-TAC.

Net Income and Adjusted Net Income

Net income decreased 15% year-over-year to $13 million (Q2 2018: $15 million). Net income margin as a percentage of revenue was 2.4% (Q2 2018: 2.7%), a 40-basis point decrease year-over-year. Net income available to shareholders of Criteo S.A. decreased 21% year-over-year to $11 million, or $0.16 per share on a diluted basis (Q2 2018: $14 million, or $0.20 per share on a diluted basis).

Adjusted Net Income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, decreased 13% year-over-year to $31 million, or $0.47 per share on a diluted basis (Q2 2018: $35 million, or $0.53 per share on a diluted basis).

Adjusted EBITDA and Operating Expenses

Adjusted EBITDA declined 18% year-over-year, or 16% at constant currency, to $56 million (Q2 2018: $69 million), primarily driven by the decrease in Revenue ex-TAC, increased Non-GAAP expenses, in particular in other cost of revenue, as well as a $5 million exceptional charge relating to an invoicing dispute. Adjusted EBITDA as a percentage of Revenue ex-TAC, which we refer to as Adjusted EBITDA margin, was 25.2% (Q2 2018: 29.9%), a 470-basis point decrease year-over-year.

Operating expenses were at $175 million (Q2 2018: $176 million), in line with the prior-year period. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring costs, depreciation and amortization and acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, increased 2% year-over-year to $149 million (Q2 2018: $147 million). In connection with our company transformation, we incurred restructuring costs of $0.7 million, including $2 million related to cash payroll and facilities expenses that were added back to Adjusted EBITDA, and $1 million of facilities related depreciation and amortization expense, partially offset by non-cash forfeitures of equity awards.

Cash Flow and Cash Position

Cash flow from operating activities increased 31% year-over-year to $53 million (Q2 2018: $40 million). Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, decreased 10% year-over-year to $20 million (Q2 2018: $22 million), representing 36% of Adjusted EBITDA (Q2 2018: 33%).

Cash and cash equivalents increased $58 million in the first half of 2019 to $422 million.

Business Outlook

The following forward-looking statements reflect Criteo's expectations as of July 31, 2019.

Third quarter 2019 guidance:

  • We expect Revenue ex-TAC to be between $219 million and $223 million, implying constant-currency growth of approximately -2% to +0%.
  • We expect Adjusted EBITDA to be between $57 million and $61 million.

Fiscal year 2019 guidance:

  • We maintain our outlook and expect Revenue ex-TAC growth for fiscal year 2019 of between 0% and 2% at constant currency.
  • We maintain our outlook and expect Adjusted EBITDA margin for fiscal year 2019 of approximately 30% of Revenue ex-TAC.

The above guidance for the quarter ending September 30, 2019 and the fiscal year ending December 31, 2019, assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.88 a U.S. dollar-Japanese Yen rate of 109, a U.S. dollar-British pound rate of 0.78 and a U.S. dollar-Brazilian real rate of 3.81.

The above guidance assumes no acquisitions are completed during the quarter ending September 30, 2019, and the fiscal year ending December 31, 2019.

Reconciliation of Revenue ex-TAC and Adjusted EBITDA guidance to the closest corresponding U.S. GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of equity awards compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our share price. We expect the variability of the above charges to have a potentially significant impact on our future U.S. GAAP financial results.

Announcement of a $80 million Share Repurchase Program

Demonstrating the Company's confidence in its business and its ability to generate Free Cash Flow, Criteo today announces that the Board of Directors has authorized a share repurchase program of up to $80 million of the Company's outstanding American Depositary Shares.

This program relies primarily upon the authorization provided by shareholders at the Company's 2019 Annual General Meeting, and as such the Company intends to use repurchased shares to satisfy employee equity plan vesting in lieu of issuing new shares, and potentially in connection with M&A transactions. The authorization is effective immediately and remains in effect until May 15, 2020.

Under the terms of the approved program, the stock purchases may be made from time to time on the NASDAQ Global Select Market in compliance with applicable state and federal securities laws (including the requirements of SEC Rule 10b-18) and applicable provisions of French corporate law. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital availability, as determined by Criteo's management team and within the limits set by the shareholders' authorization. The program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.

Non-GAAP Financial Measures

This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission (the "SEC"): Revenue ex-TAC, Revenue ex-TAC by Region, Revenue ex-TAC margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow and Non-GAAP Operating Expenses. These measures are not calculated in accordance with U.S. GAAP.

Revenue ex-TAC is our revenue excluding Traffic Acquisition Costs ("TAC") generated over the applicable measurement period and Revenue ex-TAC by Region reflects our Revenue ex-TAC by our geographies. Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our business and across our geographies.

Accordingly, we believe that Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin provide useful information to investors and the market generally in understanding and evaluating our operating results in the same manner as our management and board of directors. Adjusted EBITDA is our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA and Adjusted EBITDA margin are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short‑ and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration, Adjusted EBITDA and Adjusted EBITDA margin can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments. Adjusted Net Income and Adjusted Net Income per diluted share are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, Adjusted Net Income and Adjusted Net Income per diluted share can provide useful measures for period-to-period comparisons of our business.

Accordingly, we believe that Adjusted Net Income and Adjusted Net Income per diluted share provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment. Free Cash Flow is a key measure used by our management and board of directors to evaluate the Company's ability to generate cash. Accordingly, we believe that Free Cash Flow permits a more complete and comprehensive analysis of our available cash flows.

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures the Company uses to provide its quarterly and annual business outlook to the investment community.

Please refer to the supplemental financial tables provided in the appendix of this press release for a reconciliation of Revenue ex-TAC to revenue, Revenue ex-TAC by Region to revenue by region, Adjusted EBITDA to net income, Adjusted Net Income to net income, Free Cash Flow to cash flow from operating activities, and Non-GAAP Operating Expenses to operating expenses, in each case, the most comparable U.S. GAAP measure. Our use of non-GAAP financial measures has limitations as an analytical tool, and you should not consider such non-GAAP measures in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: 1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and 2) other companies may report Revenue ex-TAC, Revenue ex-TAC by Region, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, Non-GAAP Operating Expenses or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.

Forward-Looking Statements Disclosure

This press release contains forward-looking statements, including projected financial results for the quarter ending September 30, 2019 and the fiscal year ending December 31, 2019, our expectations regarding our market opportunity and future growth prospects and other statements that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially.Factors that might cause or contribute to such differences include, but are not limited to: failure related to our technology and our ability to respond to changes in technology, uncertainty regarding our ability to access a consistent supply of internet display advertising inventory and expand access to such inventory, investments in new business opportunities and the timing of these investments, whether the projected benefits of acquisitions materialize as expected, uncertainty regarding international growth and expansion, the impact of competition, uncertainty regarding legislative, regulatory or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in our industry to comply therewith, failure to enhance our brand cost-effectively, recent growth rates not being indicative of future growth, our ability to manage growth, potential fluctuations in operating results, our ability to grow our base of clients, and the financial impact of maximizing Revenue ex-TAC, as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in the Company's SEC filings and reports, including the Company's Annual Report on Form 10-K filed with the SEC on March 1, 2019, and in subsequent Quarterly Report on Form 10-Q as well as future filings and reports by the Company.

Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events, changes in expectations or otherwise.

Conference Call Information

Criteo's earnings conference call will take place today, July 31, 2019, at 8:00 AM ET, 2:00 PM CET. The conference call will be webcast live on the Company's website http://ir.criteo.com and will be available for replay.

Conference call details:

U.S. callers:

+1 855 209 8212

International callers:

+1 412 317 0788 or +33 1 76 74 05 02

Please ask to be joined into the "Criteo S.A." call.

About Criteo

Criteo (CRTO) is the advertising platform for the open Internet, an ecosystem that favors neutrality, transparency and inclusiveness. Close to 2,900 Criteo team members partner with close to 20,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers. For more information, please visit www.criteo.com.











1

Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 2018 average exchange rates for the relevant period to 2019 figures.

2

Revenue ex-TAC, Adjusted EBITDA, Adjusted net Income per diluted share,Free Cash Flow and growth at constant currency are not measures calculated in accordance with U.S. GAAP.

3

Same-client revenue or Revenue ex-TAC is the revenue or Revenue ex-TAC generated by clients that were live with us in a given quarter and still live with us the same quarter in the following year.

Contacts

Criteo Investor Relations
Edouard Lassalle, VP, Head of IR, e.lassalle@criteo.com 
Friederike Edelmann, IR Director, f.edelmann@criteo.com

Criteo Public Relations
Isabelle Leung-Tack, VP, Global Communications, i.leungtack@criteo.com

Financial information to follow

 

CRITEO S.A.

Consolidated Statement of Financial Position

(U.S. dollars in thousands, unaudited)




December 31, 2018


June 30, 2019

Assets





Current assets:





Cash and cash equivalents


$

364,426



$

422,053


 Trade receivables, net of allowances of $25.9 million and $19.5 million at December 31, 2018 and June 30, 2019, respectively


473,901



374,949


Income taxes


19,370



18,185


Other taxes


53,338



56,090


Other current assets


22,816



18,751


Total current assets


933,851



890,028


Property, plant and equipment, net


184,013



192,651


Intangible assets, net


112,036



103,113


Goodwill


312,881



317,093


Right of Use Asset - operating lease (1)




183,725


Non-current financial assets


20,460



21,613


Deferred tax assets


33,894



41,346


    Total non-current assets


663,284



859,541


Total assets


$

1,597,135



$

1,749,569







Liabilities and shareholders' equity





Current liabilities:





Trade payables


$

425,376



$

332,735


Contingencies


2,640



4,156


Income taxes


7,725



7,065


Financial liabilities - current portion


1,018



2,030


Lease liability - operating - current portion (1)




47,964


Other taxes


55,592



56,929


Employee - related payables


65,878



68,702


Other current liabilities


47,115



33,986


Total current liabilities


605,344



553,567


Deferred tax liabilities


10,770



8,489


Retirement benefit obligation


5,537



8,002


Financial liabilities - non current portion


2,490



2,051


Lease liability - operating - non current portion (1)




148,170


Other non-current liabilities


5,103



4,327


    Total non-current liabilities


23,900



171,039


Total liabilities


629,244



724,606


Commitments and contingencies





Shareholders' equity:





Common shares, €0.025 par value, 67,708,203 and 66,161,523 shares authorized, issued and outstanding at December 31, 2018 and June 30, 2019, respectively.


2,201



2,157


Treasury stock, 3,459,119 and 1,118,969 shares at cost as of December 31, 2018 and  June 30, 2019, respectively.


(79,159)



(26,564)


Additional paid-in capital


663,281



652,572


Accumulated other comprehensive (loss)


(30,522)



(33,293)


Retained earnings


387,869



401,209


Equity - attributable to shareholders of Criteo S.A.


943,670



996,081


Non-controlling interests


24,221



28,882


Total equity


967,891



1,024,963


Total equity and liabilities


$

1,597,135



$

1,749,569



(1)  Effective January 1, 2019 we have adopted ASC 842, Leases. We have elected the modified retrospective transition method and not restated comparative prior periods.  Upon adoption, we recognized total operating lease liabilities of $223.5 million and operating right-of-use assets of $204.3 million.

 

CRITEO S.A.

Consolidated Statement of Income

(U.S. dollars in thousands, except share and per share data, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change














Revenue


$

537,185



$

528,147



(2)

%


$

1,101,349



$

1,086,270



(1)

%














Cost of revenue













Traffic acquisition cost


(306,963)



(304,229)



(1)

%


(630,709)



(626,658)



(1)

%

Other cost of revenue


(29,957)



(29,059)



(3)

%


(60,016)



(55,104)



(8)

%














Gross profit


200,265



194,859



(3)

%


410,624



404,508



(1)

%














Operating expenses:













Research and development expenses


(47,544)



(44,015)



(7)

%


(92,862)



(90,592)



(2)

%

Sales and operations expenses


(92,726)



(95,503)



3

%


(188,375)



(191,412)



2

%

General and administrative expenses


(35,644)



(35,767)



0.3

%


(70,235)



(69,537)



(1)

%

Total Operating expenses


(175,914)



(175,285)



(0.4)

%


(351,472)



(351,541)



%

Income from operations


24,351



19,574



(20)

%


59,152



52,967



(10)

%

Financial income (expense)


(1,006)



(1,354)



35

%


(2,331)



(3,328)



43

%

Income before taxes


23,345



18,220



(22)

%


56,821



49,639



(13)

%

Provision for income taxes


(8,638)



(5,683)



(34)

%


(21,024)



(15,701)



(25)

%

Net Income


$

14,707



$

12,537



(15)

%


$

35,797



$

33,938



(5)

%














Net income available to shareholders of Criteo S.A.


$

13,726



$

10,823



(21)

%


$

33,535



$

29,943



(11)

%

Net income available to non-controlling interests


$

981



$

1,714



75

%


$

2,262



$

3,995



77

%














Weighted average shares outstanding used in computing per share amounts:













Basic


66,347,599



64,581,476





66,254,476



64,459,867




Diluted


67,488,311



65,624,505





67,479,513



65,833,642

















Net income allocated  to shareholders per share:













Basic


$

0.21



$

0.17



(19)

%


$

0.51



$

0.46



(10)

%

Diluted


$

0.20



$

0.16



(20)

%


$

0.50



$

0.45



(10)

%

 

CRITEO S.A.

Consolidated Statement of Cash Flows

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change

Net income


$

14,707



$

12,537



(15)

%


$

35,797



$

33,938



(5)

%

Non-cash and non-operating items


35,677



28,961



(19)

%


75,427



53,959



(28)

%

           - Amortization and provisions


25,099



18,282



(27)

%


51,149



37,926



(26)

%

           - Equity awards compensation expense (1)


20,241



11,713



(42)

%


39,070



25,595



(34)

%

           - Change in deferred taxes


(4,389)



7,252



NM


(7,535)



1,336



NM

           - Change in income taxes


(5,316)



(8,696)



64

%


(4,000)



(10,630)



NM

           - Other (2)


42



410



NM


(3,257)



(268)



(92)

%

Changes in working capital related to operating activities


(10,043)



11,466



NM


13,644



32,287



NM

           - Decrease in trade receivables


10,154



19,325



90

%


101,446



105,343



4

%

           - Decrease in trade payables


(26,745)



(14,995)



(44)

%


(89,690)



(73,480)



(18)

%

           - Decrease in other current assets


5,821



7,504



29

%


13,779



1,512



(89)

%

           - Increase/(Decrease) in other current liabilities (2)


727



3,015



NM


(11,891)



5,451



NM

           - Change in operating lease liabilities and right of use assets (3)




(3,383)



NM




(6,539)



NM

CASH FROM OPERATING ACTIVITIES


40,341



52,964



31

%


124,868



120,184



(4)

%

Acquisition of intangible assets, property, plant and equipment


(18,880)



(28,812)



53

%


(26,293)



(42,104)



60

%

Change in accounts payable related to intangible assets, property, plant and equipment


1,033



(3,980)



NM


(24,121)



(14,372)



(40)

%

Payment for (disposal of) a business, net of cash acquired (disposed)


-


637



NM


(10,811)



(4,688)



(57)

%

Change in other non-current financial assets


154



(1,152)



NM


42



(1,184)



NM

CASH USED FOR INVESTING ACTIVITIES


(17,693)



(33,307)



88

%


(61,183)



(62,348)



2

%

Repayment of borrowings


(235)



(167)



(29)

%


(473)



(339)



(28)

%

Net payments related to equity award activities


396



(98)



NM


562



(87)



NM

Change in other financial liabilities (2)


(35)



(209)



NM


16,810



(239)



NM

CASH FROM (USED FOR) FINANCING ACTIVITIES


126



(474)



NM


16,899



(665)



NM

Effect of exchange rates changes on cash and cash equivalents (2)


(26,363)



7,099



NM


(14,410)



456



NM

Net increase (decrease) in cash and cash equivalents


(3,589)



26,282



NM


66,174



57,627



(13)

%

Net cash and cash equivalents at beginning of period


483,874



395,771



(18)

%


414,111



364,426



(12)

%

Net cash and cash equivalents at end of period


$

480,285



$

422,053



(12)

%


$

480,285



$

422,053



(12)

%

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION













Cash paid for taxes, net of refunds


$

(18,343)



$

(7,127)



NM


$

(32,560)



$

(24,995)



(23)

%

Cash paid for interest, net of amounts capitalized


$

(432)



$

(351)



(19)

%


$

(840)



$

(758)



(10)

%


(1) Share-based compensation expense according to ASC 718 Compensation - stock compensation accounted for $19.8 million and $11.4 million of equity awards compensation expense for the quarter ended June 30, 2018 and 2019, respectively, and $38.2 million and $24.9 million of equity awards compensation for the six months ended June 30, 2018 and 2019, respectively.


(2) During the quarter ended June 30, 2018, and the six months ended June 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


(3)  Effective January 1, 2019 we have adopted ASC 842, Leases. We have elected the modified retrospective transition method and not restated prior periods. Changes in operating lease liabilities and right of use assets included rent prepayments and accrued rent amounts which were mapped to other current assets and trade payables in prior years.

 

CRITEO S.A.

Reconciliation of Cash from Operating Activities to Free Cash Flow

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change














CASH FROM OPERATING ACTIVITIES


$

40,341



$

52,964



31

%


$

124,868



$

120,184



(4)

%

Acquisition of intangible assets, property, plant and equipment


(18,880)



(28,812)



53

%


(26,293)



(42,104)



60

%

Change in accounts payable related to intangible assets, property, plant and equipment


1,033



(3,980)



NM


(24,121)



(14,372)



(40)

%

FREE CASH FLOW (1)


$

22,494



$

20,172



(10)

%


$

74,454



$

63,708



(14)

%


(1) Free Cash Flow is defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment.

 

CRITEO S.A.

Reconciliation of Revenue ex-TAC by Region to Revenue by Region

(U.S. dollars in thousands, unaudited)





Three Months Ended






Six Months Ended








June 30,






June 30,






Region


2018


2019


YoY
Change


YoY
Change
at
Constant
Currency


2018


2019


YoY
Change


YoY
Change
at
Constant
Currency

Revenue


















Americas


$

212,781



$

213,974



1

%


1

%


$

425,476



$

431,967



2

%


2

%


EMEA


201,080



194,359



(3)

%


3

%


423,691



404,002



(5)

%


3

%


Asia-Pacific


123,324



119,814



(3)

%


(1)

%


252,182



250,301



(1)

%


2

%


Total


537,185



528,147



(2)

%


1

%


1,101,349



1,086,270



(1)

%


2

%



















Traffic acquisition costs


















Americas


(125,502)



(129,491)



3

%


4

%


(257,023)



(261,036)



2

%


2

%


EMEA


(112,577)



(107,401)



(5)

%


1

%


(232,470)



(224,692)



(3)

%


4

%


Asia-Pacific


(68,884)



(67,337)



(2)

%


(0.3)

%


(141,216)



(140,930)



(0.2)

%


2

%


Total


(306,963)



(304,229)



(1)

%


2

%


(630,709)



(626,658)



(1)

%


3

%



















Revenue ex-TAC (1)


















Americas


87,279



84,483



(3)

%


(3)

%


168,453



170,931



1

%


2

%


EMEA


88,503



86,958



(2)

%


4

%


191,221



179,310



(6)

%


1

%


Asia-Pacific


54,440



52,477



(4)

%


(2)

%


110,966



109,371



(1)

%


1

%


Total


$

230,222



$

223,918



(3)

%


0.3

%


$

470,640



$

459,612



(2)

%


1

%


(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region because they are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue and review of these measures by region can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region or similarly titled measures but define the regions differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region alongside our other U.S. GAAP financial results, including revenue. The above table provides a reconciliation of Revenue ex-TAC to revenue and Revenue ex-TAC by Region to revenue by region.

 

CRITEO S.A.

Reconciliation of Adjusted EBITDA to Net Income

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change

Net income


$

14,707



$

12,537



(15)

%


$

35,797



$

33,938



(5)

%

Adjustments:













Financial (income) expense


1,006



1,354



35

%


2,331



3,328



43

%

Provision for income taxes


8,638



5,683



(34)

%


21,024



15,701



(25)

%

Equity awards compensation expense


20,245



14,391



(29)

%


39,548



28,273



(29)

%

Research and development


6,771



4,203



(38)

%


11,326



8,228



(27)

%

Sales and operations


8,668



5,693



(34)

%


16,499



11,894



(28)

%

General and administrative


4,806



4,495



(6)

%


11,723



8,151



(30)

%

Pension service costs


419



391



(7)

%


853



785



(8)

%

Research and development


212



191



(10)

%


432



384



(11)

%

Sales and operations


75



71



(5)

%


154



143



(7)

%

General and administrative


132



129



(2)

%


267



258



(3)

%

Depreciation and amortization expense


23,560



21,315



(10)

%


47,206



40,611



(14)

%

Cost of revenue


15,050



10,847



(28)

%


30,299



19,982



(34)

%

Research and development


2,245



3,534



57

%


4,466



7,011



57

%

Sales and operations


4,518



5,109



13

%


8,972



9,973



11

%

General and administrative


1,747



1,825



4

%


3,469



3,645



5

%

Restructuring cost (1)


199



728



NM


(53)



2,618



NM

Research and development


16



124



NM


(332)



124



NM

Sales and operations


183



175



(4)

%


290



2,065



NM

General and administrative




429



NM


(11)



429



NM

Total net adjustments


54,067



43,862



(19)

%


110,909



91,316



(18)

%

Adjusted EBITDA (2)


$

68,774



$

56,399



(18)

%


$

146,706



$

125,254



(15)

%


(1) For the three months ended June 30, 2019 and the six months ended June 30, 2019, respectively, the Company recognized restructuring charges for its new organizational structure implemented to support its multi-product platform strategy as detailed below:



Three Months Ended


Six Months Ended


June 30, 2019

(Gain) from forfeitures of share-based compensation expense

(2,678)



(2,678)


Depreciation and amortization expense

1,228



1,228


Payroll and Facilities related costs

2,178



4,068


Total restructuring costs

728



2,618














(2) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; (b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S. GAAP financial results, including net income.

 

CRITEO S.A.

Reconciliation from Non-GAAP Operating Expenses to Operating Expenses under GAAP

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change














Research and Development expenses


$

(47,544)



$

(44,015)



(7)

%


$

(92,862)



$

(90,592)



(2)

%

Equity awards compensation expense


6,771



4,203



(38)

%


11,326



8,228



(27)

%

Depreciation and Amortization expense


2,245



3,534



57

%


4,466



7,011



57

%

Pension service costs


212



191



(10)

%


432



384



(11)

%

Restructuring costs (1)


16



124



NM


(332)



124



NM

Non GAAP - Research and Development expenses


(38,300)



(35,963)



(6)

%


(76,970)



(74,845)



(3)

%

Sales and Operations expenses


(92,726)



(95,503)



3

%


(188,375)



(191,412)



2

%

Equity awards compensation expense


8,668



5,693



(34)

%


16,499



11,894



(28)

%

Depreciation and Amortization expense


4,518



5,109



13

%


8,972



9,973



11

%

Pension service costs


75



71



(5)

%


154



143



(7)

%

Restructuring costs (1)


183



175



(4)

%


290



2,065



NM

Non GAAP - Sales and Operations expenses


(79,282)



(84,455)



7

%


(162,460)



(167,337)



3

%

General and Administrative expenses


(35,644)



(35,767)



0.3

%


(70,235)



(69,537)



(1)

%

Equity awards compensation expense


4,806



4,495



(6)

%


11,723



8,151



(30)

%

Depreciation and Amortization expense


1,747



1,825



4

%


3,469



3,645



5

%

Pension service costs


132



129



(2)

%


267



258



(3)

%

Restructuring costs (1)




429



NM


(11)



429



NM

Non GAAP - General and Administrative expenses


(28,959)



(28,889)



(0.2)

%


(54,787)



(57,054)



4

%

Total Operating expenses


(175,914)



(175,285)



(0.4)

%


(351,472)



(351,541)



%

Equity awards compensation expense


20,245



14,391



(29)

%


39,548



28,273



(29)

%

Depreciation and Amortization expense


8,510



10,468



23

%


16,907



20,629



22

%

Pension service costs


419



391



(7)

%


853



785



(8)

%

Restructuring costs (1)


199



728



NM


(53)



2,618



NM

Total Non GAAP Operating expenses (2)


$

(146,541)



$

(149,307)



2

%


$

(294,217)



$

(299,236)



2

%


(1) For the three months ended June 30, 2019 and the six months ended June 30, 2019, respectively, the Company recognized restructuring charges for its new organizational structure implemented to support its multi-product platform strategy as detailed below:



Three Months Ended


Six Months Ended


June 30, 2019

(Gain) from forfeitures of share-based compensation expense

(2,678)



(2,678)


Depreciation and amortization expense

1,228



1,228


Payroll and Facilities related costs

2,178



4,068


Total restructuring costs

728



2,618














(1) We define Non-GAAP Operating Expenses as our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration. The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash. We believe Non-GAAP Operating Expenses reflects our ongoing operating expenses in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business. As a result, we believe that Non-GAAP Operating Expenses provides useful information to investors in understanding and evaluating our core operating performance and trends in the same manner as our management and in comparing financial results across periods. In addition, Non-GAAP Operating Expenses is a key component in calculating Adjusted EBITDA, which is one of the key measures we use to provide our quarterly and annual business outlook to the investment community.

 

CRITEO S.A.

 Detailed Information on Selected Items

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change

Equity awards compensation expense













Research and development


$

6,771



$

4,203



(38)

%


$

11,326



$

8,228



(27)

%

Sales and operations


8,668



5,693



(34)

%


16,499



11,894



(28)

%

General and administrative


4,806



4,495



(6)

%


11,723



8,151



(30)

%

Total equity awards compensation expense


20,245



14,391



(29)

%


39,548



28,273



(29)

%














Pension service costs













Research and development


212



191



(10)

%


432



384



(11)

%

Sales and operations


75



71



(5)

%


154



143



(7)

%

General and administrative


132



129



(2)

%


267



258



(3)

%

Total pension service costs


419



391



(7)

%


853



785



(8)

%














Depreciation and amortization expense













Cost of revenue


15,050



10,847



(28)

%


30,299



19,982



(34)

%

Research and development


2,245



3,534



57

%


4,466



7,011



57

%

Sales and operations


4,518



5,109



13

%


8,972



9,973



11

%

General and administrative


1,747



1,825



4

%


3,469



3,645



5

%

Total depreciation and amortization expense


23,560



21,315



(10)

%


47,206



40,611



(14)

%














Restructuring costs (1)













Research and development


16



124



NM


(332)



124



NM

Sales and operations


183



175



(4)

%


290



2,065



NM

General and administrative




429



NM


(11)



429



NM

Total restructuring costs


$

199



$

728



NM


$

(53)



$

2,618



NM


(1) For the three months ended June 30, 2019 and the six months ended June 30, 2019, respectively, the Company recognized restructuring charges for its new organizational structure implemented to support its multi-product platform strategy as detailed below:



Three Months Ended


Six Months Ended


June 30, 2019

(Gain) from forfeitures of share-based compensation expense

(2,678)



(2,678)


Depreciation and amortization expense

1,228



1,228


Payroll and Facilities related costs

2,178



4,068


Total restructuring costs

728



2,618














 

CRITEO S.A.

Reconciliation of Adjusted Net Income to Net Income

(U.S. dollars in thousands except share and per share data, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change














Net income


$

14,707



$

12,537



(15)

%


$

35,797



$

33,938



(5)

%

Adjustments:













Equity awards compensation expense


20,245



14,391



(29)

%


39,548



28,273



(29)

%

Amortization of acquisition-related intangible assets


3,448



5,465



58

%


6,905



10,937



58

%

Restructuring costs (1)


199



728



NM


(53)



2,618



NM

Tax impact of the above adjustments


(3,117)



(2,391)



(23)

%


(6,196)



(5,331)



(14)

%

Total net adjustments


20,775



18,193



(12)

%


40,204



36,497



(9)

%

Adjusted net income (2)


$

35,482



$

30,730



(13)

%


$

76,001



$

70,435



(7)

%














Weighted average shares outstanding













 - Basic


66,347,599



64,581,476





66,254,476



64,459,867




 - Diluted


67,488,311



65,624,505





67,479,513



65,833,642

















Adjusted net income per share













 - Basic


$

0.53



$

0.48



(9)

%


$

1.15



$

1.09



(5)

%

 - Diluted


$

0.53



$

0.47



(11)

%


$

1.13



$

1.07



(5)

%


(1) For the three months ended June 30, 2019 and the six months ended June 30, 2019, respectively, the Company recognized restructuring charges for its new organizational structure implemented to support its multi-product platform strategy as detailed below:



Three Months Ended


Six Months Ended


June 30, 2019

(Gain) from forfeitures of share-based compensation expense

(2,678)



(2,678)


Depreciation and amortization expense

1,228



1,228


Payroll and Facilities related costs

2,178



4,068


Total restructuring costs

728



2,618














(2) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Adjusted Net Income has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP-based financial results, including net income.

 

CRITEO S.A.

Constant Currency Reconciliation

(U.S. dollars in thousands, unaudited)




Three Months Ended




Six Months Ended





June 30,




June 30,





2018


2019


YoY
Change


2018


2019


YoY
Change














Revenue as reported


$

537,185



$

528,147



(2)

%


$

1,101,349



$

1,086,270



(1)

%

Conversion impact U.S. dollar/other currencies




15,705







39,746




Revenue at constant currency(1)


537,185



543,852



1

%


1,101,349



1,126,016



2

%














Traffic acquisition costs as reported


(306,963)



(304,229)



(1)

%


(630,709)



(626,658)



(1)

%

Conversion impact U.S. dollar/other currencies




(8,662)







(22,132)




Traffic Acquisition Costs at constant currency(1)


(306,963)



(312,891)



2

%


(630,709)



(648,790)



3

%














Revenue ex-TAC as reported(2)


230,222



223,918



(3)

%


470,640



459,612



(2)

%

Conversion impact U.S. dollar/other currencies




7,043







17,614




Revenue ex-TAC at constant currency(2)


230,222



230,961



0.3

%


470,640



477,226



1

%

Revenue ex-TAC(2)/Revenue as reported


43

%


42

%




43

%


42

%
















Other cost of revenue as reported


(29,957)



(29,059)



(3)

%


(60,016)



(55,104)



(8)

%

Conversion impact U.S. dollar/other currencies




(643)







(1,393)




Other cost of revenue at constant currency(1)


(29,957)



(29,702)



(1)

%


(60,016)



(56,497)



(6)

%














Adjusted EBITDA(3)


68,774



56,399



(18)

%


146,706



125,254



(15)

%

Conversion impact U.S. dollar/other currencies




1,638







5,973




Adjusted EBITDA(3) at constant currency(1)


$

68,774



$

58,037



(16)

%


$

146,706



$

131,227



(11)

%

Adjusted EBITDA(3)/Revenue ex-TAC(2)


30

%


25

%




31

%


27

%




(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results. We have included results on a constant currency basis because it is a key measure used by our management and Board of directors to evaluate operating performance. Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends. The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.


(2) Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Revenue ex-TAC by Region to Revenue by Region" for a reconciliation of Revenue Ex-TAC to revenue.


(3) Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. See the table entitled "Reconciliation of Adjusted EBITDA to Net Income" for a reconciliation of Adjusted EBITDA to net income.

 

CRITEO S.A.

Information on Share Count

(unaudited)




Six Months Ended



June 30,



2018


2019

Shares outstanding as at January 1,


66,085,097



64,249,084


Weighted average number of shares issued during the period


169,379



210,783


Basic number of shares - Basic EPS basis


66,254,476



64,459,867


Dilutive effect of share options, warrants, employee warrants - Treasury method


1,225,037



1,373,775


Diluted number of shares - Diluted EPS basis


67,479,513



65,833,642







Shares issued as at June 30, before Treasure stocks


66,861,045



66,161,523


Treasury stock as of June 30,




(1,118,969)


Shares outstanding as of June 30, after Treasury stocks


66,861,045



65,042,554


Total dilutive effect of share options, warrants, employee warrants


8,477,469



7,458,330


Fully diluted shares as of June 30,


75,338,514



72,500,884














 

CRITEO S.A.

Supplemental Financial Information and Operating Metrics

(U.S. dollars in thousands except where stated, unaudited)



Q3
2017

Q4
2017

Q1
2018

Q2
2018

Q3
2018

Q4
2018

Q1
2019

Q2
2019

YoY
Change

QoQ
Change














Clients

17,299

18,118

18,528

18,936

19,213

19,419

19,373

19,733

4%

2%














Revenue

563,973

674,031

564,164

537,185

528,869

670,096

558,123

528,147

(2)%

(5)%


Americas

228,326

324,696

212,695

212,781

211,247

317,350

217,993

213,974

1%

(2)%


EMEA

207,168

221,019

222,611

201,080

195,230

220,904

209,643

194,359

(3)%

(7)%


APAC

128,479

128,316

128,858

123,324

122,392

131,842

130,487

119,814

(3)%

(8)%














TAC

(329,576)

(397,087)

(323,746)

(306,963)

(305,387)

(398,238)

(322,429)

(304,229)

(1)%

(6)%


Americas

(141,869)

(203,368)

(131,521)

(125,502)

(126,406)

(196,168)

(131,545)

(129,491)

3%

(2)%


EMEA

(115,446)

(120,662)

(119,893)

(112,577)

(111,131)

(128,053)

(117,291)

(107,401)

(5)%

(8)%


APAC

(72,261)

(73,057)

(72,332)

(68,884)

(67,850)

(74,017)

(73,593)

(67,337)

(2)%

(9)%














Revenue ex-TAC (1)

234,397

276,944

240,418

230,222

223,482

271,858

235,694

223,918

(3)%

(5)%


Americas

86,457

121,328

81,174

87,279

84,841

121,182

86,448

84,483

(3)%

(2)%


EMEA

91,722

100,357

102,718

88,503

84,099

92,851

92,352

86,958

(2)%

(6)%


APAC

56,218

55,259

56,526

54,440

54,542

57,825

56,894

52,477

(4)%

(8)%














Cash flow from operating activities

61,727

79,002

84,527

40,341

50,256

85,600

67,220

52,964

31%

(21)%














Capital expenditures

27,773

25,476

32,567

17,847

29,656

45,408

23,684

32,792

84%

38%














Capital expenditures/Revenue

5%

4%

6%

3%

6%

7%

4%

6%

N.A

N.A














Net cash position

357,983

414,111

483,874

480,285

458,690

364,426

395,771

422,053

(12)%

7%














Headcount

2,712

2,764

2,675

2,678

2,737

2,744

2,813

2,873

7%

2%














Days Sales Outstanding (days - end of month)

56

57

60

61

60

58

59

58

N.A

N.A




(1) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region because they are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue and review of these measures by region can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors. Our use of Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these limitations are: (a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; (b) other companies may report Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region or similarly titled measures but define the regions differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region alongside our other U.S. GAAP financial results, including revenue. The above table provides a reconciliation of Revenue ex-TAC to revenue and Revenue ex-TAC by Region to revenue by region.

 

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