New Delhi – Criteo, the global technology company powering the world’s marketers with trusted and impactful advertising, today announced financial results for the first quarter ended March 31, 2021 that exceeded the Company’s quarterly guidance.
First Quarter 2021 Financial Highlights:
The following table summarizes our consolidated financial results for the three months ended March 31, 2021 and 2020:
First Quarter 2021 Financial Highlights:
The following table summarizes our consolidated financial results for the three months ended March 31, 2021 and 2020:
Three Months Ended March 31,
2021 2020 YoY
(in millions, except EPS data)
| GAAP Results | |||
| Revenue | $ 541 | $ 503 | 7 % |
| Net Income | $ 23 | $ 16 | 43 % |
| Diluted EPS | $ 0.35 | $ 0.25 | 40 % |
| Cash from operating activities | $ 77 | $ 57 | 36 % |
| Net cash position | $ 520 | $ 437 | 19 % |
|
Non-GAAP Results1 Revenue ex-TAC |
$ 213 |
$ 206 |
4 % |
| Revenue ex-TAC margin | 39 % | 41 % | (2)% |
| Adjusted EBITDA | $ 76 | $ 59 | 28 % |
| Adjusted diluted EPS | $ 0.67 | $ 0.52 | 29 % |
| Free Cash Flow (FCF) | $ 64 | $ 45 | 41 % |
| FCF / Adjusted EBITDA | 84 % | 76 % | 8 % |
Megan Clarken, Chief Executive Officer of Criteo, said, “Our commitments to deliver measurable results for our customers, our growth investments and our consistent focus on execution and productivity enabled us to deliver strong top line and margin.”
Q1 2021 Operating Highlights
• New solutions grew 60% year-over-year at constant currency2 to 21% of total Revenue ex-TAC.
• Retail Media revenue grew 69% year-over-year at constant currency2 and Retail Media Revenue ex-TAC grew 122% at constant currency2. Same-client revenue3 for Retail Media grew 61% and same-client Revenue ex-TAC3 for Retail Media increased 89% year-over-year.
• Criteo launched its contextual advertising solution, a first-of-its-kind product that connects first-party commerce data with real-time contextual signals, paving the way for marketers to continue to drive and measure incremental revenue in a post-cookie world.
• Same-client revenue3 increased 8% year-over-year, accelerating vs. Q4 2020, and same-client Revenue ex-TAC3 increased 3% year-over-year at constant currency2.
• We added over 120 net new live clients in Q1 2021 and closed the quarter with 20,626 clients4.
Financial Summary
Revenue for Q1 2021 was $541 million and Revenue ex-TAC was $213 million. Adjusted EBITDA for the quarter was $76 million, resulting in an adjusted diluted EPS of $0.67. At constant currency, Q1 2021 Revenue increased by 4% and Revenue ex-TAC increased by 0.5%. Excluding the estimated $18 million incremental impact of the pandemic, we estimate that Revenue ex-TAC increased about 9% in Q1 2021. Free Cash Flow was $64 million in Q1 2021, up 41% year-over-year. Free Cash Flow conversion was 84% of Adjusted EBITDA in Q1 2021, representing the highest quarterly level for the past 21 quarters. We had $566 million in cash and marketable securities on our balance sheet at the end of Q1 2021.
Sarah Glickman, Chief Financial Officer, said, “We are on track to achieve about 50% growth from our new solutions in 2021, and excited to deliver value to newly signed customers in Retail Media and for our newly launched Contextual advertising product.”
Revenue and Revenue ex-TAC
Revenue increased by 7% year-over-year in Q1 2021, or 4% at constant currency, to $541 million (Q1 2020:
$503 million). Revenue ex-TAC in the quarter increased 4% year-over-year, or 0.5% at constant currency, to
$213 million (Q1 2020: $206 million), after an approximately $18 million net negative impact from the COVID-19 disruption incremental to 2020, or approximately 9 points of year-over-over growth at constant currency. Good performance of retargeting, driven by our retail clients, stellar performance of Retail Media and continued growth of our Audience Targeting and Omnichannel solutions offset Q1 2021 COVID-19 pandemic impact, in particular on our travel clients. Revenue ex-TAC as a percentage of revenue, or Revenue ex-TAC margin, was 39% (Q1 2020: 41%).
• In the Americas, Revenue increased 6% year-over-year, or 8% at constant currency, to $204 million and represented 38% of total Revenue. Revenue ex-TAC increased 6% year-over-year, or 8% at constant currency, to $76 million and represented 36% of total Revenue ex-TAC.
• In EMEA, Revenue increased 12% year-over-year, or 4% at constant currency, to $212 million and represented 39% of total Revenue. Revenue ex-TAC increased 5% year-over-year, or decreased 2% at constant currency, to $85 million and represented 40% of total Revenue ex-TAC.
• In Asia-Pacific, Revenue increased 3% year-over-year, or declined 1% at constant currency, to
$125 million and represented 23% of total Revenue. Revenue ex-TAC declined 2% year-over-year, or 5% at constant currency, to $52 million and represented 24% of total Revenue ex-TAC.
Net Income and Adjusted Net Income
Net income increased 43% year-over-year in Q1 2021 to $23 million (Q1 2020: $16 million). Net income margin as a percentage of revenue was 4% (Q1 2020: 3%). In the quarter, we incurred $12 million in restructuring related and transformation costs. Net income available to shareholders of Criteo S.A. increased 45% year-over- year to $22 million, or $0.35 per share on a diluted basis (Q1 2020: $15 million, or $0.25 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, restructuring related and transformation costs and the tax impact of these adjustments, increased 35% year-over-year to $43 million, or $0.67 per share on a diluted basis (Q1 2020: $32 million, or $0.52 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA increased 28% year-over-year, or 21% at constant currency, to $76 million (Q1 2020:
$59 million), driven by the Revenue ex-TAC performance over the period and effective cost discipline balanced with investments in our growth areas. Adjusted EBITDA as a percentage of Revenue ex-TAC, or Adjusted EBITDA margin, was 36% (Q1 2020: 29%).
Operating expenses decreased by 3% or $4 million, to $144 million (Q1 2020: $148 million), mostly driven by lower headcount-related expense and disciplined expense management across the Company. Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring related and transformation costs, and depreciation and amortization, which we refer to as Non-GAAP Operating Expenses, decreased 6% or $8 million, to $118 million (Q1 2020: $126 million), largely driven by lower headcount and effective cost discipline, after investing in the growth areas of the Company.
Cash Flow, Cash and Financial Liquidity Position
Cash flow from operating activities increased 36% year-over-year to $77 million (Q1 2020: $57 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, increased 41% to $64 million (Q1 2020: $45 million), or 84% of Adjusted EBITDA (Q1 2020: 76%), driven by our Adjusted EBITDA performance over the period and positive working capital.
Cash and cash equivalents increased $32 million compared to December 31, 2020 to $520 million, after spending $5 million on share repurchases in the first quarter 2021.
As of March 31, 2021, the Company had total financial liquidity of approximately $1 billion, including its cash position, marketable securities, Revolving Credit Facility and treasury shares reserved for M&A.
Business Outlook
The following forward-looking statements reflect Criteo’s expectations as of May 5, 2021. Second quarter 2021 guidance:
• We expect Revenue ex-TAC to be approximately $208 million, translating into constant-currency growth of about 14% year-over-year.
• We expect Adjusted EBITDA to be approximately $60 million.
Fiscal year 2021 guidance:
• We maintain our target of low to mid-single digit growth in Revenue ex-TAC at constant-currency.
• We maintain our expectation of an Adjusted EBITDA margin above 30% of Revenue ex-TAC.
The above guidance for the second quarter and the fiscal year ending December 31, 2021 assumes the following exchange rates for the main currencies impacting our business: a U.S. dollar-euro rate of 0.847, a
U.S. dollar-Japanese Yen rate of 108, a U.S. dollar-British pound rate of 0.746, a U.S. dollar-Korean Won rate of 1,150 and a U.S. dollar-Brazilian real rate of 5.70.
The above guidance assumes no acquisitions are completed during the second quarter ending June 30, 2021 and fiscal year ended December 31, 2021.
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. The variability of the above charges could potentially have a significant impact on our future U.S. GAAP financial results.
Investor Day 2021
Criteo will hold a virtual investor day on Thursday, June 3rd, 2021. More details will be provided ahead of the event, which will be webcast live, on the Company’s Investor Relations website http://ir.criteo.com.
