Beginning with the first quarter of 2024, the Company has changed its segment reporting structure to two reportable segments: Retail Media and Performance Media, which combines our former Marketing Solutions and Iponweb segments, to align with a change in how the Chief Operating Decision Maker (CODM), our Chief Executive Officer (CEO), allocates resources and assesses performance.
As such, prior period segment results and related disclosures have been conformed to reflect the Company’s current reportable segments. This change in accounting policy did not impact our results of operations, financial position, or cash flows. Refer to Note 2 for further discussion.
Goodwill Interim Impairment Evaluation
The Company's goodwill balance was $526.6 million and $524.2 million at September 30, 2024 and December 31, 2023, respectively. We assess goodwill for impairment at least annually during the fourth quarter and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. As noted above, during the first quarter 2024, the Company made a change to its operating and reportable segments from three to two segments: Retail Media and Performance Media. As a result of this change, we reassessed our reporting units for the evaluation of goodwill. Prior to this change, consistent with the determination that we had three operating/reportable segment, we determined that we had three reporting units for goodwill assessment purposes. Our reassessment during the first quarter of 2024 determined that, consistent with the determination that we had two operating/ reportable segments, we also have two reporting units for goodwill assessment purposes: Retail Media and Performance Media.
10
As a result of this change in reporting units, effective January 1, 2024, we estimated the fair value of our new reporting units and, based on an assessment of the relative fair values of our new reporting units after the change, we determined that the goodwill held by the Iponweb reportable unit was now allocated to the Performance Media reporting unit. This determination was largely based on the fact that the operations of the previous Iponweb operating segment/ reporting unit are significantly integrated with the Performance Media operating segment / reportable unit. The change in reporting units was also considered a triggering event indicating a test for goodwill impairment was required as of January 1, 2024 before and after the change in reporting units. The Company performed those impairment tests, which did not result in the identification of an impairment loss as of January 1, 2024.
Goodwill allocated to the two reportable segments and the changes in the carrying amount for the quarter-ended September 30, 2024 were as follows:
Retail Media
Performance Media
Total
Balance at January 1, 2024
$
149,680
$
374,517
$
524,197
Acquisitions
—
—
—
Disposals
—
—
—
Currency translation adjustment
429
1,943
2,372
Impairments
—
—
—
Balance at September 30, 2024
$
150,109
$
376,460
$
526,569
There have been no other significant changes to our accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
As of September 30, 2024, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $89.6 million, which is expected to be recognized over a weighted-average period of 3.3 years.
Performance Stock Units
Performance stock units are subject to either a performance condition or a market condition.
Awards that are subject to a performance condition, are earned based on internal financial performance metrics measured by Contribution ex-TAC. A total of 568,081 shares have been granted at target under two plans with a vesting period of three years. The target shares are subject to a range of vesting from 0% to 200% based on the performance of internal financial metrics, for a maximum number of shares of 1,136,162. The grant-date fair value is determined based on the fair-value of the shares at the grant date. The weighted average grant-date fair value of those plans is €30.54 per share for a total fair value of approximately $18.9 million, to be expensed on a straight-line basis over the respective vesting period. The number of shares granted, vesting and outstanding subject to performance conditions is as follows:
As of September 30, 2024, a total of $3.4 million expense has been recognized and the Company had unrecognized stock-based compensation related to performance stock units based of market conditions of $10.5 million, which is expected to be recognized over a period from October 1, 2024 to March 1, 2027.
Non-employee warrants
Non-employee warrants generally vest over four years, subject to the holder’s continued service through the vesting date.
Shares
Weighted-Average Grant date Fair Value Per Share
Weighted-Average Remaining Contractual Term (Years)
Aggregate Intrinsic Value
Outstanding as of December 31, 2023
244,457
Granted
—
Exercised
(84,560)
Canceled
—
Expired
—
Outstanding as of September 30, 2024
159,897
€
16.59
3.80
€
20.11
Vested and exercisable - September 30, 2024
159,897
The aggregate intrinsic value represents the difference between the exercise price of the non-employee warrants and the fair market value of common stock on the date of exercise.
No new stock non-employee warrants were granted in the period ending September 30, 2024. As of September 30, 2024 all instruments have fully vested.
The following table presents provision for income taxes:
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
Provision for income tax (expense) benefit
$
(15,014)
$
1,685
For the nine months ended September 30, 2024, the provision for income taxes differs from the nominal standard French rate of 25.0% primarily due to the application the reduced income tax rate on the majority of the technology royalties income in France and nondeductible equity awards compensation expense.
We have recorded a $31.9 million provision related to certain non-income tax items accounted for as a contingency under ASC 450. These risks were identified and recognized as part of the Iponweb Acquisition. We have recorded an indemnification asset in the full amount of the provision as the Company is indemnified against certain tax liabilities under the Framework Purchase Agreement (FPA). The indemnification asset is recorded as part of "Other non current assets" on the consolidated statement of financial position.
25
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 or of the retailers.
Three Months Ended
Americas
EMEA
Asia-Pacific
Total
(in thousands)
September 30, 2024
$
206,816
$
161,745
$
90,331
$
458,892
September 30, 2023
$
219,667
$
158,756
$
90,770
$
469,193
Nine Months Ended
Americas
EMEA
Asia-Pacific
Total
(in thousands)
September 30, 2024
$
617,555
$
493,083
$
269,616
$
1,380,254
September 30, 2023
$
616,418
$
482,939
$
283,786
$
1,383,143
Revenue generated in other significant countries where we operate is presented in the following table:
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
(in thousands)
Americas
United States
$
185,864
$
199,270
$
553,867
$
557,116
EMEA
Germany
$
48,128
$
46,391
$
146,881
$
140,592
France
$
20,888
$
23,423
$
64,836
$
71,130
Asia-Pacific
Japan
$
49,763
$
49,213
$
151,760
$
162,767
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.
Americas
EMEA
Asia-Pacific
Total
(in thousands)
September 30, 2024
$
74,080
$
199,948
$
13,197
$
287,225
December 31, 2023
$
89,355
$
202,969
$
15,058
$
307,382
26
Note 16. Subsequent Events
The Company evaluated all subsequent events that occurred after September 30, 2024 through the date of issuance of the unaudited condensed consolidated financial statements and determined there are no significant events that require adjustments or disclosure.
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC"), on February 23, 2024. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A, "Risk Factors."
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"), we present Contribution ex-TAC, and Adjusted EBITDA, which are non-GAAP financial measures. We define Contribution ex-TAC as a profitability measure akin to gross profit. It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other costs of revenue. Contribution ex-TAC is presented in the section entitled "Contribution excluding Traffic Acquisition Costs", which includes a reconciliation to its most directly comparable GAAP financial measure, Gross Profit. 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, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter. Adjusted EBITDA is presented in the section entitled "Adjusted EBITDA", which includes a reconciliation to its most directly comparable GAAP financial measure, Net Income. We also present revenues, traffic acquisition costs and Contribution ex-TAC on a constant currency basis; these measures exclude the impact of foreign currency fluctuations and are computed by applying the average exchange rates for the prior year to the current year figures. A reconciliation is provided in the section entitled "Constant Currency Reconciliation".
We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business. As required by the rules of the SEC, we provide reconciliations of the non-GAAP financial measures contained in this document to the most directly comparable measures under GAAP.
Results of Operations for the Periods Ended September 30, 2024 and September 30, 2023 (Unaudited)
Revenue
Revenue breakdown by segment
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
Revenue as reported
458,892
469,193
(2)%
1,380,254
1,383,143
—%
Conversion impact U.S. dollar/other currencies
1,698
18,110
Revenue at constant currency
$
460,590
$
469,193
(2)%
1,398,364
1,383,143
1%
Retail Media revenue as reported
60,765
49,813
22%
166,414
132,424
26%
Conversion impact U.S. dollar/other currencies
98
(60)
Retail Media revenue at constant currency
$
60,863
$
49,813
22%
$
166,354
$
132,424
26%
Performance Media revenue as reported
398,127
419,380
(5)%
1,213,840
1,250,719
(3)%
Conversion impact U.S. dollar/other currencies
1,601
18,171
Performance Media revenue at constant currency
$
399,728
$
419,380
(5)%
$
1,232,011
$
1,250,719
(1.5)%
Revenue for the three months ended September 30, 2024 decreased (2)%, or (2)% on a constant currency basis, to $460.6 million compared to the three months ended September 30, 2023 reflecting lower Performance Media, partially offset by growth in Retail Media.
In the three months ended September 30, 2024, 92% of revenue came from existing clients while 8% came from new client additions.
Traffic acquisition costs in Performance Media decreased by (14)%, or (13)% at constant currency, compared to the three months ended September 30, 2023. This was driven by a (20)% decrease (or (20)% at constant currency) in the average cost per thousand impressions ("CPM") for inventory purchased, including lower CPMs for signal-limited environments where Criteo continues to perform, and an 8% increase in the number of impressions we purchased.
The decrease in other cost of revenue included a decrease in depreciation of servers, offset by other hosting costs.
33
Cost of revenue for the nine months ended September 30, 2024 decreased $(98.5) million, or (12)%, compared to the nine months ended September 30, 2023. This decrease was primarily the result of a decrease of $(83.7) million, or (12)% (or (11)% on a constant currency basis) in traffic acquisition costs driven by a lower average price partially offset by an increase in volume, and a decrease of $(14.7) million, or (12)% in other cost of revenue.
Traffic acquisition costs in Retail Media decreased by (10)%, or (10)% at constant currency, compared to the nine months ended September 30, 2023.
Traffic acquisition costs in Performance Media decreased by (12)%, or (11)% at constant currency, compared to the nine months ended September 30, 2023. This was driven by a (17)% decrease (or (15)% at constant currency) in the average cost per thousand impressions ("CPM") for inventory purchased, including lower CPMs for signal-limited environments where Criteo continues to perform, and a 5% increase in the number of impressions we purchased.
The decrease in other cost of revenue included a decrease in depreciation of servers, offset by other hosting costs.
Research and development expenses for the three months ended September 30, 2024, increased $22.8 million or 36% compared to the three months ended September 30, 2023. This increase was related to an increase in share-based compensation expense related to the Iponweb lock-up shares (see Note 10), an increase in amortization, and impairment of certain intangible assets.
Research and development expenses for the nine months ended September 30, 2024, increased $17.9 million or 9% compared to the nine months ended September 30, 2023. This increase was mainly related to an increase in amortization, impairment of certain intangible assets, and headcount-related costs.
Sales and Operations Expenses
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
Sales and operations expenses
$
90,823
$
94,572
(4)%
$
278,734
$
308,325
(10)%
% of revenue
20
%
20
%
20
%
22
%
Sales and operations expenses for the three months ended September 30, 2024 decreased $(3.7) million or (4)% compared to the three months ended September 30, 2023. This decrease was mainly related to a decrease in headcount-related costs and a decrease in bad debt expense partially offset by third-party services and marketing costs.
Sales and operations expenses for the nine months ended September 30, 2024 decreased $(29.6) million or (10)% compared to the nine months ended September 30, 2023. This decrease was mainly related to a decrease in headcount-related costs, a decrease in bad debt expense partially offset by an increase in marketing costs.
General and Administrative Expenses
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
General and administrative expenses
$
46,222
$
36,599
26%
$
134,590
$
95,306
41%
% of revenue
10
%
8
%
10
%
7
%
General and administrative expenses for the three months ended September 30, 2024, increased $9.6 million or 26%, compared to the three months ended September 30, 2023. The increase primarily related to third party services and an increase in share-based compensation.
37
General and administrative expenses for the nine months ended September 30, 2024, increased $39.3 million or 41%, compared to the nine months ended September 30, 2023. The increase was mainly related to the partial reversal of the loss contingency on regulatory matters in 2023 and an increase to third-party services.
Financial and Other Income
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
Financial and Other Income (Expense)
$
(8)
$
(2,967)
(100)%
$
889
$
2,008
(56)%
% of revenue
0
%
(1)
%
0
%
0
%
Financial and Other Expenses for the three months ended September 30, 2024, decreased by $3.0 million or 100% compared to the three months ended September 30, 2023. The decrease was mainly related to financial income from cash and cash equivalents, a positive change in foreign exchange loss, and the accretion of the earn-out liability related to the Iponweb Acquisition.
Financial and Other Income for the nine months ended September 30, 2024, decreased by $(1.1) million or (56)% compared to the nine months ended September 30, 2023. The decrease was due to the disposal of non consolidated investments during the three months ended March 31, 2023, partially offset by income from cash equivalents, the accretion of the earn-out liability related to the Iponweb Acquisition, and income from cash equivalents.
As of September 30, 2024, 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.
Provision for Income Taxes
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
Provision for income tax (expense) benefit
$
(3,450)
$
(1,832)
88%
$
(15,014)
$
1,685
(991)%
Provision for income tax expense for the three months ended September 30, 2024, increased $1.6 million or 88% compared to the three months ended September 30, 2023. The increase of the income tax provision was driven by higher Contribution ex-Tac.
Provision for income tax expense for the nine months ended September 30, 2024, increased $16.7 million or (991)% compared to the nine months ended September 30, 2023. The increase was driven by higher Contribution ex-TAC.
The provision for income taxes differs from the nominal standard French rate of 25.0% primarily due to the application of the reduced income tax rate on the majority of the technology royalties income in France and nondeductible equity awards compensation expense.
38
Adjusted EBITDA
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, certain restructuring, integration and transformation costs, and certain acquisition costs. Adjusted EBITDA is not a measure calculated in accordance with 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, certain restructuring, integration and transformation costs, and certain acquisition costs 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 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 GAAP financial results, including net income.
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
(in thousands, except percentages)
Net Income (loss)
$
6,144
$
6,635
$
42,769
$
(7,407)
Adjustments:
Financial (Income) expense
8
2,958
(889)
(1,692)
Provision for income taxes (benefit)
3,450
1,832
15,014
(1,685)
Equity awards compensation expense
34,863
24,323
84,032
78,219
Pension service costs
174
179
518
532
Depreciation and amortization expense
25,684
24,648
75,679
76,574
Acquisition-related costs
1,961
86
1,961
1,281
Net loss contingency on regulatory matters
—
(51)
—
(21,667)
Restructuring, integration and transformation costs
9,717
7,833
27,026
38,998
Total net adjustments
75,857
61,808
203,341
170,560
Adjusted EBITDA
$
82,001
$
68,443
$
246,110
$
163,153
The following table presents our Adjusted EBITDA on a comparative basis:
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
% change
September 30, 2024
September 30, 2023
% change
(in thousands, except percentages)
Adjusted EBITDA
$
82,001
$
68,443
20%
$
246,110
$
163,153
51%
Adjusted EBITDA increased $13.6 million, or 20%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to higher Contribution ex-TAC partially offset by an increase in operating expenses.
Adjusted EBITDA increased $83.0 million, or 51%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to higher Contribution ex-TAC.
39
Liquidity and Capital Resources
Our cash and cash equivalents and restricted cash at September 30, 2024 were held for working capital and general corporate purposes, which could include acquisitions, and amounted to $284.0 million as of September 30, 2024. The $(127.4) million decrease in cash and cash equivalents, and restricted cash compared to December 31, 2023, primarily resulted from a decrease of $(154.4) million in cash used for financing activities, a decrease of $(59.0) million in cash used for investing activities partially offset by an increase of $88.7 million in cash provided by operating activities over the period. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Accordingly, our cash and cash equivalents are invested primarily in demand deposit accounts that are currently providing only a minimal return.
As disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, on September 27, 2022, the Company entered into a new five year Revolving Credit Facility (as amended, the "RCF") that allows immediate access to an additional €407.0 million ($455.7 million) of liquidity, which, combined with our cash position, marketable securities and treasury shares as of September 30, 2024, provides total liquidity above $710.8 million. Overall, we believe that our current financial liquidity, combined with our expected cash-flow generation in 2024, enables financial flexibility.
Share buy-back programs
In December 2021, we completed a $100.0 million share repurchase program. In 2022, we completed an additional $136.0 million share repurchase program, and in 2023, we completed an additional $125.0 million share repurchase program. For the nine months ended September 30, 2024, we have repurchased $157.5 million of shares.
All above programs have been implemented under our multi-year authorization granted by our Board of Directors. On February 1, 2024, this authorization was extended to a total amount of $630.0 million. Other than these repurchase programs, we intend to retain all available funds and any future earnings to fund our growth.
Off-Balance Sheet Arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
Operating and Capital Expenditure Requirements
For the nine months ended September 30, 2024 and 2023, our capital expenditures were $(53.2) million and $(94.6) million, respectively. During the nine months ended September 30, 2024, these capital expenditures were mainly comprised of acquisitions of data centers, server equipment, and software development costs. We expect our capital expenditures to remain at around 7% of Contribution ex-TAC for 2024, as we plan to continue to build, reshape and maintain additional data center equipment capacity in all regions and we increase our investments to further develop our Commerce Media Platform.
We currently anticipate that our available funds and cash flow from operations and financing activities will be sufficient to meet our operational cash needs and fund our share repurchase program for at least the next 12 months, and thereafter for the foreseeable future. We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital requirements.
Our future working capital requirements will depend on many factors, including the rate of our revenue growth, the amount and timing of our investments in personnel and capital equipment, and the timing and extent of our introduction of new products and product enhancements.
40
If our cash and cash equivalents balances and cash flows from operating activities are insufficient to satisfy our liquidity requirements, we may need to raise additional funds through equity, equity-linked or debt financings to support our operations, and such financings may not be available to us on acceptable terms, or at all.
We may also need to raise additional funds in the event we determine in the future to effect one or more acquisitions of businesses, technologies, assets or products.
If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing will be dilutive to our shareholders.
Historical Cash Flows
The following table sets forth our cash flows for the three month period ended September 30, 2024 and September 30, 2023:
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
Cash (used for) from operating activities
$
88,707
$
62,906
Cash (used for) from investing activities
$
(58,966)
$
(104,199)
Cash (used for) from financing activities
$
(154,355)
$
(124,858)
Operating Activities
Cash from operating activities was driven by the increased performance of our operations, primarily due to higher Contribution ex-TAC partially offset by an increase in operating expenses. Cash flow from operating activities has typically been generated from changes in our operating assets and liabilities, particularly in the areas of accounts receivable, accounts payable and accrued expenses, adjusted for certain non-cash and non-operating items such as depreciation, amortization and share-based compensation, deferred tax assets and income taxes.
For the nine months ended September 30, 2024, net cash provided by operating activities mostly consisted of net income adjusted for certain non-cash and non-operating items, such as amortization and provision expense of $67.1 million, and equity awards compensation expense of $82.2 million, partially offset by $(90.1) million of changes in working capital. The increase in cash flow from operating activities during the nine months ended September 30, 2024, compared to the same period in 2023, was mainly due to higher net income.
Investing Activities
Our investing activities to date consisted primarily of purchases of servers and other data-center equipment, software development costs, and business acquisitions. For the nine months ended September 30, 2024, net cash used for investing activities was $(59.0) million, primarily driven by purchases of data-center and capitalized software development costs of $(53.2) million, and a $(5.2) million change from the maturity of investments in Marketable Securities.
Cash used for investing activities decreased during the nine months ended September 30, 2024, compared to the same period in 2023, due to lower capital expenditures for our data centers compared to the previous period, and due to proceeds from the sale of a non consolidated investment during the three months ended March 31, 2023.
Financing Activities
For the nine months ended September 30, 2024, net cash used for financing activities was $(154.4) million, due to the repurchasing of shares of $(157.5) million. The increase in cash used for financing activities during the nine months ended September 30, 2024, compared to the same period in 2023, was mostly due to an increase in the amount of shares repurchased.
41
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Recently Issued Pronouncements
See "Recently Issued Accounting Standards" under Note 1, "Summary of Significant Accounting Policies," of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of certain accounting standards that have been issued during 2024.
42
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market Risk
We are mainly exposed to foreign currency exchange rate fluctuations. There have been no material changes to our exposure to market risk during the nine months ended September 30, 2024.
For a description of our foreign exchange risk, please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - B. Liquidity and Capital Resources" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
A hypothetical 10% increase or decrease of the Pound Sterling, the Euro, the Japanese yen or the Brazilian real against the U.S. dollar would have impacted the Condensed Consolidated Statements of Income as follows:
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
GBP/USD
+10%
-10%
+10%
-10%
Net income (loss) impact
$
383
$
(383)
$
(244)
$
244
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
BRL/USD
+10%
-10%
+10%
-10%
Net income (loss) impact
$
217
$
(217)
$
126
$
(126)
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
JPY/USD
+10%
-10%
+10%
-10%
Net income (loss) impact
$
2,966
$
(2,966)
$
832
$
(832)
Nine Months Ended
September 30, 2024
September 30, 2023
(in thousands)
EUR/USD
+10%
-10%
+10%
-10%
Net income (loss) impact
$
1,959
$
(1,959)
$
(3,636)
$
3,636
Credit Risk and Trade receivables
For a description of our trade receivables, please see "Note 4. Trade Receivables" in the Notes to the Unaudited Condensed Consolidated Financial Statements.
43
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Based on their evaluation as of September 30, 2024, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to provide reasonable assurance that (i) the information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness of Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Criteo have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
44
PART II
Item 1. Legal Proceedings.
For a discussion of our legal proceedings, refer to Note 14. Commitments and contingencies.
Item 1A. Risk Factors.
You should carefully consider the risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. If any such risks materialize, our business, financial condition and results of operations could be materially harmed and the trading price of our American Depositary Shares could decline. These risks are not exclusive and additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. There have been no material changes to the Risk Factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.
45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the issuer and Affiliated Purchasers
The following table provides certain information with respect to our purchases of our ADSs during the third fiscal quarter of 2024:
Period
Total Number of Shares Purchased(1)
Average Price Paid per Share(2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1)
July 1 to 31, 2024
263,641
$
41.03
263,641
$
155,484,463
August 1 to 31, 2024
859,838
$
47.03
859,838
$
115,049,219
September 1 to 30, 2024
83,945
$
44.56
83,945
$
111,307,372
Total
1,207,424
1,207,424
(1) In February 2024, the board of directors approved an extension of the long-term share repurchase program of up to $150 million of the Company's outstanding American Depositary Shares to a total of $630 million.
(2) Weighted average price paid per share excludes any broker commissions paid.
Item 5. Other Information
Trading Plans
On September 13, 2024, Ryan Damon, the Company's Chief Legal and Transformation Officer, adopted a trading plan to sell up to 51,211 shares of Company stock between December 12, 2024 and May 30, 2025. Mr. Damon's trading plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company's policies regarding insider transactions.
On August 8, 2024, Brian Gleason, the Company's Chief Revenue Officer and President, Retail Media, adopted a trading plan to sell up to 54,720 shares of Company stock between November 8, 2024 and August 8, 2025. Mr. Gleason's trading plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act and the Company's policies regarding insider transactions.
During the three months ended September 30, 2024, no other directors or Section 16 officers of the Company adopted or terminated any Rule 10b5-1 trading arrangement or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K.
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101.
# Filed herewith.
* Furnished herewith.
47
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CRITEO S.A.
(Registrant)
By:
/s/ Sarah Glickman
Date: October 30, 2024
Name:
Sarah Glickman
Title:
Chief Financial Officer
(Principal financial officer and duly authorized signatory)