Criteo S.A. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unaudited U.S. GAAP results; dollar amounts below are in U.S. dollars. Criteo provides a commerce media platform serving marketers and media owners. Beginning in Q1, it reports two segments—Retail Media and Performance Media—and conformed prior-period segment data to the new structure.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $450.1 million | $445.0 million; up 1% reported and 3% at constant currency |
| Gross profit / margin | $217.2 million / 48% | $181.5 million / 41% |
| Contribution ex-TAC (non-GAAP) / revenue | $253.9 million / 56% | $220.6 million / 50%; up 15% reported and 17% at constant currency |
| Operating income (loss) | $10.4 million | $(23.5) million |
| Net income (loss) | $8.6 million; diluted EPS $0.12 | $(12.1) million; diluted loss per share $0.21 |
| Adjusted EBITDA (non-GAAP) | $70.7 million | $38.7 million; up 83% |
| Operating cash flow | $14.0 million | $42.0 million |
| Investing / financing cash flow | $(13.9) million / $(62.2) million | $(36.1) million / $(72.2) million |
Revenue growth reflected Retail Media expansion, partly offset by lower Performance Media revenue. Retail Media revenue was $50.9 million, up 34%; Performance Media revenue was $399.2 million, down 2% reported but flat at constant currency. Americas revenue rose 5%, EMEA rose 2%, and Asia-Pacific declined 8% reported (down 1% at constant currency). Foreign exchange reduced reported revenue by approximately $6.2 million.
Traffic acquisition costs fell 13% to $196.2 million, helping lift gross margin. Operating expenses were $206.9 million, versus $205.0 million a year earlier: R&D rose 5%, sales and operations fell 8%, and general and administrative expense rose 17%, partly due to Iponweb earn-out fair-value changes and higher share-based compensation. Financial and other income declined to $1.2 million from $6.8 million, in part because the prior-year period included gains on investment disposals.
At March 31, cash and cash equivalents were $266.9 million; restricted cash was $75.0 million and marketable securities were $22.0 million. Cash, cash equivalents and restricted cash totaled $341.9 million, down $69.4 million from year-end. Current assets were $1.16 billion and current liabilities $995.0 million. Financial liabilities were $5.0 million current and $0.1 million non-current; operating lease liabilities totaled $111.9 million. The company also reported access to a €407 million ($440 million) revolving credit facility and stated total liquidity exceeded $805.5 million, including treasury shares. No material conventional funded debt balance is otherwise identified in the filing.
Material changes and cash use
- Operating cash flow declined year over year, which management attributed mainly to working-capital movements, including higher trade payables; working capital used $54.7 million in the quarter.
- Financing cash use primarily reflected $62.1 million of share repurchases. The board extended the repurchase authorization to a total of $630 million; 1,996,797 shares were repurchased during the quarter.
- Capital expenditures were approximately $13.2 million, compared with $33.2 million in Q1 2023. Cash used for investing activities also differed because the prior period included proceeds from an investment disposal.
- The company changed from three reportable segments to Retail Media and Performance Media. It reassessed goodwill reporting units and reported no impairment from the required January 1, 2024 tests.
Outlook, risks and contingencies
- No specific revenue or earnings guidance for 2024 is provided in the supplied filing text. Management expects 2024 capital expenditures to be around 9% of Contribution ex-TAC and says available funds, operating cash flow and financing capacity should cover operating needs and the buyback for at least the next 12 months.
- Management cites advertising demand and planning uncertainty tied to inflation, high interest rates, and geopolitical conflicts. Advertising activity is seasonal, historically strongest in Q3 and Q4.
- Privacy regulation, consumer opt-outs, browser and platform changes, and loss of third-party identifiers may constrain data access and ad targeting. Google’s Chrome cookie deprecation was delayed from the prior expected timetable; management says a one-percent deprecation began in Q1 2024 and identifies Privacy Sandbox developments as a factor to monitor.
- The French data-protection authority’s €40 million GDPR sanction was paid in Q3 2023 and is under appeal; the decision concerns past matters and does not require changes to current practices. Criteo also reports the Doe v. GoodRx litigation and says the outcome cannot be predicted.
- A $31.9 million provision for specified non-income-tax matters related to the Iponweb acquisition is matched by an indemnification asset. A $75.0 million restricted-cash escrow secures contingent Iponweb consideration; the current earn-out liability was $54.6 million.
- Management reported disclosure controls were effective as of March 31, 2024 and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether Retail Media’s rapid growth continues and offsets Performance Media trends, particularly in Asia-Pacific and signal-limited advertising environments.
- How reported revenue and Contribution ex-TAC compare with constant-currency growth, and whether lower traffic acquisition costs and stronger margins are sustainable.
- Cash conversion and working-capital movements, the use and availability of the revolving credit facility, and the cash impact of buybacks and Iponweb earn-out payments.
- Developments in cookie deprecation, Privacy Sandbox, privacy rules, and the French Council of State appeal and other litigation.
- The filing’s non-GAAP measures, including Contribution ex-TAC and Adjusted EBITDA, alongside their GAAP reconciliations and limitations.