Criteo S.A. — FY2022 Form 10-K
Business context and reporting period. Criteo is a France-based commerce media and ad-tech company connecting marketers, retailers and media owners through advertising technology and commerce data. This annual report covers the fiscal year ended December 31, 2022; it also provides unaudited quarterly results, including Q4 2022. The company acquired IPONWEB on August 1, 2022, and reports three segments: Marketing Solutions, Retail Media and Iponweb.
Financial performance
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | $2,017.0 million | $2,254.2 million | -11% reported; -4% at constant currency |
| Gross profit | $795.2 million | $781.9 million | +2% |
| Gross margin | 39% | 35% | +4 percentage points |
| Operating income | $24.3 million | $151.9 million | Down substantially |
| Net income | $10.9 million | $137.6 million | Down substantially |
| Adjusted EBITDA | $267.3 million | $322.5 million | -17% |
| Contribution ex-TAC | $928.2 million | $920.8 million | +1% reported; +10% at constant currency |
| Cash from operations | $256.0 million | $220.9 million | +$35.1 million |
| Free cash flow | $200.1 million | Not stated here | Company-reported measure |
Gross margin improved partly because Retail Media platform revenue is generally reported net of media costs as Criteo acts as agent, rather than gross as under legacy arrangements. Contribution ex-TAC and Adjusted EBITDA are non-GAAP measures and should be read alongside U.S. GAAP results. Adjusted EBITDA was 29% of Contribution ex-TAC.
Segments and Q4
- Marketing Solutions: FY2022 revenue was $1,762.5 million, down 12% reported and 5% at constant currency, reflecting reduced spend by existing clients, especially on retargeting.
- Retail Media: revenue was $202.3 million, down 18% reported and 16% at constant currency, while Contribution ex-TAC increased 29% reported (33% constant currency). The revenue decline was affected by client migration to the platform and net revenue reporting.
- Iponweb: contributed $52.2 million of revenue from acquisition through year-end. Its lower-margin profile affected profitability.
- Q4 2022: revenue was $564.4 million versus $653.3 million in Q4 2021 (about -14%); gross profit was $246.6 million versus $244.4 million; net income was $16.0 million versus $74.9 million. Non-retargeting solutions represented approximately 47% of Q4 Contribution ex-TAC, up from 32% a year earlier.
Liquidity, cash flow and debt
At year-end, cash and cash equivalents were $348.2 million and marketable securities were $25.1 million. The company also reported approximately $835 million of financial liquidity including its revolving credit facility; the facility permits borrowing up to €407 million (approximately $434 million) and had no amount drawn at December 31, 2022. Criteo reported compliance with its leverage covenant. Cash flow from investing activities was $(166.1) million and financing activities $(113.0) million; financing outflows primarily reflected share repurchases.
The cash flow statement reports ending cash and cash equivalents of $448.2 million, while the balance sheet reports $348.2 million of cash and cash equivalents. The $100 million difference corresponds to restricted cash disclosed for the IPONWEB earn-out escrow; verify the statement presentation and classification. The company reported $100 million of restricted cash, $25 million current and $75 million non-current. It had $108.5 million of operating lease liabilities and $64.3 million of other purchase obligations.
Material changes, outlook and risks
- Revenue fell in 2022 amid lower spend from existing clients and adverse currency translation; at constant currency the decline was smaller. New clients contributed approximately 6% of organic revenue, and the client count was broadly stable.
- Operating expenses rose: R&D increased 24%, sales and operations 16%, and general and administrative 35%. The latter included a $63.2 million (€60 million) provision related to the CNIL GDPR investigation. The proposed penalty was not a final decision and could be higher or lower; Adjusted EBITDA excludes this loss contingency.
- The IPONWEB acquisition had stated consideration of $250 million in cash and shares, plus potential earn-out consideration of up to $100 million. The acquisition note reports $290.2 million purchase price under acquisition accounting, including $61.2 million fair value of contingent consideration; $70.2 million of transferred shares is accounted for separately as share-based compensation. Purchase-price allocation was preliminary.
- Management expects non-retargeting solutions to approach 50% of the business in 2023, including IPONWEB, and expects 2023 capital expenditures to remain at or slightly below 4% of revenue. Management aims for sustainable profitable growth while continuing investments in Retail Media, first-party data, acquisition solutions, video, Connected TV and Commerce Insights. These are expectations, not guarantees.
- Key risks include privacy and data-use regulation, the proposed CNIL sanction, browser and platform restrictions on identifiers and cookies, competition from large technology platforms, access and cost of advertising inventory, macroeconomic-driven advertising cuts, foreign exchange, acquisition integration, and seasonality. Criteo suspended advertising activity in Russia in March 2022.
Important facts for investors to verify
- Reconcile the $448.2 million cash-flow-statement ending balance with $348.2 million balance-sheet cash and the $100 million restricted escrow.
- Track the CNIL proceeding, final decision and potential financial exposure against the $63.2 million recorded provision.
- Assess underlying Retail Media growth using Contribution ex-TAC and working media activity, accounting for migration-related gross-to-net revenue presentation.
- Monitor IPONWEB integration, acquisition-related costs, earn-out outcomes and the completion of the preliminary purchase-price allocation.
- Compare 2023 non-retargeting mix, profitability, capital spending and operating cash generation with management’s stated expectations.