UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31, 20202021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from _________ to _________
Commission file number: 001-36153
Criteo S.A.
(Exact name of registrant as specified in its charter)

France
Not Applicable
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
32 Rue BlancheParisFrance75009
(Address of principal executive offices)(Zip Code)

+33 1 40 40 22 90
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act
Title of each classTrading Symbol(s)Name of each exchange on which registered
American Depositary Shares, each representing one Ordinary Share,
nominal value €0.025 per share
CRTONasdaq Global Select Market
Ordinary Shares, nominal value €0.025 per share​share*Nasdaq Global Select Market*
* Not for trading, but only in connection with the registration of the American Depositary Shares.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large Accelerated FilerAccelerated Filer
Non-accelerated FilerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes        No x
          As of April 29, 2020,May 5, 2021, the registrant had 61,724,14160,727,589 ordinary shares, nominal value €0.025 per share, outstanding.





TABLE OF CONTENTS












General
    Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q ("Form 10-Q") to the "Company," "Criteo," "we," "us," "our" or similar words or phrases are to Criteo S.A. and its subsidiaries, taken together. In this Form 10-Q, references to "$" and "US$" are to United States dollars. Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or "U.S. GAAP."
Trademarks
    “Criteo,” the Criteo logo and other trademarks or service marks of Criteo appearing in this Form 10-Q are the property of Criteo. Trade names, trademarks and service marks of other companies appearing in this Form 10-Q are the property of their respective holders.
Special Note Regarding Forward-Looking Statements
    This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than present and historical facts and conditions contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. When used in this Form 10-Q, the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is designed to,” “may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of these and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
the ongoing effect of the novel coronavirus pandemic ("COVID-19"), including its macroeconomic effects, on our business, operations, and financial results; and the effect of governmental lockdowns, restrictions and new regulations on our operations and processes;
the ability of the Criteo Artificial Intelligence (AI) Engine to accurately predict engagement by a user;
our ability to predict and adapt to changes in widely adopted industry platforms and other new technologies;technologies, including without limitation the proposed changes to and enhancements of the Chrome browser announced by Google;
our ability to continue to collect and utilize data about user behavior and interaction with advertisers;advertisers and publishers;
our ability to acquire an adequate supply of advertising inventory from publishers on terms that are favorable to us;
our ability to meet the challenges of a growing and international company in a rapidly developing and changing industry, including our ability to forecast accurately;
our ability to maintain an adequate rate of revenue growth and sustain profitability;
our ability to manage our international operations and expansion and the integration of our acquisitions;
the effects of increased competition in our market;
the impact of COVID-19 on our workforce, operations and revenue, as well as on the workforce, operations and revenue of our customers, and the effectiveness of our actions taken in response to COVID-19;
our ability to adapt to regulatory, legislative or self-regulatory developments regarding internet privacy matters;
our ability to protect users’ information and adequately address privacy concerns;
our ability to enhance our brand;
our ability to enter new marketing channels and new geographies;
our ability to effectively scale our technology platform;
our ability to attract and retain qualified employees and key personnel;
our ability to maintain, protect and enhance our brand and intellectual property; and
failures in our systems or infrastructure.




    You should also refer to Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019,2020, and to Part II, Item 1A "Risk Factors" of this Form 10-Q, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. The degree to which COVID-19 may affect our results and operations will depend on future developments that are highly uncertain, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
    You should read this Form 10-Q and the documents that we reference in this Form 10-Q and have filed as exhibits to this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary factors.
     This Form 10-Q may contain market data and industry forecasts that were obtained from industry publications. These data and forecasts involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified any third-party information. While we believe the market position, market opportunity and market size information included in this Form 10-Q is generally reliable, such information is inherently imprecise.





PART I
Item 1. Financial Statements.Statements
2



CRITEO S.A. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
NotesDecember 31, 2019March 31, 2020NotesMarch 31, 2021December 31, 2020
(in thousands)(in thousands)
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalents Cash and cash equivalents3$418,763  $436,506   Cash and cash equivalents3$520,060 $488,011 
Trade receivables, net of allowances of $16.1 million and $23.1 million at December 31, 2019 and March 31, 2020, respectively4481,732  364,440  
Trade receivables, net of allowances of $38.7 million and $39.9 million at March 31, 2021 and December 31, 2020, respectively
Trade receivables, net of allowances of $38.7 million and $39.9 million at March 31, 2021 and December 31, 2020, respectively
4416,910 474,055 
Income taxes Income taxes21,817  23,101   Income taxes12,750 11,092 
Other taxes Other taxes60,924  65,293   Other taxes69,692 69,987 
Other current assets Other current assets517,225  19,832   Other current assets522,494 21,405 
Marketable securities - current portion Marketable securities - current portion317,586 
Total current assets Total current assets1,000,461  909,172   Total current assets1,059,492 1,064,550 
Property, plant and equipment, netProperty, plant and equipment, net194,161  181,848  Property, plant and equipment, net168,036 189,505 
Intangible assets, netIntangible assets, net686,886  79,818  Intangible assets, net79,440 79,744 
GoodwillGoodwill6317,100  315,266  Goodwill322,821 325,805 
Right of use assets - operating leaseRight of use assets - operating lease8142,044  139,954  Right of use assets - operating lease796,266 114,012 
Marketable securities - non current portionMarketable securities - non current portion328,281 41,809 
Non-current financial assetsNon-current financial assets21,747  20,373  Non-current financial assets14,788 18,109 
Deferred tax assetsDeferred tax assets27,985  29,458  Deferred tax assets13,511 19,876 
Total non-current assets Total non-current assets789,923  766,717   Total non-current assets723,143 788,860 
Total assetsTotal assets$1,790,384  $1,675,889  Total assets$1,782,635 $1,853,410 
Liabilities and shareholders' equityLiabilities and shareholders' equityLiabilities and shareholders' equity
Current liabilities:Current liabilities:Current liabilities:
Trade payables Trade payables$390,277  $300,315   Trade payables$347,209 $367,025 
Contingencies Contingencies146,385  6,020   Contingencies141,773 2,250 
Income taxes Income taxes3,422  3,013   Income taxes1,201 2,626 
Financial liabilities - current portion Financial liabilities - current portion33,636  2,303   Financial liabilities - current portion32,114 2,889 
Operating lease liabilities - current portion Operating lease liabilities - current portion845,853  47,288   Operating lease liabilities - current portion744,501 48,388 
Other taxes Other taxes50,099  49,159   Other taxes56,192 58,491 
Employee - related payables Employee - related payables74,781  73,251   Employee - related payables71,450 85,272 
Other current liabilities Other current liabilities735,886  35,709   Other current liabilities632,693 33,390 
Total current liabilities Total current liabilities610,339  517,058   Total current liabilities557,133 600,331 
Deferred tax liabilitiesDeferred tax liabilities9,272  7,922  Deferred tax liabilities4,066 5,297 
Retirement benefit obligationRetirement benefit obligation8,485  7,111  Retirement benefit obligation85,621 6,167 
Financial liabilities - non-current portionFinancial liabilities - non-current portion3769  555  Financial liabilities - non-current portion3371 386 
Operating lease liabilities - non-current portionOperating lease liabilities - non-current portion8117,988  113,920  Operating lease liabilities - non-current portion761,874 83,007 
Other non-current liabilitiesOther non-current liabilities5,543  2,715  Other non-current liabilities9,807 5,535 
Total non-current liabilities Total non-current liabilities142,057  132,223   Total non-current liabilities81,739 100,392 
Total liabilitiesTotal liabilities752,396  649,281  Total liabilities638,872 700,723 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies00
Shareholders' equity:Shareholders' equity:Shareholders' equity:
Common shares, €0.025 par value, 66,197,181 and 66,202,881 shares authorized, issued and outstanding at December 31, 2019 and March 31, 2020, respectively.
2,158  2,158  
Treasury stock, 3,903,673 and 4,533,650 shares at cost as of December 31, 2019 and March 31, 2020, respectively.
(74,900) (79,834) 
Common shares, €0.025 par value, 66,391,906 and 66,272,106 shares authorized, issued and outstanding at March 31, 2021, and December 31, 2020, respectively.
Common shares, €0.025 par value, 66,391,906 and 66,272,106 shares authorized, issued and outstanding at March 31, 2021, and December 31, 2020, respectively.
2,164 2,161 
Treasury stock, 5,597,601 and 5,632,536 shares at cost as of March 31, 2021 and December 31, 2020, respectively.
Treasury stock, 5,597,601 and 5,632,536 shares at cost as of March 31, 2021 and December 31, 2020, respectively.
(87,263)(85,570)
Additional paid-in capitalAdditional paid-in capital668,389  676,510  Additional paid-in capital702,022 693,164 
Accumulated other comprehensive (loss)(40,105) (54,283) 
Accumulated other comprehensive lossAccumulated other comprehensive loss(17,825)16,028 
Retained earningsRetained earnings451,725  450,480  Retained earnings510,528 491,359 
Equity-attributable to shareholders of Criteo S.A.Equity-attributable to shareholders of Criteo S.A.1,007,267  995,031  Equity-attributable to shareholders of Criteo S.A.1,109,626 1,117,142 
Non-controlling interestsNon-controlling interests30,721  31,577  Non-controlling interests34,137 35,545 
Total equityTotal equity1,037,988  1,026,608  Total equity1,143,763 1,152,687 
Total equity and liabilitiesTotal equity and liabilities$1,790,384  $1,675,889  Total equity and liabilities$1,782,635 $1,853,410 
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
3



CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months EndedThree Months Ended
NotesMarch 31,
2019
March 31,
2020
NotesMarch 31,
2021
March 31,
2020
(in thousands, except share per data)(in thousands, except share per data)
RevenueRevenue9$558,123  $503,376  Revenue9$541,077 $503,376 
Cost of revenue:Cost of revenue:Cost of revenue:
Traffic acquisition costsTraffic acquisition costs(322,429) (297,364) Traffic acquisition costs(327,667)(297,364)
Other cost of revenueOther cost of revenue(26,045) (33,806) Other cost of revenue(34,712)(33,806)
Gross profitGross profit209,649  172,206  Gross profit178,698 172,206 
Operating expenses:Operating expenses:Operating expenses:
Research and development expensesResearch and development expenses(46,577) (37,515) Research and development expenses(31,697)(37,515)
Sales and operations expensesSales and operations expenses(95,909) (84,974) Sales and operations expenses(79,354)(84,974)
General and administrative expensesGeneral and administrative expenses(33,770) (25,915) General and administrative expenses(33,428)(25,915)
Total operating expensesTotal operating expenses(176,256) (148,404) Total operating expenses(144,479)(148,404)
Income from operationsIncome from operations33,393  23,802  Income from operations34,219 23,802 
Financial income (expense)11(1,974) (334) 
Financial expenseFinancial expense11(718)(334)
Income before taxesIncome before taxes31,419  23,468  Income before taxes33,501 23,468 
Provision for income taxesProvision for income taxes12(10,018) (7,040) Provision for income taxes12(10,051)(7,040)
Net incomeNet income$21,401  $16,428  Net income$23,450 $16,428 
Net income available to shareholders of Criteo S.A.Net income available to shareholders of Criteo S.A.$19,120  $15,459  Net income available to shareholders of Criteo S.A.$22,406 $15,459 
Net income available to non-controlling interestsNet income available to non-controlling interests$2,281  $969  Net income available to non-controlling interests$1,044 $969 
Net income allocated to shareholders of Criteo S.A. per share:
Weighted average shares outstanding used in computing per share amounts:Weighted average shares outstanding used in computing per share amounts:
BasicBasic13$0.30  $0.25  Basic13$60,741,674 $61,691,001 
DilutedDiluted13$0.29  $0.25  Diluted13$64,077,409 $62,125,582 
Weighted average shares outstanding used in computing per share amounts:
Net income allocated to shareholders per share:Net income allocated to shareholders per share:
BasicBasic1364,336,777  61,691,001  Basic130.37 0.25 
DilutedDiluted1366,041,296  62,125,582  Diluted130.35 0.25 
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.

4



CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31,
2021
March 31,
2020
(in thousands)(in thousands)
Net incomeNet income$21,401  $16,428  Net income$23,450 $16,428 
Foreign currency translation differences, net of taxesForeign currency translation differences, net of taxes(10,492) (15,932) Foreign currency translation differences, net of taxes(36,983)(15,932)
Actuarial (losses) gains on employee benefits, net of taxesActuarial (losses) gains on employee benefits, net of taxes(1,053) 1,734  Actuarial (losses) gains on employee benefits, net of taxes629 1,734 
Other comprehensive income (loss)Other comprehensive income (loss)$(11,545) $(14,198) Other comprehensive income (loss)$(36,354)$(14,198)
Total comprehensive income (loss)Total comprehensive income (loss)$9,856  $2,230  Total comprehensive income (loss)$(12,904)$2,230 
Attributable to shareholders of Criteo S.A.Attributable to shareholders of Criteo S.A.$7,773  $1,281  Attributable to shareholders of Criteo S.A.$(11,446)$1,281 
Attributable to non-controlling interestsAttributable to non-controlling interests$2,083  $949  Attributable to non-controlling interests$(1,458)$949 
The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
5



CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
Share capitalTreasury
Stock
Additional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equityShare capitalTreasury
Stock
Additional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equity
Common sharesSharesCommon sharesShares
(in thousands, except share amounts )(in thousands, except share amounts )
Balance at December 31, 201867,708,203$2,201(3,459,119)$(79,159)$663,281$(30,522)$387,869$943,670$24,221$967,891
Balance at December 31, 2019Balance at December 31, 201966,197,181$2,158(3,903,673)$(74,900)$668,389$(40,105)$451,725$1,007,267$30,721$1,037,988
Net incomeNet income19,1202,28121,401Net income15,45996916,428
Other comprehensive income (loss)Other comprehensive income (loss)(11,347)(11,347)(198)(11,545)Other comprehensive income (loss)(14,178)(14,178)(20)(14,198)
Issuance of ordinary sharesIssuance of ordinary shares28,5961372373373Issuance of ordinary shares5,700393939
Change in treasury stocksChange in treasury stocks(1,594,288)(45)1,786,71540,080(36,091)(3,944)Change in treasury stocks(629,977)(4,934)(13,305)(18,239)(18,239)
Share-Based CompensationShare-Based Compensation13,53313,533(11)13,522Share-Based Compensation8,0828,082498,131
Other changes in equityOther changes in equity(1)155154154Other changes in equity(3,399)(142)(3,541)
Balance at March 31, 201966,142,511$2,157(1,672,404)$(39,079)$641,094$(41,869)$403,200$965,503$26,293$991,796
Balance at March 31, 2020Balance at March 31, 202066,202,881$2,158(4,533,650)$(79,834)$676,510$(54,283)$450,480$995,031$31,577$1,026,608

Share capitalTreasury StockAdditional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equityShare capitalTreasury StockAdditional paid-in capitalAccumulated Other Comprehensive Income (Loss)Retained EarningsEquity - attributable to shareholders of Criteo S.A.Non controlling interestTotal equity
Common sharesSharesCommon sharesShares
(in thousands, except share amounts )(in thousands, except share amounts )
Balance at December 31, 201966,197,181$2,158(3,903,673)$(74,900)$668,389$(40,105)$451,725$1,007,267$30,721$1,037,988
Balance at December 31, 2020Balance at December 31, 202066,272,106$2,161(5,632,536)$(85,570)$693,164$16,027$491,359$1,117,142$35,545$1,152,687
Net incomeNet income15,45996916,428Net income22,4061,04423,450
Other comprehensive income (loss)Other comprehensive income (loss)(14,178)(14,178)(20)(14,198)Other comprehensive income (loss)(33,852)(33,852)(2,502)(36,354)
Issuance of ordinary sharesIssuance of ordinary shares5,700393939Issuance of ordinary shares119,80032,1482,1512,151
Change in treasury stocks(629,977)(4,934)(13,305)(18,239)(18,239)
Change in treasury stocks(*)
Change in treasury stocks(*)
34,935(1,693)(3,237)(4,930)(4,930)
Share-Based CompensationShare-Based Compensation8,0828,082498,131Share-Based Compensation6,7106,710506,760
Other changes in equity (*)(3,399)(142)(3,541)
Balance at March 31, 202066,202,881$2,158(4,533,650)$(79,834)$676,510$(54,283)$450,480$995,031$31,577$1,026,608
Other changes in equityOther changes in equity0
Balance at March 31, 2021Balance at March 31, 202166,391,906$2,164(5,597,601)$(87,263)$702,022$(17,825)$510,528$1,109,626$34,137$1,143,763
(*) From January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): MeasurementOn February 5, 2021, Criteo's Board of Credit Losses on Financial Instruments, which requiresDirectors authorized a share repurchase program of up to $100.0 million of the measurement and recognitionCompany's outstanding American Depositary Shares. The change in treasury stocks is comprised of expected credit losses149,960 shares repurchased at an average price of $32.9 offset by 184,895 treasury shares used for financial assets held at amortized cost issued by the Financial Accounting Standards Board (FASB).RSUs vesting.

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
6



CRITEO S.A.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31,
2021
March 31,
2020
(in thousands)(in thousands)
Net incomeNet income$21,401  $16,428  Net income$23,450 $16,428 
Non-cash and non-operating itemsNon-cash and non-operating items24,998  32,828  Non-cash and non-operating items30,017 32,828 
- Amortization and provisions - Amortization and provisions19,644  27,044   - Amortization and provisions17,225 27,044 
- Net gain (loss) on disposal of non-current assets—  2,266  
- Net gain or loss on disposal of non-current assets - Net gain or loss on disposal of non-current assets3,945 2,266 
- Equity awards compensation expense (1)
- Equity awards compensation expense (1)
13,882  8,502  
- Equity awards compensation expense (1)
7,215 8,502 
- Change in deferred taxes - Change in deferred taxes(5,916) (2,678)  - Change in deferred taxes4,998 (2,678)
- Income tax for the period(1,934) (2,329) 
- Change in income taxes - Change in income taxes(3,379)(2,329)
- Other - Other(678) 23   - Other13 23 
Changes in working capital related to operating activitiesChanges in working capital related to operating activities20,821  7,487  Changes in working capital related to operating activities23,895 7,487 
- Decrease in trade receivables86,018  99,388  
- (Decrease) in trade payables(58,485) (81,679) 
- (Increase) in other current assets(5,992) (10,398) 
- (Decrease) / Increase in other current liabilities2,436  (945) 
- (Increase) / Decrease in trade receivables - (Increase) / Decrease in trade receivables47,226 99,388 
- Increase / (Decrease) in trade payables - Increase / (Decrease) in trade payables(10,640)(81,679)
- (Increase) / Decrease in other current assets - (Increase) / Decrease in other current assets(5,050)(10,398)
- Increase/ (Decrease) in other current liabilities - Increase/ (Decrease) in other current liabilities(4,527)(945)
- Change in operating lease liabilities and right of use assets - Change in operating lease liabilities and right of use assets(3,156) 1,121   - Change in operating lease liabilities and right of use assets(3,114)1,121 
Cash from operating activitiesCash from operating activities67,220  56,743  Cash from operating activities77,362 56,743 
Acquisition of intangible assets, property, plant and equipmentAcquisition of intangible assets, property, plant and equipment(13,292) (11,258) Acquisition of intangible assets, property, plant and equipment(11,953)(11,258)
Change in accounts payable related to intangible assets, property, plant and equipmentChange in accounts payable related to intangible assets, property, plant and equipment(10,392) (479) Change in accounts payable related to intangible assets, property, plant and equipment(1,827)(479)
(Payment for) Disposal of a business, net of cash acquired (disposed)(5,325) —  
Change in other non-current financial assetsChange in other non-current financial assets(32) 889  Change in other non-current financial assets(3,252)889 
Cash used for investing activitiesCash used for investing activities(29,041) (10,848) Cash used for investing activities(17,032)(10,848)
Repayment of borrowingsRepayment of borrowings(172) (170) Repayment of borrowings(182)(170)
Proceeds from capital increaseProceeds from capital increase11   Proceeds from capital increase2,074 
Change in treasury stocks—  (18,241) 
Repurchase of treasury stocksRepurchase of treasury stocks(4,930)(18,241)
Change in other financial liabilitiesChange in other financial liabilities(30) (354) Change in other financial liabilities(378)(354)
Cash used for financing activitiesCash used for financing activities(191) (18,761) Cash used for financing activities(3,416)(18,761)
Effect of exchange rates changes on cash and cash equivalentsEffect of exchange rates changes on cash and cash equivalents(6,643) (9,391) Effect of exchange rates changes on cash and cash equivalents(24,865)(9,391)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents31,345  17,743  Net increase in cash and cash equivalents32,049 17,743 
Net cash and cash equivalents at beginning of periodNet cash and cash equivalents at beginning of period364,426  418,763  Net cash and cash equivalents at beginning of period488,011 418,763 
Net cash and cash equivalents at end of periodNet cash and cash equivalents at end of period$395,771  $436,506  Net cash and cash equivalents at end of period$520,060 $436,506 
Supplemental disclosures of cash flow informationSupplemental disclosures of cash flow informationSupplemental disclosures of cash flow information
Cash paid for taxes, net of refundsCash paid for taxes, net of refunds(17,868) (12,047) Cash paid for taxes, net of refunds(8,432)(12,047)
Cash paid for interest, net of amounts capitalized(407) (349) 
Cash paid for interestCash paid for interest(367)(349)
(1) Of which $13.5$6.8 million and $8.1 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the quarter ended March 31, 20192021 and 2020, respectively.

The accompanying notes form an integral part of these unaudited condensed consolidated financial statements.
7



CRITEO S.A.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Criteo S.A. was initially incorporated as a société par actions simplifiée, or S.A.S., under the laws of the French Republic on November 3, 2005, for a period of 99 years and subsequently converted to a société anonyme, or S.A.
We are a global technology company buildingpowering the leading advertising platform forworld's marketers with trusted and impactful advertising. We operate at the intersection of ecommerce, digital marketing and media monetization. We enable brands' and retailers' growth by providing best-in-class marketing and monetization services on the open Internet. We strive to deliver impactful business results atdo this by activating commerce data through artificial intelligence ("AI") technology, reaching consumers on an extensive scale to commerce companiesacross all stages of the consumer journey, and consumer brands by meeting their marketing goals at their targeted return on investment. Using shopping data, predictive technology and large consumer reach, we help our clients drive Awareness, Consideration and Conversion for their products and services1, and help retailers generategenerating advertising revenues from brands.consumer brands for large retailers. Our vision is to build the world's leading Commerce Media Platform to deliver measurable business outcomes at scale for global brands, agencies and retailers across multiple marketing goals. Our data is pooled among our clients and publishers and offers deep insights into consumer intent and purchasing habits. To drive measurable results for clients,trusted and impactful advertising, we activate our data assets in a privacy-by-design way through proprietary artificial intelligence ("AI")AI technology to engage consumers in real time through the pricing and delivery ofwith highly relevant digital advertisements ("ads"), across devices and environments. By pricing our offering on a range of pricing models and measuring our value based on clear, well-defined performance metrics, we make the return on investment transparent and easy to measure for advertisers.
In these notes, Criteo S.A. is referred to as the "Parent" company and together with its subsidiaries, collectively, as "Criteo," the "Company," the "Group," or "we".

































___________________________________________________
1 Driving Awareness for a brand means exposing its brand name to consumers who have not been in touch with the brand before, thereby creating brand awareness from such consumers. Driving Consideration for an advertiser's products or services means attracting prospective new consumers to consider engaging with and/or buying this advertiser's products or services. Driving Conversion for an advertisers' products or services means triggering a purchase by consumers who have already engaged with this advertisers products or services in the past.
8



9


Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements included herein (the "Unaudited Condensed Consolidated Financial Statements") have been prepared by Criteo S.A. pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the SEC on March 2, 2020.February 26, 2021. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.

Conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in the condensed consolidated financial statements and accompanying notes. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. Our actual results may differ from these estimates. U.S. GAAP requires us to make estimates and judgments in several areas, including, but not limited to: (1) revenue recognition criteria, (2) allowances for credit losses, (3) research tax credits, (4) income taxes, including i) recognition of deferred tax assets arising from the subsidiaries projected taxable profit for future years, ii) evaluation of uncertain tax positions associated with our transfer pricing policy and iii) recognition of income tax position in respect with tax reforms recently enacted in countries we operate, (5) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (6) assumptions used in the valuation of goodwill, intangible assets and right of use assets - operating lease, and (7) assumptions used in the valuation model to determine the fair value of share-based compensation plan.

The ongoing impactseverity, magnitude, duration and after-effects of the COVID-19 increasespandemic on general economic conditions increase uncertainty associated with these estimates, in particular those related to allowance for credit losses, assumptions used in the valuation of goodwill and estimates relating to income taxes.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, except for the update to our existing accounting pronouncements adopted below.policy described below:

Revenue Recognition

Principal vs Agent:

For certain customer arrangements, related to transactions using our Retail Media Platform, a new self-service solution providing transparency, measurement and control to our brand and retailer customers, we act as agent, because we (i) do not control the advertising inventory before it is transferred to our clients, (ii) do not have inventory risks because we do not purchase the inventory upfront and (iii) have limited discretion in establishing prices as we charge a platform fee based on a percentage of the digital advertising inventory purchased through the use of the platform. Therefore, based on these and other factors, we report the revenue earned and related costs incurred by the Retail Media Platform solution on a net basis.

Accounting Pronouncements adoptedAdopted in 20202021


Effective January 1, 2020,2021, we have adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments-Credit Losses2019-12, Income Taxes (Topic 326)740): Measurement of Credit Losses on Financial InstrumentsSimplifying the Accounting for Income Taxes (ASU 2019-12), which requiressimplifies the measurement and recognitionaccounting for income taxes. The adoption of expected credit losses forthis new standard did not have a material impact on our consolidated financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This results in earlier recognition of credit losses.

We measure loss allowances for all trade receivables using the lifetime expected credit loss approach, as described above. The expected credit losses on these financial assets are estimated using a provision matrix based on the Company’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date.


statements.

109



Effective January 1, 2020,2021, we have adopted ASU 2017-04,the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2018-14, Goodwill and Other (Topic 350)C. ASU 2017-04 simplifies the subsequent measurement of goodwill and reduces the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. The adoption of the ASU did not have an impact in our financial position or results of operations as we did not recognize an impairment loss during the period.
Effective January 1, 2020, we have adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer’s Accounting for Implementation Costs incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU was issued to clarify the accounting for implementation costs incurred for SaaS agreements. Previously the guidance only referred to development of internal use software and the accounting for SaaS agreements was not clarified. This ASU states that the implementation costs of SaaS agreements should be capitalized. The adoption of the standard did not have an impact on our financial position or results of operations, however, it did have a minor impact on expense classification in current and future periods.

Recent Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-14, Compensationompensation - Retirement Benefits - Defined Benefit Plans - General. The purpose of this update is to modify disclosure requirements for Defined Benefit Plans. It removes requirements to disclose the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year among others. It adds disclosure requirements for the items such as an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. We intend to adopt the standard on the effective date of January 1, 2021. The adoption of ASU 2018-14 isthis new standard did not expected to have a material impact on our consolidated financial position or results of operations but may have an impact on our disclosures.statements.
In December 2019, the FASB issued
Recent Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. We intend to adopt the standard on the effective date of January 1, 2021. The adoption of ASU 2019-12 is not expected to have a material impact on our financial position or results of operations but may have an impact on our disclosures.Pronouncements
Other accountingAccounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s Consolidated Financial Statements upon adoption.

1110



Note 2. Significant Events and Transactions of the Period
Share repurchase program
On October 25, 2018, Criteo's Board of Directors authorized a share repurchase program of up to $80.0 million of the Company’s outstanding American Depositary Shares. We completed this share repurchase program in 2018. As of December 31, 2018, 3.5 million shares were held as treasury shares.
On February 8, 2019, the Board of Directors authorized the reduction of capital resulting in the formal retirement of 1.6 million treasury shares.
On July 26, 2019, Criteo's Board of Directors authorized a share repurchase program of up to $80.0 million of the Company's outstanding American Depositary Shares. As of December 31, 2019, 3.2 million shares were held as treasury shares as part of the share repurchase program authorized on July 26, 2019.
As of March 31, 2020, we had 4.5 million treasury shares remaining which may be used to satisfy the Company's obligations under its employee equity plans upon RSU vestings in lieu of issuing new shares, and for M&A activity. We completed the 2019 share repurchase program in February 2020.
Number of Treasury SharesAmount
(in thousands of dollars)
Balance at January 1, 20203,903,673  $74,900  
Treasury Shares Repurchased for RSU Vesting1,258,068  18,239  
Treasury Shares Issued for RSU Vesting(628,091) (13,305) 
Balance at March 31, 20204,533,650  $79,834  

Restructuring

Cease of our R&D operations in Palo Alto
On October 7, 2019, in connection with the new organization structure,February 1, 2021, the Company announced a plan to restructure its R&D activitiesworkforce across functions and regions to better align with the closingCompany's evolution. We expect the plan will be completed by the end of its R&D operations in Palo Alto.2021. The Company incurred additional netrecorded $5.2 million of restructuring costs of $0.4 millioncharges for severance related to this plan in the three month period ended March 31, 2020 comprising of payroll2021. For the three months ended March 31, 2021, $4.0 million was included in Sales and Operations expenses, $1.1 million was included in General and Administrative expenses and $0.1 million was included in Research and Development expenses.

The following table summarizes restructuring activities as of March 31, 2020 included in other current liabilities on the balance sheet:


Three Months Ended
March 31, 2020
(in thousands)
Restructuring liability - January 1, 2020$5,581 
Restructuring costs449 
Amount paid(3,788)
Restructuring liability - March 31, 20202,242 



12


New organization structure
As part of a new organization structure designed to best support our multi-product platform strategy and accelerate execution, commenced in the twelve month period ended December 31, 2019, the Company incurred net restructuring costs of $0.8 million for the three month period ended March 31, 2020, comprising of payroll expenses.

Three Months Ended
March 31, 2020
(in thousands)
Payroll related costs$(772)
Total restructuring costs(772)

For the three month period ended March 31, 2020, $0.2 million was included in Research and Development expenses and $0.6 millionwas included in Sales and Operations expenses.

The following table summarizespresents the breakdown of restructuring activitiesliability as of March 31, 2020 included in other current liabilities2021, presented as part of employees related payables on the balance sheet:

Three Months Ended
March 31, 2020
(in thousands)
Restructuring liability - January 1, 20202021$510 
Restructuring costs7725,152 
Amount paid(686)(84)
Restructuring liability - March 31, 202020215965,578 







13


Note 3. Financial Instruments
Financial assets
The maximum exposure to credit risk at the end of each reported period is represented by the carrying amount of financial assets and summarized in the following table:
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Trade receivables, net of allowance481,732  364,440  
Trade receivables, net of allowancesTrade receivables, net of allowances416,910 474,055 
Other taxesOther taxes60,924  65,293  Other taxes69,692 69,987 
Other current assetsOther current assets17,225  19,832  Other current assets22,494 21,405 
Non-current financial assetsNon-current financial assets21,747  20,373  Non-current financial assets14,788 18,109 
Marketable SecuritiesMarketable Securities45,867 41,809 
TotalTotal$581,628  $469,938  Total$569,751 $625,365 

Credit Risk
We maintain an allowance for estimated credit losses. During the twelve-month period ended December 31, 2019 and the three-month period ended March 31, 2020, our net change in allowance for credit losses was $9.9 million and $(7.0) million, respectively (note 4). The primary cause of this change was the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) effective January 1, 2020 resulting in an earlier recognition of credit losses, the cumulative effect of which, was recorded as an adjustment to retained earnings for $3.5 million (note 1).
For our financial assets, other than trade receivables, net of allowances, the fair value approximates the carrying amount, given the nature of the financial assets and the maturity of the expected cash flows.
Trade Receivables
Credit risk is defined as an unexpected loss in cash and earnings if the client is unable to pay its obligations in due time. We perform internal ongoing credit risk evaluations of our clients. When a possible risk exposure is identified, we require prepayments or pause the provision of services until payment of past due receivables is made.
As of December 31, 2019 and March 31, 2020,
11

no customer accounted for 10% or more of trade receivables.
Financial Liabilities
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Trade payablesTrade payables$390,277  $300,315  Trade payables$347,209 $367,025 
Other taxesOther taxes50,099  49,159  Other taxes56,192 58,491 
Employee-related payablesEmployee-related payables74,781  73,251  Employee-related payables71,450 85,272 
Other current liabilitiesOther current liabilities35,886  35,709  Other current liabilities32,693 33,390 
Financial liabilitiesFinancial liabilities4,405  2,858  Financial liabilities2,485 3,275 
TotalTotal$555,448  $461,292  Total$510,029 $547,453 

For ourThe fair value of financial liabilities the fair value approximates the carrying amount, given the nature of the financial liabilities and the maturity of the expected cash flows.

14


We are party to several loan agreements and a revolving credit facility, or RCF, with third-party financial institutions. There have been no significant changes from what was disclosed in Note 12 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
15



Fair Value Measurements     
We measure the fair value of our cash equivalents and marketable securities, which include interest-bearing bank deposits, as level 2 measurements because they are valued using observable market data.
Financial assets or liabilities include derivative financial instruments used to manage our exposure to the risk of exchange rate fluctuations. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

Derivative Financial Instruments
Derivatives consist of foreign currency forward contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. We recognize gains and losses on these contracts in financial income (expense), and their position on the balance sheet is based on their fair value at the end of each respective period. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

December 31, 2019March 31, 2020
(in thousands)
Derivative Assets:
Included in other current assets$— $105 
Derivative Liabilities:
Included in financial liabilities - current portion$1,284 $— 
March 31, 2021December 31, 2020
(in thousands)
Derivative Liabilities:
Included in financial liabilities - current portion$394 $925 

For ourThe fair value of derivative financial instruments the fair value approximates the carryingnotional amount, given the nature of the derivative financial instruments and the maturity of the expected cash flows.






12


Cash and Cash Equivalents
The following table presents for each reporting period, the breakdown of cash and cash equivalents:
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Cash equivalentsCash equivalents$189,119  $169,569  Cash equivalents$154,885 $162,457 
Cash on handCash on hand229,644  266,937  Cash on hand365,175 325,554 
Total cash and cash equivalentsTotal cash and cash equivalents$418,763  $436,506  Total cash and cash equivalents$520,060 $488,011 

InvestmentsCash equivalents are investments in interest–bearing bank deposits which meet ASC 230—Statement of Cash flows criteria: short-term, highly liquid investments, for which the risks of changes in value are considered to be insignificant. Interest-bearing bank deposits are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.
For our cash and cash equivalents, the fair value approximates the carrying amount, given the nature of the cash and cash equivalents and the maturity of the expected cash flows.
Marketable Securities

The following table presents for each reporting period, the breakdown of the fair value of marketable securities:
March 31, 2021December 31, 2020
(in thousands)
Securities Available-for-sale
Term Deposits$23,281 $24,538 
Securities Held-to-maturity
Term Deposits$22,586 $17,271 
Total$45,867 $41,809 

The gross unrealized gains on our marketable securities were not material as of March 31, 2021.
Term deposits are considered a level 2 financial instrument as they are measured using valuation techniques based on observable market data.
The following table classifies our marketable securities by contractual maturities:
Held-to-maturityAvailable-for-sale
March 31, 2021
(in thousands)
Due in one year$17,586 $
Due in one to five years$5,000 $23,281 
Total$22,586 $23,281 

1613



Note 4. Trade Receivables
The following table shows the breakdown in trade receivables net book value for the presented periods:
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Trade accounts receivablesTrade accounts receivables$497,800  $387,524  Trade accounts receivables$455,604 $513,954 
(Less) Allowance for credit losses(Less) Allowance for credit losses(16,068) (23,084) (Less) Allowance for credit losses(38,694)(39,899)
Net book value at end of periodNet book value at end of period$481,732  $364,440  Net book value at end of period$416,910 $474,055 
Changes in allowance for credit accounts are summarized below:
20192020 2021 2020
(in thousands)(in thousands)
Balance at January 1Balance at January 1$(25,918) $(16,068) Balance at January 1$(39,899)$(16,068)
Allowance for credit losses through retained earnings (*)Allowance for credit losses through retained earnings (*)—  (3,498) Allowance for credit losses through retained earnings (*)— (3,498)
Allowance for credit lossesAllowance for credit losses(5,282) (6,997) Allowance for credit losses(2,759)(6,997)
Reversal of provisionReversal of provision5,931  2,989  Reversal of provision3,306 2,989 
Currency translation adjustmentCurrency translation adjustment100  490  Currency translation adjustment658 490 
Balance at March 31Balance at March 31$(25,169) $(23,084) Balance at March 31$(38,694)$(23,084)
(*) FromOn January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost issued by the Financial Accounting Standards Board (FASB). ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. This results in earlier recognition of credit losses. We adopted ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings (note 1).earnings.
The amount charged to allowance for credit losses forWe write off accounts receivable balances once the three months ended March 31, 2020 increased compared to the same period in the prior year due to the application of the expected credit loss model beginning on January 1, 2020 as well as an increase in the provision due to the expected impact of COVID-19 on the Company's future cash collections.
The reversal of provision decreased duringreceivables are no longer deemed collectible. During the three month period ended March 31, 2020, mainly due to lower payments received2021, and write-offs of long outstanding receivables already reserved for which it is certain we will not collect the receivable. During the three months ended March 31, 2020, the Company recovered $0.5 million, and $0.6 million, respectively, previously written off, and accounted for as a reversal of provision.
The Company mitigates its credit risk with respect to accounts receivables by performing credit evaluationsAs of March 31, 2021 and monitoring agencies and advertisers' accounts receivables balances.December 31, 2020 no customer accounted for 10% or more of trade receivables.

1714



Note 5. Other Current Assets
The following table shows the breakdown in other current assets net book value for the presented periods:
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Prepayments to suppliersPrepayments to suppliers$5,109  $4,668  Prepayments to suppliers$4,362 $5,613 
Other debtorsOther debtors4,225  3,822  Other debtors3,725 5,991 
Prepaid expensesPrepaid expenses7,891  11,237  Prepaid expenses14,407 9,801 
Derivative instruments—  105  
Gross book value at end of period17,225  19,832  
Net book value at end of periodNet book value at end of period$17,225  $19,832  Net book value at end of period$22,494 $21,405 

Prepaid expenses mainly consist of costs related to SaaS arrangements and office rental advance payments.
Derivative financial instruments include foreign currency swaps or forward purchases or sales contracts used to manage our exposure to the risk of exchange rate fluctuations. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

15

Note 6. Intangible Assets and Goodwill
There have been no significant additions to intangible assets or goodwill since December 31, 2019.
Due to the changes in the current economic environment and the recent decline in global equity markets related to the COVID-19 pandemic, we believe that there has been a change in events and circumstances that may indicate that the carrying amount of goodwill might not be recoverable. We have therefore conducted an interim impairment test between our annual tests. This interim test was based on a stretched scenario reflecting the estimated impact of COVID-19, built on top of the business plan used for our 2019 annual test. The test concluded that the reporting unit’s fair value is above its carrying amount, including goodwill. Therefore, no impairment loss was recorded.
In addition, no triggering events have occurred that would indicate impairment of intangible assets.
The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows:
SoftwareTechnology and customer relationshipsTotal
(in thousands)
From April 1 to December 31, 2020$6,420  $8,537  $14,957  
20217,414  11,382  18,796  
20224,826  11,382  16,208  
20232,652  10,897  13,549  
2024685  8,700  9,385  
Thereafter59  6,852  6,911  
Total$22,056  $57,750  $79,806  
18



19


Note 7.6. Other Current Liabilities
Other current liabilities are presented in the following table:
December 31, 2019March 31, 2020March 31, 2021December 31, 2020
(in thousands)(in thousands)
Clients' prepaymentsClients' prepayments$13,618  $11,249  Clients' prepayments$11,575 $12,234 
Credit notesCredit notes16,420  18,993  Credit notes15,529 14,433 
Accounts payable relating to capital expendituresAccounts payable relating to capital expenditures4,408  3,834  Accounts payable relating to capital expenditures2,366 4,721 
Other creditorsOther creditors1,213  1,447  Other creditors2,235 1,918 
Deferred revenueDeferred revenue227  186  Deferred revenue988 84 
TotalTotal$35,886  $35,709  Total$32,693 $33,390 

2016



Note 8.7. Leases
We have adopted Topic 842 effective January 1, 2019 on a modified retrospective basis and elected not to restate comparative periods. We chose to use certain practical expedients offered by the standard including:
We did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or the initial direct costs for any existing leases.
We do not recognize a lease liability or right of use asset for leases with a term of 12 months or less.
We used hindsight in determining the lease term.
We lease space under non-cancellable operating leases for our offices as well as our data centers. Our office leases typically include free rent periods or rent escalation periods, and may also include leasehold improvement incentives. Leases for data centers may also include free rent periods or rent escalation periods. These leases typically do not include residual value guarantees. Both office and data center leases may contain both lease components (rent) and non-lease components (maintenance, electrical costs, and other service charges). Non-lease components are accounted for separately.
Both office and data center leases typically contain options to renew, and/or early terminate. We have evaluated management's expectations for these options as of March 31, 2020. Options have been included in the lease term if management has determined it is reasonably certain it will be exercised.
Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate at lease commencement to determine the present value of future payments. We have a centralized treasury function, and the majority of our leases are negotiated and signed by representatives of Criteo SA. As such, the incremental borrowing rate of Criteo SA is used for all of our contracts. It is then adjusted in consideration of the currency of the lease and the lease term as of the lease commencement date.
Lease expense is recognized for minimum lease payments on a straight-line basis over the lease term. Variable costs are expensed in the period incurred. Variable expenses include changes in indexation. Leases for data centers may have variable costs based on electrical usage.
The components of lease expense are as follows:
Three Months EndedThree Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
OfficesData CentersTotalOfficesData CentersTotalOfficesData CentersTotalOfficesData CentersTotal
(in thousands)(in thousands)
Lease expenseLease expense$8,340  $5,187  $13,527  $6,314  $6,536  $12,850  Lease expense$6,543 $6,398 $12,941 $6,314 $6,536 $12,850 
Short term lease expenseShort term lease expense925  530  1,455  286  56  342  Short term lease expense76 83 286 56 342 
Variable lease expenseVariable lease expense—  114  114   516  525  Variable lease expense144 73 217 516 525 
Sublease incomeSublease income(1,076) —  (1,076) (202) —  (202) Sublease income(188)(188)(202)(202)
Total operating lease expenseTotal operating lease expense$8,189  $5,831  $14,020  $6,407  $7,108  $13,515  Total operating lease expense$6,575 $6,478 $13,053 $6,407 $7,108 $13,515 

21


As of March 31, 2020, we had future minimum lease payments as follows:
March 31, 2020
OfficesData CentersTotal
(in thousands)
Remainder of 2020$24,813  $14,251  $39,064  
202130,386  14,586  44,972  
202227,839  10,714  38,553  
202318,455  4,383  22,838  
20249,413  2,229  11,642  
Thereafter14,285  373  14,658  
Total minimum lease payments125,191  46,536  171,727  
Impact of Discount Rate(9,748) (770) (10,518) 
Total Lease Liability$115,443  $45,766  $161,209  

The weighted average remaining lease term and discount rates as of March 31, 2020 are as follows:
March 31, 2019March 31, 2020
Weighted average remaining lease term (years)
    Offices5.44.5
    Data Centers3.03.0
Weighted average discount rate
    Offices2.6 %2.5 %
    Data Centers1.7 %1.7 %

Supplemental cash flow information related to our operating leases is as follows for the period ended March 31, 2020:
Three Months Ended
March 31, 2019March 31, 2020
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities
Cash flow for operating activities$(13,964) $(14,048) 
Right of use assets obtained in exchange for new operating lease liabilities$10,926  $—  
As of March 31, 2020,2021, we have additional operating leases, that have not yet commenced which will result in additional operating lease liabilities and right of use assets:
OfficesData Centers
(in thousands)
Additional operating lease liabilities$11,295  $7,807  
Additional right of use assets$8,446  $7,807  

OfficesData Centers
(in thousands)
Additional operating lease liabilities$$7,893 
Additional right of use assets$$7,893 
These operating leases will commence during the fiscal year ending December 31, 2020.2021.


2217


Note 8. Employee Benefits

Defined Benefit Plans
According to the French law and the Syntec Collective Agreement, French employees are entitled to compensation paid on retirement.
The following table summarizes the changes in the projected benefit obligation:
Projected benefit obligation
(in thousands)
Projected benefit obligation present value at January 1, 2020$8,485
Service cost2,232 
 Interest cost95 
Actuarial losses (gains)(5,214)
Currency translation adjustment569 
Projected benefit obligation present value at December 31, 2020$6,167
Service cost337 
 Interest cost13 
Actuarial losses (gains)(629)
Currency translation adjustment(267)
Projected benefit obligation present value at March 31, 2021$5,621

The Company does not hold any plan assets for any of the periods presented.
The main assumptions used for the purposes of the actuarial valuations are listed below:
Three months endedYear ended
March 31,
2021
December 31, 2020
Discount rate (Corp AA)1.25%0.85%
Expected rate of salary increase5%5%
Expected rate of social charges49% - 50%49% - 50%
Expected staff turnover0% - 17.8%0% - 17.8%
Estimated retirement ageProgressive tableProgressive table
Life tableTH-TF 2000-2002 shiftedTH-TF 2000-2002 shifted


18


Defined Contribution Plans
The total expense represents contributions payable to these plans by us at specified rates.
In some countries, the Group’s employees are eligible for pension payments and similar financial benefits. The Group provides these benefits via defined contribution plans. Under defined contribution plans, the Group has no obligation other than to pay the agreed contributions, with the corresponding expense charged to income for the year. The main contributions concern France, the United States, for 401k plans, and the United Kingdom.
Three Months Ended
March 31,
2021
March 31,
2020
(in thousands)
Defined contributions plans included in personnel expenses$(5,553)$(3,429)

19


Note 9. Revenue

Revenue Recognition
We sell personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies. Historically, the Criteo model has focused solely on converting our clients' website visitors into customers, enabling us to charge our clients only when users engage with an ad we deliver, usually by clicking on it. More recently, we have expanded our solutions to address a broader range of marketing goals for our clients.
We offer two families of solutions to our commerce and brand clients:
Criteo Marketing Solutions allow commerce companies to address multiple marketing goals by engaging their consumers with personalized ads across the web, mobile and offline store environments.
Criteo Retail Media solutions allow retailers to generate advertising revenues from consumer brands, and/or to drive sales for themselves, by monetizing their data and audiences through personalized ads, either on their own digital property or on the open Internet, that address multiple marketing goals.
In conjunction with broadening our solutions, we have also started expanding our pricing models to now include a combination of cost-per-install and cost-per-impression for selected new solutions, in addition to cost-per-click.
We recognize revenues when we transfer control of promised services directly to our clients or to advertising agencies, which we collectively refer to as our clients, in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services.
For campaigns priced on a cost-per-click and cost-per-install basis, we bill our clients when a user clicks on an advertisement we deliver or installs an application by clicking on an advertisement we delivered, respectively. For these pricing models, we recognize revenue when a user clicks on an advertisement or installs an application.  
For campaigns priced on a cost-per-impression basis, we bill our clients based on the number of times an advertisement is displayed to a user. For this pricing model, we recognize revenue when an advertisement is displayed.
We act as principal in our arrangements because (i) we control the advertising inventory (spaces on websites) before it is transferred to our clients; (ii) we bear sole responsibility for fulfillment of the advertising promise and inventory risks and (iii) we have full discretion in establishing prices. Therefore, based on these factors, we report revenue earned and the related costs incurred on a gross basis.
Disaggregation of revenue
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.
The following table presents our revenues disaggregated by geographical area:revenues:
AmericasEMEAAsia-PacificTotalMarketing SolutionsRetail MediaTotal
For the three months ended For the three months ended  (in thousands)For the three months ended(in thousands)
March 31, 2019$217,993  $209,643  $130,487  $558,123  
March 31, 2021March 31, 2021$483,190 $57,887 $541,077 
March 31, 2020March 31, 2020$191,745  $190,114  $121,517  $503,376  March 31, 2020$469,773 $33,603 $503,376 

Excluding our historical solution for driving Conversion through Criteo Marketing Solutions (formerly called Criteo Dynamic Retargeting), no individual solution accounted for more than 10% of total consolidated revenue for the periods presented.

0
2320



Customer Credit Notes
We offer credit notes to certain customers as a form of incentive, which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and they are recognized as a reduction of revenue. We believe that there will not be significant changes to our estimates of variable consideration.
Deferred Revenues
We record deferred revenues when cash payments are received or due in advance of our performance. Our payment terms vary depending on the service or the type of customer. For certain customers, we require payment before the services are delivered.
Practical Expedients
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and operating expenses.

24


Note 10. Share-Based Compensation
The board of directors has been authorized by the general meeting of the shareholders to grant employee warrants (Bons de Souscription de Parts de Créateur d’Entreprise or "BSPCEs"), share options (Options de Souscription d'Actions or "OSAs"), restricted share units ("RSUs") and non-employee warrants (Bons de Souscription d'Actions or "BSAs").
During the three months ended March 31, 2020,2021, there was one grant of RSUs under the Employee Share Option Plan 1213 as defined in Note 20 19 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019.2020.
On March 2, 2020, 40,240February 25, 2021, 96,450 RSUs were granted to Criteo employees subject to continued employment and 43,217235,850 RSUs and 43,217235,848 PSUs were granted to a membermembers of the management subject to continued employment.
There have been no changes in the vesting and method of valuation of the BSPCEs, OSAs, RSUs, or BSAs from what was disclosed in Note 2019 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019,2020, filed with the SEC on March 2, 2020.February 26, 2021.

Change in Numbernumber of BSPCE/OSA/RSU/outstanding BSPCE / OSA / RSU / BSA
OSA/BSPCERSUBSATotalOSA/BSPCERSU/PSUBSATotal
Balance at January 1, 20202,559,534  4,978,987  363,767  7,902,288  
Balance at January 1, 2021Balance at January 1, 20212,102,158 4,954,091 343,775 7,400,024 
GrantedGranted—  126,674  —  126,674  Granted568,148 568,148 
Exercised (OSA/BSPCE/BSA)Exercised (OSA/BSPCE/BSA)(5,700) —  —  (5,700) Exercised (OSA/BSPCE/BSA)(101,710)(101,710)
Vested (RSU)Vested (RSU)—  (640,528) —  (640,528) Vested (RSU)(181,505)(181,505)
ForfeitedForfeited(107,929) (275,710) (12,742) (396,381) Forfeited(9,564)(215,956)(225,520)
ExpiredExpired(3,600) —  —  (3,600) Expired(700)(700)
Balance at March 31, 20202,442,305  4,189,423  351,025  6,982,753  
Balance at March 31, 2021Balance at March 31, 20211,990,184 5,124,778 343,775 7,458,737 

25


Breakdown of the Closing Balance
OSA/BSPCERSUBSAOSA/BSPCERSUBSA
Number outstandingNumber outstanding2,442,305  4,189,423  351,025  Number outstanding1,990,184 5,124,778 343,775 
Weighted-average exercise priceWeighted-average exercise price23.01  NA  14.82  Weighted-average exercise price23.33 NA15.12 
Number vestedNumber vested1,815,222  NA  154,576  Number vested1,527,511 221,562 
Weighted-average exercise priceWeighted-average exercise price24.40  NA  17.42  Weighted-average exercise price26.23 NA17.00 
Weighted-average remaining contractual life of options outstanding, in yearsWeighted-average remaining contractual life of options outstanding, in years5.8NA  7.4Weighted-average remaining contractual life of options outstanding, in years5.50NA6.54


21


Reconciliation with the Unaudited Consolidated Statements of Income
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
R&DS&OG&ATotalR&DS&OG&ATotalR&DS&OG&ATotalR&DS&OG&ATotal
RSUsRSUs$(3,846) $(5,955) $(2,516) $(12,317) $(2,369) $(3,619) $(1,988) $(7,976) RSUs$(2,496)$(1,649)$(2,288)$(6,433)$(2,369)$(3,619)$(1,988)$(7,976)
Share options / BSPCEShare options / BSPCE(179) (246) (780) (1,205) —  (61) (94) (155) Share options / BSPCE(105)(222)(327)(61)(94)(155)
Total share-based compensationTotal share-based compensation(4,025) (6,201) (3,296) (13,522) (2,369) (3,680) (2,082) (8,131) Total share-based compensation(2,496)(1,754)(2,510)(6,760)(2,369)(3,680)(2,082)(8,131)
BSAsBSAs—  —  (360) (360) —  —  (372) (372) BSAs(455)(455)(371)(371)
Total equity awards compensation expenseTotal equity awards compensation expense$(4,025) $(6,201) $(3,656) $(13,882) $(2,369) $(3,680) $(2,454) $(8,503) Total equity awards compensation expense$(2,496)$(1,754)$(2,965)$(7,215)$(2,369)$(3,680)$(2,453)$(8,502)

2622



Note 11. Financial Income and Expenses
The condensed consolidated statements of income line item “Financial income (expense)” can be broken down as follows:
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31,
2021
March 31,
2020
(in thousands)(in thousands)
Financial income from cash equivalentsFinancial income from cash equivalents$177  $382  Financial income from cash equivalents$128 $382 
Interest and feesInterest and fees(523) (432) Interest and fees(540)(432)
Interest on debtInterest on debt(430) (380) Interest on debt(417)(380)
FeesFees(93) (52) Fees(123)(52)
Foreign exchange gain (loss)Foreign exchange gain (loss)(1,598) (1,628) Foreign exchange gain (loss)(798)(1,628)
Other financial expenseOther financial expense(30) 1,344  Other financial expense492 1,344 
Total financial income (expense)$(1,974) $(334) 
Total financial expenseTotal financial expense$(718)$(334)

The $0.7 million and the $0.3 million and the $2.0 million financial expenses for the three month periodsmonths ended March 31, 20202021 and March 31, 2019,2020, respectively, were driven by the up-front fees amortization, the non-utilization costs incurred as part ofand the financial expense relating to our available Revolving Credit Facility (RCF) financing offset by income from cash and cash equivalents and the recognition of a negative impact of foreign exchange reevaluations net of related hedging costs.
We managehedging. At March 31, 2021, our exposure to foreign currency risk was centralized at the Criteo S.A. level and hedgehedged using foreign currency swaps or forward purchases or sales of foreign currencies.




27
23



Note 12. Income Taxes
Breakdown of Income Taxes
The tax provision for interim periods is determined using an estimate of our annual effective tax rate (“AETR”), adjusted for discrete items arising in the period. To calculate our estimated AETR, we estimate our income before taxes and the related tax expense or benefit for the full fiscal year (total of expected current and deferred tax provisions), excluding the effect of significant unusual or infrequently occurring items or comprehensive income items not recognized in the statement of income. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate does change, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors including our ability to accurately predict our income (loss) before provision for income taxes in multiple jurisdictions and the changes in foreign exchange rates. Our effective tax rate in the future will depend on the portion of our profits earned within and outside of France.
The condensed consolidated statements of income line item “Provision for income taxes” can be broken down as follows:
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31, 2021March 31, 2020
(in thousands)(in thousands)
Current income taxCurrent income tax$(15,934) $(9,718) Current income tax$(5,053)$(9,718)
Net change in deferred taxesNet change in deferred taxes5,916  2,678  Net change in deferred taxes(4,998)2,678 
Provision for income taxesProvision for income taxes$(10,018) $(7,040) Provision for income taxes$(10,051)$(7,040)

For the three months ended March 31, 20192021 and March 31, 2020, we used an annual estimated tax rate of 30% to calculate the provision for income taxes. The effective tax rate was 32% and 30% for the three months ended March 31, 20192021 and 2020, respectively. The difference between the annual estimated tax rate and the effective tax rate is mainly due to the tax impact of discrete items such as share-based compensation in the United States. Discrete items were immaterial for the three months ended March 31, 2020 resulting in no material difference between the annual estimated tax rate and the effective tax rate.
Current tax assets and liabilities
The total amount of current tax assets consists mainly of prepayments of income taxes and credits of Criteo SA,S.A, Criteo Corp., and Criteo Gmbh. The current tax liabilities refers mainly to the corporate tax payables ofGmbH and Criteo K.K.
Ongoing tax inspection in the United States
On September 27, 2017, we received a draft notice of proposed adjustment (NOPA) from the Internal Revenue Service ("IRS") audit of Criteo Corp. for the year ended December 31, 2014, confirmed by the definitive notice dated February 8, 2018. Although we disagree with the IRS's position and are currently contesting this issue, the ultimate resolution of this litigation is uncertain and, if resolved in a manner unfavorable to us, could result in an additional federal tax liability of an estimated maximum aggregate amount of approximately $15.0 million, excluding related fees, interest and penalties.
2824



Note 13. Earnings Per Share
Basic Earnings Per Share
We calculate basic earnings per share by dividing the net income for the period attributable to shareholders of the Parent by the weighted average number of shares outstanding.
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
Net income attributable to shareholders of Criteo S.A.Net income attributable to shareholders of Criteo S.A.$19,120  $15,459  Net income attributable to shareholders of Criteo S.A.$22,406 $15,459 
Weighted average number of shares outstandingWeighted average number of shares outstanding64,336,777  61,691,001  Weighted average number of shares outstanding60,741,674 61,691,001 
Basic earnings per shareBasic earnings per share$0.30  $0.25  Basic earnings per share$0.37 $0.25 
Diluted Earnings Per Share
We calculate diluted earnings per share by dividing the net income attributable to shareholders of the Parent by the weighted average number of shares outstanding plus any potentially dilutive shares not yet issued from share-based compensation plans (see Note 10). There were no other potentially dilutive instruments outstanding as of March 31, 20192020 and March 31, 2020.2021. Consequently, all potential dilutive effects from shares are considered.
For each period presented, a contract to issue a certain number of shares (i.e. share option, non-employee warrant, ("BSA"), restricted share unit ("RSU") or employee warrant ("BSPCE")) is assessed as potentially dilutive if it is “in the money” (i.e., the exercise or settlement price is lower than the average market price).
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31, 2021March 31, 2020
Net income attributable to shareholders of Criteo S.A.Net income attributable to shareholders of Criteo S.A.$19,120  $15,459  Net income attributable to shareholders of Criteo S.A.$22,406 $15,459 
Weighted average number of shares outstanding of Criteo S.A.Weighted average number of shares outstanding of Criteo S.A.64,336,777  61,691,001  Weighted average number of shares outstanding of Criteo S.A.60,741,674 61,691,001 
Dilutive effect of :Dilutive effect of :Dilutive effect of :
Restricted share awards ("RSUs")Restricted share awards ("RSUs")1,317,350  264,309  Restricted share awards ("RSUs")2,972,382 264,309 
Share options and BSPCEShare options and BSPCE336,647  153,786  Share options and BSPCE296,071 153,786 
Share warrantsShare warrants50,522  16,486  Share warrants67,282 16,486 
Weighted average number of shares outstanding used to determine diluted earnings per shareWeighted average number of shares outstanding used to determine diluted earnings per share66,041,296  62,125,582  Weighted average number of shares outstanding used to determine diluted earnings per share64,077,409 62,125,582 
Diluted earnings per shareDiluted earnings per share$0.29  $0.25  Diluted earnings per share$0.35 $0.25 

The weighted average number of securities that were anti-dilutive for diluted EPS for the periods presented but which could potentially dilute EPS in the future are as follows:
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
Restricted share awardsRestricted share awards482,152  2,241,223  Restricted share awards332,300 2,241,223 
Share options and BSPCEShare options and BSPCE65,500  —  Share options and BSPCE
Weighted average number of anti-dilutive securities excluded from diluted earnings per shareWeighted average number of anti-dilutive securities excluded from diluted earnings per share547,652  2,241,223  Weighted average number of anti-dilutive securities excluded from diluted earnings per share332,300 2,241,223 

2925



Note 14. Commitments and contingencies
Commitments
Revolving Credit Facilities "RCF", Credit Line Facilities and Bank Overdrafts     
As mentioned in Note 3, weWe are party to an RCF with a syndicate of banks which allowallows us to draw up to €350.0 million ($383.5410.4 million) until March 2022..
We are also party to short-term credit lines and overdraft facilities with HSBC plc, BNP Paribas and LCL with an authorization to draw up to a maximum of €21.5 million ($23.625.2 million) in the aggregate under the short-term credit lines and overdraft facilities. As of March 31, 2020,2021, we had not drawn on any of these facilities. Any loans or overdraftoverdrafts under these short-term facilities bear interest based on the one month EURIBOR rate or three month EURIBOR rate. As these facilities are exclusively short-term credit and overdraft facilities, our banks have the ability to terminate such facilities on short notice.

Contingencies
Changes in provisions during the presented periods are summarized below:
Provision for employee-related litigationOther provisionsTotalProvision for employee-related litigationOther provisionsTotal
(in thousands)(in thousands)
Balance at January 1, 2020$620  $5,765  $6,385  
Balance at January 1, 2021Balance at January 1, 2021$1,179 $1,071 $2,250 
IncreaseIncrease92  13  105  Increase265 265 
Provision usedProvision used(4) (211) (215) Provision used(247)(247)
Provision released not used—  (42) (42) 
Provision released not used*Provision released not used*(400)(400)
Currency translation adjustmentsCurrency translation adjustments(12) (201) (213) Currency translation adjustments(47)(48)(95)
Balance at March 31, 2020$696  $5,324  $6,020  
Balance at March 31, 2021Balance at March 31, 2021$750 $1,023 $1,773 
- of which current - of which current696  5,324  6,020   - of which current750 1,023 1,773 

*Due to changes in management's best estimates of the future outflow
The amount of the provisions represents management’s best estimate of the future outflow.
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Note 15. Breakdown of Revenue and Non-Current Assets by Geographical Areas
The Company operates in the following 3 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.
AmericasEMEAAsia-PacificTotal
For the three months ended:(in thousands)
March 31, 2019$217,993  $209,643  $130,487  $558,123  
March 31, 2020$191,745  $190,114  $121,517  $503,376  

AmericasEMEAAsia-PacificTotal
For the three months ended:(in thousands)
March 31, 2021$203,900 $212,096 $125,081 $541,077 
March 31, 2020$191,745 $190,114 $121,517 $503,376 
Revenue generated in France the country of incorporation of the Parent, amountedamounted to $37.4$37.7 million and $32.0 million for the three monthsmonth ended March 31, 20192021 and March 31, 2020, respectively.
Revenue generated in other significant countries where we operate is presented in the following table:
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31, 2021March 31, 2020
(in thousands)(in thousands)
AmericasAmericasAmericas
United StatesUnited States$195,791  $173,027  United States$184,084 $173,027 
EMEAEMEAEMEA
GermanyGermany$53,595  $50,618  Germany$53,596 $50,618 
United KingdomUnited Kingdom$21,768  $20,820  United Kingdom$23,292 $20,820 
Asia-PacificAsia-PacificAsia-Pacific
JapanJapan$93,168  $84,637  Japan$84,212 $84,637 
As of March 31, 2019 and 2020, our largest client represented 2.1% and 3.3%, respectively, of our consolidated revenue.

27


Other Information
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.
Of whichOf which
HoldingAmericasUnited StatesEMEAAsia-PacificJapanSingaporeTotal
(in thousands)
December 31, 2019$136,621  $104,389  $100,107  $20,336  $19,701  $9,617  $5,970  $281,047  
March 31, 2020$127,707  $94,642  $94,412  $18,158  $21,159  $11,844  $5,374  $261,666  
Of whichOf which
HoldingAmericasUnited StatesEMEAAsia-PacificJapanTotal
(in thousands)
March 31, 2021$123,930 $85,900 $85,408 $8,040 $29,606 $19,580 $247,476 
December 31, 2020$135,516 $93,389 $93,030 $8,746 $31,598 $20,532 $269,249 

31


Note 16. Related Parties
There were no significant related-party transactions during the period nor any change in the nature of the transactions as describeddescribed in Note 25 to24 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 20192020 except as follows:


On March 2, 2020, the Group announced that Chief Financial Officer Benoit Fouilland plans to depart from Criteo at the end of the second quarter 2020. Mr. Fouilland has indicated that he will remain fully committed to his role as Chief Financial Officer and member of the senior executive team, and will play an active role in identifying and hiring his successor to ensure an orderly and smooth transition until his anticipated departure date of June 30, 2020.


The Executive Officers as of March 31, 20202021 were:
• Jean-Baptiste Rudelle - Chairman
Megan Clarken - Chief Executive Officer
Benoit FouillandSarah Glickman - Chief Financial Officer and Principal Accounting Officer
Ryan Damon - General Counsel and Corporate Secretary

3228



Note 17. Subsequent Events
Given the ongoing impact that the COVID-19 pandemic is having on the Company's clients' business, it will remain a factor in our analysis of estimates residing in the financial statements, including, but not limited to, estimates related to receivable reserves calculated under the CECL model, the impairment analysis, and the income tax calculation. These estimates involve projections and assumptions regarding the future economic environment and as such it is possible that events may occur rapidly or unexpectedly that could lead to their changes. We will continue to closely monitor the COVID-19 pandemic, and continuously evaluate its impact on our key estimates.

On April 29, 2020, the Company announced that the Board of Directors has authorized a share repurchase program of up to $30 million of the Company’s outstanding American Depositary Shares.

On April 29, 2020, the Company decided to preventively draw under its Multicurrency Revolving Facility Agreement for general purposes for a total amount of €140 million ($150 million).

The Company evaluated all other subsequent events that occurred after March 31, 20202021 through the date of issuance of the unaudited condensed consolidated financial statements and determined there are no other significant events that require adjustments.


adjustments or disclosure.
3329



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion 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, 2019,2020, filed with the Securities and Exchange Commission, or "SEC", on March 2, 2020.February 26, 2021.

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 filed on Form 10-K for the year ended December 31, 2019. Please refer to Note 1,"Summary of Significant Accounting Policies," of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of the changes in accounting policies due to the adoption of this standard.2020.

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 2020.2021.

Use of Non-GAAP Financial Measures

This Form 10-Q includes the following financial measures defined as non-GAAP financial measures by the SEC: Revenue ex-TAC, Adjusted EBITDA and Adjusted Net Income. 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 core 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 core business and across our core 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 related and transformation costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA 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- and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration, Adjusted EBITDA can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides 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.
3430




Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration, 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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration 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.

Please refer to the supplemental financial tables provided for a reconciliation of Revenue ex-TAC to revenue, Adjusted EBITDA to net income, and Adjusted Net Income to net income in each case, the most comparable U.S. GAAP measurement. Our use of non-GAAP financial measures 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: (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, Adjusted EBITDA, Adjusted Net Income, 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.

3531


Condensed Consolidated Statements of Income Data (Unaudited):
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands, except share and per share data)(in thousands, except share and per share data)
RevenueRevenue$558,123  $503,376  Revenue$541,077 $503,376 
Cost of revenue (2)
Cost of revenue (2)
Cost of revenue (2)
Traffic acquisition costsTraffic acquisition costs(322,429) (297,364) Traffic acquisition costs(327,667)(297,364)
Other cost of revenueOther cost of revenue(26,045) (33,806) Other cost of revenue(34,712)(33,806)
Gross profitGross profit209,649  172,206  Gross profit178,698 172,206 
Operating expensesOperating expensesOperating expenses
Research and development expenses (2)(1)
Research and development expenses (2)(1)
(46,577) (37,515) 
Research and development expenses (2)(1)
(31,697)(37,515)
Sales and operations expenses (2)(1)
Sales and operations expenses (2)(1)
(95,909) (84,974) 
Sales and operations expenses (2)(1)
(79,354)(84,974)
General and administrative expenses (2)(1)
General and administrative expenses (2)(1)
(33,770) (25,915) 
General and administrative expenses (2)(1)
(33,428)(25,915)
Total operating expensesTotal operating expenses(176,256) (148,404) Total operating expenses(144,479)(148,404)
Income from operationsIncome from operations33,393  23,802  Income from operations34,219 23,802 
Financial income (expense)(1,974) (334) 
Financial expenseFinancial expense(718)(334)
Income before taxesIncome before taxes31,419  23,468  Income before taxes33,501 23,468 
Provision for income taxesProvision for income taxes(10,018) (7,040) Provision for income taxes(10,051)(7,040)
Net incomeNet income$21,401  $16,428  Net income$23,450 $16,428 
Net income available to shareholders of Criteo S.A. (1)
Net income available to shareholders of Criteo S.A. (1)
$19,120  $15,459  
Net income available to shareholders of Criteo S.A. (1)
$22,406 $15,459 
Net income available to shareholders of Criteo S.A. per share:
Net income available to non-controlling interestsNet income available to non-controlling interests1,044 969 
Net income allocated to shareholders per share:Net income allocated to shareholders per share:
BasicBasic$0.30  $0.25  Basic$0.37 $0.25 
DilutedDiluted$0.29  $0.25  Diluted$0.35 $0.25 
Weighted average shares outstanding used in computing per share amounts:Weighted average shares outstanding used in computing per share amounts:Weighted average shares outstanding used in computing per share amounts:
BasicBasic64,336,777  61,691,001  Basic60,741,674 61,691,001 
DilutedDiluted66,041,296  62,125,582  Diluted64,077,409 62,125,582 
(1)For the three month periods ended March 31, 2019 and March 31, 2020, this excludes $2.3 million and $1.0 million, respectively, of net income attributable to non-controlling interests held by Yahoo! Japan in our Japanese subsidiary Criteo KK.
(2) Cost of revenue and operating expenses include equity awards compensation expense, pension service costs, depreciation and amortization expense, restructuring related and transformation costs, acquisition-related costs and deferred price consideration as follows:

3632



Detailed Information on Selected Items (unaudited):
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
Equity awards compensation expenseEquity awards compensation expenseEquity awards compensation expense
Research and development expensesResearch and development expenses$4,025  $2,370  Research and development expenses$2,496 $2,370 
Sales and operations expensesSales and operations expenses6,201  3,618  Sales and operations expenses2,369 3,618 
General and administrative expensesGeneral and administrative expenses3,656  2,515  General and administrative expenses3,017 2,515 
Total equity awards compensation expenseTotal equity awards compensation expense$13,882  $8,503  Total equity awards compensation expense$7,882 $8,503 
Pension service costsPension service costsPension service costs
Research and development expensesResearch and development expenses193  269  Research and development expenses175 269 
Sales and operations expensesSales and operations expenses72  95  Sales and operations expenses53 95 
General and administrative expensesGeneral and administrative expenses129  174  General and administrative expenses110 174 
Total pension service costs (a)
Total pension service costs (a)
$394  $538  
Total pension service costs (a)
$338 $538 
Depreciation and amortization expenseDepreciation and amortization expenseDepreciation and amortization expense
Cost of revenueCost of revenue9,135  12,771  Cost of revenue15,244 12,771 
Research and development expenses (b)
Research and development expenses (b)
3,477  5,650  
Research and development expenses (b)
1,753 5,650 
Sales and operations expenses (c)
Sales and operations expenses (c)
4,864  4,340  
Sales and operations expenses (c)
3,954 4,340 
General and administrative expensesGeneral and administrative expenses1,820  1,377  General and administrative expenses903 1,377 
Total depreciation and amortization expenseTotal depreciation and amortization expense$19,296  $24,138  Total depreciation and amortization expense$21,854 $24,138 
Restructuring costs (1)
Restructuring related and transformation costsRestructuring related and transformation costs
Research and development expensesResearch and development expenses—  995  Research and development expenses1,436 995 
Sales and operations expensesSales and operations expenses1,890  1,021  Sales and operations expenses7,367 1,021 
General and administrative expensesGeneral and administrative expenses—  193  General and administrative expenses2,833 193 
Total Restructuring costs (1)
$1,890  $2,209  
Total Restructuring related and transformation costs (1)
Total Restructuring related and transformation costs (1)
$11,636 $2,209 
(a) Effective January 1, 2012, actuarial gains and losses are recognized in other comprehensive income.
(b) Includes acquisition-related amortization of intangible assets of $0.7 million and $4.7 million for the three months ended March 31, 2021 and 2020, respectively.
(c) Includes acquisition-related amortization of intangible assets of $2.2 million and $2.2 million for the three months ended March 31, 2021 and 2020, respectively.
(1) For the three month periodsmonths ended March 31, 2019,2021, and March 31, 2020, respectively, the Company recognized restructuringrestructuring-related and transformation charges following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy, respectively, initiated at the end of the fiscal year ended December 31, 2019 as detailed below:policy:
Three Months EndedThree Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
(Gain) from forfeitures of share-based compensation awards(Gain) from forfeitures of share-based compensation awards(666)— 
Depreciation and amortization expense1,143  —  
Facilities and impairment related costsFacilities and impairment related costs747  987  Facilities and impairment related costs6,616 987 
Payroll related costsPayroll related costs—  1,222  Payroll related costs5,152 1,222 
Total restructuring costs1,890  2,209  
Consulting costs related to transformationConsulting costs related to transformation534 — 
Total restructuring related and transformation costsTotal restructuring related and transformation costs11,636 2,209 
(a) Effective January 1, 2012, actuarial gains and losses are recognized in other comprehensive income.
(b) Includes acquisition-related amortization of intangible assets of $2.7 million and $4.7 million for
33


For the three months ended March 31, 20192021 and March 31, 2020, respectively.
(c) Includes acquisition-related amortization of intangible assets of $2.7respectively, the cash outflows related to restructuring related and transformation costs were $6.1 million, and $2.2$4.5 million for the three months ended March 31, 2019respectively, and 2020, respectively.



37


were mainly comprised of payroll costs and broker and termination penalties related to facilities and other consulting fees.
Consolidated Statements of Financial Position Data (unaudited):
December 31, 2019March 31, 2020March 31, 2021December 31,
2020
(in thousands)(in thousands)
Cash and cash equivalentsCash and cash equivalents$418,763  $436,506  Cash and cash equivalents$520,060 $488,011 
Total assetsTotal assets1,790,384  1,675,889  Total assets1,782,635 1,853,410 
Trade receivables, net of credit lossesTrade receivables, net of credit losses481,732  364,440  Trade receivables, net of credit losses416,910 474,055 
Total financial liabilitiesTotal financial liabilities4,405  2,858  Total financial liabilities2,485 3,275 
Total liabilitiesTotal liabilities752,396  649,281  Total liabilities638,872 700,723 
Total equityTotal equity$1,037,988  $1,026,608  Total equity$1,143,763 $1,152,687 

Other Financial and Operating Data (unaudited):
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31, 2021March 31, 2020
(in thousands, except client data)(in thousands, except client data)
Number of clientsNumber of clients19,373  20,360  Number of clients20,626 20,360 
Revenue ex-TAC (3)
Revenue ex-TAC (3)
$235,694  $206,012  
Revenue ex-TAC (3)
$213,410 $206,012 
Adjusted Net Income (4)
Adjusted Net Income (4)
$39,705  $32,028  
Adjusted Net Income (4)
$43,152 $32,028 
Adjusted EBITDA (5)
Adjusted EBITDA (5)
$68,855  $59,190  
Adjusted EBITDA (5)
$75,929 $59,190 








34


(3) We define Revenue ex-TAC (Traffic Acquisition Costs) as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period. Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC in this Form 10-Q 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 TAC from revenue can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Revenue ex-TAC 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 Revenue ex-TAC 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) 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 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 alongside our other U.S. GAAP financial results, including revenue. The following table presents a reconciliation of Revenue ex-TAC to revenue, the most directly comparable U.S. GAAP measure, for each of the periods indicated:
Three Months EndedThree Months Ended
March 31,
2019
March 31,
2020
March 31, 2021March 31, 2020
(in thousands)(in thousands)
RevenueRevenue$558,123  $503,376  Revenue$541,077 $503,376 
Adjustment:Adjustment:Adjustment:
Traffic acquisition costsTraffic acquisition costs(322,429) (297,364) Traffic acquisition costs(327,667)(297,364)
Revenue ex-TACRevenue ex-TAC$235,694  $206,012  Revenue ex-TAC$213,410 $206,012 


3835



(4) 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 related and transformation 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 in this Form 10-Q 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, restructuring related and transformation costs, acquisition-related costs and deferred price consideration, 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 core 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 financial results, including net income. The following table presents a reconciliation of Adjusted Net Income to net income, the most directly comparable U.S. GAAP measure, for each of the periods indicated:
Three Months Ended
March 31, 2019March 31, 2020
(in thousands)
Net income$21,401  $16,428  
Adjustments:
Equity awards compensation expense13,882  8,503  
Amortization of acquisition-related intangible assets5,472  6,848  
Restructuring costs (1)
1,890  2,209  
Tax impact of the above adjustments(2,940) (1,960) 
Adjusted Net Income$39,705  $32,028  
(1)For the three month periods ended March 31, 2019, and March 31, 2020, respectively, the Company recognized restructuring charges following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy, respectively, initiated at the end of the fiscal year ended December 31, 2019 as detailed below:
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020
(in thousands)
Depreciation and amortization expense1,143  —  
Facilities and impairment related costs747  987  
Payroll related costs—  1,222  
Total restructuring costs1,890  2,209  

Three Months Ended
March 31, 2021March 31, 2020
(in thousands)
Net income$23,450 $16,428 
Adjustments:
Equity awards compensation expense7,882 8,503 
Amortization of acquisition-related intangible assets2,935 6,848 
Restructuring related and transformation costs11,636 2,209 
Tax impact of the above adjustments(2,751)(1,960)
Adjusted Net Income$43,152 $32,028 


3936


(5) 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 related and transformation 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 in this Form 10-Q 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 and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring related and transformation costs,, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core 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 other U.S. GAAP financial results, including net income. The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for each of the periods indicated:

Three Months Ended
March 31,
2019
March 31,
2020
(in thousands)
Net income$21,401  $16,428  
Adjustments:
Financial expense (income)1,974  334  
Provision for income taxes10,018  7,040  
Equity awards compensation expense13,882  8,503  
Pension service costs394  538  
Depreciation and amortization expense19,296  24,138  
Restructuring costs (1)
1,890  2,209  
Total net adjustments47,454  42,762  
Adjusted EBITDA$68,855  $59,190  
(1)For the three month periods ended March 31, 2019, and March 31, 2020, respectively, the Company recognized restructuring charges following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy, respectively, initiated at the end of the fiscal year ended December 31, 2019 as detailed below:
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020
(in thousands)
Depreciation and amortization expense1,143  —  
Facilities and impairment related costs747  987  
Payroll related costs—  1,222  
Total restructuring costs1,890  2,209  
Three Months Ended
March 31, 2021March 31, 2020
(in thousands)
Net income$23,450 $16,428 
Adjustments:
Financial expense718 334 
Provision for income taxes10,051 7,040 
Equity awards compensation expense7,882 8,503 
Pension service costs338 538 
Depreciation and amortization expense21,854 24,138 
Restructuring related and transformation costs11,636 2,209 
Total net adjustments52,479 42,762 
Adjusted EBITDA$75,929 $59,190 

4037



Results of Operations for the Periods Ended March 31, 2019 2021and March 31, 2020(Unaudited)

Revenue breakdown by region
Three months ended March 31, 20202021 compared to the three months ended March 31, 20192020
Three Months Ended
March 31,
2019
March 31,
2020
2019 vs 2020Three Months Ended
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands)(in thousands)
Revenue as reportedRevenue as reported$558,123  $503,376  (10)%Revenue as reported$541,077 $503,376 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies8,118  Conversion impact U.S. dollar/other currencies$(16,747)
Revenue at constant currency (1)
Revenue at constant currency (1)
558,123  511,494  (8)%
Revenue at constant currency (1)
524,330 503,376 %
AmericasAmericasAmericas
Revenue as reportedRevenue as reported217,993  191,745  (12)%Revenue as reported203,900 191,745 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies1,758  Conversion impact U.S. dollar/other currencies$2,306 
Revenue at constant currency (1)
Revenue at constant currency (1)
217,993  193,503  (11)%
Revenue at constant currency (1)
206,206 191,745 %
EMEAEMEAEMEA
Revenue as reportedRevenue as reported209,643  190,114  (9)%Revenue as reported212,096 190,114 12 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies5,624  Conversion impact U.S. dollar/other currencies$(14,220)
Revenue at constant currency (1)
Revenue at constant currency (1)
209,643  195,738  (7)%
Revenue at constant currency (1)
197,876 190,114 %
Asia-PacificAsia-PacificAsia-Pacific
Revenue as reportedRevenue as reported130,487  121,517  (7)%Revenue as reported125,081 121,517 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies736  Conversion impact U.S. dollar/other currencies$(4,833)
Revenue at constant currency(1)
Revenue at constant currency(1)
$130,487  $122,253  (6)%
Revenue at constant currency(1)
$120,248 $121,517 (1)%

Revenue breakdown by solution
Three months ended March 31, 2021 compared to the three months ended March 31, 2020
Three Months Ended
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands)
Revenue as reported$541,077 $503,376 %
Conversion impact U.S. dollar/other currencies$(16,747)
Revenue at constant currency (1)
$524,330 $503,376 %
Marketing Solutions as reported$483,190 $469,773 %
Conversion impact U.S. dollar/other currencies$(15,653)
Marketing Solutions at constant currency (1)
467,537 469,773 (0.5)%
Retail Media as reported (2)
57,887 33,603 72 %
Conversion impact U.S. dollar/other currencies$(1,094)
Retail Media at constant currency (1)
56,793 33,603 69 %

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(1)Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the 20192020 average exchange rates for the relevant period to 20202021 figures. We have included revenue at constant currency in this Form 10-Q 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.
(2) Criteo operates as one operating segment. From January 1,2021 we have disaggregated revenues between Marketing Solutions and Retail Media. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. Over time, we expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform. As new clients onboard and existing clients transition to the Retail Media Platform, Revenue may decline but Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by this transition.

Revenue for the three months ended March 31, 2020 decreased (10)% (or decreased by (8)%2021 increased 7% or 4% on a constant currency basis, (as defined in footnote 1 directly above), to $541.1 million, compared to the three months ended March 31, 2019.2020.

The COVID-19 outbreak started havingpandemic impacted our business during most of the quarter, with an estimated net negative impact on our revenue beginning in mid-February. Overall,of approximately $46 million for the COVID-19 impact on our revenue wasthree months ended March 31, 2021, or approximately $24 million, or more than 49 points of year-over-year growth, as some clients decided to temporarily pause or reduce their campaigns with us. The COVID-19 impact differed significantly by client vertical. Traditionally, the mix of our revenue is approximately 70% in the Retail vertical, 10% in the Travel vertical, 10% in the Classifieds vertical and the remaining 10% a collection of other verticals including consumer finance, auto, gaming and ride sharing. In the first quarter 2020, our revenue in the Travel vertical was impacted by up to 95% compared to pre-COVID-19 levels, while revenue in Classifieds decreased by around 40%, mostly in the marketplace space. Our revenue in the Retail vertical remained relatively healthier, with reductions limited to about 10%. The Travel vertical, which was deeply affected by COVID-19, contributed to 40% of the revenue impact and the remaining 60% were evenly spread between Retail, Classifieds and other verticals. About 80% of the COVID impact on revenue was with large clients, as spending in the midmarket remained resilient.

Due toIn the material impact from the COVID-19 outbreak,quarter, 81% of the year-over-year decreaseincrease in revenue was entirely driven by the lowerhigher contribution from our existing clients which exceeded revenues derivedwhile 19% came from new clients.client additions. We added 987266 net new clients year-over-year across regions, a higher volume than during the prior year period. Revenuewhile revenue from existing clients decreasedincreased by 9%8% at constant currency over the period including 5 points attributable to the impact of COVID-19, despite the continued adoption of our new products across our client base..

RevenueThe year-over-year increase in revenue on a constant currency basis was 88% attributable to volume-based drivers of our business (increasing number of impressions delivered and clicks delivered on the Americas regionadvertising banners displayed), and 12% attributable to price-based drivers (increasing average price charged to advertisers).

Marketing Solutions revenue increased 3% (or decreased (12)% (or (11)(0.5)% on a constant currency basis, including 12% in the U.S.)basis) to $191.7$483.2 million for the three months ended March 31, 20202021, as increased spend from Retail clients, in particular in our retargeting solution, was partially offset by the negative impact from continued lower spend from Travel clients.

Retail Media revenue increased 72% (or 69% on a constant currency basis) to $57.9 million for the three months ended March 31, 2021, driven by strong performance with large retailers across the U.S. and EMEA, supported by continued solid trends in ecommerce shopping sustained through the COVID-19 pandemic.

Our revenue in the Americas region increased 6% (or 8% on a constant currency basis), including 6% in the U.S., to $203.9 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2019. This decline was2020, driven by an impact from COVID-19 of $8 million,positive Retail trends, in particular with large customers across our retargeting and new solutions, continued strong performance of Retail Media, in the broaderparticular with CPG brands and existing retailers, partially offset by continued negative impact from COVID-19 on Travel and Classifieds vertical. This came in addition to a soft start in January, due to client budget slowdowns after very high spend levels during the Q4 2019 peak season in the Americas.clients.
41


RevenueOur revenue in EMEA decreased (9)%increased 12% (or decreased (7)%4% on a constant currency basis) to $190.1$212.1 million for the three months ended March 31, 20202021 compared to the three months ended March 31, 2019. This decrease at constant currency includes approximately $12 million revenue2020, driven by positive Retail trends, in particular with large customers across our retargeting and new solutions, continued strong performance of Retail Media, partially offset by continued negative impact from the COVID-19 in the region, in part due to the fact that EMEA is the region with the highest exposure to theon Travel vertical, which was most hit by COVID-19. In this difficult context, our performance in the midmarket across the region, as well as in our German and Eastern European businesses remained solid and resilient.Classifieds clients.

RevenueOur revenue in the Asia-Pacific region decreased (7)increased 3% (or (1)% (or decreased (6)%decrease on a constant currency basis) to $121.5$125.1 million for the three months ended March 31, 20202021 compared to the three months ended March 31, 2019. The decrease at constant currency, included an approximately $5 million revenue2020, as the continued negative impact from the COVID-19 mostlypandemic on Travel and Classifieds more than offset the recovery of Retail accounts in the Travel and Retail verticals, with our South-East Asian markets most hit. Our Japanese business was less impacted than other markets, and Korea continued to grow double digits despite the early COVID-19 outbreak in the country.region.

Additionally, our $503.4$541.1 million of revenue for the three months ended March 31, 20202021 was negativelypositively impacted by $8.1$16.7 million of currency fluctuations, particularly as a result of changes in foreign currency againstthe depreciation of the Turkish Lira, Russian Ruble, the Brazilian real, partially offset by the appreciation of the Euro and the Japanese Yen, compared to the U.S. dollardollar.

39


Cost of Revenue
Three months ended March 31, 2021 compared to the three months ended March 31, 2019.2020
The year-over-year decrease
Three Months Ended% change
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands, except percentages)
Traffic acquisition costs*$(327,667)$(297,364)10%
Other cost of revenue$(34,712)$(33,806)3%
Total Cost of Revenue$(362,379)$(331,170)9%
% of revenue(67)%(66)%
Gross profit %33 %34 %
*Traffic acquisition costs breakdown by solution:

Three Months Ended% change
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands, except percentages)
Marketing Solutions$(290,873)$(273,057)7%
Retail Media (1)
$(36,794)$(24,307)51%
Traffic Acquisition Costs$(327,667)$(297,364)10%
(1) Criteo operates as one operating segment. From January 1,2021 we have disaggregated revenues between Marketing Solutions and Retail Media. A strategic building block of Criteo’s Commerce Media Platform, the Retail Media Platform, introduced in June 2020, is a self-service solution providing transparency, measurement and control to brands and retailers. In all arrangements running on this platform, Criteo recognizes revenue on a constant currencynet basis, is entirely attributablewhereas revenue from arrangements running on legacy Retail Media solutions are accounted for on a gross basis. Over time, we expect most clients using Criteo’s legacy Retail Media solutions to transition to this platform. As new clients onboard and existing clients transition to the decrease in the average cost-per-click charged to advertisers, partially offsetRetail Media Platform, Revenue may decline but Revenue ex-TAC margin will increase. Revenue ex-TAC will not be impacted by the increased number of clicks delivered on the advertising banners displayed by us and the increased number of impressions delivered by us.this transition.

Cost of Revenue
Three months ended March 31, 2020 compared to the three months ended March 31, 2019
Three Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020
(in thousands,
except percentages)
Traffic acquisition costs$(322,429) $(297,364) (8)%
Other cost of revenue$(26,045) $(33,806) 30%
Total Cost of Revenue$(348,474) $(331,170) (5)%
% of revenue(62)%(66)%
Gross profit %38 %34 %
Cost of revenue for the three months ended March 31, 2020 decreased $(17.3)2021 increased $31.2 million, or (5)%9%, compared to the three months ended March 31, 2019.2020. This decreaseincrease was primarily the result of a decreasean increase of $(25.1)$30.3 million, or (8)%10% (or a decrease of (6)%7% on a constant currency basis) in traffic acquisition costs, and aan increase of $7.8$0.9 million, or 30%3% (or 31%2% on a constant currency basis) in other cost of revenue.
The decreaseincrease in traffic acquisition costs on a constant currency basis related primarily to the lower average cost per thousand impressions (or "CPM"), which decreased by (15)% (or (13)% on a constant currency basis). This was mainly driven by lower global demand for advertising inventory, despite the increase in online traffic globally caused by the lockdown imposed in COVID-19 affected areas, making the unit price of inventory cheaper. This was also driven by the effectiveness of our Criteo Direct Bidder, which allows us to buy quality inventory directly from large publishers in the web and in apps and remove intermediary fees in the process. This was not entirely compensated by the 8%13% increase in the number of impressions we purchased, reflecting higher volumes of inventory available and our expanding relationships with existing and new publisher partners, in particular through direct connections, to support client demand for advertising campaigns. This increase was partially offset by the (3)% decrease (and (3)% decrease on a constant currency basis) in the average CPM for inventory purchased. This was partly driven by the effectiveness of our Criteo Direct Bidder and direct publisher integrations, which allows us to buy quality inventory directly from large publishers and remove intermediary fees in the process.
Traffic acquisition costs in Marketing Solutions increased by 7%, driven by a 12% increase in the number of impressions we purchased, partially offset by a 5% decrease in the average CPM for inventory purchased.
Traffic acquisition costs in Retail Media increased by 51%, driven by a 53% increase in the number of impressions we purchased, partially offset by a 1% decrease in the average CPM for inventory purchased. As we recognize revenue on a net basis in all arrangements running on the Retail Media platform, we expect our Traffic acquisition costs for Retail Media to decrease over time as our clients are transitioned to the Criteo Retail Media Platform.
40


The increase in other cost of revenue includes a $3.6$1.3 million increase in allocated depreciation and amortization expense following the acquisitions of servers and other equipment used in our data centers offset by a $2.1$0.4 million increase in hosting costs and a $2.0 million increasedecrease in other costs including $1.6 million of provision for Digital Taxes.costs.
We consider Revenue ex-TAC as a key measure of our business activity. Our strategy focuses on maximizing the growth of our Revenue ex-TAC on an absolute basis over maximizing our near-term gross margin. We believe this focus builds sustainable long-term value for our business by fortifying a number of our competitive strengths, including
42


access to advertising inventory, breadth and depth of data and continuous improvement of the Criteo Engine’s performance, allowing it to deliver more relevant advertisements at scale. As a part of this focus, we continue to invest in building relationships with direct publishers and pursuing access to leading advertising exchanges.
Our performance-based business model provides us with significant control over our level of Revenue ex-TAC margin, which we seek to optimize in order to maximize Revenue ex-TAC growth on an absolute basis in accordance with our strategic focus.

41


Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region
The following table sets forth our revenue, traffic acquisition costs and Revenue ex-TAC by geographic region, including the Americas (North and South America), Europe, Middle East and Africa, or EMEA, and Asia-Pacific.

Three Months Ended
RegionMarch 31, 2019March 31, 2020Year over Year Change
Revenue:(amounts in thousands, except percentages)
Americas$217,993  $191,745  (12)%
EMEA209,643  190,114  (9)%
Asia-Pacific130,487  121,517  (7)%
Total558,123  503,376  (10)%
Traffic acquisition costs:
Americas(131,545) (120,022) (9)%
EMEA(117,291) (108,397) (8)%
Asia-Pacific(73,593) (68,945) (6)%
Total(322,429) (297,364) (8)%
Revenue ex-TAC (1):
Americas86,448  71,723  (17)%
EMEA92,352  81,717  (12)%
Asia-Pacific56,894  52,572  (8)%
Total$235,694  $206,012  (13)%
Three Months Ended
RegionMarch 31,
2021
March 31,
2020
Year over Year Change
Revenue(amounts in thousands, except percentages)
Americas$203,900 $191,745 %
EMEA212,096 190,114 12 %
Asia-Pacific125,081 121,517 %
Total541,077 503,376 7 %
Traffic Acquisition Costs
Americas(127,628)(120,022)%
EMEA(126,648)(108,397)17 %
Asia-Pacific(73,391)(68,945)%
Total(327,667)(297,364)10 %
Revenue ex-TAC (1)
Americas76,272 71,723 %
EMEA85,448 81,717 %
Asia-Pacific51,690 52,572 (2)%
Total$213,410 $206,012 4 %

(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 in this Form 10-Q because they are key measures used by our management and board of directors to evaluate operating performance and generate future operating plans. 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 core business. Accordingly, we believe that Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region 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 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 by region to revenue by region. Please also refer to footnote 3 to the Other Financial and Operating Data table in "Item 2—Management's Discussion and Analysis" of this Form 10-Q for a reconciliation of revenue ex-TAC to revenue, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
4342


Constant Currency Reconciliation
Information in this Form 10-Q with respect to results presented on a constant currency basis was calculated by applying the 20192020 average exchange rates for the relevant period to 20202021 figures. We have included information with respect to our results presented 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. Below is a table which reconciles the actual results presented in this section with the results presented on a constant currency basis:  

Three Months EndedThree Months Ended
March 31, 2019March 31, 2020YoY ChangeMarch 31,
2021
March 31,
2020
YoY Change
(amounts in thousands, except percentages)(amounts in thousands, except percentages)
(amounts in thousands, except percentages)
Revenue as reportedRevenue as reported$558,123  $503,376  (10)%Revenue as reported$541,077 $503,376 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies8,118  Conversion impact U.S. dollar/other currencies(16,747)
Revenue at constant currencyRevenue at constant currency$558,123  $511,494  (8)%Revenue at constant currency$524,330 $503,376 %
Traffic acquisition costs as reportedTraffic acquisition costs as reported$(322,429) $(297,364) (8)%Traffic acquisition costs as reported$(327,667)$(297,364)10 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies(4,525) Conversion impact U.S. dollar/other currencies$10,317 
Traffic Acquisition Costs at constant currencyTraffic Acquisition Costs at constant currency$(322,429) $(301,889) (6)%Traffic Acquisition Costs at constant currency$(317,350)$(297,364)%
Revenue ex-TAC as reportedRevenue ex-TAC as reported$235,694  $206,012  (13)%Revenue ex-TAC as reported$213,410 $206,012 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies3,593  Conversion impact U.S. dollar/other currencies$(6,430)
Revenue ex-TAC at constant currencyRevenue ex-TAC at constant currency$235,694  $209,605  (11)%Revenue ex-TAC at constant currency$206,980 $206,012 0.5 %
Revenue ex-TAC/Revenue as reportedRevenue ex-TAC/Revenue as reported42 %41 %Revenue ex-TAC/Revenue as reported39 %41 %
Other cost of revenue as reportedOther cost of revenue as reported$(26,045) $(33,806) 30 %Other cost of revenue as reported$(34,712)$(33,806)%
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies(424) Conversion impact U.S. dollar/other currencies322 
Other cost of revenue at constant currencyOther cost of revenue at constant currency$(26,045) $(34,230) 31 %Other cost of revenue at constant currency$(34,390)$(33,806)%
Adjusted EBITDA as reportedAdjusted EBITDA as reported$68,855  $59,190  (14)%Adjusted EBITDA as reported$75,929 $59,190 28 %
Conversion impact U.S. dollar/other currenciesConversion impact U.S. dollar/other currencies1,617  Conversion impact U.S. dollar/other currencies(4,591)
Adjusted EBITDA at constant currencyAdjusted EBITDA at constant currency$68,855  $60,807  (12)%Adjusted EBITDA at constant currency$71,338 $59,190 21 %

4443


Research and Development Expenses
Three months ended March 31, 20202021 compared to the three months ended March 31, 2019
Three Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020
(in thousands,
except percentages)
Research and development expenses$(46,577) $(37,515) (19)%
% of revenue(8)%(7)%
2020

Three Months Ended% change
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands, except percentages)
Research and development expenses$(31,697)$(37,515)(16)%
% of revenue(6)%(7)%

Research and development expenses for the three months ended March 31, 2020,2021, decreased $(9.1)$(5.8) million or (19)(16)%, compared to three months ended March 31, 2019. This decrease for the three month period mainly related to a decrease in headcount-related costs following the cease of our R&D operations in Palo Alto in 2019, and a lower share-based compensation expense partially offset by an increased amortization expense for Manage technology due to a revised useful life and an increase in the French Research Tax Credit.

Sales and Operations Expenses
Three months ended March 31, 2020 compared to the three months ended March 31, 20192020. This decrease mainly relates to a decrease in headcount-related costs, and a decrease in depreciation and amortization following the full depreciation of Manage technology in 2020.
Three Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020
(in thousands,
except percentages)
Sales and operations expenses$(95,909) $(84,974) (11)%
% of revenue(17)%(17)%

Sales andOperations Expenses
Three months ended March 31, 2021 compared to the three months ended March 31, 2020

Three Months Ended% change
March 31, 2021March 31, 20202021 vs 2020
(in thousands, except percentages)
Sales and operations expenses$(79,354)$(84,974)(7)%
% of revenue(15)%(17)%

Sales and operations expenses for the three months ended March 31, 2020,2021, decreased $(10.9)$(5.6) million or (11)(7)%, compared to the three months ended March 31, 2019.2020. This decrease for the three month period is mainly related todriven by lower bad debt expense, a decreasereduction in headcount-related costs and a lower share-based compensation expense, partially offset by an increase in facilities costs due to early termination of a negative change in provisions for doubtful receivables includinglease agreement as part of the adoptionright-sizing of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326)our real estate footprint.








4544



General andAdministrative Expenses
Three months ended March 31, 20202021 compared to the three months ended March 31, 20192020
Three Months Ended% changeThree Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020March 31, 2021March 31, 20202021 vs 2020
(in thousands,
except percentages)
(in thousands, except percentages)
General and administrative expensesGeneral and administrative expenses$(33,770) $(25,915) (23)%General and administrative expenses$(33,428)$(25,915)29%
% of revenue% of revenue(6)%(5)%% of revenue(6)%(5)%
General and administrative expenses for the three months ended March 31, 2020 decreased $(7.9)2021 increased $7.5 million or (23)%29%, compared to the three months ended March 31, 2019.2020. This decreaseincrease is mainly related to an increase in third-party services as part of our on-going transformation program, a decreasefavorable one-time accounting impact in headcount-relatedQ1 2020 which lowered the comparable basis, as well as the negative impact of our growing stock price on social charges related to people costs and in facilities costs following the right-sizing policy aiming to optimize the office spaces..

Financial Income (Expense)Expense
Three months ended March 31, 20202021 compared to the three months ended March 31, 2019
Three Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020
(in thousands,
except percentages)
Financial income (expense)$(1,974) $(334) (83)%
% of revenue(0.4)%(0.1)%
2020

Three Months Ended% change
March 31, 2021March 31, 20202021 vs 2020
(in thousands, except percentages)
Financial expense$(718)$(334)NM
% of revenue(0.1)%(0.1)%

Financial expense for the three month periodmonths ended March 31, 2020, decreased2021, respectively, increased by $(1.6)$(0.4) million, or (83)%, compared to the three months ended March 31, 2019.2020. The $0.3$0.7 million financial expense for the three months ended March 31, 20202021 was driven by the up-front fees amortization, the non-utilization costs incurred as part ofand the financial expense relating to our available Revolving Credit Facility (RCF) financing offset by income from cash and cash equivalents and the recognition of a negative impact of foreign exchange reevaluations net of related hedging costs. Ourhedging. At March 31, 2021, 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.

4645


Provision for Income Taxes
Three months ended March 31, 20202021 compared to the three months ended March 31, 20192020
Three Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020
(in thousands,
except percentages)
Provision for income taxes$(10,018) $(7,040) (30)%
% of revenue(1.8)%(1)%
Effective tax rate32 %30 %

Three Months Ended% change
March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands, except percentages)
Provision for income taxes$(10,051)$(7,040)43%
% of revenue(2)%(1)%
Effective tax rate30 %30 %

For the three ended months ended March 31, 20192021 and March 31, 2020, respectively, we used an annual estimated tax rate of 30% to calculate the provision for income taxes. The effective tax rate was 32% and 30% for both the three months ended March 31, 20192021 and 2020, respectively. The difference between the annual estimated tax rate and the effective tax rate is mainly due due to the tax impact of discrete items such as share-based compensation in the United States.March 31, 2020.

Net Income
Three months ended March 31, 20202021 compared to the three months ended March 31, 20192020
Three Months Ended% changeThree Months Ended% change
March 31,
2019
March 31,
2020
2019 vs 2020March 31,
2021
March 31,
2020
2021 vs 2020
(in thousands,
except percentages)
(in thousands, except percentages)
Net incomeNet income$21,401  16,428  (23)%Net income$23,450 16,428 43%
% of revenue% of revenue%%% of revenue%%
Net income for the three months ended March 31, 2020, decreased $(5.0)2021, increased $7.0 million, or (23)%43%, compared to the three months ended March 31, 2019.2020. This decreaseincrease was the result of the factors discussed above, in particular, a $(9.6)$10.4 million decreaseincrease in income from operations partially offset by a $1.6$(0.4) million decreaseincrease in financial expense and a $3.0$(3.0) million decreaseincrease in provision for income taxes compared to the three months ended March 31, 2019.


2020.


4746



Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents and cash generated from operating activities. We have never declared or paid any cash dividends on our ordinary shares. We do not anticipate paying cash dividends on our equity securities in the foreseeable future. In 2018, we completed an $80 million share repurchase program. In July 2019, the Board of Directors authorized a new share repurchase program of up to $80 million of the Company’s outstanding American Depositary Shares, which we completed in February 2020. In April 2020, the Board of Directors authorized a new share repurchase program of up to $30 million of the Company's outstanding American Depositary Shares, which we completed in July 2020. In February 2021, the Board of Directors approved a new, long-term share repurchase program of up $100 million of the Company's outstanding American Depositary Shares, for which the duration is estimated to be until February, 2023. Other than these repurchase programs, we intend to retain all available funds from any future earnings to fund our growth. As discussed in Note 314 to the unaudited condensed consolidated financial statements in Item 1 to this Form 10-Q, we are party to several loan agreements and revolving credit facilities with third-party financial institutions.
Our cash and cash equivalents are invested primarily in demand deposit accounts that are currently providing only a minimalminimal return. Our cash and cash equivalents at March 31, 20202021 were held for working capital and general corporate purposes, which could include acquisitions, and amounted to $436.5$520.1 million as of March 31, 2020.2021. The $40.7$32.0 million increase in cash and cash equivalents compared with December 31, 20192020 primarily resulted from $56.7$77.4 million in cash from operating activities, partially offset by a $(10.8)$(17.0) million in cash used for investing activities and a $(18.8)$(3.4) million in cash used for financing activities over the period. The cash used for financing activities is primarilymainly related to $(18.2)$(4.9) million cash used for the share repurchase programs. In addition, the increase in cash includes a $(9.4)$(24.9) million negative impact of changes in foreign exchange rates on our cash position over the period. We do not enter into investments for trading or speculative purposes. 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.
Furthermore, the Company has immediate access to aan additional €350 million from the Revolving Credit Facility, which, combined with its cash position, marketable securities and treasury shares as of March 31, 2020,2021, provides total liquidity in excess of $820 million. On April 29, 2020, we decided to preventively draw under our Multicurrency Revolving Facility Agreement for general purposes for a total amount of €140 million ($150 million).$1.0 billion. Overall, we believe that our current financial liquidity, combined with our expected cash-flow generation in 2020, puts us in a strong position to weather the COVID-19 crisis under multiple scenarios.

2021, enables financial flexibility.
Operating and Capital Expenditure Requirements
For the three months ended March 31, 20192021 and 2020, our capital expenditures were $23.7$13.8 million and $11.7 million, respectively. During the three months ended March 31, 2020,2021, these capital expenditures were primarily related to the acquisition of data center and server equipment, and IT systems.systems. We expect our capital expenditures to remain at, or slightly above, 3% of revenue for 2020,2021, as we plan to continue to build and maintain additional data center equipment capacity in all regions and significantly increase our redundancy capacity to strengthen our infrastructure.
We believe our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months.  
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.
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.
4847


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.
Historical Cash Flows
The following table sets forth our cash flows for the three month period ended March 31, 20192021 and 2020:
Three Months Ended
March 31,
2019
March 31,
2020
(in thousands)
Cash from operating activities$67,220  $56,743  
Cash used in investing activities$(29,041) $(10,848) 
Cash from (used for) financing activities$(191) $(18,761) 
Three Months Ended
March 31, 2021March 31,
2020
(in thousands)
Cash from operating activities$77,362 $56,743 
Cash used for investing activities$(17,032)$(10,848)
Cash used for financing activities$(3,416)$(18,761)
Operating Activities
Cash provided by operating activities is primarily impacted by the increase in the number of clients using our solution and by the amount of cash we invest in personnel to support the anticipated growth of our business. Cash provided by operating activities has typically been generated from net income and by changes in our operating assets and liabilities, particularly in the areas of accounts receivable and 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 three months ended March 31, 2020,2021, net cash provided by operating activities was $56.7$77.4 million and consisted of net income of $16.4$23.5 million, $32.8$30.0 million in adjustments for certain non-cash and non-operating items and changes in working capital of $7.5$23.9 million. Adjustments for certain non-operating items primarily consisted of depreciation and amortization expense of $27.0$17.2 million, equity awards compensation expense of $8.5$7.2 million, $3.9 million on disposal of non-current assets and $2.3$5.0 million for other items,changes in deferred tax assets, partially offset by a $2.3$3.4 million of changeschange in income taxes and a $2.7 million of changes in deferred tax assets.taxes. The $7.5$23.9 million increase in cash from changes in working capital primarily consisted of a $99.4$47.2 million decrease in trade receivables, and a $1.1 million increase in lease liabilities and right of use assets, partially offset by a $81.7 million decrease in trade payables, a $10.4$5.1 million increase in other current assets including prepaid expenses and VAT receivables, a $3.1 million change in lease liabilities and right of use assets, a $10.6 million decrease in trade payables, and a $0.9$4.5 million decrease in other current liabilities such as payroll and payroll related expenses and value-added tax ("VAT") payables.
Investing Activities
Our investing activities to date have consisted primarily of purchases of servers and other data-center equipment and business acquisitions.equipment. For the three months ended March 31, 2020,2021, net cash used for investing activities was $10.8$17.0 million and primarily consisted of $23.7$13.8 million in capital expenditures, mainly comprised of purchases of servers and other data-center equipment offset byand capitalized costs, and a $0.9$3.3 million change in other non-current financial assets.
Financing Activities
For the three months ended March 31, 2020,2021, net cash used for financing activities was $18.8$3.4 million, resulting mostlymainly from a $18.2$4.9 million payment for our share repurchase program, $0.4 million change in other financial liabilities and a $0.2 million repayment of borrowings and a $0.4partially offset by $2.1 million change in other financial liabilities.of proceeds from capital increase.
4948



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 three month periodmonths ended March 31, 2020.2021.
    
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 year ended December 31, 2019.2020.
A 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:
Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
GBP/USDGBP/USD+10%-10%+10%-10%GBP/USD+10%-10%+10%-10%
Net income impactNet income impact$(496) $496  $(34) $34  Net income impact$(14)$14 $(34)$34 

Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
BRL/USDBRL/USD+10%-10%+10%-10%BRL/USD+10%-10%+10%-10%
Net income impactNet income impact$(97) $97  $(4) $ Net income impact$44 $(44)$(4)$

Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
JPY/USDJPY/USD+10%-10%+10%-10%JPY/USD+10%-10%+10%-10%
Net income impactNet income impact$443  $(443) $194  $(194) Net income impact$203 $(203)$194 $(194)

Three Months EndedThree Months Ended
March 31, 2019March 31, 2020March 31, 2021March 31, 2020
(in thousands)(in thousands)
EUR/USDEUR/USD+10%-10%+10%-10%EUR/USD+10%-10%+10%-10%
Net income impactNet income impact$2,736  $(2,736) $3,195  $(3,195) Net income impact$3,033 $(3,033)$3,195 $(3,195)













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Credit Risk and Trade receivables
For a description of our credit risk and trade receivables, please see "Note 3. Financial instruments" and "Note 4. Trade Receivables" in the Notes to the Consolidated Financial Statements.
The Company has observed a decrease in payments from customers in geographic regions that are most affected by COVID-19, in the last part of the three month period ended March 31, 2020. The expected credit losses model, adapted by the Company on January 1, 2020, requires us to look at how current and future economic conditions impact the amount of expected credit losses, As such, we have increased the provision for credit losses, using our best available current estimates on the impact of COVID-19.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Based on their evaluation as of March 31, 2020,2021, 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.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

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 of fraud may occur and not be detected.

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PART II
Item 1.    Legal Proceedings.
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

The following risk factor is provided to updateYou should carefully consider the risk factors previously disclosedrisks described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 2, 2020. Except as presented below, there have been no material changes from the risk factors described in our Annual Report on Form 10-K.

Our business has been and likely will continue to be negatively impacted by the recent COVID-19 pandemic and the global attempt to contain it.

We face various risks related to health epidemics, pandemics and similar outbreaks, including the recent COVID-19 pandemic. The spread of COVID-19 and the various attempts to contain it have created significant volatility, uncertainty and economic disruption. Certain of our customers, especially those in the Travel and Classified verticals, have seen their businesses and revenues negatively impacted by the COVID-19 pandemic. As a result, we saw a decline in revenue during March 2020. We expect that the negative impact of the COVID-19 pandemic on our revenues will continue until economic conditions improve and stabilize.

The extent to which COVID-19 will continue to impact our business, operations and financial results depends on numerous future developments which are highly uncertain and may be difficult to predict, including, among others, the duration and scope of the pandemic, new information which may emerge concerning the severity of the COVID-19 pandemic, governmental, business and individual actions taken to control the spread of COVID-19 or treat its impact, the effect on our customers and customer demand, and ability to pay, for our services, and changes in worldwide economic conditions. We will continue to actively monitor the situation and assess possible implications to our business and the business of our customers, and will strive to take appropriate actions in an effort to mitigate any adverse consequences. These actions may alter our business operations, may be required by governmental authorities, and/or may be actions we determine to be in the best interests of our employees, customers, partners and shareholders. We cannot assure you that we will be successful in any mitigation efforts.

We cannot at this time predict the extent of the impact of the COVID-19 pandemic and its resulting economic impact, but it has had, and likely will continue to have, a material adverse effect on our business, financial position and results of operations. To the extent the COVID-19 pandemic adversely impacts our business, operations and financial results, it may also result in the heightening the other risks described in “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with2020. These risks and uncertainties are not the SEConly 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 March 2,Form 10-K for the fiscal year ended December 31, 2020.

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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 first fiscal quarter of 2020:2021:
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)
January 1 to 31, 2020400,548  $15.14  400,548  $18,228,007.37  
February 1 to 29, 2020857,520  $14.19  857,520  $12,163,930.60  
March 1 to 31, 2020—  —  $—  
Total1,258,068  $14.49  1,258,068  
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)
January 1 to 31, 2021— $— — $— 
February 1 to 28, 2021— — — $— 
March 1 to 31, 2021149,960 $32.87 149,960 $95,069,508 
Total149,960 $32.87 149,960 — 
(1) In July 2019,On February 5, 2021, Criteo's Board of Directors authorized a share repurchase program of up to $80.0$100.0 million (€70.5 million) of the Company's outstanding American Depositary Shares. The Company intendedintends 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 repurchase program commenced in July 2019March 2021 and completedwill be concluded in February 2020.March 2023.
(2) Average price paid per share excludes any broker commissions paid.



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Item 6. Exhibits.
Exhibit Index
Incorporated by Reference
ExhibitDescriptionSchedule/ FormFile
Number
ExhibitFile
Date
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104.104Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101.

#    Filed herewith.
*    Furnished herewith.

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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/ Benoit FouillandSarah Glickman
Date: April 30, 2020May 5, 2021Name: Benoit FouillandSarah Glickman
Title: Chief Financial Officer
 (Principal financial officer and duly authorized signatory)
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