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Risks Related to Our Business and Industry
−Removed: If we fail to innovate, adapt and respond effectively to rapidly changing technology, our offerings may become less competitive or obsolete.
+Added: If we fail to innovate, enhance our brand, adapt and respond effectively to rapidly changing technology, our offerings may become less competitive or obsolete.
Our investments in new solutions and technologies to address new marketing goals for our clients are inherently risky and may not be successful.
−Removed: Our industry and business is subject to rapid and frequent changes in technology, evolving client needs and the frequent introduction by our competitors of new and enhanced offerings.
−Removed: Our future success will depend on our ability to continuously enhance and improve our offerings to meet client needs, add functionality to and improve the performance of the Criteo Platform, and address technological and industry advancements.
+Added: Our industry and business are subject to rapid and frequent changes in technology, evolving client needs and the frequent introduction by our competitors of new and enhanced offerings.
+Added: Our future success will depend on our ability to continuously enhance and improve our offerings to meet client needs, add functionality to and improve the performance of the Criteo Commerce Media Platform, and address technological and industry advancements.
If we are unable to enhance our solutions to meet market demand in a timely manner, we may not be able to maintain our existing clients or attract new clients.
−Removed: Historically, the Criteo model focused solely on converting our clients' website visitors into customers through our historical solution, Criteo Dynamic Retargeting .
−Removed: Since then, we have broadened our solutions portfolio to include additional marketing and monetization goals (including Awareness and Consideration) for commerce companies and consumer brands across web, apps and stores, which has required the investment of substantial resources.
−Removed: However, our investments into these new solutions and technologies are inherently risky and may not be successful.
−Removed: First, we believe that broadening our solutions portfolio to include additional marketing and monetization goals is important to achieving our vision for the Company and positioning Criteo for future success.
−Removed: However, many of these marketing and monetization goals are new to us, and we have had to invest substantial resources to adapt our model, pricing and organization to support this expansion.
+Added: Our investments into new solutions and technologies are inherently risky and may not be successful.
+Added: Addressing broader marketing and monetization goals, in particular customer acquisition and brand awareness, is relatively new to us, and we have had to invest substantial resources to adapt our model, pricing and organization to support this expansion.
+Added: It also implies investing in new advertising formats like video for Connected TV.
Similarly, we do not have a long or established track record of competing successfully in this space.
−Removed: If we are not successful in expanding our solutions along broader marketing goals, in particular along the Awareness and Consideration marketing goals, our results of operations could be adversely affected.
−Removed: Further, our current and potential clients may not shift as quickly as we expect or at all to new advertising methods, such as in-app, reducing our growth potential.
−Removed: If the market for these channels deteriorates or develops more slowly than we expect, it could reduce our growth prospects and our financial condition may be adversely affected.
−Removed: In addition, we have made, and intend to continue to make, substantial investments in research and development in order to further strengthen Criteo AI Engine and scale our technology platform.
+Added: If we are not successful in expanding our solutions along broader marketing goals, our results of operations could be adversely affected.
+Added: Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases.
+Added: In addition, we have made, and intend to continue to make, substantial investments in order to further build our brand, strengthen the Criteo Commerce Media Platform and scale our technology capabilities.
However, if we are unable to continuously enhance and improve our offerings, we may be unable to respond effectively to changes in our industry, technology or user preferences, and our solutions may become less competitive or obsolete.
−Removed: Our ability to generate revenue depends on our collection of significant amounts of data from various sources, which may be restricted by consumer choice, restrictions imposed by clients, publishers and browsers or other software, changes in technology, and new developments in laws, regulations and industry standards.
−Removed: Our ability to optimize the delivery of internet advertisements for our clients depends on our ability to successfully leverage data, including data that we collect from our clients, data we receive from our publisher partners and third parties, and data from our own operating history.
−Removed: Using cookies and non-cookie based mechanisms, such as hashed emails, mobile advertising identifiers, we collect information about the interactions of users with our clients’ and publishers’ digital properties (including, for example, information about the placement of advertisements and users’ shopping or other interactions with our clients’ websites or advertisements).
−Removed: Our ability to successfully leverage such data depends on our continued ability to access and use such data, which could be restricted by a number of factors, including consumer choice, restrictions imposed by counterparties (including clients, supply sources and publishers, who may also compete with us for advertising spend and inventory) and web browser developers or other software developers, changes in technology, including changes in web browser technology, and new developments in, or new interpretations of, laws, regulations and industry standards.
−Removed: Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or "do not track" mechanisms as a result of industry regulatory and/or legal developments or industry practices, the adoption by consumers of browsers settings or "ad-blocking" software and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant advertisements, which could materially impair the results of our operations.
−Removed: Similarly, web browser developers, such as Apple, Mozilla Foundation, Microsoft Corp.
−Removed: ("Microsoft") or Google, have implemented or may implement changes in browser or device functionality that impair our ability to understand the preferences of consumers, including by limiting the use of third-party cookies or other tracking technologies or data indicating or predicting consumer preferences.
−Removed: For example, Google previously announced that it will introduce privacy features to its Chrome web browser, which aim to provide users with increased transparency and control with respect to the collection and use of user data by third parties or limit the use of third-party cookies.
−Removed: Additionally, in January 2020 Google announced that it plans to phase out support for third-party cookies in Chrome within the next two years.
−Removed: Google controls more than 60% of the browser market and has an even more dominant position in the digital advertising market.
−Removed: These web browser developers have significant resources at their disposal and command substantial market share, and any restrictions they impose could foreclose our ability to understand the preferences of a substantial number of consumers.
−Removed: We already have solutions, through our direct publisher integrations, our mobile-ID based solutions in apps and Criteo Retail Media, that operate using either first-party or cookie-less mechanisms, representing close to 50% of our business in fiscal year 2019.
−Removed: This means close to 50% of our business was already independent from third-party cookies as of the end of 2019.
−Removed: In addition, we have a detailed identity resolution plan, leveraging our differentiated assets around first-party integrations with all our clients and our direct publishers, as well as our larger ID Graph and other capabilities, to help us make the remaining 50% of our business independent from third-party cookies.
−Removed: However, if we are blocked from serving advertisements to a significant portion of internet users, our business could suffer and our results of operations could be harmed.
−Removed: Furthermore, any restrictions on our access to data could cause the overall quantity of the data we collect on consumers to be diminished.
−Removed: If we are unable to mitigate the impacts on our business of any such restrictions for a substantial period of time, as a result of such diminution in collected data, the accuracy, effectiveness and value of our offerings could be materially impacted.
−Removed: Similarly, Internet users are increasingly able to download free or paid “ad-blocking” software, including on mobile devices, which prevent third-party cookies from being stored on a user’s computer and block advertisements from being displayed to such user.
−Removed: In addition, search engines and other service providers that explicitly do not allow the tracking of data, such as DuckDuckGo, Inc., may be growing in popularity.
−Removed: If a significant number of web browser users download such “ad-blocking” software or switch to advertising-free services or platforms, our business could be materially impacted.
−Removed: Further, mobile devices allow users to opt out of the use of mobile device IDs for targeted advertising.
−Removed: For in-app advertising, data regarding interactions between users and devices are tracked mostly through stable, pseudonymous mobile device identifiers that are built into the device operating system with privacy controls that allow users to express a preference with respect to data collection for advertising, including to disable the identifier.
−Removed: These identifiers and privacy controls are defined by the developers of the mobile platforms and could be changed by the mobile platforms in a way that may negatively impact our business.
−Removed: Further, operating systems such as Apple’s iOS and Google’s Android may implement changes in how app developers should use advertising identifiers.
−Removed: If this occurs, our business, including our App business and our Criteo Shopper Graph, may be materially impacted.
−Removed: In addition, if we fail to comply with user choices and settings, we may experience legal and reputational harm to our business.
−Removed: User privacy features of other channels of programmatic advertising, such as Connected TV or over-the-top video, are still developing.
−Removed: Technical or policy changes, including regulation or industry self-regulation, could harm our growth in those channels.
−Removed: The data we gather is important to the continued development and success of Criteo Shopper Graph, which is a key element of the Criteo Platform.
−Removed: With Criteo Shopper Graph, we are building one the world's largest data sets focused on shopping data.
−Removed: If too few of our clients provide us with the permission to share their data or if our clients choose to stop sharing their data, or if regulatory or other factors inhibit or restrict us from maintaining the data collectives underlying Criteo Shopper Graph, the value of Criteo Shopper Graph could be materially diminished and our business could be materially impacted.
−Removed: In addition, our ability to collect and use data may be restricted or prevented by a number of other factors, including:
−Removed: the failure of our network, hardware, or software systems, or the network, hardware, or software systems of our clients;
−Removed: decisions by some of our clients or publishers to restrict our ability to collect data from them, third parties and users or to refuse to implement mechanisms we request to ensure compliance with our legal obligations;
−Removed: changes in device functionality and settings, and other new technologies, which make it easier for users to prevent the placement of cookies or other tracking technologies and impact our publishers’ or our clients’ ability to collect and use data;
−Removed: changes by large internet and technology companies to the nature of Display Advertising (for example, any changes in Apple’s Identifier for Advertising, or IDFA, that could prevent us from identifying users and associating particular browsing behaviors to those users as they use mobile applications that run on Apple’s operating system);
−Removed: changes in traffic filtering performed by various internet service providers, causing some of the information we use for tracking to be removed before requests are sent to our servers;
−Removed: our inability to develop an identity graph that is strong enough to properly match users and track sales across an increasing number of devices and environments;
−Removed: our inability to grow our client and publisher base in new industry verticals and geographic markets in order to obtain the critical mass of data necessary for Criteo AI Engine to perform optimally in such new industry verticals or geographic markets;
−Removed: the growth of advertising inventory available within "walled-garden" publisher environments, which may restrict our ability to use such inventory effectively and in an optimized way for advertisers, outstripping the growth of other advertising inventory available on the market;
−Removed: malicious traffic (such as non-human traffic) that introduces "noise" in the information that we collect from clients and publishers;
−Removed: interruptions, failures or defects in our data collection, mining, analysis and storage systems;
−Removed: changes in laws, rules, regulations and industry standards or increased enforcement of laws, rules, regulations and industry standards in or across any of the geographies in which we operate or may want to operate in the future.
−Removed: Any of the above described limitations on our ability to successfully collect, utilize and leverage data could also materially impair the optimal performance of Criteo AI Engine and severely limit our ability to reach and engage users with our advertisements, which would harm our business and adversely impact our future results of operations.
−Removed: The third parties upon which we rely for access to data and revenue opportunities may implement technical restrictions that impede our access to such data and revenue opportunities, which could materially impact our business and results of operations.
−Removed: A substantial portion of the data we rely on comes from our publisher partners and other third parties, including advertising exchange platforms (including supply-side platforms, or “SSPs”, such as Google's Ad Manager).
−Removed: Similarly, we rely on our publisher partners, advertising exchange platforms and other third parties for opportunities to serve advertisements through which we generate our revenue.
−Removed: Our ability to successfully leverage such data and successfully generate revenue from such opportunities could be impacted by restrictions imposed by or on our publisher partners or other third parties, including restrictions on our ability to use or read cookies or other tracking features or our ability to use real-time bidding networks or other bidding networks.
−Removed: For example, in light of the GDPR, some SSPs imposed restrictions on our ability to bid on opportunities to serve ads.
−Removed: Third-party publishers are responsible under GDPR for gathering necessary user consents and indicating to SSPs that Criteo has been approved by the applicable users.
−Removed: As part of their efforts to comply with their understanding of the requirements of the GDPR, which are subject to interpretation, certain SSPs that run advertising exchanges have required actions from such third party publishers with respect to such consents that appear to be stricter than what the regulations require.
−Removed: Similarly, SSPs and other relevant third parties may take similar actions in response to any new legislation or regulatory developments or interpretations in the future, in response to perceived user preferences, or for other reasons.
−Removed: If third parties on which we rely for data or opportunities to serve advertisements impose similar restrictions or are not able to comply with restrictions imposed by other ecosystem participants, we may lose the ability to access data, bid on opportunities, or purchase digital ad space, which could have a substantial impact on our revenue.
+Added: Furthermore, brand promotion activities may not yield any increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand.
+Added: We have significant global sales and operations and face risks related to health epidemics that could impact our sales and operating results.
+Added: In particular, our business has been and we expect will continue to be negatively impacted by the ongoing COVID-19 pandemic and the global attempt to contain it.
+Added: We face various risks related to health epidemics, pandemics and similar outbreaks, including the ongoing COVID-19 pandemic.
+Added: Any outbreak of contagious diseases, and other adverse public health developments, could have a material adverse effect on our business operations.
+Added: The spread of COVID-19 and the various attempts to contain it have created significant volatility, uncertainty and economic disruption to our clients’ businesses.
+Added: Certain of our customers, especially those in the Travel and Classified verticals, as well as traditional brick-and-mortar retailers, have seen their businesses and revenues negatively impacted by the COVID-19 pandemic.
+Added: As a result, we have seen a continued negative impact on our revenues tied to COVID-19 since March 2020.
+Added: We expect that the negative impact of the COVID-19 pandemic on our revenues will continue until economic conditions durably improve and stabilize.
+Added: The impact of the ongoing pandemic has adversely impacted and may continue to adversely impact our business, financial position and results of operations in several ways, including, but not limited to:
+Added: • Significant reductions or volatility in demand for our services as customers pause their campaigns with us, decrease advertiser spend, decide not to enter into new purchase commitments, enter bankruptcy proceedings, or otherwise decrease investment in their business due to financial downturns or general economic uncertainty.
+Added: This would result in a significant decline in our revenues, which could persist through and beyond the pandemic period.
+Added: • A hindrance on our ability to operate, as well as our partners’ and/or customers’ ability to operate, in affected areas, which may cause our business and operating results to decline.
+Added: • A significant decrease in our operating cash flows due to deterioration in the credit quality and liquidity of our customers and their ability to meet their payment obligations to us, which could adversely affect our accounts receivable.
+Added: • The shift to a remote working environment may negatively impact our productivity, connectivity, and oversight, and may increase our expenses.
+Added: It is not clear when a return to worksite locations or travel will be permitted or what restrictions will be in place in those environments.
+Added: The extent and/or duration of ongoing workforce restrictions and limitations could impact our ability to enhance, develop and support existing products and services, hold sales and marketing events, and generate new sales leads.
+Added: To the extent the COVID-19 pandemic or any other health epidemic or outbreak adversely impacts our business, operations and financial results, it may also result in the heightening the other risks described in “Item 1A.
+Added: Risk Factors” and elsewhere in this Form 10-K.
We face intense and increasing competition for employee talent, and if we do not retain and continue to attract highly skilled talent or retain our senior management team and other key employees, we may not be able to sustain our growth or achieve our business objectives.
−Removed: Our future success depends on our ability to continue to attract, retain and motivate highly skilled employees, particularly AI experts, software engineers and other employees with the technical skills that enable us to deliver effective advertising solutions, client sales and publisher partnership representatives with experience in digital advertising, in particular in Display Advertising, and more broadly employees that are highly qualified in their areas of expertise to support and grow our operations.
−Removed: Competition for highly skilled employees in our industry is intense, in particular in the fields of artificial intelligence and data science, and we expect certain of our key competitors, who generally are larger than us and have access to more substantial resources, to pursue top talent even more aggressively.
+Added: Our future success depends on our ability to continue to attract, retain and motivate highly skilled employees, particularly AI experts, software engineers, product managers and other employees with the technical skills that enable us to deliver effective advertising solutions, client sales and publisher partnership representatives with experience in digital advertising.
+Added: Competition for highly skilled employees in our industry is intense, in particular in the fields of AI and data science, and we expect certain of our key competitors, who generally are larger than us and have access to more substantial resources, to pursue top talent aggressively on a global basis.
Our future success also depends on the continued service of our senior management team.
Our management team has been and may again be spread across multiple physical locations and geographies, which can strain the organization and make coordinated management more challenging.
+Added: We have recently experienced several changes to senior management, and we are in the process of deeply transforming our business, including through certain cost reduction activities.
+Added: Transition periods accompanying changes in leadership and changes due to business reorganization may result in uncertainty, impact business performance and strategies, and retention of key personnel.
We may be unable to attract or retain the management and highly skilled personnel who are critical to our success, which could hinder our ability to keep pace with innovation and technological change in our industry or result in harm to our key client and publisher relationships, loss of key information, expertise or proprietary knowledge and unanticipated recruitment and training costs.
−Removed: The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and pursue our business goals.
+Added: In addition, we believe that our corporate culture fosters teamwork, impactful results and an open environment.
+Added: As our organization grows and evolves, we may need to implement more complex organizational management structures or adapt our corporate culture and work environments to changing circumstances, such as during times of a natural disaster or pandemic (including COVID-19).
+Added: These changes could impact our ability to compete effectively, or could have an adverse impact on our corporate culture.
The market in which we participate is intensely competitive, and we may not be able to compete successfully with our current or future competitors.
The market for internet advertising solutions is highly competitive and rapidly changing.
−Removed: New technologies and methods of buying advertising present a dynamic competitive challenge as market participants offer multiple new products and services aimed at facilitating and/or capturing advertising spend.
−Removed: With the introduction of new technologies and the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our profitability.
−Removed: We compete in the broader market for digital advertising, primarily through Display Advertising.
−Removed: This market is rapidly evolving, highly competitive, complex and still fragmented, although rapidly consolidating.
−Removed: We face significant competition in this market, and we expect that competition will intensify in the future, in particular as we continue to expand the breadth of our offerings.
+Added: New technologies and methods of buying advertising present a dynamic competitive challenge as market participants develop and offer multiple new products and services aimed at facilitating and/or capturing advertising spend.
+Added: With the introduction of new technologies and the influx of new entrants to the market, including large established companies and companies that we do not yet know about or do not yet exist, we expect competition to persist and intensify in the future, which could harm our ability to increase sales and maintain our profitability.
+Added: Large and established internet and technology companies may have the power to significantly change the very nature of the digital advertising marketplaces in ways that could materially disadvantage us.
+Added: These companies could leverage their positions to make changes to their web browsers, mobile operating systems, platforms, exchanges, networks or other solutions or services that could be significantly harmful to our business and results of operations.
+Added: These companies also have significantly larger resources than we do, and in many cases have advantageous competitive positions in popular products and services like Gmail, YouTube, Chrome, Facebook and Instagram, which they can use to their advantage.
+Added: Furthermore, our competitors include large and established internet and technology companies that have invested substantial resources in innovation, which could lead to technological advancements that change the competitive dynamics of our business in ways that we may not be able to predict.
In addition to competing for advertising spend, we compete with many companies for advertising inventory, some of whom also operate their own advertising networks or exchanges from which we buy advertising inventory.
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If this were to occur, our ability to place advertisements would be significantly impaired and our results of operations would be adversely affected.
−Removed: Along with existing competitors and intermediaries, new competitors are entering our marketplace and may continue to do so in the future.
−Removed: In particular, large established companies such as Adobe (which acquired Omniture, Inc., Efficient Frontier, Inc.
−Removed: and TubeMogul, Inc.), Verizon, Inc.
−Removed: (which acquired AOL, Inc., which in turn had previously acquired Platform-A, Inc.
−Removed: (advertising.com), Millennial Media, and Yahoo!), Alliance Data (which acquired Conversant, Inc., which in turn had previously acquired Dotomi), Ve Interactive (which acquired eBay's display retargeting business, which in turn had previously acquired both Fetchback, Inc.
−Removed: and GSI Commerce Inc.), Tesco plc (which acquired Sociomantic Labs) and AdRoll have been entering our marketplace.
−Removed: Similarly, existing competitors may intensify or broaden the manner in which they compete with us.
−Removed: Notably, for example, Amazon, Google and Facebook have been expanding their advertising and marketing platforms and have been making substantial investments in artificial intelligence and data science capabilities, which, to a large extent, could compete with Criteo AI Engine.
−Removed: Large and established internet and technology companies such as those mentioned above may have the power to significantly change the very nature of the Display Advertising marketplaces in ways that could materially disadvantage us.
−Removed: For example, Amazon, Apple, Facebook, Google and Microsoft have a significant share of widely adopted industry platforms such as web browsers, mobile operating systems and advertising exchanges and networks.
−Removed: These companies could leverage their positions to make changes to their web browsers, mobile operating systems, platforms, exchanges, networks or other solutions or services that could be significantly harmful to our business and results of operations.
−Removed: These companies also have significantly larger resources than we do, and in many cases have advantageous competitive positions in popular products and services like Gmail, YouTube, Chrome, Facebook and Instagram, which they can use to their advantage.
−Removed: Furthermore, our competitors include large and established internet and technology companies that have invested substantial resources in innovation, which could lead to technological advancements that change the competitive dynamics of our business in ways that we may not be able to predict.
−Removed: In addition to direct competition, we also face competition for advertising spend from within our own clients.
−Removed: Large advertisers are increasingly developing in-house advertising technologies, facilitated by self-service tools offered by internet and technology companies like Adobe and Google.
+Added: We also face competition for advertising spend from within our own clients.
+Added: Some large advertisers are increasingly developing in-house advertising technologies, facilitated by self-service tools offered by internet and technology companies like Adobe and Google.
Similarly, large enterprise marketing platforms, like Adobe, Oracle, and Salesforce.com, Inc., could create tools that offer our clients additional opportunities to allocate advertising dollars to in-house campaigns.
Competition could also hinder the success of new advertising solutions that we offer in the future.
−Removed: For example, Amazon has a strong presence in "sponsored products" and other advertising formats on its platform and directly competes with certain Criteo Retail Media solutions for advertising spend.
−Removed: As we seek to grow our business and expand our offerings, such competition could become more intense.
−Removed: Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, be able to devote greater resources to the development, promotion, sale and support of their products and services, have more extensive client bases and broader publisher relationships than we have, and have longer operating histories and greater name recognition than we have.
−Removed: As a result, these competitors may be able to respond more quickly to technological changes, develop deeper client relationships or offer services at lower prices.
−Removed: Existing or new competitors could develop, market or resell competitive high-value advertising solutions or services, acquire one of our existing competitors or form a strategic alliance with one of our competitors.
−Removed: If any of such risks were to materialize, our ability to compete effectively could be significantly compromised and our results of operations could be harmed.
+Added: If any of these risks were to materialize, our ability to compete effectively could be significantly compromised and our results of operations could be harmed.
Any of these developments would make it more difficult for us to sell our offerings and could result in increased pricing pressure, reduced gross margins, increased sales and marketing expense and/or the loss of market share.
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As a result, we do not own or control the advertising inventory upon which our business depends.
−Removed: We currently access advertising inventory through various channels, including through direct relationships with publishers, advertising exchange platforms (such as Google's Ad Manager, Twitter's MoPub and Microsoft’s Ad Exchange) and other platforms that aggregate the supply of advertising inventory, such as Appnexus Inc., The Rubicon Project, Inc., PubMatic, Inc., Taboola, Inc., Baidu, Inc.
−Removed: and Yandex N.V.
+Added: We currently access advertising inventory through various channels, including through direct relationships with publishers and large retailers, advertising exchange platforms and other platforms that aggregate the supply of advertising inventory.
Since many widely used aggregators of advertising inventory are owned by companies that may compete with us for clients, competitive pressure may incentivize these companies to limit our access to advertising inventory available through their platforms.
For example, in September 2019 we filed a complaint with the French Competition Authority against Facebook, due to Facebook’s gradual exclusion of companies including Criteo from the Facebook platform.
−Removed: The fact that advertising inventory available within "walled-garden" publisher environments, which may restrict our ability to use such inventory effectively and in an optimized way for advertisers, tends to grow faster than other advertising inventory available on the market, may limit the growth of our access to advertising inventory or our mere access to it overall.
+Added: The fact that advertising inventory available within "walled-garden" publisher environments tends to grow faster than other advertising inventory available on the market may limit the growth of our access to advertising inventory or our mere access to it overall.
In addition, industry or technological changes may affect our access to inventory or the price we pay for inventory.
−Removed: Similarly, our ability to continue to purchase inventory from many of the publishers with whom we have direct relationships depends in part on our ability to consistently pay sufficiently competitive CPMs for their advertising inventory, or in the case of some Criteo Retail Media solutions, to generate sufficient advertising revenue for retailers, as well as our ability to offer advertisements from high quality companies.
−Removed: As more companies compete for advertising impressions on advertising exchange platforms and other platforms that aggregate supply of advertising inventory, advertising inventory may become more expensive, which may adversely affect our ability to acquire it and to deliver internet display advertisements on a profitable basis.
+Added: Similarly, our ability to continue to purchase inventory from many of the publishers and large retailers with whom we have direct relationships depends in part on our ability to consistently pay sufficiently competitive CPMs for their advertising inventory, or in the case of some Criteo Retail Media solutions, to generate sufficient advertising revenue for retailers, as well as our ability to offer advertisements from high quality companies.
+Added: As more companies compete for advertising impressions on advertising exchange platforms and other platforms that aggregate supply of advertising inventory, advertising inventory may become more expensive, which may adversely affect our ability to acquire it and to deliver advertisements on a profitable basis.
We may in the future have to increasingly rely on direct relationships with strong publisher partners in order to maintain the necessary access to quality advertising inventory, and we may not be able to do so on terms that are favorable to us.
−Removed: In addition, to support the growth of our solutions for the Awareness and Consideration marketing goals—aimed at generating brand awareness for clients and driving new visitors or prospective customers for clients—we will need to expand our access to video inventory, both in the web and in mobile applications, the price of which may not be available on terms that are favorable to us.
+Added: In addition, to support the growth of our solutions for the Awareness and Consideration marketing goals—aimed at generating brand awareness for clients and driving new visitors or prospective customers for clients—we will need to expand our access to video and connected TV inventory, both in the web and in mobile applications, the price of which may not be available on terms that are favorable to us.
Additionally, we are party to certain agreements with partners that provide us with preferred access to inventory.
If the terms of those agreements change and we lose our preferred access, then our financial results could be adversely affected.
−Removed: We cannot guarantee that we will successfully grow our direct relationships with new publishers or maintain or expand our access to quality advertising inventory through other channels.
−Removed: In addition, even if we do grow our direct relationships, we cannot assure you that those direct relationships with publishers will be on terms favorable to us.
−Removed: Similarly, we may not be able to expand our access to video inventory and in-app inventory to the extent necessary to monetize these opportunities.
−Removed: If we are not successful, our business and results of operations could be harmed.
+Added: If we are not successful in these endeavors, our business and results of operations could be harmed.
The failure by Criteo AI Engine to accurately predict engagement by users could result in significant costs to us, lost revenue and diminished advertising inventory.
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We historically charged our clients primarily based on a cost-per-click pricing model, and our clients only paid us when a user engaged with the advertisement, usually by clicking on it.
−Removed: Although we have more recently started evolving our pricing models alongside our broader suite of solutions, to now include a combination of cost-per-install and cost-per-impression for selected new solutions, in addition to cost-per-click, as well as subscription-type pricing model for large retailers using our technology platform as part of our Criteo Retail Media offering, the majority of our revenue is generated through cost-per-click pricing models.
+Added: Although we have started evolving our pricing models alongside our broader suite of solutions, the majority of our revenue is generated through cost-per-click pricing models or equivalent.
Our agreements with clients are open-ended and often do not include a spending minimum.
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In addition, as we have increased the number of clients and publishers that use our offerings on a global basis, we have experienced significant growth in the amount and complexity of data processed by Criteo AI Engine and the number of advertising impressions we deliver.
−Removed: As the amount of data and number of variables processed by Criteo AI Engine increase, the risk of errors in the type of data collected, stored, generated or accessed also increases.
−Removed: In addition, the calculations that the algorithms must compute become increasingly complex and the likelihood of any defects or errors increases.
−Removed: If we were to experience significant errors or defects in Criteo AI Engine, our solution could be impaired or stop working altogether, which could prevent us from purchasing any advertising inventory and generating any revenue until the errors or defects were detected and corrected.
−Removed: Other negative consequences from significant errors or defects in Criteo AI Engine could include:
−Removed: a loss of clients and publishers;
−Removed: a decrease in inventory purchased by clients;
+Added: As the amount of data and number of variables processed by Criteo AI Engine increase, and the calculations that the algorithms must compute become increasingly complex, the risk of errors in the type of data collected, stored, generated or accessed also increases.
+Added: Fraudulent or malicious activity, including non-human traffic, could also impair the proper functioning of Criteo AI Engine.
+Added: For example, the use of bots or other automated or manual mechanisms to generate fraudulent clicks or misattribute clicks on advertisements we deliver could overstate the performance of our advertising.
+Added: Due to the higher CPM paid for video and connected TV advertisements, the risk of fraudulent traffic may increase as we increase our purchasing of video and connected TV inventory.
+Added: If we were to experience significant errors, defects, or fraudulent or malicious activity in Criteo AI Engine, our solution could be impaired or stop working altogether, which could prevent us from purchasing any advertising inventory and generating any revenue until the errors, defects or fraudulent or malicious activity were detected and corrected.
+Added: Other negative consequences from significant errors, defects or fraudulent or malicious activity in Criteo AI Engine could include:
+Added: • a loss of clients and publishers or a decrease in inventory purchased by clients;
• fewer consumer visits to our client websites or mobile applications;
−Removed: lower click-through rates;
−Removed: lower conversion rates;
+Added: • lower click-through rates or conversion rates;
• lower profitability per impression, up to and including negative margins;
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• delivery of advertisements that are less relevant or irrelevant to users;
−Removed: liability for damages or regulatory inquiries or lawsuits;
−Removed: harm to our reputation.
−Removed: Furthermore, the ability of Criteo AI Engine to accurately predict engagement by a user depends in part on our ability to continuously innovate and improve the algorithms underlying Criteo AI Engine in order to deliver positive results for our clients and publishers that can be clearly attributed to the services we provide.
−Removed: The failure to do so could result in delivering poor performance for our clients and a reduced ability to secure advertising inventory from publishers.
−Removed: If failures in Criteo AI Engine or our inability to innovate and improve the algorithms underlying Criteo AI Engine result in our clients and publishers ceasing to partner with us, we cannot guarantee that we will be able to replace, in a timely or effective manner, departing clients with new clients that generate comparable revenue or departing publishers with new publishers that offer similar internet advertising inventory.
+Added: • refusals to pay, demands for refunds, loss of confidence, withdrawal of future business and potential liability for damages or regulatory inquiries or lawsuits;
+Added: • negative publicity or harm to our reputation.
As a result, the failure by Criteo AI Engine to accurately predict engagement of users and to continue to do so over time could result in significant costs to us, lost revenue and diminished advertising inventory.
−Removed: The proper functioning of Criteo AI Engine may be impaired by fraudulent or malicious activity, including non-human traffic.
−Removed: Fraudulent or malicious activity, including non-human traffic, could impair the proper functioning of Criteo AI Engine.
−Removed: For example, the use of bots or other automated or manual mechanisms to generate fraudulent clicks or misattribute clicks on advertisements we deliver could overstate the performance of our advertising.
−Removed: Preventing and combating fraud requires constant vigilance, and we may not always be successful in our efforts to do so.
−Removed: It may be difficult to detect fraudulent or malicious activity, particularly because the perpetrators of such activity, which may include foreign governments, may have significant resources at their disposal, may frequently change their tactics and may become more sophisticated, requiring us to improve our processes for detecting and controlling such activity.
−Removed: Such fraudulent or malicious activity could result in negative publicity and reputational harm and require significant additional management time and attention.
−Removed: Further, if we fail to detect or prevent fraudulent or malicious activity, our clients may experience or perceive a reduced return on their investment or heightened risk associated with the use of our solutions, resulting in refusals to pay, demands for refunds, loss of confidence, withdrawal of future business and potential legal claims.
−Removed: Due to the higher CPM paid for video advertisements, the risk of fraudulent traffic may increase as we increase our purchasing of video inventory.
−Removed: If we show advertising or inventory that is fraudulent, we may lose the trust of our clients, which would harm our brand and reputation.
−Removed: If potential clients perceive that Criteo AI Engine is vulnerable to bots or similar non-human traffic, fraudulent clicks or other malicious activity, we may not be able to maintain our existing clients or attract new clients.
−Removed: As a result, our business could suffer and our results of operations could be materially impacted.
Regulatory, legislative or self-regulatory developments regarding internet privacy matters could adversely affect our ability to conduct our business.
−Removed: The United States and foreign governments have enacted, considered or are considering legislation or regulations that could significantly restrict our ability to collect, process, use, transfer and pool data collected from and about consumers and devices.
+Added: Governmental authorities around the world have enacted, considered or are considering legislation or regulations that could significantly restrict our ability to collect, process, use, transfer and pool data collected from and about consumers and devices.
Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising.
−Removed: and foreign governments, self-regulatory bodies and public advocacy groups have called for new regulations specifically directed at the digital advertising industry, and we expect to see an increase in legislation, regulation and self-regulation in this area.
−Removed: The legal, regulatory and judicial environment we face around privacy and other matters is constantly evolving and can be subject to significant change.
−Removed: For example, the General Data Protection Regulation, or GDPR, which was agreed by EU institutions in 2016 and came into effect after a two year transition period on May 25, 2018, updated and modernized the principles of the 1995 Data Protection Directive and significantly increases the level of sanctions for non-compliance.
−Removed: In the European Union, the two main pillars of the data protection legal framework are the E-Privacy Directive (Directive on Privacy and Electronic Communications) and the General Data Protection Regulation.
−Removed: The E-Privacy Directive was amended in November 2009 by Directive 2009/136/EC (the E-Privacy Directive Amendment) to introduce new requirements for EU companies like ours, along with advertisers and publishers, to present users with an information notice and obtain their consent prior to placing cookies or other tracking technologies for targeted advertising purposes.
−Removed: As there were different transpositions of the E-Privacy Directive Amendment in domestic laws across the EU Member States, there are currently different interpretations of what constitutes valid consent (e.g.
−Removed: explicit versus implied consent) across the EU, posing a risk of regulatory divergence and creating legal uncertainty for businesses.
−Removed: To illustrate this risk of different interpretations by the competent authorities, the Spanish Data Protection Authority (Agencia Espanola de Proteccion de Datos) recently published updated guidance in which it is stated that continuing to browse a website could constitute consent of a user for cookie tracking, while the French Data Protection Authority (Commission Nationale de l'Informatique et des Libertés, or CNIL) and UK Data Protection Authority (Information Commissioner's Office) are listing stricter requirements in their own updated guidance and seem to impose a very clear and specific statement of consent.
−Removed: On January 14, 2020, CNIL published its draft recommendations on the use of cookies and other tracking technologies.
−Removed: The draft recommendations provide that, when required, consent must be indicated by a clear and positive action of the data subject, such as by clicking on an “accept all” button on the first layer of the consent management platform.
+Added: In the European Union, the two main pillars of the data protection legal framework are the Directive on Privacy and Electronic Communications (E-Privacy Directive) and the GDPR.
+Added: The E-Privacy Directive directs EU member states to ensure that accessing information on an Internet user’s computer, such as through a cookie and other similar technologies, is allowed only if the Internet user has been informed about such access and given his or her consent.
+Added: A recent ruling by the Court of Justice of the European Union clarified that such consent must be reflected by an affirmative act of the user, and European regulators are increasingly agitating for more robust forms of consent.
+Added: These developments may result in decreased reliance on implied consent mechanisms that have been used to meet requirements of the E-Privacy Directive in some markets.
+Added: A replacement by an e-privacy regulation for the E-Privacy Directive is currently under discussion by EU member states to complement and bring electronic communication services in line with the GDPR and force a harmonized approach across EU member states.
+Added: It is possible that the proposed e-privacy regulation could further impede the use of cookies and the fines and penalties for breach could be significant.
+Added: Under GDPR, data protection authorities have the power to impose administrative fines of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total worldwide turnover of the preceding financial year.
+Added: Similarly, the e-privacy regulation, once enacted, could result in new rules and mechanisms for "cookie" consent.
+Added: Further, on October 1, 2020, the French data protection authority ( Commission Nationale de l'Informatique et des Libertés , or CNIL) issued the final version of its guidelines on the use of cookies and other trackers and its final recommendations on modalities for obtaining users’ consent to store or read non-essential cookies and similar technologies on their devices.
+Added: The recommendations provide that, when required, consent must be indicated by a clear and positive action of the data subject, such as by clicking on an “accept all” button on the first layer of the consent management platform.
CNIL also noted that it should be as easy to refuse consent to the use of cookies as it is to accept consent, and a “refuse all” button should be present on the first layer of the consent management platform, equivalent to the “accept all” button in terms of size, position and color.
+Added: Further, the ability to withdraw consent must be readily available at all times.
The recommendations are not binding, nor are they intended to be prescriptive and exhaustive.
−Removed: The recommendations were open to public consultation until February 25, 2020.
−Removed: We expect that a final version of the recommendations will be submitted for adoption soon thereafter.
−Removed: Data Protection Authorities will have the power to impose administrative fines of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total worldwide turnover of the preceding financial year.
−Removed: Similarly, the E-Privacy Regulation, which drafting was launched by the European Parliament in October 2016, could result in, once new regulation is enacted, new rules and mechanisms for "cookie" consent.
−Removed: In addition, the interpretation and application of data protection laws in the United States, Europe and elsewhere are often uncertain and in flux.
−Removed: For example, on October 6, 2015, the European Court of Justice invalidated the EU-US Safe Harbor framework, which we relied on to operate our data transfers both internally (for HR, CRM and other back-office data processing) and with several U.S.-based partners (notably RTB platforms).
−Removed: Following the Safe Harbor invalidation, in July 2016, the European Commission announced the formal adoption of the "EU-US Privacy Shield." We elected to rely on the Standard Contractual Clauses of the European Commission to secure our data transfers, but we cannot anticipate whether this legal scheme will be compromised in the future.
−Removed: Legislative and regulatory authorities around the world may decide to enact additional legislation or regulations, which could reduce the amount of data we can collect or process and, as a result, significantly impact our business.
+Added: Companies have until March 2021 to ensure compliance with these guidelines.
In 2018, the State of California adopted the California Consumer Privacy Act of 2018, or the CCPA.
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Our advertising or publishing partners may impose new CCPA restrictions with which we must adapt and comply.
+Added: This past November, voters in California voted to pass the California Privacy Rights Act (“CPRA”), which both amends and expands the scope of the CCPA.
+Added: The CPRA will become effective on January 1, 2023, with a look back period to January 1, 2022.
+Added: The CPRA creates new criteria by which businesses can be regulated, expands the definition of “personal information” to more closely match European regulations, a new audit requirement, and the creation of an agency to oversee enforcement of the CPRA.
+Added: The CPRA also explicitly provides an opt-out right for cross-contextual behavioral advertising.
We cannot predict the timing or outcome of this adaptation or the effect on our business.
−Removed: Adapting our business to the CCPA could involve substantial resources and expense, and may cause us to divert resources from other aspects of our business, all of which may adversely affect our business.
−Removed: Similarly, clarifications of and changes to these existing and proposed laws, regulations, judicial interpretations and industry standards can be costly to comply with, and we may be unable to pass along those costs to our clients in the form of increased fees, which may negatively affect our operating results.
−Removed: Such changes can also delay or impede the development of new solutions, result in negative publicity and reputational harm, require significant incremental management time and attention, increase our risk of non-compliance and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices, including our ability to charge per click or the scope of clicks for which we charge.
+Added: Adapting our business to the CCPA and the forthcoming new requirements under the CPRA could involve substantial resources and expense, and may cause us to divert resources from other aspects of our business, all of which may adversely affect our business.
+Added: Clarifications of and changes to these existing and proposed laws, regulations, judicial interpretations and industry standards can be costly to comply with, and we may be unable to pass along those costs to our clients in the form of increased fees, which may negatively affect our operating results.
+Added: Such changes can also delay or impede the development of new solutions, result in negative publicity and reputational harm, require significant management time and attention, increase our risk of non-compliance and subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices, including our ability to charge per click or the scope of clicks for which we charge.
Additionally, any perception of our practices or solutions as an invasion of privacy, whether or not such practices or solutions are consistent with current or future regulations and industry practices, may subject us to public criticism, private class actions, reputational harm or claims by regulators, which could disrupt our business and expose us to increased liability.
Finally, our legal and financial exposure often depends in part on our clients’ or other third parties' adherence to privacy laws and regulations and their use of our services in ways consistent with visitors’ expectations.
−Removed: We rely on representations made to us by clients that they will comply with all applicable laws, including all relevant privacy and data protection regulations.
−Removed: We make reasonable efforts to enforce such representations and contractual requirements, but we do not fully audit our clients’ compliance with our recommended disclosures or their adherence to privacy laws and regulations.
−Removed: If our clients fail to adhere to our contracts in this regard, or a court or governmental agency determines that we have not adequately, accurately or completely described our own solutions, services and data collection, use and sharing practices in our own disclosures to consumers, then we and our clients may be subject to potentially adverse publicity, damages and related possible investigation or other regulatory activity in connection with our privacy practices or those of our clients.
−Removed: In 2016, the Commission Nationale de l'Informatique et des Libertés ("CNIL") commenced an inquiry into our compliance with French data privacy laws.
−Removed: The inquiry is now closed.
−Removed: At this stage, there can be no assurance that there will not be further inquiries with respect to our compliance with privacy laws from CNIL or regulatory bodies in other jurisdictions.
−Removed: Similarly, in November 2018, Privacy International filed a complaint with relevant data protection authorities against Criteo and a number of other similarly situated advertising technology companies, arguing that certain of these companies' practices do not comply with the GDPR.
+Added: If our clients fail to adhere to our contracts in this regard, or a court or governmental agency determines that we have not adequately, accurately or completely described our own solutions, services and data collection, use and sharing practices in our own disclosures to consumers, then we and our clients and publisher partners may be subject to potentially adverse publicity, damages and related possible investigation or other regulatory activity in connection with our privacy practices or those of our clients.
+Added: In November 2018, Privacy International filed a complaint with relevant data protection authorities against Criteo and a number of other similarly situated advertising technology companies, arguing that certain of these companies' practices do not comply with the GDPR.
In January 2020, CNIL opened a formal investigation into Criteo in response to this complaint.
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In addition, if we place advertisements on websites containing content that is not permitted under the terms of the applicable agreements with a client, we may be unable to charge the client for impressions or clicks generated on those sites, the client may terminate their campaign, the client may require us to indemnify them for any resulting third party claims, or the client may allege breach of contract.
−Removed: Further, our publishers and exchange partners rely upon us not to place advertisements on their websites, the content of which is unlawful or inappropriate.
+Added: Further, our publishers and exchange partners rely upon us not to place advertisements with inappropriate or unlawful content on their websites.
As we grow our business to serve a larger number of smaller clients using self-service tools with less intervention by us, it could become more challenging to prevent inappropriate or unlawful advertisements from being shown.
If we are unable to maintain the quality of our client and publisher content as the number of clients and publishers we work with continues to grow, our reputation and business may suffer and we may not be able to retain or secure additional clients or publisher relationships.
+Added: Our success depends on our ability to implement our business transformation and achieve our global business strategies.
+Added: Our business has recently undergone, and continues to undergo, a significant transformation, partially in response to major changes in the advertising technology industry driven by, but not limited to, regulations such as the GDPR and restrictions on data collection and use.
+Added: The components of our transformation include diversification of our services as we shift away from third-party cookies, focus on opportunities for growth and investment, and certain organization adjustments and cost-saving initiatives.
+Added: Our future performance and growth depends on the success of this transformation and our new business strategies, including our management team’s ability to successfully implement them.
+Added: The multi-year implementation of our transformation is expected to result in changes to business priorities and operations, capital allocation priorities, operational and organizational structure, and increased demands on management.
+Added: Such changes could result in short-term and one-time costs, lost customers, reduced sales volume, higher than expected restructuring costs, loss of key personnel and other negative impacts on our business.
+Added: We may also become subject to the risks of labor unrest, negative publicity and business disruption in connection with these initiatives.
+Added: Implementation of our business transformation may take longer than anticipated, and, once implemented, we may not realize, in full or in part, the anticipated benefits or such benefits may be realized more slowly than anticipated.
+Added: The failure to realize benefits or savings, which may be due to our inability to execute plans, delays in the implementation of the transformation, global or local economic conditions, competition, changes in the advertising technology industry and the other risks described herein, could have a material adverse effect on our business, financial condition and results of operations, as well as the trading price of our securities.
We may not be able to effectively integrate the businesses we acquire, which may adversely affect our ability to achieve our growth and business objectives.
−Removed: Over the past five years, we have acquired Manage.com Group, Inc., Storetail SA, HookLogic, Monsieur Drive SAS and three other businesses.
−Removed: We may seek to acquire additional businesses, products, solutions, technologies or teams in the future.
+Added: We explore, on an ongoing basis, potential acquisitions of additional businesses, products, solutions, technologies or teams.
If we identify an appropriate acquisition candidate, we may not be successful in negotiating the terms and/or financing of the acquisition, and our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, product, solution or technology, including issues related to intellectual property, product quality or architecture, employees or clients, regulatory compliance practices or revenue recognition or other accounting practices.
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• increased fixed costs.
−Removed: There can be no assurance that we will be able to successfully integrate the businesses that we acquire or that we will be able to leverage the acquired commercial relationships or technologies in the manner we anticipate.
+Added: There can be no assurance that we will be able to successfully integrate the businesses that we acquire or that we will be able to leverage the acquired commercial relationships, products or technologies in the manner we anticipate.
If we are unable to successfully integrate the businesses we have acquired or any business, product, solution or technology we acquire in the future, our business and results of operations could suffer, and we may not be able to achieve our business and growth objectives.
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As of December 31, 2020, we had a direct operating presence through 29 offices located in 19 countries and did business in 104 countries.
−Removed: Our primary research and development operations are located in France and the United States.
−Removed: In addition, we currently have international offices outside of France and the United States, which focus primarily on selling and implementing our offerings in those regions.
−Removed: In the future, we may expand to other international locations.
−Removed: Our current global operations and future initiatives involve a variety of risks, including:
−Removed: localization of the product interface and systems, including translation into foreign languages and adaptation for local practices;
−Removed: compliance with (and liability for failure to comply with) applicable local laws and regulations, including, among other things, laws and regulations with respect to data protection (including requirements that user data be stored locally in a given country) and user privacy, consumer protection, spam and content, which laws and regulations may be inconsistent across jurisdictions;
−Removed: more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union;
−Removed: taxation in a variety of jurisdictions with increasingly complex tax laws, the application of which can be uncertain;
+Added: Our current global operations and future initiatives involve a variety of risks, including, in addition to risks described elsewhere in this section:
+Added: • operational and execution risk, including localization of the product interface and systems, translation into foreign languages, adaptation for local practices, adequate coordination of timing to onboard local clients and publishers, difficulty of maintaining our corporate culture, challenges inherent to hiring and efficiently managing an increased number of employees over large geographic distances, and the increasing complexity of the organizational structure required to support expansion and operations into multiple geographies and regulatory systems;
+Added: • insufficient, or insufficiently coordinated, demand for and supply of advertising inventory in specific geographic markets processed through Criteo AI Engine, which could impair its ability to accurately predict user engagement in that market;
+Added: • compliance with (and liability for failure to comply with) applicable local laws and regulations, including, among other things, laws and regulations with respect to data protection and user privacy, tax and withholding, labor regulations, anti-corruption, consumer protection, spam and content, which laws and regulations may be inconsistent across jurisdictions;
• intensity of local competition for digital advertising budgets and internet display inventory;
−Removed: unexpected changes in laws and regulatory requirements, trade laws, tariffs, export quotas, customs duties or other trade restrictions;
−Removed: labor regulations and labor laws that can be interpreted as more advantageous to employees than those in the United States, including with respect to deemed hourly wage and overtime regulations;
• changes in a specific country’s or region’s political or economic conditions;
−Removed: challenges inherent to hiring and efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs, and the increasing complexity of the organizational structure required to support expansion into multiple geographies;
−Removed: the difficulty of maintaining our corporate culture of rapid innovation and teamwork that has been central to our growth in the face of an increasingly geographically diverse workforce;
−Removed: risks resulting from changes in currency exchange rates and the implementation of exchange controls, including restrictions promulgated by the Office of Foreign Assets Control of the U.S.
−Removed: Department of the Treasury, and other similar trade protection regulations and measures in the United States or in other jurisdictions;
−Removed: reduced ability to timely collect amounts owed to us by our clients in countries where our recourse may be more limited;
−Removed: limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries
−Removed: restrictions on foreign ownership and investments;
+Added: • risks related to pricing structure, payment and currency, including aligning our pricing model and payment terms with local norms, higher levels of credit risk and payment fraud, difficulties in invoicing and collecting in foreign currencies and associated foreign currency exposure, restrictions on foreign ownership and investments, and difficulties in repatriating or transferring funds from or converting;
• limited or unfavorable intellectual property protection;
−Removed: exposure to liabilities under anti-money laundering laws, international and international sanction requirements and anti-corruption laws, including the U.S.
−Removed: Foreign Corrupt Practices Act and similar laws and regulations in other jurisdictions;
−Removed: restrictions on repatriation of earnings.
We have one U.K.
subsidiary, some of our operations are in the U.K., and some of our customers and partners pay us in British Pounds and Euros.
−Removed: It is unclear what impact Brexit will have on our business in the U.K., EU and elsewhere globally.
+Added: It remains unclear what impact Brexit will have on our business in the U.K., EU and elsewhere globally.
Brexit may adversely affect economic conditions in the U.K., EU and elsewhere across the globe, and could contribute to volatility in foreign exchange markets with respect to the British Pound and Euro, which we may not be able to effectively manage, and our financial results could be adversely affected.
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Accordingly, we cannot predict the additional expense, impact on revenue, or other business impact that may stem from Brexit.
−Removed: We have established operations in geographies such as China, India, Brazil and Russia, and may establish operations in additional geographies in the near future, where we may face more complex regulatory environments and market conditions than those we have experienced in markets where we currently operate.
−Removed: If we invest substantial time and resources to expand our international operations and are unable to execute successfully or in a timely manner, our business and results of operations could suffer, and we may not be able to achieve our business and growth objectives.
Additionally, operating in international markets also requires significant management attention and financial resources.
We cannot be certain that the investment and additional resources required in establishing operations in other countries will produce desired levels of revenue or profitability.
−Removed: Our future success depends on our ability to scale our offerings as our business grows.
−Removed: As our business grows, it may become increasingly difficult to maintain the proper functioning of Criteo AI Engine as we continue to collect increasing amounts of data from new geographic markets, new advertising channels, new industry verticals and a growing base of clients.
−Removed: We currently process 250 terabytes of additional compressed data every day, with total storage capacity exceeding 750,000 terabytes and 2,000 terabytes of random-access memory.
−Removed: However, future growth could exceed these rates, and our ability to scale our offerings to keep pace with the amount of data we process may be impaired by failure of software or hardware (including storage, processing, support and security infrastructure).
−Removed: As a result, our operations might suffer from unanticipated system disruptions or slow processing or reporting which could negatively affect our reputation and ability to attract and retain clients.
−Removed: In addition, the expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance our business will increase.
−Removed: Furthermore, inventory-related traffic continues to increase faster than our revenue has grown over the past few years.
−Removed: Reducing the cost and improving the efficiency of our infrastructure may require us to invest an increasing percentage of our revenue, and there can be no assurance that we will be successful.
−Removed: Similarly, advancements in machine learning approaches and other technology may require us to upgrade or replace essential hardware (such as GPUs), which could involve substantial resources and could be difficult to implement.
−Removed: If we fail to respond to technological change or to adequately maintain, expand, upgrade and develop our systems and infrastructure in a timely fashion, our growth prospects and results of operations could be adversely affected.
−Removed: Moreover, even if we are able to expand our computing and other infrastructure to keep pace with the industry-related traffic growth, it may be too costly for us to continue to provide services under our current business model and capital expense assumptions and our profitability and results of operations may suffer.
−Removed: If we fail to manage our growth and the shift in our client portfolio towards the midmarket effectively, we may be unable to execute our business plan or maintain high levels of client and publisher satisfaction.
+Added: Because our functional currency is the euro, while our reporting currency is the U.S.
+Added: dollar, we face exposure to fluctuations in foreign currency exchange rates.
+Added: Foreign currency exchange risk exposure also arises from intra-company transactions and financing with subsidiaries that have a functional currency different than the euro.
+Added: While we are engaging in hedging transactions to minimize the impact of uncertainty in future exchange rates on intra-company transactions and financing, we may not hedge all of our foreign currency exchange rate risk.
+Added: In addition, hedging transactions carry their own risks and costs, and could expose us to additional risks that could harm our financial condition and operating results.
+Added: If we fail to manage our growth and the shift in our client portfolio toward the midmarket effectively, we may be unable to execute our business plan or maintain high levels of client and publisher satisfaction.
We have experienced, and may in the future experience, rapid growth and changes in our client portfolio, which have created, and may continue to create, challenges to the quality of our service to our clients, and which have placed, and may continue to place, significant demands on our management and our operational and financial resources.
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As our business shifts toward the midmarket category, there are several additional risks to our business, including risks relating to the financial stability of our clients and our ability to collect accounts receivable from such clients.
−Removed: In addition, since our midmarket business is comprised of thousands of smaller clients which require significant resources to support, it is currently less profitable than our large client business, and overall there may not be a direct correlation between a change in the number of clients in a particular period and an increase or decrease in our revenue.
−Removed: In 2018, we started to implement a new go-to-market strategy, aimed at maximizing our commercial opportunity for our multi-solution offering, by providing the right level of services to each our client segments (based on their size and business potential with us) and scaling our midmarket operations more efficiently and profitably.
−Removed: However, due to the growing number of midmarket clients that require support, we will need to continue automating certain of our processes to service the midmarket category as it continues to grow globally.
−Removed: There can be no assurance that we will be able to successfully adjust to these shifting dynamics and remain profitable.
−Removed: As we continue to expand, we also must maintain a high level of service to ensure client and publisher satisfaction.
−Removed: To the extent our client and publisher base grows, we will need to expand our account management, publisher support and other personnel in order to continue to provide adequate account management and services, the quality of which has been central to our growth to date.
−Removed: To do so will require significant expenses, significant capital expenditures and valuable management resources.
−Removed: If we fail to manage the anticipated changes in our client portfolio in a manner that preserves our attention to our clients, our brand and reputation may suffer, which would in turn impair our ability to attract and retain clients and publishers.
−Removed: If we are unable to successfully manage the changes in our client portfolio and the associated changes in employee headcount and our organizational structure, our results of operations could suffer.
−Removed: The development and deployment of the self-registration and onboarding module of the Criteo Platform and associated processes may be delayed or may experience technical issues.
+Added: In addition, since our midmarket business is comprised of thousands of smaller clients that require significant resources to support, it is currently less profitable than our large client business, and overall there may not be a direct correlation between a change in the number of clients in a particular period and an increase or decrease in our revenue.
+Added: In 2018, we started to implement a new go-to-market strategy, aimed at maximizing our commercial opportunity for our multi-solution offering, by providing the right level of services to each our client segments and scaling our midmarket operations more efficiently and profitably.
+Added: However, we will need to continue automating certain of our processes to service the midmarket category as it continues to grow globally.
+Added: There can be no assurance that we will be able to successfully adjust to these shifting dynamics and remain profitable, while maintaining a high level of service to ensure client and publisher satisfaction.
+Added: If we fail to successfully manage the anticipated changes in our client portfolio and the associated changes in employee headcount and our organizational structure, our brand and reputation may suffer, which would in turn impair our ability to attract and retain clients and publishers and our results of operations.
+Added: The development and deployment of the self-registration and onboarding module of the Criteo Commerce Media Platform and associated processes may be delayed or may experience technical issues.
In 2018, we started undertaking a transformation of our go-to-market model, aimed at maximizing the commercial opportunity for our multi-solution offering, by providing the right level of services to each of our client segments - based on their size and business potential with us - and by scaling our midmarket operations more efficiently and profitably.
−Removed: This includes the roll out of the self-registration and onboarding module of the Criteo Platform, supported by appropriate sales and marketing services and channels, to enable lower segments of midmarket clients to sign up and be self-served in a more automated, scalable and profitable way.
+Added: This includes the roll out of a self-registration and onboarding module for lower segments of midmarket clients to sign up and be self-served in an automated, scalable and profitable way.
If our ability to develop the right capabilities internally, planning for roles and responsibilities, redeployment of resources, or training of teams fails or is lacking, then we may not be able to operate our self-registration and onboarding module in an effective manner.
−Removed: Further, if we lack coordination in anticipating project dependencies or lack project management and change management skills, the deployment of this self-registration and onboarding module may be delayed or may experience technical issues.
+Added: Further, if we lack coordination in anticipating project dependencies or lack project management and change management skills, the deployment and adoption of this self-registration and onboarding module may be delayed or may experience technical issues.
As a result, we may not be able to timely leverage our self-registration and onboarding module to profitability scale, which could result in significant costs to us, lost revenue and reputational harm.
−Removed: If we fail to successfully enhance our brand, our ability to protect and expand our client base will be impaired and our financial condition may suffer.
−Removed: We believe that developing and maintaining awareness of the Criteo brand is critical to achieving widespread acceptance of our existing offering and any future solutions, such as new solutions directed toward capturing broader advertising budgets, and is an important element in attracting new commerce clients, consumer brand clients, retailer partners and publisher partners.
−Removed: Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases.
−Removed: Successful promotion of our brand will depend largely on the effectiveness of our marketing efforts and on our ability to deliver valuable solutions for our commerce clients, consumer brand clients, retailer partners and publisher partners.
−Removed: In the past, our efforts to build our brand have involved significant expenses and they may continue to do so in the future.
−Removed: As a result, we may not be able to develop our brand in a cost-effective manner.
−Removed: Furthermore, brand promotion activities may not yield any increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand.
−Removed: If we fail to successfully promote and maintain our brand we may fail to attract enough new commerce clients, consumer brand clients, retailer partners and publisher partners or retain enough of our existing commerce clients, consumer brand clients, retailer partners and publisher partners, and our business could suffer.
Our future success will depend in part on our ability to expand into new industry verticals.
−Removed: As we market our offering to a wider group of consumer brands and companies outside of our historical three key industry verticals of retail, travel and classifieds, including businesses in the automotive, telecommunications, consumer goods and finance industries, as well as mobile app-first verticals such as gaming, ride sharing and food delivery, we will need to adapt our solutions and effectively market our value to businesses in these new industry verticals.
−Removed: Our success into new industry verticals will depend on various factors, including our ability to:
−Removed: design solutions that are attractive to businesses in such industries;
+Added: As we market our offering to a wider group of consumer brands and companies outside of our historical three key industry verticals of retail, travel and classifieds, as well as mobile app-first verticals such as gaming, ride sharing and food delivery, we will need to adapt our solutions and effectively market our value to businesses in these new industry verticals.
+Added: Our successful expansion into new industry verticals will depend on various factors, including our ability to:
+Added: • accumulate sufficient data sets relevant for those industry verticals to ensure that Criteo AI Engine has sufficient quantity and quality of information to deliver efficient and effective internet display advertisements within the relevant industry;
+Added: • design solutions that are attractive to businesses in such verticals;
+Added: • work with clients in new industry verticals through the advertising agencies that manage their advertising budgets
+Added: • hire personnel with relevant industry vertical experience to lead sales and product teams
• provide high returns on advertising spend in such industries and maintain such high returns on advertising spend at scale;
• transparently measure the performance of such advertising spend based on clear, measurable metrics.
−Removed: hire personnel with relevant industry vertical experience to lead sales and product teams;
−Removed: work with clients in new industry verticals through the advertising agencies that manage their advertising budgets;
−Removed: accumulate sufficient data sets relevant for those industry verticals to ensure that Criteo AI Engine has sufficient quantity and quality of information to deliver efficient and effective internet display advertisements within the relevant industry.
−Removed: For example, with the acquisition of Manage.com Group, Inc.
−Removed: in 2018, we further expanded our offering into gaming and other app-first areas such as food delivery and ride sharing.
−Removed: Similarly, with the acquisition of HookLogic in 2016 and the introduction of Criteo Retail Media, we expanded our offering to benefit consumer brands.
−Removed: However, there can be no assurance that we will be able to maintain the client base built by Manage or HookLogic or that we will be able to expand the Criteo Retail Media business successfully.
If we are unable to successfully adapt our offering to appeal to businesses in industries other than our core verticals, or are unable to effectively market such solutions to businesses in such industries, we may not be able to achieve our growth or business objectives.
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As we market our solutions, we may increasingly need advertising agencies to work with us in assisting businesses in planning and purchasing for broader marketing goals.
−Removed: In particular, many of our Criteo Retail Media clients, whom we have started working with since our acquisition of HookLogic, work with us through advertising agencies:
−Removed: 72%, 66% and 62% of Criteo sold sponsored products revenue for 2017, 2018 and 2019 , respectively, relied on advertising agencies.
−Removed: Historically, however, direct relationships with our clients accounted for 73%, 73% and 74% of our revenue for 2017 , 2018 and 2019 , respectively, for Criteo Marketing Solutions.
−Removed: We believe several elements of our growth strategy, including the increasing deployment and availability of self-service platform capabilities for our clients to have greater control and transparency over the management and execution of their advertising campaigns with us, as well as the ongoing expansion of our solutions into advertising scenarios to address Consideration marketing goals, may make our overall value proposition more attractive to advertisers, including to the potential advertising agencies that help them manage their advertising budgets.
+Added: In particular, many of our Criteo Retail Media clients work with us through advertising agencies:
+Added: 49%, 62% and 66% of Criteo sponsored products revenue for 2020, 2019 and 2018, respectively, relied on advertising agencies.
Overall, we believe that accessing broader advertising budgets by partnering with advertising agencies represents a significant incremental business opportunity for us.
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Since then, we have expanded into mobile in-browser and in-app, native display, including on social media platforms, and video inventory.
−Removed: In the future, we may decide to broaden the spectrum of our advertising channels further if we believe that doing so would significantly increase the value we can offer to clients.
−Removed: We believe a broader platform delivering our solutions through complementary advertising channels can enhance our value proposition for existing and prospective clients.
+Added: In the future, we may decide to broaden the spectrum of our advertising channels further, including connected TV and Digital Out of Home, if we believe that doing so would significantly increase the value we can offer to clients.
However, any future attempts to enter new advertising channels may not be successful.
−Removed: For example, we launched our Criteo Email Retargeting offering in 2014 after we acquired Tedemis SA in 2014.
−Removed: In 2016, we decided to discontinue our Criteo Email Retargeting offering based on country-specific circumstances.
−Removed: Similarly, we launched our Criteo Predictive Search offering in 2016.
−Removed: In 2017, we decided to discontinue our Criteo Predictive Search offering based on client and country-specific circumstances.
Our success in expanding into any additional advertising channels will depend on various factors, including our ability to:
• identify additional advertising channels where our solutions could perform;
+Added: • accumulate sufficient data sets relevant for those advertising channels to ensure that Criteo AI Engine has a sufficient quantity and quality of information to deliver relevant personalized advertisements through those additional advertising channels;
• adapt our solutions to additional advertising channels and effectively market it for such additional advertising channels to our existing and prospective clients;
• integrate newly developed or acquired advertising channels into our pricing and measurement models, with a clear and measurable performance attribution mechanism that works across all channels, and in a manner that is consistent with our privacy standards;
−Removed: accumulate sufficient data sets relevant for those advertising channels to ensure that Criteo AI Engine has a sufficient quantity and quality of information to deliver relevant personalized advertisements through those additional advertising channels;
• achieve client performance levels through the new advertising channels that are similar to those delivered through existing advertising channels, and in any case that are not dilutive to the overall client performance;
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If we are unable to successfully adapt our solutions to additional advertising channels and effectively market such offerings to our existing and prospective clients, or if we are unable to maintain our pricing and measurement models in these additional advertising channels, we may not be able to achieve our growth or business objectives.
−Removed: Our revenue would decline if we fail to effectively coordinate the demand for and supply of advertising inventory in a specific geographic market.
−Removed: The performance of Criteo AI Engine in a specific geographic market depends on having sufficient clients implemented and utilizing our offering, and our ability to coordinate the demand for and supply of advertising inventory with the publishers in that market.
−Removed: Since we cannot consistently predict the demand for advertising inventory by our clients or the advertising inventory available to us, including on a priority basis, the demand for and supply of advertising inventory in that market may not be sufficient or sufficiently coordinated for Criteo AI Engine to function optimally.
−Removed: As such, as we target new geographic markets, we will need to adequately coordinate the timing to onboard local clients and publishers.
−Removed: A failure to effectively manage demand for, and the supply of, advertising inventory processed through Criteo AI Engine could impair its ability to accurately predict user engagement in that market, which could result in:
−Removed: a reduction in the amount of inventory our publishers make available to us in the future;
−Removed: a loss of existing clients or publishers;
−Removed: changes in the priority given to our advertisements by publishers;
−Removed: an adverse effect on our ability to attract new publishers willing to give us preferred access;
−Removed: harm to our reputation;
−Removed: increased cost;
−Removed: lost revenue.
−Removed: Our sales efforts with both potential clients and publishers require significant time and expense, and our success will depend on effectively expanding and integrating our sales and marketing operations and activities to grow our base of clients and publishers.
−Removed: Attempting to increase our base of clients and publishers is a key component of our growth strategy.
−Removed: However, attracting clients and publishers requires substantial time and expense, and it may be difficult to identify, engage and market to potential clients that are unfamiliar with Criteo and our offering, particularly as we seek to address new marketing goals for clients, or enter new advertising channels or new industry verticals.
−Removed: Furthermore, many potential clients require input from multiple internal constituencies to make advertising decisions, or delegate advertising decisions to advertising agencies.
−Removed: As a result, we must identify those involved in the purchasing decision and devote a sufficient amount of time to presenting our offering to those individuals (including providing demonstrations and comparisons of our value relative to other available solutions), which can be a costly and time-consuming process.
−Removed: Our ability to grow our client and publisher base will depend to a significant extent on our ability to effectively expand our sales, marketing and publisher support operations.
−Removed: In particular, as we target new industry verticals, we will need to attract sales and publisher support personnel that are familiar with the relevant industries and geographic markets.
−Removed: We believe that there is significant competition for direct sales and support personnel with the sales skills and technical knowledge that we require.
−Removed: Therefore, our ability to grow our client and publisher base will depend, in large part, on our success in recruiting, training and retaining the sales and publisher support personnel we require.
−Removed: Over the past years, we have hired a number of new sales personnel and expanded our marketing department.
−Removed: However, we may not be successful in growing headcount to the extent necessary to support and expand our operations.
−Removed: Similarly, we cannot be sure that newly hired personnel will be integrated effectively, and such personnel may require significant training and may not become productive as quickly as we would like, or at all.
−Removed: If we are not successful in recruiting and training our client sales and publisher support personnel and streamlining our sales and business development processes to cost-effectively grow our client and publisher base, our ability to grow our business and our results of operations could be adversely affected.
−Removed: If we are unable to protect our proprietary information or other intellectual property, our business could be adversely affected.
−Removed: We rely largely on trade secret law to protect our proprietary information and technology.
−Removed: We generally seek to protect our proprietary information through confidentiality, non-disclosure and assignment of invention agreements with our employees, contractors and parties with which we do business.
−Removed: However, we may not execute these agreements with every party who has access to our confidential information or contributes to the development of our intellectual property.
−Removed: In addition, those agreements may be breached, and we may not have adequate remedies for any such breach.
−Removed: Breaches of the security of our data center systems and infrastructure or other IT resources could also result in the exposure of our proprietary information.
−Removed: Additionally, our trade secrets may be independently developed by competitors.
−Removed: We cannot be certain that the steps we have taken to protect our trade secrets and proprietary information will prevent unauthorized use or reverse engineering of our trade secrets or proprietary information.
−Removed: Although we also rely on copyright laws to protect works of authorship created by us, including software, we do not register the copyrights in any of our copyrightable works.
−Removed: We will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited.
−Removed: In the United States and internationally, we have filed various applications for protection of certain aspects of our intellectual property, including patent applications.
−Removed: Effective protection of our intellectual property rights may require additional filings and applications in the future.
−Removed: However, pending and future applications may not be approved, and any of our existing or future patents, trademarks or other intellectual property rights may not provide sufficient protection for our business as currently conducted or may be challenged by others or invalidated through administrative process or litigation.
−Removed: Additionally, patent rights in the United States have switched from the former “first-to-invent” system to a “first-to-file” system, which may favor larger competitors that have the resources to file more patent applications.
−Removed: Furthermore, our existing patents and any patents issued in the future may give rise to ownership claims or to claims for the payment of additional remuneration of fair price by persons having participated in the creation of the inventions.
−Removed: Similarly, to the extent that our employees, contractors or other third parties with whom we do business use intellectual property owned by others in their work for us, disputes may arise as to the rights to such intellectual property.
−Removed: Further, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our proprietary technology adequately against unauthorized third-party copying, infringement or use, which could adversely affect our competitive position.
−Removed: To protect or enforce our intellectual property rights, we may initiate litigation against third parties.
−Removed: Any lawsuits that we initiate could be expensive, take significant time and divert management’s attention from other business concerns.
−Removed: Additionally, we may unintentionally provoke third parties to assert claims against us.
−Removed: These claims could invalidate or narrow the scope of our own intellectual property.
−Removed: We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially valuable.
−Removed: Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.
−Removed: The occurrence of any of these events may adversely affect our business, financial condition and results of operations.
−Removed: Our business may suffer if it is alleged or determined that our technology or another aspect of our business infringes the intellectual property rights of others.
−Removed: The online and mobile advertising industries are characterized by the existence of large numbers of patents, copyrights, trademarks, trade secrets and other intellectual property and proprietary rights.
−Removed: Companies in these industries are often required to defend against litigation claims that are based on allegations of infringement or other violations of intellectual property rights.
−Removed: Our technologies may not be able to withstand any third-party claims or rights against their use.
−Removed: Our success depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement or misappropriation without major financial expenditures or adverse consequences.
−Removed: From time to time, we may be the subject of claims that our solutions and underlying technology infringe or violate the intellectual property rights of others, particularly as we expand the scope and complexity of our business.
−Removed: Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and the outcome of any litigation is inherently uncertain.
−Removed: Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could.
−Removed: Claims that we are infringing patents or other intellectual property rights could:
−Removed: subject us to significant liabilities for monetary damages, which may be tripled in certain instances;
−Removed: prohibit us from developing, commercializing or continuing to provide some or all of our offering unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, who may not be willing to offer them on terms that are acceptable to us, or at all;
−Removed: subject us to indemnification obligations or obligations to refund fees to, and adversely affect our relationships with, our current or future clients, advertising agencies, media networks and exchanges or publishers;
−Removed: cause delays or stoppages in providing our offering;
−Removed: cause clients, potential clients, advertising agencies, media networks and exchanges or publishers to avoid working with us;
−Removed: divert the attention and resources of management and technical personnel;
−Removed: harm our reputation;
−Removed: require technology or branding changes to our offering that would cause us to incur substantial cost and that we may be unable to execute effectively or at all.
−Removed: In addition, we may be exposed to claims that the content contained in advertising campaigns violates the intellectual property or other rights of third parties.
−Removed: Such claims could be made directly against us or against the advertising agencies we work with, and media networks and exchanges and publishers from whom we purchase advertising inventory.
−Removed: Generally, under our agreements with advertising agencies, media networks and exchanges and publishers, we are required to indemnify the advertising agencies, media networks and exchanges and publishers against any such claim with respect to an advertisement we served.
−Removed: We generally require our clients to indemnify us for any damages from any such claims.
−Removed: There can be no assurance, however, that our clients will have the ability to satisfy their indemnification obligations to us, and pursuing any claims for indemnification may be costly or unsuccessful.
−Removed: As a result, we may be required to satisfy our indemnification obligations to advertising agencies, media networks and exchanges and publishers or claims against us with our assets.
−Removed: This result could harm our reputation, business, financial condition and results of operations.
+Added: We operate in a rapidly evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
+Added: Our historical growth rates may not be indicative of our future growth, and we expect our operating and capital investments to continue to increase in the foreseeable future.
+Added: Accordingly, we may have difficulty sustaining profitability.
+Added: We operate in a rapidly evolving industry.
+Added: Our ability to forecast our future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth in both our business and the digital advertising market generally.
+Added: We are subject to risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, including challenges in forecasting accuracy, determining appropriate nature and levels of investments, assessing appropriate returns on investments, achieving market acceptance of our existing and future offerings, managing client implementations and developing new solutions.
+Added: If our assumptions regarding these uncertainties, which we regularly use and update to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
+Added: You should not consider our revenue growth in past periods to be indicative of our future performance.
+Added: In future periods, our revenue could decline or grow more slowly than we expect.
+Added: We believe the growth of our revenue depends on a number of factors, including our ability to:
+Added: • attract new clients, and retain and expand our relationships with existing clients;
+Added: • maintain the breadth of our publisher network and attract new publishers, including publishers of web content, mobile applications and video and social games, in order to grow the volume and breadth of advertising inventory available to us;
+Added: • broaden our solutions portfolio to include additional marketing and monetization goals (including Awareness and Consideration) for commerce companies and consumer brands across the open Internet, including web, apps and stores;
+Added: • adapt our offering to meet evolving needs of businesses, including to address market trends such as (i) the migration of consumers from desktop to mobile and from websites to mobile applications, (ii) the increasing percentage of sales that involve multiple digital devices, (iii) the growing adoption by consumers of “ad-blocking” software on web browsers on desktop and/or on mobile devices and use or consumption by consumers of advertising-free services such as Netflix, (iv) changes in the marketplace for and supply of advertising inventory, including the shift toward header bidding, and (v) changes in the overall ecosystem such as Apple's introduction of its Intelligent Tracking Prevention feature into its Safari browser, Microsoft’s Tracking Prevention feature in its Edge browser, and Mozilla’s introduction of Enhanced Tracking Protection into its Firefox browser;
+Added: and (vi) changes in consumer acceptance of tracking technologies for targeted or behavioral advertising purposes;
+Added: • maintain and increase our access to data necessary for the performance of Criteo AI Engine;
+Added: • continuously improve the algorithms underlying Criteo AI Engine and apply state-of-the-art Machine Learning approaches and hardware;
+Added: • continue to adapt to a changing regulatory landscape governing data protection and privacy matters.
+Added: We also anticipate continuing to invest in our business to increase the scale of our solutions, existing and new, grow our headcount and expand our operations.
+Added: In particular, we plan to continue to focus on maximizing our revenue after traffic acquisition costs on an absolute basis, or the revenue we derive after deducting the costs we incur to purchase advertising inventory, which we call Revenue ex-TAC, as we believe this focus fortifies a number of our competitive strengths.
+Added: Our focus on maximizing Revenue ex-TAC on an absolute basis may have an adverse impact on our gross margin and we cannot be certain that this strategy will be successful or result in increased liquidity or long-term value for our shareholders.
+Added: We derive a significant portion of our revenue from companies in the retail, travel and classified industries, and any downturn in these industries or any changes in regulations affecting these industries could harm our business.
+Added: A significant portion of our revenue is derived from companies in the Retail, Travel and Classifieds industries.
+Added: For example, in 2020, 2019 and 2018, 75.6% , 68.9% and 69.1%, respectively, of our combined revenue for Criteo Marketing Solutions was derived from advertisements placed for Retail commerce businesses.
+Added: Any downturn or increased competitive pressure in any of our core industries, or other industries we may target in the future, may cause our clients to reduce their spending with us, or delay or cancel their advertising campaigns with us.
+Added: We have substantial client concentration in certain local markets and solutions, with a limited number of clients accounting for a substantial portion of our revenues in those areas.
+Added: Although our overall customer base is well-diversified, in certain of our local markets and specific solutions we derive a substantial portion of revenues from a limited number of clients.
+Added: There are inherent risks whenever a large percentage of revenues within any specific market or solution are concentrated within a limited number of clients.
+Added: We cannot predict the future level of demand for our services and products that will be generated by these clients.
+Added: In addition, revenues from these clients may fluctuate from time to time.
+Added: Further, some of our contracts with these clients may permit them to terminate use of our products at any time (subject to notice and certain other provisions).
+Added: If any of these clients terminate or reduce use of our products, our revenues within local markets or specific solutions may be negatively impacted.
+Added: We experience fluctuations in our results of operations due to a number of factors, which make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.
+Added: Our quarterly and annual results of operations fluctuate due to a variety of factors, many of which are outside of our control.
+Added: As a result, comparing our results of operations on a period-to-period basis may not be meaningful.
+Added: Fluctuations in our results of operations could cause our performance to fall below the expectations of analysts and investors, and adversely affect the price of our ADSs.
+Added: You should not rely on our past results as an indication of our future performance.
+Added: Factors that may affect our quarterly results of operations include:
+Added: • the nature of our clients’ products or services, including the seasonal nature of our clients’ advertising spending;
+Added: • lengthy implementation cycles resulting in substantial expenses incurred without any guarantee of revenue generation;
+Added: • demand for our offering and the size, scope and timing of digital advertising campaigns;
+Added: • the relative lack of long-term agreements with our clients and publishers;
+Added: • client and publisher retention rates;
+Added: • market acceptance of our offering and future solutions and services (i) in current industry verticals and new industry verticals, (ii) in new geographic markets, (iii) in new advertising channels, or (iv) for broader marketing goals;
+Added: • the timing of large expenditures related to expansion into new solutions, new geographic markets, new industry verticals, acquisitions and/or capital projects;
+Added: • the timing of adding support for new digital devices, platforms and operating systems;
+Added: • the amount of inventory purchased through direct relationships with publishers versus internet advertising exchanges or networks;
+Added: • our clients’ budgeting cycles;
+Added: • changes in the competitive dynamics of our industry, including consolidation among competitors;
+Added: • consumers' response to our clients’ advertisements, to online advertising in general and to tracking technologies for targeted or behavioral advertising purposes;
+Added: • our ability to control costs, including our operating expenses;
+Added: • network outages, errors in our technology or security breaches and any associated expense and collateral effects;
+Added: • foreign currency exchange rate fluctuations, as some of our foreign sales and costs are denominated in their local currencies;
+Added: • failure to successfully manage any acquisitions;
+Added: • general economic and political conditions in our domestic and international markets.
+Added: As a result, we may have a limited ability to forecast the amount of future revenue and expense, and our results of operations may from time to time fall below our estimates or the expectations of public market analysts and investors.
+Added: Risks Related to Data Privacy, Intellectual Property and Cybersecurity
+Added: Our ability to generate revenue depends on our collection of significant amounts of data from various sources, which may be restricted by consumer choice, clients, publishers and browsers or other software, changes in technology, and new developments in laws, regulations and industry standards.
+Added: Our ability to optimize the delivery of internet advertisements for our clients depends on our ability to successfully leverage data, including data that we collect from our clients, data we receive from our publisher partners and third parties, and data from our own operating history.
+Added: Using cookies and non-cookie based mechanisms, such as hashed emails, hashed customer log-ins or mobile advertising identifiers, we collect information about the interactions of users with our clients’ and publishers’ digital properties (including, for example, information about the placement of advertisements and users’ shopping or other interactions with our clients’ websites or advertisements).
+Added: Our ability to successfully leverage such data depends on our continued ability to access and use such data, which could be restricted by a number of factors, including consumer choice, restrictions imposed by counterparties (such as clients, supply sources and publishers, who may also compete with us for advertising spend and inventory) and web browser developers or other software developers, changes in technology, including changes in web browser technology, increased visibility of consent or “do not track” mechanisms or “ad-blocking” software, and new developments in, or new interpretations of, laws, regulations and industry standards.
+Added: These types of restrictions could materially impair the results of our operations.
+Added: Web browser developers, such as Apple, Mozilla Foundation, Microsoft or Google, have implemented or may implement changes in browser or device functionality that impair our ability to understand the preferences of consumers, including by limiting the use of third-party cookies or other tracking technologies or data indicating or predicting consumer preferences.
+Added: Today, three major web browsers — Apple’s Safari, Mozilla’s Firefox and Microsoft’s Edge — block third party cookies by default.
+Added: Internet users can also delete cookies from their computers at any time.
+Added: In January 2020, Google announced that it plans to phase out support for third-party cookies in Chrome by early 2022.
+Added: Google controls more than 60% of the browser market and has an even more dominant position in the digital advertising market.
+Added: These web browser developers have significant resources at their disposal and command substantial market share, and any restrictions they impose could foreclose our ability to understand the preferences of a substantial number of consumers.
+Added: Although we are actively in the process of moving our business away from third-party cookies, if we are blocked from serving advertisements to a significant portion of internet users, our business could suffer and our results of operations could be harmed.
+Added: Similarly, Internet users are increasingly able to download free or paid “ad-blocking” software, including on mobile devices, which prevent third-party cookies from being stored on a user’s computer and block advertisements from being displayed to such user.
+Added: In addition, Google has introduced ad blocking software in its Chrome browser that blocks certain ads based on quality standards established under a multi-stakeholder coalition.
+Added: If such a feature inadvertently or mistakenly blocks ads that are not within the established blocking standards, or if such capabilities become widely adopted and the advertising technology industry does not collaboratively develop alternative technologies, our business could be harmed.
+Added: The Interactive Advertising Bureau and Digital Advertising Alliance have also developed frameworks that allow users to opt out of the “sale” of their personal information under the CCPA, in ways that stop or severely limit the ability to show targeted ads.
+Added: In addition, search engines and other service providers that explicitly do not allow the tracking of data, such as DuckDuckGo, Inc., may be growing in popularity.
+Added: If a significant number of web browser users switch to advertising-free services or platforms, our business could be materially impacted.
+Added: Further, mobile devices allow users to opt out of the use of mobile device IDs for targeted advertising.
+Added: For in-app advertising, data regarding interactions between users and devices are tracked mostly through stable, pseudonymous mobile device identifiers that are built into the device operating system with privacy controls that allow users to express a preference with respect to data collection for advertising, including to disable the identifier.
+Added: These identifiers and privacy controls are defined by the developers of the mobile platforms and could be changed by the mobile platforms in a way that may negatively impact our business.
+Added: For example, Apple announced in June 2020 that it will require user opt-in before permitting access to Apple’s unique identifier, or IDFA.
+Added: Apple initially targeted September 2020 for implementing these changes but has pushed that date out until early Spring 2021.
+Added: This shift from enabling user opt-out to an opt-in requirement is likely to have a substantial impact on the mobile advertising ecosystem and could harm our growth in this channel.
+Added: User privacy features of other channels of programmatic advertising, such as Connected TV or over-the-top video, are still developing.
+Added: Technical or policy changes, including regulation or industry self-regulation, could harm our growth in those channels.
+Added: The data we gather is important to the continued development and success of Criteo Shopper Graph, which is a key element of the Criteo Commerce Media Platform.
+Added: If too few of our clients provide us with the permission to share their data or if our clients choose to stop sharing their data, or if regulatory or other factors inhibit or restrict us from maintaining the data collectives underlying Criteo Shopper Graph, the value of Criteo Shopper Graph could be materially diminished, which could impact the performance of our products and materially impact our business.
+Added: In addition, our ability to collect and use data may be restricted or prevented by a number of other factors, including:
+Added: • the failure of our network, hardware, or software systems, or the network, hardware, or software systems of our clients;
+Added: • our inability to grow our client and publisher base in new industry verticals and geographic markets in order to obtain the critical mass of data necessary for Criteo AI Engine to perform optimally in such new industry verticals or geographic markets;
+Added: • malicious traffic (such as non-human traffic) that introduces "noise" in the information that we collect from clients and publishers;
+Added: • interruptions, failures or defects in our data collection, mining, analysis and storage systems.
+Added: Any of the above described limitations could also harm our business and adversely impact our future results of operations.
+Added: The third parties upon which we rely for access to data and revenue opportunities may implement technical restrictions that impede our access to such data and revenue opportunities, which could materially impact our business and results of operations.
+Added: A substantial portion of the data we rely on comes from our publisher partners and other third parties, including advertising exchange platforms (including supply-side platforms, or “SSPs”, such as Google's Ad Manager).
+Added: Similarly, we rely on our publisher partners, advertising exchange platforms and other third parties for opportunities to serve advertisements through which we generate our revenue.
+Added: Our ability to successfully leverage such data and successfully generate revenue from such opportunities could be impacted by restrictions imposed by or on our publisher partners or other third parties, including restrictions on our ability to use or read cookies or other tracking features or our ability to use real-time bidding networks or other bidding networks.
+Added: For example, in light of the GDPR, some SSPs imposed restrictions on our ability to bid on opportunities to serve ads.
+Added: Third-party publishers are responsible under GDPR for gathering necessary user consents and indicating to SSPs that Criteo has been approved by the applicable users.
+Added: As part of their efforts to comply with their understanding of the requirements of the GDPR, which are subject to interpretation, certain SSPs that run advertising exchanges have required actions from such third party publishers with respect to such consents that appear to be stricter than what the regulations require.
+Added: Similarly, SSPs and other relevant third parties may take similar actions in response to any new legislation or regulatory developments or interpretations in the future, in response to perceived user preferences, or for other reasons.
+Added: If third parties on which we rely for data or opportunities to serve advertisements impose similar restrictions or are not able to comply with restrictions imposed by other ecosystem participants, we may lose the ability to access data, bid on opportunities, or purchase digital ad space, which could have a substantial impact on our revenue.
Our business involves the use, transmission and storage of personal data and confidential information, and the failure to properly safeguard such information could result in significant reputational harm and monetary damages.
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As a result of our prominence, the size of our user base, and the types and volume of personal data on our systems, we believe that we are a particularly attractive target for such breaches and attacks.
−Removed: Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information, or information from marketers, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position.
+Added: Any failure to prevent or mitigate security breaches and improper access to or disclosure of our data or user data, including personal information and intellectual property, or information from marketers, could result in the loss or misuse of such data, which could harm our business and reputation and diminish our competitive position.
In addition, computer malware, viruses, unauthorized access or system compromises and hacking by sophisticated actors have become more prevalent in our industry.
Security incidents have occurred on our systems in the past, and will likely occur on our systems in the future.
−Removed: For example, in November 2019, we became aware of a compromise of certain of our systems.
−Removed: We have taken and continue to take additional steps to fully identify the incident and have and continue to implement remedial measures to increase the security of our systems and networks to respond to these types of threats.
−Removed: As of the date of this filing, we do not believe that this incident has resulted in a material adverse effect on our business or any material damage to us or any loss or misuse of customer data.
−Removed: However, the investigation is ongoing and there can be no assurance that this or any other breach or incident will not have a material impact on our operations and financial results in the future.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target.
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We have expended significant resources to protect against such threats and to alleviate problems caused by breaches in security and may have to expend additional resources for such purposes in the future.
−Removed: Finally, computer viruses or malware may harm our systems or cause the loss or alteration of data, and the transmission of computer viruses or malware via Criteo technology could expose us to litigation and a loss of confidence in the security of our technology.
−Removed: Our errors and omissions insurance may be inadequate or may not be available in the future on acceptable
−Removed: terms, or at all.
+Added: Our errors and omissions insurance may be inadequate or may not be available in the future on acceptable terms, or at all.
In addition, our policy may not cover any claim against us for loss of data or other indirect or consequential damages and defending a suit, regardless of its merit, could be costly and divert management’s attention.
−Removed: While we have dedicated resources to privacy and security matters, our response process may not be adequate, may fail to accurately assess the severity of an incident, may not respond quickly enough, or may fail to sufficiently remediate an incident, among other issues.
Our efforts to address undesirable activity on our platform may also increase the risk of retaliatory attacks.
As a result, we may suffer significant legal, reputational, or financial exposure, which could adversely affect our business and results of operations.
−Removed: Failures in the systems and infrastructure supporting our solutions and operations could significantly disrupt our operations and cause us to lose clients.
+Added: Failures in the systems and infrastructure supporting our solutions and operations, including as we scale our offerings, could significantly disrupt our operations and cause us to lose clients.
In addition to the optimal performance of Criteo AI Engine, our business relies on the continued and uninterrupted performance of our software and hardware infrastructures.
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Sustained or repeated system failures of our software or hardware infrastructures (such as massive and sustained data center outages) or of the software or hardware infrastructures of our third-party providers, which interrupt our ability to deliver advertisements quickly and accurately, our ability to serve and track advertisements, our ability to process consumers’ responses to those advertisements or otherwise disrupt our internal operations, could significantly reduce the attractiveness of our offering to clients and publishers, reduce our revenue or otherwise negatively impact our financial situation, impair our reputation and subject us to significant liability.
+Added: Additionally, if, for any reason, our arrangement with one or more data centers is terminated, we could experience additional expense in arranging for new facilities and support.
+Added: Any steps we take to increase the security, reliability and redundancy of our systems supporting the Criteo technology or operations may be expensive and may not be successful in preventing system failures.
+Added: Similarly, advancements in machine learning approaches and other technology may require us to upgrade or replace essential hardware (such as graphics processing units), which could involve substantial resources and could be difficult to implement.
In addition, while we seek to maintain excess capacity to facilitate the rapid provision of new client deployments and the expansion of existing client deployments, we may need to increase data center hosting capacity, bandwidth, storage, power or other elements of our system architecture and our infrastructure as our client base and/or our traffic continues to grow.
+Added: The expansion and improvement of our systems and infrastructure may require us to commit substantial financial, operational and technical resources, with no assurance our business will increase.
Our existing systems may not be able to scale up in a manner satisfactory to our existing or prospective clients, and may not be adequately designed with the necessary reliability and redundancy of certain critical portions of our infrastructure to avoid performance delays or outages that could be harmful to our business.
Our failure to continuously upgrade or increase the reliability and redundancy of our infrastructure to meet the demands of a growing base of global clients and publishers could adversely affect the functioning and performance of our technology and could in turn affect our results of operations.
−Removed: Finally, our systems are vulnerable to damage from a variety of sources, some of which are outside of our control, including telecommunications failures, natural disasters, terrorism, power outages, a variety of other possible outages affecting data centers, and malicious human acts, including hacking, computer viruses, malware and other security breaches.
+Added: Finally, our systems and the systems of our third-party providers are vulnerable to damage from a variety of sources, some of which are outside of our control, including telecommunications failures, natural disasters, terrorism, power outages, a variety of other possible outages affecting data centers, a decision to close any data center or the facilities of any other third-party provider without adequate notice, and malicious human acts, including hacking, computer viruses, malware and other security breaches.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target.
As a result, we may be unable to anticipate some of these techniques or to implement adequate preventive measures.
−Removed: Any steps we take to increase the security, reliability and redundancy of our systems supporting the Criteo technology or operations may be expensive and may not be successful in preventing system failures.
If we are unable to prevent system failures, the functioning and performance of our solutions could suffer, which in turn could interrupt our business and harm our results of operations.
−Removed: We are a company operating in a rapidly evolving industry, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
−Removed: Our recent growth rates may not be indicative of our future growth, and we expect our operating expenses to continue to increase in the foreseeable future.
−Removed: Accordingly, we may have difficulty sustaining profitability.
−Removed: We are a company operating in a rapidly evolving industry.
−Removed: Our ability to forecast our future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth in both our business and the digital advertising market generally, and the Display Advertising market in particular.
−Removed: We have encountered and will continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, including challenges in forecasting accuracy, determining appropriate investments, achieving market acceptance of our existing and future offerings, managing client implementations and developing new solutions.
−Removed: For example, the Criteo model historically focused solely on converting our clients’ website visitors into customers through our historical solution, Criteo Dynamic Retargeting .
−Removed: Since then, we have broadened our solutions portfolio to include additional marketing and monetization goals (including Awareness and Consideration) for commerce companies and consumer brands across web, apps and stores, many of which are new to us and for which we do not have a long and established track record.
−Removed: If our assumptions regarding these uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.
−Removed: You should not consider our revenue growth in past periods to be indicative of our future performance.
−Removed: In future periods, our revenue could decline or grow more slowly than we expect.
−Removed: We believe the growth of our revenue depends on a number of factors, including our ability to:
−Removed: attract new clients, and retain and expand our relationships with existing clients;
−Removed: maintain the breadth of our publisher network and attract new publishers, including publishers of web content, mobile applications and video and social games, in order to grow the volume and breadth of advertising inventory available to us;
−Removed: broaden our solutions portfolio to include additional marketing and monetization goals (including Awareness and Consideration) for commerce companies and consumer brands across the open Internet, including web, apps and stores;
−Removed: adapt our offering to meet evolving needs of businesses, including to address market trends such as (i) the migration of consumers from desktop to mobile and from websites to mobile applications, (ii) the increasing percentage of sales that involve multiple digital devices, (iii) the growing adoption by consumers of “ad-blocking” software on web browsers on desktop and/or on mobile devices and use or consumption by consumers of advertising-free services such as Netflix, (iv) changes in the marketplace for and supply of advertising inventory, including the shift toward header bidding;
−Removed: and (v) changes in the overall ecosystem such as Apple's introduction of its Intelligent Tracking Prevention feature into its Safari browser, Microsoft’s Tracking Prevention feature in its Edge browser, and Mozilla’s introduction of Enhanced Tracking Protection into its Firefox browser;
−Removed: and (vi) changes in consumer acceptance of tracking technologies for targeted or behavioral advertising purposes;
−Removed: maintain and increase our access to data necessary for the performance of Criteo AI Engine;
−Removed: continuously improve the algorithms underlying Criteo AI Engine and apply the state of the art in Machine Learning approaches and hardware;
−Removed: continue to adapt to a changing regulatory landscape governing data protection and privacy matters.
−Removed: We also anticipate that our operating expenses will continue to increase as we scale our business, grow our headcount and expand our operations.
−Removed: In particular, we plan to continue to focus on maximizing our revenue after traffic acquisition costs on an absolute basis, or the revenue we derive after deducting the costs we incur to purchase advertising inventory, which we call Revenue ex-TAC, as we believe this focus fortifies a number of our competitive strengths, including access to advertising inventory, breadth and depth of data and continuous improvement of Criteo AI Engine’s performance.
−Removed: As part of this focus, we are continuing to invest in (i) building relationships with direct publishers on both web and mobile application properties, (ii) increasing access to leading advertising exchanges on both web and mobile application properties, and (iii) enhancing the liquidity of our advertising inventory supply, which may include purchasing advertising inventory that may result in lower margin on an individual impression basis and may be less effective in generating user engagement and driving measurable results, including sales, for our clients.
−Removed: In addition, we are experiencing, and expect to continue to experience, increased competition for advertising inventory purchased on a programmatic basis.
−Removed: Our focus on maximizing Revenue ex-TAC on an absolute basis may have an adverse impact on our gross margin and we cannot be certain that this strategy will be successful or result in increased liquidity or long-term value for our shareholders.
−Removed: In addition, as our business expands, we may not be able to maintain our current profitability margin or to achieve our long-term profitability margin target.
−Removed: For example, our midmarket business is currently less profitable than our large client business.
−Removed: As we expect our midmarket business to grow as a proportion of our overall business, our profitability may be negatively affected.
−Removed: Similarly, as we transition to a multi-solution company, with solutions available to clients across several advertising channels, new solutions may require additional investments in sales, business development and marketing, such as product sales specialists or similar resources to enable sales.
−Removed: As a result of such additional investments, our new solutions may be less profitable than our existing business and therefore drive down our overall profitability.
−Removed: In periods of economic uncertainty, businesses may delay or reduce their spending on advertising, which could materially harm our business.
−Removed: General worldwide economic conditions have been significantly unstable in recent years, especially in the European Union where we generated 29% of our revenue for 2019 .
−Removed: Unstable conditions make it difficult for our clients and us to accurately forecast and plan future business activities, and could cause our clients to reduce or delay their advertising spending with us.
−Removed: Historically, economic downturns have resulted in overall reductions in advertising spending, and businesses may curtail spending both on advertising in general and on a solution such as ours.
−Removed: We cannot predict the timing, strength or duration of any economic slowdown or recovery.
−Removed: Any macroeconomic deterioration in the future, especially further deterioration in the European Union and some emerging markets, such as Brazil and Russia, could impair our revenue and results of operations.
−Removed: Furthermore, we have recently expanded our offerings to serve a larger number of smaller clients, and have expanded into emerging markets such as Brazil, India, and Russia.
−Removed: Our changing client portfolio exposes us to additional credit risk, which could result in further exposure in the event of economic uncertainty or an economic downturn.
−Removed: In addition, even if the overall economy improves, we cannot assure you that the market for digital advertising and Display Advertising will experience growth or that we will experience growth.
−Removed: Furthermore, we generally sell through insertion orders with our clients.
−Removed: These insertion orders generally do not include long-term obligations and are cancellable upon short notice and without penalty.
−Removed: Any reduction in advertising spending could limit our ability to grow our business and negatively affect our results of operations.
−Removed: We derive a significant portion of our revenue from companies in the retail, travel and classified industries, and any downturn in these industries or any changes in regulations affecting these industries could harm our business.
−Removed: A significant portion of our revenue is derived from companies in the retail, travel and classifieds industries.
−Removed: For example, in 2017 , 2018 and 2019 , 67.8%, 69.1% and 68.9%, respectively, of our combined revenue for Criteo Marketing Solutions 1 was derived from advertisements placed for retail commerce businesses.
−Removed: While we have been growing our client base in additional industries such as gaming, ride-sharing and food delivery, and expect to continue to do so in the future, any downturn or increased competitive pressure in any of our core industries, or other industries we may target in the future, may cause our clients to reduce their spending with us, or delay or cancel their advertising campaigns with us.
−Removed: Furthermore, our business could be negatively impacted by the application of existing laws and regulations or the enactment of new laws by federal, state and foreign governmental or regulatory agencies which would impose taxes on goods and services provided over the internet.
−Removed: To the extent such taxes discourage the use of the internet as a means of commercial marketing or reduce the amount of products and services offered through ecommerce websites, online advertising spending may decline and the use or attractiveness of our offering by our clients or potential clients may be adversely affected.
−Removed: We have substantial client concentration in certain local markets and solutions, with a limited number of clients accounting for a substantial portion of our revenues in those areas.
−Removed: Although our overall customer base is well-diversified, in certain of our local markets and specific solutions we derive a substantial portion of revenues from a limited number of clients.
−Removed: For example, for fiscal year 2019, one single large client accounted for a third of our revenues in Korea, and four clients accounted for more than 50% of our revenues within the mobile marketing solutions of our business previously known as Manage.com.
−Removed: There are inherent risks whenever a large percentage of revenues within any specific market or solution are concentrated within a limited number of clients.
−Removed: We cannot predict the future level of demand for our services and products that will be generated by these clients.
−Removed: In addition, revenues from these clients may fluctuate from time to time.
−Removed: Further, some of our contracts with these clients may permit them to terminate use of our products at any time (subject to notice and certain other provisions).
−Removed: If any of these clients terminate or reduce use of our products, our revenues within local markets or specific solutions may be negatively impacted.
+Added: If we are unable to protect our proprietary information or other intellectual property, our business could be adversely affected.
+Added: Our patents, trademarks, trade secrets, copyrights, and other intellectual property rights are important assets for us.
+Added: Various events outside of our control pose a threat to our intellectual property rights, as well as to our products, services, and technologies.
+Added: For example, effective intellectual property protection may not be available in every country in which we operate or intend to operate our business.
+Added: Third parties may knowingly or unknowingly infringe our proprietary rights or challenge proprietary rights held by us, and our pending and future trademark and patent applications may not be approved.
+Added: Although we seek to obtain patent protection for our innovations, it is possible we may not be able to protect some of these innovations in a sufficient or effective manner.
+Added: Moreover, we may not have adequate patent or copyright protection for certain innovations that later turn out to be important.
+Added: Furthermore, there is always the possibility, despite our efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed invalid or unenforceable.
+Added: Breaches of the security of our data center systems and infrastructure or other IT resources could also result in the exposure of our proprietary information.
+Added: Additionally, our trade secrets may be independently developed by competitors.
+Added: We cannot be certain that the steps we have taken to protect our trade secrets and proprietary information will prevent unauthorized use or reverse engineering of our trade secrets or proprietary information.
+Added: To protect or enforce our intellectual property rights, we may initiate litigation against third parties.
+Added: Any lawsuits that we initiate could be expensive, take significant time and divert management’s attention from other business concerns.
+Added: We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially valuable.
+Added: Any increase in the unauthorized use of our intellectual property may adversely affect our business, financial condition and results of operations.
+Added: Our business may suffer if it is alleged or determined that our technology or another aspect of our business infringes the intellectual property rights of others.
+Added: The online and mobile advertising industries are characterized by the existence of large numbers of patents, copyrights, trademarks, trade secrets and other intellectual property and proprietary rights.
+Added: Our success depends, in part, upon non-infringement of intellectual property rights owned by others and being able to resolve claims of intellectual property infringement or misappropriation without major financial expenditures or adverse consequences.
+Added: From time to time, we may be the subject of claims that our solutions and underlying technology infringe or violate the intellectual property rights of others, particularly as we expand the scope and complexity of our business.
+Added: Regardless of whether claims that we are infringing patents or other intellectual property rights have any merit, these claims are time-consuming and costly to evaluate and defend, and the outcome of any litigation is inherently uncertain.
+Added: Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could.
+Added: Claims that we are infringing patents or other intellectual property rights could subject us to significant liabilities for monetary damages, interfere with or delay our development, commercialization or provision of our offerings on acceptable terms, harm our reputation or require us to make technology or branding changes to our offerings.
+Added: In addition, we may be exposed to claims that the content contained in advertising campaigns violates the intellectual property or other rights of third parties.
+Added: Such claims could be made directly against us or against the advertising agencies we work with, and media networks and exchanges and publishers from whom we purchase advertising inventory.
+Added: Generally, under our agreements with advertising agencies, media networks and exchanges and publishers, we are required to indemnify the advertising agencies, media networks and exchanges and publishers against any such claim with respect to an advertisement we served.
+Added: We generally require our clients to indemnify us for any damages from any such claims.
+Added: There can be no assurance, however, that our clients will have the ability to satisfy their indemnification obligations to us, and pursuing any claims for indemnification may be costly or unsuccessful.
+Added: As a result, we may be required to satisfy our indemnification obligations to advertising agencies, media networks and exchanges and publishers or claims against us with our assets.
+Added: This result could harm our reputation, business, financial condition and results of operations, and could impact our relationships with advertising agencies, media networks and exchanges, or clients.
Our inability to use software licensed from third parties, or our use of open source software under license terms that interfere with our proprietary rights, could disrupt our business.
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In the future, we could be required to seek licenses from third parties in order to continue offering our solutions, which licenses may not be available on terms that are acceptable to us, or at all.
−Removed: ___________________________________________________
−Removed: 1 Excluding the business acquired from Manage.
Alternatively, we may need to re-engineer our offering or discontinue using portions of the functionality provided by our technology.
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Any such restriction on the use of our own software, or our inability to use open source or third-party software, could result in disruptions to our business or operations, or delays in our development of future offerings or enhancements of our existing platform, which could impair our business.
−Removed: We experience quarterly fluctuations in our results of operations due to a number of factors which make our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.
−Removed: Our quarterly results of operations fluctuate due to a variety of factors, many of which are outside of our control.
−Removed: As a result, comparing our results of operations on a period-to-period basis may not be meaningful.
−Removed: You should not rely on our past results as an indication of our future performance.
−Removed: If our revenue or results of operations fall below the expectations of investors or securities analysts, or below any guidance we may provide to the market, the price of our ADSs could decline substantially.
−Removed: Our operating results and cash flows from operations may vary from quarter to quarter due to the seasonal nature of our clients’ spending.
−Removed: For example, many businesses in the online retail industry devote the largest portion of their advertising spend to the fourth quarter of the calendar year, and many of our commerce clients typically conduct fewer advertising campaigns in the second quarter than they do in other quarters.
−Removed: With respect to Criteo Retail Media, the concentration of advertising spend in the fourth quarter of the year is particularly pronounced.
−Removed: If, and to the extent that, seasonal fluctuations are significant, our operating cash flows could fluctuate materially from period to period as a result.
−Removed: Additionally, implementing our advertising solutions for a client can be a long process, which generally requires clients to integrate software code on their digital property.
−Removed: This process can be complex and time-consuming, and can delay the deployment and use of our offering by a client even after the client has signed up to utilize it.
−Removed: Depending upon the time and resources that a client is willing to devote to the integration of our technology with their digital property and the nature and complexity of a client’s network and systems, the actual implementation of our solution may occur long after a client has signed up to use our solution.
−Removed: As a result, we may incur substantial expenses in one period without any guarantee of revenue generation in the near term, or at all.
−Removed: This possibly lengthy implementation cycle may result in difficulty in predicting our future results of operations.
−Removed: We also plan to continue to substantially increase our investment in research and development, product development and sales and marketing, as we seek to continue to expand geographically, into new marketing goals, into new solutions, into new advertising channels and into new industry verticals to capitalize on what we see as a growing global opportunity for us.
−Removed: Our general and administrative expenses may also increase to support our growing operations and due to the increased costs of operating as a public company.
−Removed: For the foregoing reasons or other reasons we may not anticipate, historical patterns should not be considered as indicative of our future quarterly results of operations.
−Removed: Other factors that may affect our quarterly results of operations include:
−Removed: the nature of our clients’ products or services;
−Removed: demand for our offering and the size, scope and timing of digital advertising campaigns;
−Removed: the lack of long-term agreements with our clients and publishers;
−Removed: client and publisher retention rates;
−Removed: market acceptance of our offering and future solutions and services (i) in current industry verticals and new industry verticals, (ii) in new geographic markets, (iii) in new advertising channels, or (iv) for broader marketing goals;
−Removed: the timing of large expenditures related to expansion into new solutions, new geographic markets, new industry verticals, acquisitions and/or capital projects;
−Removed: the timing of adding support for new digital devices, platforms and operating systems;
−Removed: the amount of inventory purchased through direct relationships with publishers versus internet advertising exchanges or networks;
−Removed: our clients’ budgeting cycles;
−Removed: changes in the competitive dynamics of our industry, including consolidation among competitors;
−Removed: consumers' response to our clients’ advertisements, to online advertising in general and to tracking technologies for targeted or behavioral advertising purposes;
−Removed: our ability to control costs, including our operating expenses;
−Removed: network outages, errors in our technology or security breaches and any associated expense and collateral effects;
−Removed: foreign currency exchange rate fluctuations, as some of our foreign sales and costs are denominated in their local currencies;
−Removed: failure to successfully manage any acquisitions;
−Removed: general economic and political conditions in our domestic and international markets.
−Removed: As a result, we may have a limited ability to forecast the amount of future revenue and expense, and our results of operations may from time to time fall below our estimates or the expectations of public market analysts and investors.
−Removed: We have significant global sales and operations and face risks related to health epidemics that could impact our sales and operating results.
−Removed: Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of respiratory illness caused by a novel strain of coronavirus (COVID-19) first identified in Wuhan, Hubei Province, China.
−Removed: Any outbreak of contagious diseases, and other adverse public health developments, could have a material adverse effect on our business operations.
−Removed: These could include disruptions or restrictions on our ability to travel or hold in-person commercial interactions, as well as temporary closures of our facilities or the facilities of our customers, the deferral of elective procedures in impacted countries, a disruption of supply chain for our customers, or the temporary suspension of operations by us or our customers.
−Removed: Additionally, because our revenues are, in part, tied to the revenues of our advertising customers, any impact on the business or revenues of our advertising customers may result in an impact on our own business or revenues.
−Removed: While the duration of business interruption from this outbreak and related financial impact cannot be reasonably estimated at this time, we expect that any disruption of our operations, or those of our customers, would likely impact our sales and operating results.
−Removed: In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our offerings and likely impact our operating results.
−Removed: Interruptions or delays in services provided by third-party providers that we rely upon could impair the performance of the Criteo technology or operations and harm our business.
−Removed: We currently lease space from third-party data center hosting facilities for our servers and/or networking equipment located in the United States (California, New York, Virginia), France, The Netherlands, Hong Kong and Japan.
−Removed: All of our data gathering and analytics are conducted on, and the advertisements we deliver are processed through, our servers and network equipment located in these facilities.
−Removed: We also rely on bandwidth providers and internet service providers to deliver advertisements.
−Removed: Any damage to, or failure of, the systems or facilities of our third-party providers could adversely impact our ability to deliver technology offering to our clients.
−Removed: If, for any reason, our arrangement with one or more data centers is terminated, we could experience additional expense in arranging for new facilities and support.
−Removed: The occurrence of a natural disaster, an act of terrorism, vandalism or sabotage, a decision to close any data center or the facilities of any other third-party provider without adequate notice, or other unanticipated problems at these facilities could result in lengthy interruptions in the availability of our technology or operations.
−Removed: Our testing of our services in actual disasters or similar events has been limited.
−Removed: If any such event were to occur, our business, results of operations and financial condition could be adversely affected.
−Removed: We are exposed to foreign currency exchange rate fluctuations.
−Removed: The functional currency of the Company is the euro, while our reporting currency is the U.S.
−Removed: Since we incur large portions of our expenses and derive significant revenues in currencies other than the euro, we are exposed to foreign currency exchange risk to the extent that our results of operations and cash flows are subject to fluctuations in foreign currency exchange rates.
−Removed: Foreign currency exchange risk exposure also arises from intra-company transactions and financing with subsidiaries that have a functional currency different than the euro.
−Removed: The statements of financial position of consolidated entities having a functional currency different from the U.S.
−Removed: dollar are translated into U.S.
−Removed: dollars at the closing exchange rate (spot exchange rate at the statement of financial position date) and the statement of income, statement of comprehensive income and statement of cash flow of such consolidated entities are translated at the average period to date exchange rate.
−Removed: The resulting translation adjustments are included in equity under the caption “Accumulated Other Comprehensive Income” in the consolidated statement of changes in equity.
−Removed: While we are engaging in hedging transactions to minimize the impact of uncertainty in future exchange rates on intra-company transactions and financing, we may not hedge all of our foreign currency exchange rate risk.
−Removed: In addition, hedging transactions carry their own risks and costs, including the possibility of a default by the counterparty to the hedge transaction.
−Removed: There can be no assurance that we will be successful in managing our foreign currency exchange rate risk.
−Removed: We cannot predict the impact of foreign currency fluctuations, and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.
−Removed: Our failure to maintain certain tax benefits applicable to French technology companies may adversely affect our results of operations.
−Removed: As a French technology company, we have benefited from certain tax advantages, including, for example, a reduced tax rate in France on technology royalty income received from subsidiaries and the French research tax credit ( crédit d’impôt recherche ), or CIR.
−Removed: The CIR is a French tax credit aimed at stimulating research and development.
−Removed: The CIR can be offset against French corporate income tax due and the portion in excess (if any) may be refunded at the end of a three fiscal-year period.
−Removed: The CIR is calculated based on our claimed amount of eligible research and development expenditures in France and represented $6.3 million, $10.9 million and $16.2 million for 2017 , 2018 and 2019 , respectively and is classified as a reduction of our research and development expenses.
−Removed: The French tax authority, with the assistance of the Research and Technology Ministry, may audit each research and development program in respect of which a CIR benefit has been claimed and assess whether such program qualifies, in their view, for the CIR benefit.
−Removed: If the French tax authority determines that our research and development programs do not meet the requirements for the CIR benefit, or challenges our calculations with respect to the CIR benefit, we could be liable for additional corporate tax, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows.
−Removed: Furthermore, if the French Parliament decides to modify the regime of the reduced tax rate on technology royalty income or to reduce the scope or the rate of the CIR benefit, which it could decide to do at any time, our results of operations could be adversely affected.
−Removed: We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions as a result of new taxes or laws, or revised interpretations thereof, which may negatively affect our business.
−Removed: As a multinational organization operating in multiple jurisdictions we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
−Removed: The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and results of operations.
−Removed: For example, many of the jurisdictions in which we conduct business have detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arm’s length pricing principles.
−Removed: Contemporaneous documentation must exist to support this pricing.
−Removed: The tax authorities in these jurisdictions could challenge whether our related party transfer pricing policies are at arm’s length and, as a consequence, challenge our tax treatment of corresponding expenses and income.
−Removed: International transfer pricing is an area of taxation that depends heavily on the underlying facts and circumstances and generally involves a significant degree of judgment.
−Removed: If any of these tax authorities were successful in challenging our transfer pricing policies, we may be liable for additional corporate income tax, and penalties, fines and interest related thereto, which may have a significant impact on our effective tax rate, results of operations and future cash flows.
−Removed: The European Union and its member states, as well as a number of other countries, are actively considering changes to existing tax laws or have enacted new tax laws applicable to digital business activities.
−Removed: Such taxes could increase our tax liability in many countries where we do business.
−Removed: holders of our ADSs may suffer adverse tax consequences if we are characterized as a passive foreign investment company.
−Removed: corporation will be considered a passive foreign investment company, or PFIC, for U.S.
−Removed: federal income tax purposes, any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during such year) is attributable to assets that produce or are held for the production of passive income.
−Removed: Based on the value and composition of our assets, although not free from doubt, we do not believe we were a PFIC for the taxable year ended December 31, 2019, and we do not expect to be a PFIC in the current taxable year or the foreseeable future.
−Removed: Since a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year), we cannot assure you that we will not be or become a PFIC in the current year or any future taxable year.
−Removed: If we are a PFIC for any taxable year during which a U.S.
−Removed: holder holds ADSs, the U.S.
−Removed: holder may be subject to adverse tax consequences, including (1) the treatment of all or a portion of any gain on disposition as ordinary income, (2) the application of an interest charge with respect to such gain and certain dividends and (3) compliance with certain reporting requirements.
−Removed: holder is strongly urged to consult its tax advisor regarding the application of these rules and the availability of any potential elections.
−Removed: If a United States person is treated as owning at least 10% of our ADSs, such person may be subject to adverse U.S.
−Removed: federal income tax consequences.
−Removed: If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ADSs, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any).
−Removed: Because our group includes one or more U.S.
−Removed: subsidiaries, certain of our non-U.S.
−Removed: subsidiaries could be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation).
−Removed: A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S.
−Removed: taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S.
−Removed: property by controlled foreign corporations, regardless of whether we make any distributions.
−Removed: Failure to comply with such reporting requirements could result in adverse tax effects for United States shareholders and potentially significant monetary penalties.
−Removed: An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S.
−Removed: We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S.
−Removed: subsidiaries is treated as a controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned obligations.
−Removed: A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ADSs.
Risks Related to Ownership of Our Shares and the ADSs and the Trading of the ADSs
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Since the ADSs were sold at our initial public offering in October 2013 at a price of $31.00 per share, the price per ADS has ranged as low as $5.89 and as high as $60.95 through December 31, 2020.
−Removed: The market price of the ADSs may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
+Added: The market price of the ADSs has fluctuated and may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
• actual or anticipated fluctuations in our revenue and other results of operations;
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• any other risks identified in this Form 10-K.
−Removed: In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies.
+Added: In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies.
Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies.
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If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.
−Removed: If securities or industry analysts cease publishing research or publish inaccurate or unfavorable research about our business or our industry, the price and trading volume of the ADSs could decline.
−Removed: The trading market for the ADSs depends in part on the research and reports that securities or industry analysts publish about us or our business.
−Removed: If one or more of the analysts who covers us downgrades the ADSs or publishes incorrect or unfavorable research about our business, the price of the ADSs would likely decline.
−Removed: If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for the ADSs could decrease, which could cause the price of the ADSs or trading volume to decline.
Our business could be negatively impacted by the activities of predatory hedge funds or short sellers.
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Additional capital may not be available on favorable terms, or at all, which could compromise our ability to meet our financial obligations and grow our business.
−Removed: While we anticipate that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations for at least the next 12 months, we may need to raise additional capital to fund operations in the future or to finance acquisitions.
−Removed: If adequate funds are not available on acceptable terms, we may be unable to fund the expansion of our research and development and sales and marketing efforts, increase working capital, take advantage of acquisition or other opportunities, or adequately respond to competitive pressures which could seriously harm our business and results of operations.
We currently have a senior unsecured revolving credit facility under which we may borrow up to €350 million (or its equivalent in U.S.
dollars or, subject to the satisfaction of certain conditions, other optional currencies) for general corporate purposes, including the funding of business combinations (the "General RCF").
−Removed: To the extent we draw on the General RCF or incur new debt, the debt holders have rights senior to shareholders to make claims on our assets, and the terms of such debt could restrict our operations, including our ability to pay dividends on our ordinary shares.
−Removed: In addition, pursuant to the terms of our credit facilities, we may be restricted in the use of such facilities to fund capital expenditures and information technology-related expenses may be restricted.
−Removed: If adequate additional funds are not available, we may be required to delay, reduce the scope of, or eliminate material parts of our business strategy, including potential additional acquisitions or development of new technologies.
+Added: While we anticipate that our existing cash and cash equivalents and short-term investments will be sufficient to fund our operations for at least the next 12 months, we may need to raise additional capital to fund operations in the future or to finance acquisitions.
+Added: If adequate funds are not available on acceptable terms, we may be unable to fund the expansion of our research and development and sales and marketing efforts, increase working capital, take advantage of acquisition or other opportunities, or adequately respond to competitive pressures which could seriously harm our business and results of operations.
Furthermore, if we issue additional equity securities, shareholders will experience dilution, and the new equity securities could have rights senior to those of our ordinary shares.
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In addition, we have used a portion of our available liquidity to repurchase our Company's shares in the past, and may continue to do so from time to time in the future.
−Removed: Further, the credit agreement for the General RCF contains restrictions on our ability to pay dividends.
In addition, to the extent any dividends are paid in the future, under French law, payment of such dividends may subject us to additional taxes, and the determination of whether we have been sufficiently profitable to pay dividends is made on the basis of our statutory financial statements prepared and presented in accordance with accounting principles generally accepted in France.
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Consequently, investors may need to sell all or part of their holdings of ADSs after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
−Removed: In July 2019, our board of directors authorized a share repurchase program of up to $80.0 million (€70.5 million) of our outstanding ADSs.
−Removed: We intend to use repurchased shares to satisfy employee equity plan vesting in lieu of issuing new shares, and potentially in connection with M&A transactions.
−Removed: The repurchase program commenced in July 2019 and remains in effect until May 15, 2020.
−Removed: If we adopt another such program in the future, the actual amount and timing of future share repurchases, if any, will depend on market and economic conditions, applicable SEC rules, federal and state regulatory restrictions, cash availability and various other factors.
−Removed: Further, as a French private company, we are subject to certain limitations with respect to share repurchase programs that would not apply if we were a U.S.
−Removed: company, which may limit our flexibility.
−Removed: If we were to adopt another such share buyback program, there would be no guarantee that it would enhance shareholder value.
−Removed: Any share repurchases could increase volatility in the trading price of our ADSs and would diminish our available cash.
−Removed: Any share buyback program we adopt may also be suspended or terminated at any time, which may result in a decrease in the trading price of our ADSs.
Our credit agreement contains, and future debt agreements may contain, restrictions that may limit our flexibility in operating our business.
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Our credit agreement also requires, and documents governing our future indebtedness may require, us or our subsidiaries to meet certain financial ratios and tests in order to incur certain additional debt, make certain loans, acquisitions or other investments, or pay dividends or make other distributions or restricted payments.
+Added: To the extent we draw on the General RCF or incur new debt, the debt holders have rights senior to shareholders to make claims on our assets.
Our ability and the ability of our subsidiaries to comply with these and other provisions of our debt agreements are dependent on our future performance, which will be subject to many factors, some of which are beyond our control.
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In addition, provisions of our by-laws impose various procedural and other requirements, which could make it more difficult for shareholders to effect certain corporate actions.
−Removed: These provisions include the following:
+Added: These provisions include, but are not limited to, the following:
• our ordinary shares are in registered form only and we must be notified of any transfer of our shares in order for such transfer to be validly registered;
−Removed: under French law, a non-resident of France as well as any French entity controlled by non-French residents may have to file a declaration for statistical purposes with the Bank of France ( Banque de France ) following the date of certain direct or indirect investments in us (see the section entitled "Exchange Controls & Ownership by Non-French Residents" in Item 5 to Part II in this Form 10-K);
• under French law, any individual or entity located outside of the European Union may need to seek the authorization of the French Minister of Economy prior to acquiring the control of, all or part of a business of, or more than 33.33% of the share capital or voting rights of the Company (see the section entitled" Exchange Controls & Ownership by Non-French Residents" in Item 5 to Part II in this Form 10-K);
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• under French law, a cash merger is treated as a share purchase and would require the consent of each participating shareholder;
−Removed: our shareholders have granted and may grant in the future our board of directors broad authorizations to increase our share capital or to issue additional ordinary shares or other securities (for example, warrants) to our shareholders, the public or qualified investors, including as a possible defense following the launching of a tender offer for our shares;
• our shareholders have preferential subscription rights proportionally to their shareholding in our company on the issuance by us of any additional securities for cash or a set-off of cash debts, which rights may only be waived by the extraordinary general meeting (by a two-thirds majority vote) of our shareholders or on an individual basis by each shareholder.
−Removed: our board of directors has the right to appoint directors to fill a vacancy created by the resignation or death of a director, subject to the approval by the shareholders of such appointment at the next shareholders’ meeting, which prevents shareholders from having the sole right to fill vacancies on our board of directors;
−Removed: our board of directors can only be convened by its chairman or, when no board meeting has been held for more than two consecutive months, by directors representing at least one third of the total number of directors;
−Removed: our board of directors meetings can only be regularly held if at least half of the directors attend either physically or by way of videoconference or teleconference enabling the directors’ identification and ensuring their effective participation in the board’s decisions;
−Removed: approval of at least a majority of the votes held by shareholders present, represented by a proxy, or voting by mail at the relevant ordinary shareholders’ general meeting, is required to remove directors with or without cause;
−Removed: advance notice is required for nominations to the board of directors or for proposing matters to be acted upon at a shareholders’ meeting, except that a vote to remove and replace a director can be proposed at any shareholders’ meeting without notice;
−Removed: pursuant to French law, the sections of the by-laws relating to the number of directors and election and removal of a director from office may only be modified by a resolution adopted by a two-thirds majority of the votes of our shareholders present, represented by a proxy or voting by mail at the relevant extraordinary shareholders' meeting.
You may not be able to exercise your right to vote the ordinary shares underlying your ADSs.
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In addition, you may not be able to cancel your ADSs and withdraw the underlying ordinary shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.
−Removed: If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of the ADSs may, therefore, be adversely impacted.
−Removed: As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control.
−Removed: In addition, we are required to submit a report by management to the Audit Committee and external auditors on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and our independent registered public accounting firm is required to attest to the effectiveness of our internal controls over financial reporting.
−Removed: If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the ADSs may be adversely impacted, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
investors may have difficulty enforcing civil liabilities against our company and directors and senior management.
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It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.
+Added: General Risk Factors
+Added: In periods of economic uncertainty, businesses may delay or reduce their spending on advertising, and we are exposed to the credit risk of some of our clients and customers, which could materially harm our business.
+Added: General worldwide economic conditions have been significantly unstable in recent years, especially in the European Union where we generated 30% of our revenue for 2020.
+Added: Unstable conditions make it difficult for our clients and us to accurately forecast and plan future business activities, and could cause our clients to reduce or delay their advertising spending with us.
+Added: Historically, economic downturns have resulted in overall reductions in advertising spending, and businesses may curtail spending both on advertising in general and on a solution such as ours.
+Added: We cannot predict the timing, strength or duration of any economic slowdown or recovery.
+Added: Any macroeconomic deterioration in the future, especially further deterioration in the European Union and some emerging markets, such as Brazil and Russia, could impair our revenue and results of operations.
+Added: Furthermore, we have expanded our offerings to serve a larger number of smaller clients, and have expanded into emerging markets such as Brazil, India, Russia and Turkey.
+Added: Our changing client portfolio exposes us to additional credit risk, which could result in further exposure in the event of economic uncertainty or an economic downturn.
+Added: Additionally, our exposure to credit risks relating to our financing activities may increase if our customers are adversely affected by periods of economic uncertainty or a global economic downturn.
+Added: For instance, due to the impact of the COVID-19 pandemic, certain of our customers have had and may continue to have difficulty meeting their payment obligations to us, resulting in late or non-payment of amounts owed.
+Added: These losses have significantly impacted, and could continue to significantly impact, our operating results and financial condition.
+Added: If we fail to maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of the ADSs may, therefore, be adversely impacted.
+Added: As a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control.
+Added: In addition, we are required to submit a report by management to the Audit Committee and external auditors on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and our independent registered public accounting firm is required to attest to the effectiveness of our internal controls over financial reporting.
+Added: If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or assert that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of the ADSs may be adversely impacted, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
+Added: Our failure to maintain certain tax benefits applicable to French technology companies may adversely affect our results of operations.
+Added: As a French technology company, we have benefited from certain tax advantages, including, for example, a reduced tax rate in France on technology royalty income received from global subsidiaries and the French research tax credit ( crédit d’impôt recherche ), or CIR.
+Added: The French tax authority may audit these tax incentives and challenge the benefits.
+Added: Therefore, we could be liable for additional corporate tax, and penalties and interest related thereto, which could have a significant impact on our results of operations and future cash flows.
+Added: Furthermore, the tax laws may change, and could remove these incentives in the future or reduce their benefits.
+Added: We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions as a result of new taxes or laws, or revised interpretations thereof, which may negatively affect our business.
+Added: As a multinational organization operating in multiple jurisdictions we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain.
+Added: The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and results of operations.
+Added: holders of our ADSs may suffer adverse tax consequences if we are characterized as a passive foreign investment company.
+Added: corporation will be considered a passive foreign investment company, or PFIC, for U.S.
+Added: federal income tax purposes, any taxable year if either (1) at least 75% of its gross income for such year is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during such year) is attributable to assets that produce or are held for the production of passive income.
+Added: Based on the value and composition of our assets, although not free from doubt, we do not believe we were a PFIC for the taxable year ended December 31, 2020, and we do not expect to be a PFIC in the current taxable year or the foreseeable future.
+Added: Since a separate factual determination as to whether we are or have become a PFIC must be made each year (after the close of such year), we cannot assure you that we will not be or become a PFIC in the current year or any future taxable year.
+Added: If we are a PFIC for any taxable year during which a U.S.
+Added: holder holds ADSs, the U.S.
+Added: holder may be subject to adverse tax consequences, including (1) the treatment of all or a portion of any gain on disposition as ordinary income, (2) the application of an interest charge with respect to such gain and certain dividends and (3) compliance with certain reporting requirements.
+Added: holder is strongly urged to consult its tax advisor regarding the application of these rules and the availability of any potential elections.
+Added: If a United States person is treated as owning at least 10% of our ADSs, such person may be subject to adverse U.S.
+Added: federal income tax consequences.
+Added: If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ADSs, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any).
+Added: Because our group includes one or more U.S.
+Added: subsidiaries, certain of our non-U.S.
+Added: subsidiaries could be treated as controlled foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation).
+Added: A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S.
+Added: taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S.
+Added: property by controlled foreign corporations, regardless of whether we make any distributions.
+Added: Failure to comply with such reporting requirements could result in adverse tax effects for United States shareholders and potentially significant monetary penalties.
+Added: An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S.
+Added: We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S.
+Added: subsidiaries is treated as a controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned obligations.
+Added: A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ADSs.
Unresolved Staff Comments
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.