What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-02-26 compared with 2020-03-02 · 106 added, 101 removed, 249 unchanged (45% of the section changed)

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In addition, under the General RCF, we may not declare, make or pay dividends if our net debt to Adjusted EBITDA leverage ratio exceeds 2.0x.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2019 regarding compensation plans under which our equity securities are authorized for issuance.

Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights (1)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

(1) The weighted-average exercise price does not reflect the ordinary shares that will be issued in connection with the vesting of free shares, since free shares have no exercise price.

(2) The weighted-average exercise price was €24.12 and has been converted to U.S.

dollars based on the average exchange rate for the year ended December 31, 2019 of €1.00=$1.119574.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

In July 2019, the Board of Directors authorized a program to repurchase up to $80 million of our ADSs.

The repurchase program commenced in July 2019 and remains in effect until May 15, 2020.

As of December 31, 2019, we had repurchased a total of 3,241,932 ADSs under the July 2019 share repurchase program.

The following table summarizes the share repurchase activity for the three months ended December 31, 2019 :

Total Number of Shares Purchased

Average Price Paid Per Share (1)

Total Number of Shares Purchased as Part of Publicly Announced Programs

Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs

October 1 to 31, 2019

53,700,529.96

November 1 to 30, 2019

35,567,215.14

December 1 to 31, 2019

21,444,974.94

(1) Average price paid per share excludes any broker commissions paid.

We completed two ADS repurchase programs in 2020:

our July 2019 program of up to $80 million, which was completed in February 2020, and our April 2020 program of up to $30 million, which was completed in July 2020.

We did not have any share repurchase activity for the three months ended December 31, 2020.

Recent Sales of Unregistered Securities and Use of Proceeds

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Such changes could apply retroactively and could affect the consequences described below.

In 2011, France introduced a comprehensive set of new tax rules applicable to French assets that are held by or in foreign trusts.

These rules, among other things, provide for the inclusion of trust assets in the settlor’s net assets for purpose of applying the French wealth tax, for the application of French gift and death duties to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the French wealth tax and for a number of French tax reporting and disclosure obligations.

The following discussion does not address the French tax consequences applicable to securities held in trusts.

If securities are held in trust, the grantor, trustee and beneficiary are urged to consult their own tax adviser regarding the specific tax consequences of acquiring, owning and disposing of securities.

The description of the French income tax and wealth tax consequences set forth below is based on the Convention Between the Government of the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, or the Treaty, which came into force on December 30, 1995 (as amended by additional protocols of December 8, 2004 and January 13, 2009), and the tax guidelines issued by the French tax authorities in force as of the date of this Form 10-K.

For the purposes of this discussion, the term “U.S.

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federal income tax purposes, (2) a U.S.

domestic corporation or certain other entities created or organized in or under the laws of the United States or any state thereof, including the District of Colombia, or (3) otherwise subject to U.S.

domestic corporation or certain other entities created or organized in or under the laws of the United States or any state thereof, including the District of Columbia, or (3) otherwise subject to U.S.

federal income taxation on a net income basis in respect of securities.

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Holders are urged to consult their own tax advisers regarding the tax consequences of the purchase, ownership and disposition of securities in light of their particular circumstances, especially with regard to the “Limitations on Benefits” provision.

Estate and Gift Taxes and Transfer Taxes

In general, a transfer of securities by gift or by reason of death of a U.S.

Holder that would otherwise be subject to French gift or inheritance tax, respectively, will not be subject to such French tax by reason of the Convention between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts, dated November 24, 1978 (as amended by the protocol of December 8, 2004), unless the donor or the transferor is domiciled in France at the time of making the gift or at the time of his or her death, or the securities were used in, or held for use in, the conduct of a business through a permanent establishment or a fixed base in France.

Furthermore, in 2011, France introduced a comprehensive set of new tax rules applicable to French assets that are held by or in foreign trusts.

These rules, among other things, provide for the inclusion of trust assets in the settlor’s net assets for purpose of applying the French wealth tax, for the application of French gift and inheritance tax to French assets held in trust, for a specific tax on capital on the French assets of foreign trusts not already subject to the French wealth tax and for a number of French tax reporting and disclosure obligations.

The following discussion does not address the French tax consequences applicable to securities held in trusts.

Purchasing Consequences

Financial Transactions Tax

Pursuant to Article 235 ter ZD of the Code général des impôts (French Tax Code, or FTC), purchases of shares or ADSs of a French company listed on a regulated market of the European Union or an exchange formally acknowledged by the French Financial Market Authority (AMF) are subject to a 0.3% French tax on financial transactions provided that the issuer’s market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year.

Pursuant to Article 235 ter ZD of the French Tax Code ("FTC"), purchases of shares or ADSs (of a French company listed on a regulated market of the European Union or an exchange formally acknowledged by the French Financial Market Authority (AMF)) are subject to a 0.3% French tax on financial transactions provided that the issuer’s market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year.

A list of companies whose market capitalization exceeds €1 billion as of December 1 of the year preceding the taxation year within the meaning of Article 235 ter ZD of the French Tax Code is published annually by the French tax authorities.

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Please note that such list may be updated from time to time, or may not be published anymore in the future.

Furthermore, Nasdaq is not currently acknowledged by the French AMF but this may change in the future.

Nasdaq is not currently acknowledged by the French AMF but this may change in the future.

Consequently, Criteo’s securities should not fall within the scope of the tax on financial transactions described above.

In the future, purchases of Criteo’s securities may become subject to such tax if Nasdaq is acknowledged by the French AMF.

Registration Duties

In the case where Article 235 ter ZD of the FTC is not applicable, (i) transfers of shares issued by a listed French company are subject to uncapped registration duties at the rate of 0.1% if the transfer is evidenced by a written statement (“acte”) executed either in France or outside France, whereas (ii) transfers of shares which are not listed are subject to uncapped registration duties at the rate of 0.1% notwithstanding the existence of a written statement (“acte”).

As ordinary shares of Criteo are not listed, their transfer is subject to uncapped registration duties at the rate of 0.1% notwithstanding the existence of a written agreement (“acte”).

Although the official guidelines published by the French tax authorities are silent on this point, ADSs should remain outside of the scope of the aforementioned 0.1% registration duties.

The French wealth tax (impôt de solidarité sur la fortune) has been repealed by the finance bill for 2018 ( loi de finances pour 2018 ) dated December 30, 2017.

It used to apply only to individuals and did not generally apply to securities held by a U.S.

Holder who is a resident pursuant to the provisions of the Treaty, provided that such U.S.

Holder does not own directly or indirectly more than 25% of the issuer’s financial rights.

As from January 1, 2018, it has been replaced by a new real estate wealth tax ( impôt sur la fortune immobilière ) which applies only to individuals owning French real estate assets or rights, directly or indirectly through one or more legal entities and whose net taxable assets amount to at least 1,300,000 euros.

French real estate wealth tax may only apply to a U.S.

individual to the extent such individual holds, directly or indirectly, financial rights into a company the assets of which comprise French real estate assets that are not allocated to its operational activity.

Such financial rights may be taxable for the fraction of their value representing the French real estate assets that are not allocated to an operational activity.

In any case, pursuant to Article 965 2° of the FTC, shares of an operating company holding French real estate assets in which the relevant individual holds, directly and indirectly, less than 10% of the share capital or voting rights are exempt from real estate wealth tax.

In the case where Article 235 ter ZD of the FTC is not applicable, transfers of shares which are not listed on a regulated market of the European Union or an exchange formally acknowledged by the French Financial Market Authority (AMF) are subject to uncapped registration duties at the rate of 0.1%.

As ordinary shares of Criteo are not listed on an exchange formally acknowledged by the French Financial Market Authority (AMF) , their transfer should be subject to uncapped registration duties at the rate of 0.1%.

However, although the official guidelines published by the French tax authorities are silent on this point, ADSs should remain outside of the scope of the aforementioned 0.1% registration duties as they cannot be considered as French shares.

Ownership Consequences

Taxation of Dividends

Dividends paid by a French corporation to non-residents of France are generally subject to French withholding tax at a rate of 30% for corporate bodies or other legal entities (which is expected in principle to be progressively decreased to 25% in the coming years) or 12.8% for individuals.

Dividends paid by a French corporation to non-residents of France are generally subject to French withholding tax at a rate of 28% for corporate bodies or other legal entities (which is expected to be progressively decreased to 25% in 2022) or 12.8% for individuals.

Dividends paid by a French corporation in a non-cooperative State or territory, as set out in the list referred to in Article 238-0 A of the FTC, will generally be subject to French withholding tax at a rate of 75%.

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Holders entitled to Treaty benefits under the “Limitation on Benefits” provision contained in the Treaty who are U.S.

residents, as defined pursuant to the provisions of the Treaty, will not be subject to the 12.8%, 30% in 2019 and 28% in 2020, or 75% withholding tax rate, but may be subject to the withholding tax at a reduced rate (as described below).

Under the Treaty, the rate of French withholding tax on dividends paid to an eligible U.S.

tax residents, as defined pursuant to the provisions of the Treaty may be subject to the withholding tax at a reduced rate (as described below).

Under the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, the rate of French withholding tax on dividends paid to an eligible U.S.

Holder who is a U.S.

resident as defined pursuant to the provisions of the Treaty and whose ownership of the ordinary shares or ADSs is not effectively connected with a permanent establishment or fixed base that such U.S.

tax resident as defined pursuant to the provisions of the Treaty and whose ownership of the ordinary shares or ADSs is not effectively connected with a permanent establishment or fixed base that such U.S.

Holder has in France, is generally reduced to 15%, or to 5% if such U.S.

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The withholding tax refund, if any, ordinarily occurs within 12 months from filing the applicable French Treasury Form, but not before January 15 of the year following the calendar year in which the related dividend was paid.

Tax on Sale or Other Disposition

As a matter of principle, under French tax law, U.S.

Holder should not be subject to any French tax on any capital gain from the sale, exchange, repurchase or redemption by us of ordinary shares or ADSs, provided that all of the following apply to such U.S.

Holder is not a French tax resident for French tax purposes;

Holder has not held more than 25% of our dividend rights, known as “ droits aux bénéfices sociaux ” at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives;

Holder has not transferred ordinary shares or ADSs as part of redemption by Criteo, in which case the proceeds may under certain circumstances be partially or fully characterized as dividends under French domestic law and, as result, be subject to French dividend withholding tax.

As an exception, a U.S Holder, established, domiciled or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC should be subject to a 75% withholding tax in France on any such capital gain, regardless of the fraction of the dividend rights it holds.

In case an applicable double tax treaty between France and the U.S.

Holder country of residence contains more favorable provisions, a U.S.

Holder may not be subject to any French income tax or capital gains tax in case of sale or disposal of any ordinary shares or ADSs of Criteo even if one or more of the above mentioned statements are not applicable.

Particularly, a U.S.

At last, please note that subject to certain conditions, corporations can obtain a full refund of the withholding tax if they are in loss-making position.

In such case, the taxation is deferred and will occur if and when profits will be made.

As from January 1, 2018, French wealth tax has been replaced by a new real estate wealth tax which applies only to individuals owning French real estate assets or rights, directly or indirectly through one or more legal entities and whose net taxable assets amount to at least 1,300,000 euros.

Real estate assets allocated to an operational activity are excluded from the scope of the real estate wealth tax.

Shares of an operating company holding French real estate assets in which the relevant individual holds, directly and indirectly, less than 10% of the share capital or voting rights, are also exempt from real estate wealth tax.

The tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, does not prevent the application of real estate wealth tax to a US Holder who would be a US tax resident.

However, based on the above domestic provisions and considering that Criteo SA is an operating company, the owning of ADSs or ordinary shares should not be subject to real estate wealth tax.

Disposal Consequences

Taxation on sale or assimilated

As a matter of principle, under French tax law, a foreign.

shareholder should be subject to French tax on any capital gain from the sale, exchange, repurchase or redemption by us of ordinary shares or ADSs, provided that the foreign shareholder is not a French tax resident for French tax purposes;

and either has not held more than 25% of our dividend rights, at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives (as an exception, a foreign shareholder established, domiciled or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC should be subject to a 75% withholding tax in France on any such capital gain, regardless of the fraction of the dividend rights it holds) or holds French real estate assets or shares, units or rights in a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

However, based on the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital dated August 31, 1994, as amended by additional protocols of December 8, 2004 and January 13, 2009, a U.S.

Holder who is a U.S.

tax resident for purposes of the Treaty and is entitled to Treaty benefit will not be subject to French tax on any such capital gain, unless the ordinary shares or the ADSs form part of the business property of a permanent establishment or fixed base that the U.S.

Holder has in France.

tax resident for purposes of the treaty, has no permanent establishment or fixed base in France and is entitled to treaty benefit will only be subject to French tax on capital gain resulting from the sale of shares, units or rights in a company at least 50% of the assets of which consist of real estate located in France, or derives at least 50% of its value, directly or indirectly, from real estate located in France.

Based on these provisions, capital gain resulting from the sale or assimilated of ADSs and ordinary shares should not be subject to taxation in France.

Holders who own ordinary shares or ADSs through U.S.

partnerships that are not residents for Treaty purposes are advised to consult their own tax advisors regarding their French tax treatment and their eligibility for Treaty benefits in light of their own particular circumstances.

Holder that is not a U.S.

resident for Treaty purposes or is not entitled to Treaty benefit (and in both cases is not resident, established or incorporated in a non-cooperative State or territory as defined in Article 238-0 A of the FTC) and has held more than 25% of our dividend rights, known as “droits aux bénéfices sociaux” at any time during the preceding five years, either directly or indirectly, and, as relates to individuals, alone or with relatives will be subject to a levy in France at the rate of 31% in 2019 (and 28% in 2020) (which is anticipated to be progressively decreased to 25% in the coming years), if such U.S.

Holder is a legal person, or 12.8% if such U.S.

Holder is an individual.

Special rules apply to U.S.

Holders who are residents of more than one country.

The discussion above is a summary of the material French tax consequences of an investment in our shares or ADSs and is based upon laws and relevant interpretations thereof in effect as of the date hereof, all of which are subject to change, possibly with retroactive effect.

It does not cover all tax matters that may be of importance to a prospective investor.

Each prospective investor is urged to consult its own tax advisor about the tax consequences to it of an investment in shares or ADSs in light of the investor’s own circumstances.

Gift and inheritance Tax

Under French tax law, the following assets are subject to gift and inheritance tax :

- all movable or immovable property located in France or outside France when the donor or the deceased had his tax residence in France within the meaning of Article 4 B of the FTC;

- movable or immovable property located in France (Included French real estate assets held indirectly), when the donor or the deceased is not domiciled for tax purposes in France;

- movable and immovable property located in France or outside France received from a donor or deceased domiciled outside France by the heir, donee or legatee who is domiciled for tax purposes in France within the meaning of Article 4 B of the CGI and has been so domiciled for at least six years during the last ten years preceding the year in which he receives the property

However, based on the article 5 of the tax treaty between the Government of the United States and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Inheritances and Gifts, dated November 24, 1978 (as amended by the protocol of December 8, 2004), if the US Holder is domiciled in US and has no permanent establishment or fixed base in France , only the French real estate assets and shares, units or other interests in a company or legal entity whose assets consist, directly or through one or more other companies or legal entities, of at least 50% of real property located in France or of rights relating to such property, can be subject to gift and inheritance tax.

Based on these provisions, ADSs or ordinary shares should not be subject to gift and inheritance tax.

Selected Financial Data

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Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands, except share and per share data)

Revenue $ 2,072,617 $ 2,261,516 $ 2,300,314 $ 2,296,692 $ 1,799,146

Cost of revenue (1) :

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Other cost of revenue (137,028) (117,533) (131,744) (121,641) (85,260)

Gross profit 688,018 829,036 834,236 819,495 644,975

Operating expenses

Research and development expenses (1)

(132,513) (172,591) (179,263) (173,925) (123,649)

Sales and operations expenses (1)

(330,285) (375,477) (372,707) (380,649) (282,853)

General and administrative expenses (1)

(116,395) (139,754) (135,159) (127,077) (117,469)

Total operating expenses (579,193) (687,822) (687,129) (681,651) (523,971)

Income from operations 108,825 141,214 147,107 137,844 121,004

Financial income (expense)

Financial expense (1,939) (5,749) (5,084) (9,534) (546)

Income before taxes 106,886 135,465 142,023 128,310 120,458

Provision for income taxes (32,197) (39,496) (46,144) (31,651) (33,129)

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Net income available to shareholders of Criteo S.A.

$ 71,679 $ 90,745 $ 88,644 $ 91,214 $ 82,272

Net income available to shareholders per share:

Basic $ 1.18 $ 1.41 $ 1.33 $ 1.40 $ 1.30

Diluted $ 1.16 $ 1.38 $ 1.31 $ 1.34 $ 1.25

Weighted average shares outstanding used in computing per share amounts:

(1) Cost of revenue and operating expenses include equity awards compensation expense, pension service costs, depreciation and amortization expense, acquisition-related costs, restructuring costs and deferred price consideration as follows:

Basic 60,876,480 64,305,965 66,456,890 65,143,036 63,337,792

Diluted 61,818,593 65,598,588 67,662,904 67,851,971 65,633,470

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

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Total equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Pension service costs

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Total pension service costs

2,232 1,556 1,691 1,231 524

Depreciation and amortization expense

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Research and development expenses (b)

10,741 16,508 10,602 11,226 7,211

Sales and operations expenses (c)

16,770 24,914 18,245 19,844 7,757

General and administrative expenses 4,792 7,200 7,306 5,738 3,342

Total depreciation and amortization expense

88,238 93,488 103,500 90,796 56,779

Acquisition-related costs

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Total acquisition-related costs

286 — 1,738 6 2,921

Acquisition-related deferred price consideration

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Total acquisition-related deferred price considerations

Restructuring

Restructuring related and transformation costs

Cost of revenue — — 2,497 —

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General and administrative expenses 6,351 2,772 (11) 123 —

Total Restructuring (d)

(a) Excludes $0.7 million, $(0.5) million and $(8.1) million disclosed as restructuring costs as of December 31, 2017, 2018 and 2019 , respectively.

Total Restructuring related and transformation costs (d)

$ 19,989 $ 13,582 $ (53) $ 7,356 $ —

(a) Excludes $(2.7) million, $(8.1) million, and $(0.5) million, disclosed as restructuring and transformation related costs as of December 31, 2020, 2019 and 2018 respectively.

(b) Includes acquisition-related amortization of intangible assets of $ 6.8 million, $12.3 million, $15.8 million, $ 17.7 million and $4.1 million, (including the accelerated amortization for Manage technology due to a revised useful life for $4.0 million) as of December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

(c) Includes acquisition-related amortization of intangible assets of $3.2 million, $0.8 million, $10.0 million, $9.1 million and $15.6 million (including an impairment loss for Manage customers relationships for $4.6 million as of December 31, 2015, 2016, 2017, 2018 and 2019 , respectively.

(d) The Company recognized restructuring charges for its new organizational structure implemented to support its multi-product platform strategy as detailed below as of December 31, 2019:

Year Ended December 31, 2019

(Gain) from forfeitures of share-based compensation expense

(c) Includes acquisition-related amortization of intangible assets of $8.7 million, $15.6 million, $9.1 million, $10.0 million and $0.8 million, (including an impairment loss on Manage customers relationships for $6.9 million) as of December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

(d) The Company recognized restructuring related and transformation charges following its new organizational structure implemented to support its multi-product platform strategy and office right sizing policy as detailed below as of December 31, 2020 and 2019:

Year Ended December 31, 2020 Year Ended December 31, 2019

(Gain) from forfeitures of share-based compensation awards (2,655) (8,133)

Depreciation and amortization expense — 1,161

Facilities and impairment related costs 12,975 11,080

Payroll and Facilities related costs

Total restructuring costs

Payroll related costs 5,911 9,474

Consulting costs related to transformation 3,758 —

Total restructuring related and transformation costs $ 19,989 $ 13,582

(2) For the years ended December 31, 2020, 2019, 2018, 2017 and 2016, this excludes $3.0 million, $5.2 million, $7.2 million, $5.4 million and $5.1 million, respectively, of net income available to non-controlling interests in our Japanese subsidiary held by Yahoo!

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Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

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Acquisition-related deferred price consideration

Restructuring

Restructuring related and transformation costs 4,240 2,000 (332) 2,911 —

Non-GAAP - Research and development expenses $ (106,165) $ (138,287) $ (146,917) $ (138,074) $ (104,034)

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Pension service costs 394 283 325 247 144

Restructuring

Restructuring related and transformation costs 9,398 8,810 290 1,825 —

Non-GAAP - Sales and operations expenses (291,681) (322,169) (324,603) (327,347) (258,114)

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Acquisition-related costs

Acquisition-related deferred price consideration

Restructuring

286 — 1,738 6 2,921

Restructuring related and transformation costs 6,351 2,772 (11) 123 —

Non-GAAP - General and administrative expenses (95,112) (114,474) (109,004) (100,975) (96,724)

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Acquisition-related deferred price consideration — — — — 85

Restructuring

Restructuring related and transformation costs 19,989 13,582 (53) 4,859 —

Total Non-GAAP Operating expenses $ (492,958) $ (574,930) $ (580,524) $ (566,396) $ (458,872)

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration.

Non-GAAP Operating Expenses are our consolidated operating expenses adjusted to eliminate the impact of depreciation and amortization, equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration.

The Company uses Non-GAAP Operating Expenses to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short-term and long-term operational plans, and to assess and measure our financial performance and the ability of our operations to generate cash.

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Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Cash and cash equivalents $ 488,011 $ 418,763 $ 364,426 $ 414,111 $ 270,317

Total assets $ 1,853,410 $ 1,790,384 $ 1,597,135 $ 1,531,300 $ 1,211,186

Trade receivables, net of allowances for doubtful accounts

$ 474,055 $ 481,732 $ 473,901 $ 484,101 $ 397,244

Total financial liabilities $ 3,275 $ 4,405 $ 3,508 $ 3,657 $ 85,580

Total liabilities $ 700,723 $ 752,396 $ 629,244 $ 633,602 $ 601,309

Total equity $ 1,152,687 $ 1,037,988 $ 967,891 $ 897,698 $ 609,877

Other Financial and Operating Data:

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands, except number of clients)

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Revenue ex-TAC (3)

$ 825,046 $ 946,569 $ 965,980 $ 941,136 $ 730,235

Adjusted net income (4)

$ 134,171 $ 175,399 $ 168,738 $ 183,311 $ 136,777

Adjusted EBITDA (5)

$ 250,995 $ 298,972 $ 321,059 $ 309,584 $ 224,572

(3) We define Revenue ex-TAC as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period.

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Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Revenue $ 2,072,617 $ 2,261,516 $ 2,300,314 $ 2,296,692 $ 1,799,146

Traffic acquisition costs (1,247,571) (1,314,947) (1,334,334) (1,355,556) (1,068,911)

Revenue ex-TAC $ 825,046 $ 946,569 $ 965,980 $ 941,136 $ 730,235

(4) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments.

(4) We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments.

Adjusted Net Income is not a measure calculated in accordance with U.S.

We have included Adjusted Net Income in this Form 10-K because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our core business.

In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring related and transformation costs, acquisition-related costs and deferred price consideration and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that Adjusted Net Income provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

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Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Amortization of acquisition-related intangible assets

15,520 27,906 15,821 17,731 4,131

Acquisition-related costs

286 — 1,738 6 2,921

Acquisition-related deferred price consideration

Restructuring costs

Restructuring and transformation related costs 19,989 13,582 (53) 7,356 —

Tax impact of the above adjustments

(7,738) (11,190) (11,723) (10,792) (948)

Adjusted net income $ 134,171 $ 175,399 $ 168,738 $ 183,311 $ 136,777

(a) Excludes $(2.7) million, $(8.1) million, and $(0.5) million disclosed as restructuring costs as of December 31, 2020, 2019 and 2018, respectively.

(5) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration.

(5) We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration.

Adjusted EBITDA is not a measure calculated in accordance with U.S.

We have included Adjusted EBITDA in this Form 10-K because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring related and transformation costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management and board of directors.

11 unchanged sentences

Year Ended December 31,

2020 2019 2018 2017 2016

(in thousands)

Financial expense (income) net

Net income $ 74,689 $ 95,969 $ 95,879 $ 96,659 $ 87,329

Financial expense 1,939 5,749 5,084 9,534 546

Provision for income taxes 32,197 39,496 46,144 31,651 33,129

Equity awards compensation expense (a)

31,425 49,132 67,076 72,351 43,259

Pension service costs 2,232 1,556 1,691 1,231 524

2 unchanged sentences

Acquisition-related deferred price consideration — — — — 85

Restructuring costs

Restructuring related and transformation costs 19,989 13,582 (53) 7,356 —

Total net adjustments 176,306 203,003 225,180 212,925 137,243

2 unchanged sentences

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.

What changed 10-K

Item 5. Market for Registrant’s Common Equity