What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-26 compared with 2020-03-02 · 553 added, 550 removed, 1226 unchanged (47% of the section changed)

23 unchanged sentences

Other Information

On March 2, 2020, the board of directors amended and restated the By-laws ( statuts ) of the Company, effective immediately.

On February 25, 2021, the board of directors amended and restated the By-laws ( statuts ) of the Company, effective immediately.

Article 6 of the By-laws has been amended to provide that, as of the date of the amendment, the Company has a share capital of €1,656,802.65, divided into 66,272,106 shares with a par value of €0.025 each, increased from €1,651,008.05, divided into 66,040,322 shares with a par value of €0.025 each.

18 unchanged sentences

Incorporated by Reference

Schedule/ Form

Exhibit Description Schedule/ Form File Number Exhibit File Date

Merger Agreement, dated as of October 3, 2016, by and among Criteo Corp., TBL Holdings, Inc., Hooklogic, Inc.

and Fortis Advisors LLC

October 4, 2016

8-K 001-36153 2.1 October 4, 2016

By-laws ( statuts ) (English translation)

Form of Deposit Agreement, including the Form of American Depositary Receipt

October 2, 2013

F-1 333-191223 4.1 October 2, 2013

Agreement to Furnish Debt Instruments

Description of Registrant's Securities

10-K 001-36153 4.3 March 2, 2020

Commercial Lease between Orosdi and the registrant dated January 20, 2012 (English translation)

October 2, 2013

F-1 333-191223 10.1 October 2, 2013

Form of Registration Rights Agreement by and among the registrant and certain investors signatory thereto, dated as of August 30, 2013

October 23, 2013

F-1 333-191223 10.3 October 23, 2013

Non-Compete Agreement between the registrant and each of Messrs.

Rudelle, Le Ouay and Niccoli

October 2, 2013

F-1 333-191223 10.5 October 2, 2013

Stock Option Plans—2009, 2010, 2011, 2012, 2013 (including forms of Stock Option Grant Agreement and Exercise Notice)

October 2, 2013

F-1 333-191223 10.6 October 2, 2013

2014 Stock Option Plan (including forms of Stock Option Grant Agreement and Exercise Notice)

July 11, 2014

S-8 333-197373 99.1 July 11, 2014

Amended 2016 Stock Option Plan (including form of Stock Option Grant Agreement and Exercise Notice) (English Translation)

June 25, 2019

S-8 333-240043 99.1 July 23, 2020

Summary of BSA Terms and Conditions

February 29, 2016

10-K 001-36153 10.7 February 29, 2016

Form of BSA Grant Document (English translation)

March 1, 2017

10-K 001-36153 10.9 March 1, 2017

Incorporated by Reference

Schedule/ Form

Exhibit Description Schedule/ Form File Number Exhibit File Date

Summary of BSPCE Plan

September 18, 2013

F-1 333-191223 10.8 September 18, 2013

Form of BSPCE Grant Document (English translation)

September 18, 2013

F-1 333-191223 10.11 September 18, 2013

Amended and Restated 2015 Performance-Based Free Share Plan (including form of Allocation Letter) (English Translation)

June 25, 2019

S-8 333-240043 99.2 July 23, 2020

Amended and Restated 2015 Time-Based Free Share Plan (including form of Allocation Letter) (English Translation)

June 25, 2019

S-8 333-240043 99.3 July 23, 2020

Criteo Executive Bonus Plan

February 29, 2016

Employment Agreement between the registrant and Benoit Fouilland, dated November 18, 2011 (English translation)

October 2, 2013

10-K 001-36153 10.15 February 29, 2016

Offer Letter between the Registrant and Sarah Glickman, dated August 27, 2020

8-K 001-36153 10.1 September 3, 2020

Amendment and Restatement Agreement, dated as of March 29, 2017, by and among the registrant, as borrower, and BNP Paribas, Crédit Lyonnais (LCL), HSBC France, Natixis and Société Générale Corporate & Investment Banking

March 30, 2017

8-K 001-36153 4.1 March 30, 2017

Form of Offer to Directors, Officers or Specifically Designated Persons to Subscribe Liability Insurance and Provide Indemnification

March 1, 2019

10-K 001-36153 10.22 March 1, 2019

Management Agreement between the registrant and Megan Clarken, dated October 2, 2019

October 30, 2019

8-K 001-36153 10.1 October 30, 2019

Amendment to Management Agreement between the registrant and Megan Clarken, dated November 22, 2019

10-K 001-36153 10.18 March 2, 2020

Employment Agreement between the registrant and Ryan Damon, dated August 1, 2018

Consulting Agreement between the registrant and Rocabella, dated December 17, 2019

December 17, 2019

Mutually Agreed Termination of a Permanent Employment Contract and Approval Application, dated as of June 19, 2019, by and between the Registrant and Dan Teodosiu

August 2, 2019

10-K 001-36153 10.19 March 2, 2020

Consulting Agreement between the Company and Dave Anderson, dated May 14, 2020

10-Q 001-36153 10.1 July 31, 2020

Amendment to Consulting Agreement between the Company and Dave Anderson, dated November 29, 2020

List of Subsidiaries

Incorporated by Reference

Schedule/ Form

Consent of Deloitte & Associés

Incorporated by Reference

Exhibit Description Schedule/ Form File Number Exhibit File Date

Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

March 2, 2020

February 26, 2021 By:

/s/ Megan Clarken

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated below.

/s/ Megan Clarken

Chief Executive Officer

(Principal Executive Officer)

March 2, 2020

/s/ Megan Clarken Chief Executive Officer

(Principal Executive Officer) February 26, 2021

Megan Clarken

/s/ Benoit Fouilland

/s/ Sarah Glickman

Chief Financial Officer (Principal

Financial Officer and Principal

Accounting Officer)

March 2, 2020

Benoit Fouilland

/s/ Jean-Baptiste Rudelle

March 2, 2020

Jean-Baptiste Rudelle

Accounting Officer) February 26, 2021

Sarah Glickman

/s/ Nathalie Balla

March 2, 2020

Director February 26, 2021

Nathalie Balla

/s/ Marie Lalleman

March 2, 2020

Director February 26, 2021

Marie Lalleman

/s/ Edmond Mesrobian

March 2, 2020

Director February 26, 2021

Edmond Mesrobian

/s/ Hubert de Pesquidoux

March 2, 2020

Director February 26, 2021

Hubert de Pesquidoux

/s/ Rachel Picard

March 2, 2020

Director February 26, 2021

Rachel Picard

/s/ James Warner

March 2, 2020

Director February 26, 2021

Index to Consolidated Financial Statements

10 unchanged sentences

We have audited the accompanying consolidated statements of financial position of Criteo S.A.

and subsidiaries (the “ Company ”) as of December 31, 2019 and 2018, and the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “ financial statements ”).

and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.

Adoption of New Accounting Standard

As discussed in Note 1 to the financial statements, the Company has changed its method for accounting for leases in 2019 due to the adoption of ASU No.

2016-02, Leases (Topic 842).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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The communication of this critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue - Refer to Note 17 to the financial statements

Revenue — Refer to Notes 1 and 25 to the financial statements

Critical Audit Matter Description

The Company’s revenue consists of selling personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies.

This is achieved by converting the Company’s clients’ website visitors into customers, enabling the Company to charge its clients when users engage with an ad the Company delivers, either by clicking on it (cost-per-click basis), through installing an application by clicking on an advertiser the Company delivers (cost-per-install and cost-per-impression basis), made up of a significant volume of low-dollar transactions, sourced from multiple databases, and other tools.

Because of the nature of the Company’s transactions are based either on a cost-per-click or cost-per-install, the Company uses highly automated systems to process and record its revenue transactions based on contractual terms with advertisers.

The Company’s revenue consists primarily of selling personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies.

This is achieved by converting the Company’s clients’ website visitors into customers, enabling the Company to charge its clients when users engage with an ad the Company delivers, either by clicking on it (cost-per-click basis), or through installing an application by clicking on an ad that the Company delivers (cost-per-install).

Because of the nature of the Company’s revenue, which is made up of a significant volume of low-dollar value transactions, sourced from multiple databases and other tools, the Company uses highly automated systems to process and record its revenue transactions.

We identified revenue as a critical audit matter because the Company’s systems to process and record its revenue transactions are highly automated and thus required significantly more involvement and effort from our information technology (IT) internal specialist team to identify, test, and evaluate the Company’s system, software applications, and automated controls.

7 unchanged sentences

Paris-La Défense, France

March 2, 2020

February 26, 2021

We have served as the Company's auditor since 2011.

4 unchanged sentences

and subsidiaries (the “Company” ) as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on the criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019 of the Company and our report dated March 2, 2020, expressed an unqualified opinion on those financial statements.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020 of the Company and our report dated February 26, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Paris-La Défense, France

March 2, 2020

February 26, 2021

and subsidiaries

1 unchanged sentence

Year Ended December 31,

Notes 2020 2019

(in thousands)

2 unchanged sentences

Trade receivables, net of allowances of $ 39.9 million and $ 16.1 million as of December 2020 and 2019, respectively.

5 474,055 481,732

Income taxes 11,092 21,817

Other taxes 69,987 60,924

Other current assets 6 21,405 17,225

2 unchanged sentences

Intangible assets, net 8 79,744 86,886

Goodwill 9 325,805 317,100

Right of use asset - operating lease 13 114,012 142,044

Marketable securities 41,809 —

Non-current financial assets 10 18,109 21,747

1 unchanged sentence

Total non current assets 788,860 789,923

Total assets $ 1,853,410 $ 1,790,384

Liabilities and shareholders' equity

2 unchanged sentences

Contingencies 11 2,250 6,385

Income taxes 2,626 3,422

Financial liabilities - current portion 12 2,889 3,636

Lease liability - operating - current portion 13 48,388 45,853

Other taxes 58,491 50,099

Employee-related payables 85,272 74,781

12 unchanged sentences

Treasury stock, 5,632,536 and 3,903,673 shares at cost as of December 31, 2020 and December 31, 2019, respectively.

( 85,570 ) ( 74,900 )

Additional paid-in capital 693,164 668,389

Accumulated other comprehensive (loss)

Accumulated other comprehensive income (loss) 16,028 ( 40,105 )

Retained earnings 491,359 451,725

Equity - attributable to shareholders of Criteo S.A.

1,117,142 1,007,267

Non-controlling interests 35,545 30,721

Total equity 1,152,687 1,037,988

Total equity and liabilities $ 1,853,410 $ 1,790,384

3 unchanged sentences

Year Ended December 31,

Notes 2020 2019 2018

(in thousands, except share and per share data)

Revenue $ 2,072,617 $ 2,261,516 $ 2,300,314

Cost of revenue

1 unchanged sentence

Other cost of revenue 17 ( 137,028 ) ( 117,533 ) ( 131,744 )

Gross profit 688,018 829,036 834,236

Operating expenses:

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Provision for income taxes 21 ( 32,197 ) ( 39,496 ) ( 46,144 )

Net income $ 74,689 $ 95,969 $ 95,879

Net income available to shareholders of Criteo S.A.

$ 71,679 $ 90,745 $ 88,644

Net income available to non-controlling interests $ 3,010 $ 5,224 $ 7,235

Net income allocated to shareholders per share:

Basic 22 $ 1.18 $ 1.41 $ 1.33

Diluted 22 $ 1.16 $ 1.38 $ 1.31

Weighted average shares outstanding used in computing per share amounts:

Basic 22 60,876,480 64,305,965 66,456,890

Diluted 22 61,818,593 65,598,588 67,662,904

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

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

Net income $ 74,689 $ 95,969 $ 95,879

Foreign currency translation differences, net of taxes 53,213 ( 8,070 ) ( 18,781 )

6 unchanged sentences

Attributable to shareholders of Criteo S.A.

130,821 86,353 77,594

Attributable to non-controlling interests $ 1,773 $ 335 $ 420

2 unchanged sentences

Consolidated Statements of Changes in Shareholders’ Equity

Share capital

Treasury stock

Additional paid-in capital

Accumulated other comprehensive (loss) income

Retained earnings

Equity - attributable to shareholders of Criteo S.A.

Non controlling interests

Share capital Treasury stock Additional paid-in capital Accumulated other comprehensive (loss) income Retained earnings Equity - attributable to shareholders of Criteo S.A.

Non controlling interests Total equity

(in thousands, except share data)

(Common shares)

(Common shares) (Shares)

Balance at January 1, 2018 66,085,097 2,152 — — 591,404 ( 12,241 ) 300,210 881,525 16,173 897,698

Net income — — — — — — 88,644 88,644 7,235 95,879

Other comprehensive income (loss) — — — — — ( 18,285 ) — ( 18,285 ) 420 ( 17,865 )

Issuance of ordinary shares 1,623,106 4 — — 2,951 — — 2,955 — 2,955

Change in treasury stock (1)

— — ( 3,459,119 ) ( 79,159 ) — — — ( 79,159 ) — ( 79,159 )

Shared-based compensation — — — — 64,725 — — 64,725 393 65,118

Other changes in equity (2)

— 45 — — 4,201 4 ( 985 ) 3,265 — 3,265

Balance at December 31, 2018 67,708,203 2,201 ( 3,459,119 ) ( 79,159 ) 663,281 ( 30,522 ) 387,869 943,670 24,221 967,891

Net income — — — — — — 90,745 90,745 5,224 95,969

Other comprehensive income (loss) — — — — — ( 9,617 ) — ( 9,617 ) 335 ( 9,282 )

1 unchanged sentence

Change in treasury stock (1)

( 1,594,288 ) ( 45 ) ( 444,554 ) 4,259 ( 36,091 ) ( 296 ) ( 26,710 ) ( 58,883 ) — ( 58,883 )

Shared-based compensation — — — — 39,399 — — 39,399 214 39,613

1 unchanged sentence

Balance at December 31, 2019 66,197,181 $ 2,158 ( 3,903,673 ) $ ( 74,900 ) $ 668,389 $ ( 40,105 ) $ 451,725 $ 1,007,267 $ 30,721 $ 1,037,988

Net income — — — — — — 71,679 71,679 3,010 74,689

Other comprehensive income (loss) — — — — — 56,133 — 56,133 1,773 57,906

4 unchanged sentences

Other changes in equity (2)

Balance at December 31, 2019

( 156,859 ) ( 5 ) — 3,900 ( 4,066 ) — ( 3,028 ) ( 3,199 ) ( 147 ) ( 3,346 )

(1) From January 1, 2017, we adopted ASU 2016-09, Compensation-Stock Compensation (Topic 718):

Improvement to Employee Share-based Payment Accounting issued by the Financial Accounting Standards Board (FASB).

(2) Deferred consideration in the context of Storetail Marketing Services SAS acquisition (see note 9).

Balance at December 31, 2020 66,272,106 $ 2,161 ( 5,632,536 ) $ ( 85,570 ) $ 693,164 $ 16,028 $ 491,359 $ 1,117,142 $ 35,545 $ 1,152,687

(1) Share repurchase program (see note 2)

(2) Includes deferred consideration in the context of Storetail Marketing Services SAS acquisition in 2018 and 2020 and from January 1, 2020, the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost issued by the Financial Accounting Standards Board (FASB).

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

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

Net income $ 74,689 $ 95,969 $ 95,879

Non-cash and non-operating items 154,629 126,281 154,436

1 unchanged sentence

Equity awards compensation expense (1)

28,770 40,999 66,600

Net gain on disposal of non-current assets 2,714 — —

Change in deferred taxes 3,720 15,418 ( 8,157 )

Income tax for the period

Change in income taxes 10,867 ( 28,015 ) ( 12,744 )

Other 1,967 769 ( 3,088 )

Change in working capital related to operating activities ( 43,962 ) 582 10,411

7 unchanged sentences

Change in accounts payable related to intangible assets, property, plant and equipment 1,818 ( 15,224 ) ( 8,494 )

(Payment for) Disposal of businesses, net of cash acquired (disposed)

Payment for businesses, net of cash acquired ( 1,176 ) ( 4,582 ) ( 101,180 )

Change in other financial non-current assets ( 34,448 ) ( 1,366 ) ( 59 )

Cash used for investing activities ( 101,093 ) ( 103,888 ) ( 226,717 )

Issuance of long term borrowings

Proceeds from borrowings under line-of-credit agreement 153,188 — —

Repayment of borrowings ( 167,344 ) ( 1,022 ) ( 964 )

11 unchanged sentences

(1) Of which $ 27.1 million and $ 39.6 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the twelve month period ended December 31, 2020 and 2019, respectively.

(2) From 2017, the Company reported the cash impact of the settlement of hedging derivatives related to financing activities in cash from (used for) financing activities in the consolidated statements of cash flows.

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

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was initially incorporated as a société par actions simplifiée, or S.A.S., under the laws of the French Republic on November 3, 2005, for a period of 99 years and subsequently converted to a société anonyme, or S.A.

We are a global technology company powering marketers with trusted and impactful advertising.

We strive to deliver measurable business results at scale across multiple marketing goals for retailers and brands, through our self-service Criteo Platform.

Using shopping data, artificial intelligence ("AI") technology and extensive consumer reach, we help marketers drive Awareness, Consideration and Conversion for their products and services 1 , and help retailers generate advertising revenues from consumer brands.

We are a global technology company powering the world's marketers with trusted and impactful advertising.

We enable brands' and retailers' growth by activating commerce data through artificial intelligence ("AI") technology, reaching consumers on an extensive scale across all stages of the consumer journey, and generating advertising revenues from consumer brands for large retailers.

Our vision is to build the world's leading Commerce Media Platform to deliver measurable business outcomes at scale for global brands, agencies and retailers across multiple marketing goals.

Our data is pooled among our clients and offers deep insights into consumer intent and purchasing habits.

To drive trusted and impactful advertising for marketers, we activate our data assets in a privacy-by-design way through proprietary AI technology to engage consumers in real time by designing, pricing and delivering highly relevant digital advertisements ("ads") across devices and environments.

We price our offering on a range of pricing models and measure our value based on clear, well-defined performance metrics, making our impact on the business of our clients both transparent and easy to measure.

In these notes, Criteo S.A.

is referred to as the Parent company and together with its subsidiaries, collectively, as "Criteo," the "Company," the "Group," or "we".

___________________________________________________

1 Driving Awareness for a brand means exposing its brand name to consumers who have not been in touch with the brand before, thereby creating brand awareness from such consumers.

Driving Consideration for an advertiser's products or services means attracting prospective new consumers to consider engaging with and/or buying this advertiser's products or services.

Driving Conversion for an advertisers' products or services means triggering a purchase by consumers who have already engaged with this advertisers products or services in the past.

Principles and Accounting Methods

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the country of incorporation and the percentage of voting rights and ownership interests.

Voting rights

Ownership Interest

Voting rights

Ownership Interest

Consolidation Method

Parent company

Criteo S.A (1)

Country Voting rights Ownership Interest Voting rights Ownership Interest Consolidation Method

Parent company

Criteo S.A France 100 % 100 % 100 % 100 % Parent company

French subsidiaries

Criteo France SAS

Fully consolidated

Criteo Finance SAS

Fully consolidated

Criteo France SAS France 100 % 100 % 100 % 100 % Fully consolidated

Criteo Finance SAS France 100 % 100 % 100 % 100 % Fully consolidated

Storetail Marketing Services SAS (1)

Fully consolidated

Condigolabs SAS

Fully consolidated

France — % — % 100 % 100 % N/A

Condigolabs SAS France 100 % 40 % 100 % 40 % Fully consolidated

Foreign subsidiaries

United Kingdom

Fully consolidated

HookLogic Ltd (2)

United Kingdom

Fully consolidated

Storetail Marketing Services Ltd

United Kingdom

Fully consolidated

United States

Fully consolidated

United States

Fully consolidated

Criteo Nordics AB (3)

Fully consolidated

Criteo Ltd United Kingdom 100 % 100 % 100 % 100 % Fully consolidated

Storetail Marketing Services Ltd United Kingdom — % — % 100 % 100 % N/A

United States 100 % 100 % 100 % 100 % Fully consolidated

United States — % — % 100 % 100 % N/A

Criteo Gmbh Germany 100 % 100 % 100 % 100 % Fully consolidated

Criteo Nordics AB Sweden 100 % 100 % 100 % 100 % Fully consolidated

Criteo Korea Ltd.

Fully consolidated

Criteo Do Brasil LTDA

Fully consolidated

The Netherlands

Fully consolidated

Criteo Advertising (Beijng) Co.

Fully consolidated

Korea 100 % 100 % 100 % 100 % Fully consolidated

Criteo KK Japan 66 % 66 % 66 % 66 % Fully consolidated

Criteo Do Brasil LTDA Brazil 100 % 100 % 100 % 100 % Fully consolidated

Criteo BV The Netherlands 100 % 100 % 100 % 100 % Fully consolidated

Criteo Pty Australia 100 % 100 % 100 % 100 % Fully consolidated

Criteo Srl Italy 100 % 100 % 100 % 100 % Fully consolidated

Criteo Advertising (Beijing) Co.

Ltd China 100 % 100 % 100 % 100 % Fully consolidated

Criteo Singapore Pte.

Fully consolidated

Singapore 100 % 100 % 100 % 100 % Fully consolidated

Criteo LLC Russia 100 % 100 % 100 % 100 % Fully consolidated

Criteo Europa S.L.

Fully consolidated

Spain 100 % 100 % 100 % 100 % Fully consolidated

Criteo Espana S.L.

Fully consolidated

Spain 100 % 100 % 100 % 100 % Fully consolidated

Storetail Marketing Services S.L.U (3)

Fully consolidated

Spain — % — % 100 % 100 % N/A

Criteo Canada Corp.

Fully consolidated

Criteo Reklamcılık Hizmetleri ve Ticaret Anonim Şirketi

Fully consolidated

Criteo MEA FZ-LLC

United Arab Emirates

Fully consolidated

Canada 100 % 100 % 100 % 100 % Fully consolidated

Criteo Reklamcılık Hizmetleri ve Ticaret Anonim Şirketi Turkey 100 % 100 % 100 % 100 % Fully consolidated

Criteo MEA FZ-LLC United Arab Emirates 100 % 100 % 100 % 100 % Fully consolidated

Criteo India Private Ltd.

Fully consolidated

(1) including Criteo Korea and Criteo AB (Sweden) branches activities until 2018

(2) merged with Criteo Ltd

(3) from 2019 Criteo Korea and Criteo AB (Sweden) branches had been transformed into subsidiaries

India 100 % 100 % 100 % 100 % Fully consolidated

(1) merged with Criteo S.A

(2) merged with Criteo Corp.

(3) merged with Criteo Espana S.L.

Functional Currency and Translation of Financial Statements in Foreign Currency

17 unchanged sentences

On an on-going basis, management evaluates its estimates, primarily those related to:

(1) revenue recognition criteria (2) allowances for doubtful accounts, (3) research tax credits (4) income taxes, including i) recognition of deferred tax assets arising from the subsidiaries projected taxable profit for future years, ii) evaluation of uncertain tax positions associated with our transfer pricing policy and iii) recognition of income tax position in respect with tax reforms recently enacted in countries we operate, (5) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (6) assumptions used in the valuation of goodwill, intangible assets and right of use assets - operating lease, and (7) assumptions used in the valuation model to determine the fair value of share-based compensation plan.

(1) revenue recognition criteria (2) allowances for credit losses, (3) research tax credits (4) income taxes, including i) recognition of deferred tax assets arising from the subsidiaries projected taxable profit for future years, ii) evaluation of uncertain tax positions associated with our transfer pricing policy and iii) recognition of income tax position in respect with tax reforms recently enacted in countries we operate, (5) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (6) assumptions used in the valuation of goodwill, intangible assets and right of use assets - operating lease, and (7) assumptions used in the valuation model to determine the fair value of share-based compensation plan.

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

Business combinations

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Intangible assets are reviewed for impairment whenever events or changes in circumstances such as, but not limited to, significant declines in revenue, earnings or cash flows or material adverse changes in the business climate indicate that the carrying amount of an asset may be impaired.

We expense software development costs, including costs to develop software products or the software component of products to be sold, leased, or marketed to external users, before technological feasibility is reached.

Technological feasibility is typically reached shortly before the release of such products and as a result, development costs that meet the criteria for capitalization were not material for the periods presented.

Software development costs also include costs to develop software to be used solely to meet internal needs and cloud based applications used to deliver our services.

1 unchanged sentence

Amortization of these costs begins when assets are placed in service and is calculated on a straight-line basis over the assets’ useful lives estimated at three to five years .

Cloud computing arrangements (“CCAs”), such as software as a service and other hosting arrangements, are evaluated for capitalized implementation costs in a similar manner as capitalized software development costs.

If a CCA includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses.

If a CCA does not include a software license, the service element of the arrangement is accounted for as a service contract.

The Company capitalized certain implementation costs for its CCAs that are service contracts, which are included in other current assets.

The Company amortizes capitalized implementation costs in a CCA over the life of the service contract.

Property, Plant and Equipment

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The Company has determined that it operates as a single reporting unit and has selected December 31 as the date to perform its annual impairment test.

In the impairment assessment of its goodwill, the Company performs a two-step impairment test, which involves assumptions regarding estimated future cash flows to be derived from the Company.

In the impairment assessment of its goodwill, the Company performs an impairment test, which involves assumptions regarding estimated future cash flows to be derived from the Company The estimated future cash flows are used to derive the fair value of the reporting unit, which is then compared to its net book value, including goodwill .

If these estimates or their related assumptions change in the future, the Company may be required to record impairment for these assets.

The first step of the impairment test involves comparing the fair value of the reporting unit to its net book value, including goodwill.

If the net book value exceeds its fair value, then the Company would perform the second step of the goodwill impairment test to determine the amount of the impairment loss.

The impairment loss to be recognized would be calculated by comparing the implied fair value of the Company to its net book value.

In calculating the implied fair value of the Company’s goodwill, the fair value of the Company would be allocated to all of the other assets and liabilities based on their fair values.

The excess of the fair value of the Company over the amount assigned to its other assets and liabilities is the implied fair value of goodwill.

If the net book value exceeds its fair value, then the Company would be required to recognize an impairment loss.

The impairment loss to be recognized would be calculated by comparing the fair value of the Company to its net book value, including goodwill.

An impairment loss would be recognized in the Consolidated Statement of Income when the carrying amount of goodwill exceeds its implied fair value.

With respect to intangible assets, acquired intangible assets are accounted for at acquisition cost less cumulative amortization and any impairment loss.

Acquired intangible assets are amortized over their estimated useful lives of one to nine years on a straight-line method.

Acquired intangible assets are amortized over their estimated useful lives of three to nine years on a straight-line method.

Intangible assets are reviewed for impairment whenever events or changes in circumstances such as, but not limited to, significant declines in revenue, earnings or cash flows or material adverse changes in the financial and economic environment indicate that the carrying amount of an asset may be impaired.

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Fair value is estimated based on discounted future cash flows.

We lease office space and data centers mainly under non-cancellable operating lease agreements.

Our leases typically include rent free periods, rent escalation periods, renewal options and may also include leasehold improvement incentives.

Both office and data center leases may contain non-lease components such as maintenance, electrical costs, and other service charges.

We lease space under non-cancellable operating leases for our offices and data centers.

Our office leases typically include rent free periods or rent escalation periods, and may also include leasehold improvement incentives.

Leases for data centers may also include rent free periods or rent escalation periods.

These leases typically do not include residual value guarantees.

Both office and data center leases may contain both lease components (rent) and non-lease components (maintenance, electrical costs, and other service charges).

Non-lease components are accounted for separately.

Office and data center leases typically contain options to renew, and/or terminate the lease early.

Both office and data center leases typically contain options to renew, and/or early terminate the lease.

Options have been included in the lease term if management has determined it is reasonably certain that they will be exercised.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

Options have been included in the calculation if management has determined that it is reasonably certain that the option will be exercised.

We do not recognize a lease liability or right of use asset for leases with a term of 12 months or less, and we do not recognize a lease liability or right of use asset for low value leases.

We recognize a single lease cost under which the operating lease right of use and liability are amortized on a straight-line basis over the lease term.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate at lease commencement to determine the present value of future payments.

We have a centralized treasury function, and the majority of our leases are negotiated and signed by representatives of Criteo SA.

As such, the incremental borrowing rate of Criteo SA is used for all of our contracts.

It is then adjusted in consideration of the currency of the lease and the lease term as of the lease commencement date.

Lease expense is recognized for minimum lease payments on a straight-line basis over the lease term.

Variable costs are expensed in the period incurred.

Variable expenses include changes in indexation.

Leases for data centers may have variable costs based on electrical usage.

We chose to use certain practical expedients offered by the standard including:

• We did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or the initial direct costs for any existing leases,

• We do not recognize a lease liability or right of use asset for leases with a term of 12 months or less, and

• We used hindsight in determining the lease term.

Financial Assets and Liabilities, Excluding Derivative Financial Instruments

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Subsequently they are measured at amortized cost using the effective interest method.

We carry our accounts receivable at net realizable value.

On a periodic basis, our management evaluates our accounts receivable and determines whether to provide an allowance or if any accounts should be written down and charged to expense as a bad debt.

The evaluation is based on, among other factors, a past history of collections, current credit conditions, the ageing of the receivable and a past history of write downs.

We carry our accounts receivable at original invoiced amount less an allowance for any potential uncollectible amounts .

Management makes estimates of expected credit trends for the allowance for credit losses based on, among other factors, a past history of collections, current credit conditions, the aging of the receivables, past history of write downs, credit quality of our customers, current economic conditions, and reasonable and supportable forecasts of future economic conditions.

A receivable is considered past due if we have not received payments based on agreed-upon terms.

A higher default rate than estimated or a deterioration in our clients’ creditworthiness could have an adverse impact on our future results.

Allowances for doubtful accounts on trade receivables are recorded in “sales and operations expenses” in our Consolidated Statements of Income.

Allowances for credit losses on trade receivables are recorded in “sales and operations expenses” in our Consolidated Statements of Income.

We generally do not require any security or collateral to support our receivables.

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We recognize gains and losses on these contracts, as well as the related costs in the financial income (expense), net, along with the foreign currency gains and losses on monetary assets and liabilities.

During the years ended December 31, 2017 and December 31, 2018 , the Company reported the cash impact of the settlement of hedging derivatives in cash from (used for) financing activities in the consolidated statements of cash flows.

The Company reported the cash impact of the settlement of hedging derivatives in cash from (used for) financing activities in the consolidated statements of cash flows.

This accounting policy choice results in the cash flows from the derivative instrument to be classified in the same category as the underlying cash flows.

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The valuation techniques used to measure the fair value of the Company's financial liabilities and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using inputs derived from or corroborated by observable market data.

Cash and Cash Equivalents

Cash includes cash on hand and demand deposits with banks.

Cash, Cash Equivalents and Marketable Securities

Cash includes cash on deposit with banks and highly liquid investments such as demand deposits with banks.

Cash equivalents include short-term, highly liquid investments, with a remaining maturity at the date of purchase of three months or less for which the risk of changes in value is considered to be insignificant.

Demand deposits therefore meet the definition of cash equivalents.

Cash equivalents are measured at fair value using level 1 and level 2, respectively, for cash at hand and money market funds using quoted prices, and any changes are recognized in the Consolidated Statements of Income.

Highly liquid demand deposits therefore meet the definition of cash equivalents.

We hold investments in marketable securities, consisting mainly of term deposits with banks, not meeting the cash equivalents definition.

We classify marketable securities as either available-for-sale or held-to-maturity investments, depending on whether we have the positive intent and ability to hold the term deposits to maturity.

Our available-for-sale investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive income (loss) in stockholders' equity.

Our held-to-maturity investments are carried at amortized cost, and are subject to impairment assessments.

Interest income generated from held-to-maturity investments is recorded as financial income.

Concentration of Credit Risk

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Revenue Recognition

On January 1, 2018, we adopted Topic 606 using the modified retrospective method.

The new standard had no significant impact on our Consolidated Financial Statements.

We sell personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies.

Historically, the Criteo model has focused solely on converting our clients' website visitors into customers, enabling us to charge our clients only when users engage with an ad we deliver, usually by clicking on it.

More recently, we have expanded our solutions to address a broader range of marketing goals for our clients.

We offer two families of solutions to our commerce and brand clients:

• Criteo Marketing Solutions allow commerce companies to address multiple marketing goals by engaging their consumers with personalized ads across the web, mobile and offline store environments.

• Criteo Retail Media solutions allow retailers to generate advertising revenues from consumer brands, and/or to drive sales for themselves, by monetizing their data and audiences through personalized ads, either on their own digital property or on the open Internet, that address multiple marketing goals.

We also have multiple pricing models which now include cost plus margin models in addition to cost-per-click, cost-per-install and cost-per-impression pricing models.

We recognize revenues when we transfer control of promised services directly to our clients or to advertising agencies, which we collectively refer to as our clients, in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services.

Refer to Note 17.

Revenue for further discussion regarding the adoption of ASC 606 and revenue.

For campaigns priced on a cost-per-click, cost-per-install basis and cost plus margin basis, we bill our clients when a user clicks on an advertisement we deliver or installs an application by clicking on an advertisement we delivered, respectively.

For these pricing models, we recognize revenue when a user clicks on an advertisement or installs an application.

For campaigns priced on a cost-per-impression basis, we bill our clients based on the number of times an advertisement is displayed to a user.

For this pricing model, we recognize revenue when an advertisement is displayed.

For campaigns with a fixed pricing component, where fixed amounts are billed to the customer at various intervals, we recognize revenue on a ratable basis, based on our completion of our performance obligation to the customer.

We mainly act as principal in our arrangements because (i) we control the advertising inventory before it is transferred to our clients;

(ii) we bear sole responsibility for fulfillment of the advertising promise and inventory risks and (iii) we have full discretion in establishing prices.

Therefore, based on these factors, we report revenue earned and the related costs incurred on a gross basis.

Customer Credit Notes

We offer credit notes to certain customers as a form of incentive, which are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and they are recognized as a reduction of revenue.

We believe that there will not be significant changes to our estimates of variable consideration.

Deferred Revenues

We record deferred revenues when cash payments are received or due in advance of our performance.

Our payment terms vary depending on the service or the type of customer.

For certain customers, we require payment before the services are delivered.

Practical Expedients

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

We generally expense sales commissions when incurred because the amortization period would have been one year or less.

These costs are recorded within sales and operating expenses.

Cost of Revenue

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Other Cost of Revenue .

Other cost of revenue includes expenses related to third-party hosting fees, depreciation of data center equipment and data purchased from third parties.

Other cost of revenue includes expenses related to third-party hosting fees, depreciation of data center equipment, data purchased from third parties and digital taxes.

The Company does not build or operate its own data centers and none of its Research and Development employments are dedicated to revenue generating activities.

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We have exclusively claimed R&D performed in France for purposes of the CIR.

The U.S Research Tax Credit is a U.S.

Research Tax Credit is a U.S.

tax credit to incentivize research and development activities in the U.S.

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Our chief operating decision-maker is our CEO.

The CEO reviews consolidated data for revenue, revenue excluding traffic acquisition costs (revenue ex-TAC) and Adjusted EBITDA (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 ) for the purposes of allocating resources and evaluating financial performance.

The CEO reviews consolidated data for revenue, revenue excluding traffic acquisition costs (revenue ex-TAC) and Adjusted EBITDA (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) for the purposes of allocating resources and evaluating financial performance.

We have concluded that our operations constitute one operating and reportable segment.

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Effective January 1, 2020, we have adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No.

2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet for operating leases with terms of more than 12 months, in addition to those currently recorded.

In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842, which included an option not to restate comparative periods in transition and use the effective date of ASC 842, Leases, as the date of the initial application of transition, which we elected.

Prior periods have not been adjusted and continue to be accounted for in accordance with ASC 840.

As a result of adopting ASU 842, we recognized total operating lease liabilities of $ 223.5 million and operating right-of-use assets of $ 204.3 million as of January 1, 2019.

The adoption of ASC 842 had an immaterial impact on our condensed consolidated statements of income and our condensed consolidated statement of cash flows for the year ended December 31, 2019.

Refer to Note 13.

Leases, for additional information and required disclosures.

Effective January 1, 2019, we have adopted ASU 2018 - 07, Improvements to Non-Employee Share based Payment Accounting.

The amendments in this ASU expands Topic 718 to include share base payments for goods or services to non employees.

The adoption of ASU 2018-07 did not have a material impact on our financial position or results of operations.

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update No.

2016-13 (ASU 2016-13) Financial Instruments-Credit Losses (Topic 326):

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.

ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.

This will result in earlier recognition of credit losses.

We will adopt ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings.

We are currently assessing the impact of the adoption of ASU 2016-13 on the Company's consolidated financial statements.

The adoption of ASU 2016-13 is not expected to have a material impact on our financial position or results of operations.

In January 2017, the FASB issued ASU 2017-04 Goodwill and Other (Topic 350) .

This results in earlier recognition of credit losses.

We measure loss allowances for all trade receivables using the lifetime expected credit loss approach, as described above.

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

Effective January 1, 2020, we have adopted ASU 2017-04, Goodwill and Other (Topic 350) .

ASU 2017-04 simplifies the subsequent measurement of goodwill and reduces the cost and complexity of evaluating goodwill for impairment.

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An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value.

We intend to adopt the standard on the effective date of January 1, 2020.

The adoption of ASU 2017-04 is not expected to have a material impact on our financial position or results of operations.

In August 2017, the FASB issued ASU 2017-12 Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities.

ASU 2017-12 was issued with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements as well as to simplify the application of hedge accounting guidance in current GAAP.

We intend to adopt the standard on the effective date of January 1, 2020.

The adoption of ASU 2017-12 is not expected to have a material impact on our financial position or results of operations.

In August 2018, the FASB issued ASU 2018 - 13, Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement .

This ASU modifies disclosure requirements for Fair Value including 1) removing existing disclosure requirements such as reasons for transfers from 1 to 2 level, policy of timing of transfers 2) modifying existing disclosure requirements, such as a rollforward of level 3 assets, investments in entities that calculate net asset value, and the measurement uncertainty disclosure 3) Adds additional disclosures such as changes in unrealized gains and losses in OCI, and the range and weight of significant unobservable inputs.

We intend to adopt the standard on the effective date of January 1, 2020.

The adoption of ASU 2018-13 is not expected to have a material impact on our financial position or results of operations.

The adoption of the ASU did not have an impact on our financial position or results of operations as we did not recognize an impairment loss during the period.

Effective January 1, 2020, we have adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer’s Accounting for Implementation Costs incurred in a Cloud Computing Arrangement That is a Service Contract .

This ASU was issued to clarify the accounting for implementation costs incurred for SaaS agreements.

Previously the guidance only referred to development of internal use software and the accounting for SaaS agreements was not clarified.

This ASU states that any capitalized implementation costs would be included in prepaid expenses, amortized over the term of the hosting arrangement on a straight-line basis and presented in the same line items in the Consolidated Statement of Income as the expense for fees of the associated hosting arrangements.

The adoption of the standard did not have an impact on our financial position or results of operations, however, it did have a minor impact on expense classification in current and future periods.

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018 - 14, Compensation - Retirement Benefits - Defined Benefit Plans - General.

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The adoption of ASU 2018-14 is not expected to have a material impact on our financial position or results of operations but may have an impact on our disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer’s Accounting for Implementation Costs incurred in a Cloud Computing Arrangement That is a Service Contract .

This ASU was issued to clarify the accounting for implementation costs incurred for SaaS agreements.

Previously the guidance only referred to development of internal use software and the accounting for SaaS agreements was not clarified.

This ASU states that the implementation costs of SaaS agreements should be capitalized.

We will adopt ASU 2018-15 effective January 1, 2020.

The adoption of ASU 2018-15 is not expected to have an impact on our financial position or results of operations on the date of the adoption but will have a minor impact on expense classification in future periods.

In December 2019, the FASB issued ASU.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes.

We intend to adopt the standard on the effective date of January 1, 2021.

The adoption of ASU 2019-12 is not expected to have a material impact on our financial position, results of operations or on our disclosures.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s Consolidated Financial Statements upon adoption.

Significant Events and Transactions of the Period

Change in estimated useful life of servers and other data center equipment

During the first quarter of 2019, we revised our estimate of the useful life of all servers and other equipment used in our data centers from 3 to 5 years .

This change in estimate was determined based on a revised commissioning plan which extends the period equipment from 3 to 5 years prior to disposal, and was accounted for as a change in accounting estimate.

This resulted in an increase in income from operations of $ 42.0 million , increase in net income of $ 35.8 million , or $ 0.56 per share, from that which would have been reported had the previous expected useful life of 3 years been used for the twelve month period ended December 31, 2019.

The impact on the three month period ended December 31, 2019 was an increase in income from operations of $ 10.7 million , an increase in net income of $ 9.1 million , or $ 0.14 per share.

Share repurchase program

Share repurchase programs

On October 25, 2018 Criteo's Board of Directors authorized a share repurchase program of up to $ 80.0 million of the Company’s outstanding American Depositary Shares.

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As of December 31, 2019, 3.2 million shares were held as treasury shares as part of the share repurchase program authorized on July 26, 2019.

As of December 31, 2019, we have 3.9 million treasury shares remaining which may be used to satisfy the company's obligations under its employee equity plans upon RSU vestings in lieu of issuing new shares, and for M&A activity.

Number of Treasury Shares

We completed this share repurchase program in February 2020.

As of December 31, 2019, we have 3.9 million treasury shares remaining which may be used to satisfy the company's obligations under its employee equity plans upon RSU vesting in lieu of issuing new shares, and for M&A activity.

On April 23, 2020, Criteo's Board of Directors authorized a share repurchase program of up to $ 30.0 million of the Company's outstanding American Depositary Shares.

We completed this share repurchase program in July 2020.

As of December 31, 2020 we had 5.6 million treasury shares remaining which may be used to satisfy the Company's obligations under its employee equity plan upon RSU vesting in place of issuing new shares, and for any potential M&A activity.

Number of Treasury Shares Amount

(in thousands)

Balance at January 1 , 2019 3,459,119 $ 79,159

Treasury Shares Repurchased to potentially use for M&A

Treasury Shares Repurchased for RSU Vesting

Treasury Shares Issued for RSU Vesting

Balance at December 31, 2018

Treasury Shares Retired ( 1,594,288 ) ( 36,137 )

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Balance at December 31, 2019 3,903,673 $ 74,900

Restructuring

The Company implemented a new organization structure designed to best support its multi-product platform strategy, accelerate execution and generate cost efficiencies, in particular through right sizing facilities.

As a result of this implementation, the Company incurred net restructuring costs of $ 10.6 million and $ 13.6 million for the three months and twelve months ended December 31, 2019, respectively.

The restructuring costs comprised termination of R&D activities, costs for termination of a facility, impairment of right of use assets, and payroll expenses, offset by gains from forfeitures of equity instruments linked to share-based compensation expense.

Cease of our R&D operations in Palo Alto

Treasury Shares Repurchased to use for RSU Vesting 3,358,068 $ 43,655

Treasury Shares Issued for RSU Vesting ( 1,472,346 ) $ ( 29,085 )

Treasury Shares Issued for M&A ( 156,859 ) ( 3,900 )

Balance at December 31, 2020 5,632,536 $ 85,570

Cessation of our R&D operations in Palo Alto

On October 7, 2019, in connection with the new organization structure, the Company announced a plan to restructure its R&D activities with the closing of its R&D operations in Palo Alto.

The company incurred net restructuring costs of $ 0.7 million and $ 0.7 million for the three months and the twelve months ended December 31, 2019, respectively.

Three Months Ended

Twelve Months Ended

December 31, 2019

(in thousands)

Gain from forfeitures of share-based compensation expense

Payroll related costs

Total restructuring costs

As such, for the three months and the twelve months ended December 31, 2019, respectively, we included $( 0.7 ) million in Research and Development expenses.

The Company incurred additional net restructuring costs of $ 0.1 million and $ 0.6 million for the three and twelve months ended December 31, 2020, respectively, comprising of payroll expenses included in Research and Development expenses.

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

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Restructuring costs 633

Restructuring costs - non cash items

Restructuring liability - December 31, 2019

Facilities right sizing program

The Company decided to implement a facilities right sizing program to generate cost efficiencies

The Company incurred net restructuring costs of $ 9.4 million and $ 12.2 million for the three months ended and the twelve months ended December 31, 2019, respectively, comprising of impairment of right of use assets and a termination of a lease facility.

Three Months Ended

Twelve Months Ended

December 31, 2019

(in thousands)

Depreciation and amortization (expense)

Impairment related costs

Facilities related costs

Total restructuring costs

As such, for the three months and the twelve months ended December 31, 2019, respectively, we included $( 0.7 ) million and $( 0.7 ) million in Research and Development expenses, $( 6.3 ) million and $( 8.7 ) million in Sales and Operations expenses, $( 2.3 ) million and $( 2.8 ) million in General and Administrative expenses.

Impairment related costs for the three months and the twelve months ended December 31, 2019, respectively, were included in Research and Development expenses $( 0.7 ) million , Sales and Operations expenses $( 6.4 ) million and General and Administrative expenses $( 1.8 ) million .

The following table summarizes restructuring activities as of December 31, 2019 included in right of use assets and lease liability on the balance sheet :

Restructuring Liability

(in thousands)

Restructuring liability - January 1, 2019

Restructuring costs

Restructuring costs - non cash items

Amounts paid ( 5,932 )

Restructuring liability - December 31, 2020 $ 282

Termination of the Palo Alto Lease

During the year ended December 31, 2020, we early terminated the Palo Alto lease, originally expiring in 2027.

We incurred broker fees and termination penalties of $ 4.6 million in connection with this transaction.

The net impact of write-offs of the right of use assets, lease liabilities, and fixed assets associated with the lease was nil.

For the three and twelve months ended December 31, 2020, $ 0 million and $ 1.5 million, respectively, was included in Research and Development expenses, $ 0 million and $ 0.8 million was included in General and Administrative expenses and $ 0 million and $ 2.3 million was included in Sales and Operations expenses.

New organization structure

As part of a new organization structure designed to best support its multi-product platform strategy and accelerate execution, the Company incurred net restructuring costs of $ 0.6 million and $ 0.6 million for the three months and twelve months ended December 31, 2019, respectively, comprising of payroll expenses, offset by gains from forfeitures of equity instruments linked to share-based compensation expense.

Three Months Ended

As part of a new organization structure designed to best support our multi-product platform strategy and accelerate execution, commenced in the year ended December 31, 2019, the Company incurred net restructuring costs of $ 1.4 million and $ 5.3 million for the three and twelve month periods ended December 31, 2020, respectively, comprising of payroll expenses.

For the three and twelve month periods ended December 31, 2020, respectively, $ 0.3 million and $ 0.5 million was included in Research and Development expenses, $( 0.3 ) million and $ 0.9 million was included in General and Administrative expenses and $ 1.4 million and $ 3.9 million was included in Sales and Operations expenses.

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

Twelve Months Ended

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(in thousands)

Gain from forfeitures of share-based compensation expense

Payroll related costs

Total restructuring costs

For the three month period ended December, 2019, $( 0.3 ) million was included in Research and Development expenses, and $( 0.2 ) million in Sales and Operations expenses.

For the twelve month periods ended December, 2019, $ $( 0.5 ) million was included in Research and Development expenses, and $( 0.1 ) million in Sales and Operations expenses.

The following table summarizes restructuring activities as of December 31, 2019 included in other current liabilities on the balance sheet :

Restructuring Liability

(in thousands)

Restructuring liability - January 1, 2020 $ 510

Restructuring costs 5,278

Restructuring costs - non cash items

Amount paid ( 3,812 )

Restructuring liability - December 31, 2020 $ 1,976

Changes in Group funding

In September 2015, Criteo S.A.

entered into a Multicurrency Revolving Facility Agreement for general purposes of the Group including the funding of business combinations.

In March 2017, the maximum amount available under this RCF was increased to € 350 million ($ 429.5 million).

On May 4, 2020, Criteo decided to draw € 140 million ($ 153.2 million) under its RCF credit facility for general purposes.

This six month drawdown of € 140 million ($ 159.9 million) was fully reimbursed on November 4, 2020.

In addition, the parties to the RCF agreement have agreed to extend the term of the agreement for one additional year, from March 2022 to March 2023, composed of a € 350 million ($ 429 million) commitment through March 2022, and a € 294 million ($ 360.8 million) commitment from the end of March 2022 through March 2023.

Changes in Group financial investments

In December 2020, $ 5.0 million was invested in a 24 month term deposit with an annual yield of 0.60 % and € 10.0 million ($ 12.3 million) was invested in a 15 month term deposit with an annual yield of 0.50 %.

These investments have been classified as Marketable Securities, a non-current asset, as they do not meet the cash and cash equivalent criteria.

In September 2020, $ 20.0 million was invested in a 12 month term deposit with an annual yield of 0.75 %.

This new investment is classified as Cash and Cash Equivalents.

In June 2020, € 20.0 million ($ 24.5 million) was invested in a 24 month term deposit with an annual yield of 0.25 %.

This investment has been classified as Marketable Securities, a non-current asset, as it does not meet the cash and cash equivalent criteria.

Categories of Financial Assets and Financial Liabilities

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Trade receivables, net of allowances $ 474,055 $ 481,732

Other taxes 69,987 60,924

Other current assets 21,405 17,225

Marketable securities $ 41,809 $ —

Non-current financial assets 18,109 21,747

Total $ 625,365 $ 581,628

We maintain an allowance for estimated credit losses.

During the years ended December 31, 2019 and 2018 , our net change in allowance for doubtful accounts was $( 9.9 ) million and $ 5.1 million , respectively.

During the years ended December 31, 2020 and 2019, our net change in the allowance for credit losses was $( 23.8 ) million and $( 9.9 ) million, respectively.

The primary cause of this change was the adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) from January 1, 2020 resulting in an earlier recognition of credit losses, the cumulative effect of which was recorded as an adjustment to retained earnings for $ 3.5 million (note 1), as well as an increase to the provision due to the expected impact of COVID-19 on the Company's future cash collection.

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

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Trade payables $ 367,025 $ 390,277

Other taxes 58,491 50,099

Employee - related payables 85,272 74,781

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Financial liabilities 3,275 4,405

Total $ 547,453 $ 555,448

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

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The fair value of derivative financial instruments approximates the carrying amount, given the nature of the derivative financial instruments and the maturity of the expected cash flows.

Marketable Securities

The following table presents for each reporting period, the breakdown of marketable securities:

December 31, 2020 December 31, 2019

(in thousands)

Securities Available-for-sale

Term Deposits $ 24,538 $ —

Securities Held-to-maturity

Term Deposits $ 17,271 $ —

Total $ 41,809 $ —

The gross unrealized gains or (loss) on our marketable securities were not material as of December 31, 2020.

For our marketable securities, the fair value approximates the carrying amount, given the nature of the term deposit and the maturity of the expected cash flows.

The term deposit is considered a level 2 financial instruments as it is measured using valuation techniques based on observable market data.

The following table classifies our marketable securities by contractual maturities:

Held-to-maturity Available-for-sale

December 31, 2020

(in thousands)

Due in one year $ — $ —

Due in one to five years $ 17,271 $ 24,538

Total $ 17,271 $ 24,538

Cash and Cash Equivalents

3 unchanged sentences

Cash equivalent $ 162,457 $ 189,119

Cash on hand 325,554 229,644

Total Cash and cash equivalents $ 488,011 $ 418,763

12 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

Balance at beginning of period $ ( 16,068 ) $ ( 25,918 ) $ ( 20,818 )

Allowance for credit losses through retained earnings (*)

( 3,522 ) — —

Provision for doubtful accounts ( 30,818 ) ( 11,072 ) ( 17,656 )

3 unchanged sentences

Balance at end of period $ ( 39,899 ) $ ( 16,068 ) $ ( 25,918 )

We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectable trade receivables.

The allowance is based on both specific and general reserves.

The amount charged to allowance for doubtful accounts decreased compared to the previous year due to a consistent application of the Company credit policy.

The reversal of provision increased during the period mainly due to payments received and increased write-offs of long outstanding receivables already reserved for which it is certain we will not collect.

(*) From January 1, 2020, we adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost issued by the Financial Accounting Standards Board (FASB).

ASU 2016- 13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.

This results in earlier recognition of credit losses.

We adopted ASU 2016-13 effective January 1, 2020 with the cumulative effect of adoption recorded as an adjustment to retained earnings (note 1).

The amount charged to allowance for credit losses for the twelve months ended December 31, 2020 increased compared to the same period in the prior year due to the application of the expected credit loss model beginning on January 1, 2020 as well as an increase to the provision due to the expected impact of COVID-19 on the Company's future cash collections caused by the downturn in the economy which has led to financial difficulties for some of our customers, particularly those operating in the retail sector.

In times of the global economic turmoil brought about by COVID-19, our estimates and judgments with respect to the collectability of our receivables are subject to greater uncertainty than in more stable periods.

The reversal of provision decreased during the twelve month period ended December 31, 2020, mainly due to lower payments received and lower write-offs of long outstanding receivables already reserved for which it is certain we will not collect the receivable.

During the twelve month period ended December 31, 2020, the Company recovered $ 3.6 million previously written off, accounted for as a reversal of provision.

The Company mitigates its credit risk with respect to accounts receivables by performing credit evaluations and monitoring agencies and advertisers' accounts receivables balances.

We write off accounts receivable balances once the receivables are no longer deemed collectible.

Other Current Assets

5 unchanged sentences

Prepaid expenses 9,801 7,891

Derivative financial instruments

Gross book value at end of period 21,405 17,225

1 unchanged sentence

Prepaid expenses mainly consist of office rental advance payments.

Derivative financial instruments include foreign currency swaps or forward purchases or sales contracts used to manage our exposure to the risk of exchange rate fluctuations.

These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

Property, Plant and Equipment

Changes in net book value during the presented periods are summarized below:

Fixtures and fittings

Furniture and equipment

Construction in Progress

Fixtures and fittings Furniture and equipment Construction in Progress Total

(in thousands)

Net book value at January 1, 2019 $ 18,884 $ 144,801 $ 20,328 $ 184,013

Additions to tangible assets

Disposal of tangible assets net of accumulated depreciation

Additions to property, plant and equipment 466 23,117 46,959 70,542

Disposal of property, plant and equipment net of accumulated depreciation ( 999 ) ( 904 ) ( 12 ) ( 1,915 )

Depreciation expense ( 6,377 ) ( 50,222 ) — ( 56,599 )

6 unchanged sentences

Net book value at January 1, 2020 12,823 177,030 4,308 194,161

Additions to tangible assets

Disposal of tangible assets net of accumulated depreciation

Additions to property, plant and equipment 771 38,932 13,164 52,867

Disposal of property, plant and equipment net of accumulated depreciation ( 2,786 ) ( 1,527 ) — ( 4,313 )

Depreciation expense ( 3,815 ) ( 59,482 ) — ( 63,297 )

5 unchanged sentences

Accumulated depreciation at end of period ( 22,288 ) ( 271,066 ) — ( 293,354 )

The increase in property plant and equipment (gross book value and accumulated depreciation) mainly includes purchases of server equipment in the French, American and Japanese subsidiaries where the Company’s data center equipment is located.

Intangible assets

Changes in net book value during the presented periods are summarized below:

Technology and customer relationships

Construction in Progress

Software Technology and customer relationships Construction in Progress Total

(in thousands)

20 unchanged sentences

Additions to software mainly consist of capitalization of internally developed internal-use software and IT licenses.

Additions to technology and customer relationships in 2018 relate to the valuation of identified intangibles in the context of the business combinations with Storetail Marketing SAS ("Storetail") and Manage.com.("Manage").

Amortization on technology and customer relationships relates to HookLogic, Storetail and Manage intangibles resulting from each of the three business combinations respectively.

In 2019 we accounted for in "Amortization and depreciation expense" to a change in useful life of Manage technology based on the early decommissioning of the Manage platform ($ 2.2 million) and an impairment loss of Manage customers relationships ($ 4.6 million) driven by lower business performance compared to expectations at the time of the acquisition, largely due to high client concentration and a volatile business environment.

3 unchanged sentences

As of December 31, 2020, expected amortization expense for intangible assets for the next five years and thereafter is as follows (in thousands):

Technology and customer relationships

Software Technology and customer relationships Total

2021 $ 12,336 $ 11,704 $ 24,040

2022 9,377 11,704 21,081

2023 6,372 11,158 17,530

2024 767 8,700 9,467

2025 66 7,560 7,626

Thereafter — — —

Total $ 28,918 $ 50,826 $ 79,744

(in thousands)

6 unchanged sentences

Balance at December 31, 2020 $ 325,805

Additions to goodwill in 2019 were due to two business combinations considered as not material to our consolidated financial statements.

Additions to goodwill in 2018 were due to two business combinations with Manage.com Inc.

and Storetail Marketing Services SAS.

The total consideration paid was $ 60.0 million for the acquisition of Manage financed by available cash resources.

The total consideration paid for the acquisition of Storetail was $ 47.8 million ( € 41.3 million ) composed as follows :

$ 43.7 million ( € 37.7 million ) financed by available cash resources at the acquisition date and $ 4.1 million ( € 3.6 million ) as deferred consideration, due at the end of a 2 year period.

These transactions have been accounted for as a business combination under the acquisition method of accounting.

A valuation of the fair value of Manage's and Storetail's assets acquired and liabilities assumed have been performed as of December 31, 2018.

As regards Manage, a technology and customer relationships assets of $ 9.8 million and $ 7.3 million , respectively, and related deferred tax liability of $ 4.4 million have been identified resulting in a goodwill of $ 45.0 million , after working capital adjustments ( $ 0.6 million ).

As regards Storetail, a technology and related marketing solution of $ 14.2 million ( € 12.2 million ) and related deferred tax liability of $ 4.1 million ( € 3.6 million ) have been identified resulting in a goodwill of $ 32.3 million ( € 27.8 million ).

In addition, acquisition costs amounting to $ 1.7 million were fully expensed as incurred.

Additions to goodwill in 2020 and 2019, were due to one business combination, and two business combination, respectively considered as not material to our consolidated financial statements.

In addition, on the basis of our impairment assessment as of December 31, 2020, no impairment has been detected.

3 unchanged sentences

Changes in provisions during the presented periods are summarized below:

Provision for employee- related litigation

Other provisions

Provision for employee- related litigation Other provisions Total

(in thousands)

Balance at January 1, 2019 $ 244 $ 2,396 $ 2,640

Charges 461 3,797 4,258

Provision used ( 82 ) — ( 82 )

2 unchanged sentences

Balance at January 1, 2020 $ 620 $ 5,765 $ 6,385

Charges 507 994 1,501

Provision used — ( 831 ) ( 831 )

Provision released not used (*)

( 33 ) ( 2,207 ) ( 2,240 )

Currency translation adjustments 85 26 111

— ( 2,676 ) ( 2,676 )

Balance at December 31, 2020 $ 1,179 $ 1,071 $ 2,250

- of which current $ 1,179 $ 1,071 $ 2,250

The amount of the provisions represent management’s best estimate of the future outflow.

The increase of Other provisions during the Twelve Months ended December 31, 2019 relates mainly to provision for operating taxes.

- of which non-current $ — $ — $ —

* Due to changes in management's best estimates of the future outflow

** Transfer to Other liabilities due to tax notification received confirming the amount owed

The amount of the provisions represents management’s best estimate of the future outflow.

Financial Liabilities

We are party to several loan agreements and revolving credit facilities, or RCF, with third-party financial institutions.

We are party to several loan agreements and a revolving credit facility, or RCF, with third-party financial institutions.

Our loans and RCF agreements are presented in the table below:

Nominal/ Authorized amounts

Amount drawn as of December 31, 2019 (RCF only)

Amount Outstanding as of December 31, 2019

(in thousands)

Interest rate

Settlement date

BPI Loan - February 2014

Other BPI Loans

2023 and after

(RCF Only) Amount drawn as of December 31, 2020 (RCF only) Amount Outstanding as of December 31, 2020

Nature (in thousands) Interest rate Settlement date

BPI Loan - February 2014 NA NA $ 368.1 Fixed:

Other BPI Loans NA NA $ 912.0 — % 2023 and after

Other Loans NA NA $ 224.8 — % 2024

Bank Syndicate RCF - September 2015 (1)

€ 350,000 $ — $ — Floating rate:

EURIBOR / LIBOR + margin depending on leverage ratio

EURIBOR / LIBOR + margin depending on leverage ratio March 2022

(1) Subsequent to the settlement date of March 2022, the authorized amount of € 350 million is reduced to € 294 million through to a new settlement date of March 2023

In September 2015, Criteo entered into a 5 year revolving credit facility for general corporate purposes, including acquisitions, for a maximum amount of € 250 million ($ 306.8 million), with a bank syndicate composed of Natixis (coordinator and documentation agent), Le Credit Lyonnais (LCL) (facility agent), HSBC France, Société Générale Corporate & Investment Banking and BNP Paribas (each acting individually as bookrunners and mandated lead arrangers).

In 2017, this agreement was amended by, among other things, increasing the amount of facility from € 250.0 million ( $ 280.9 million ) to € 350.0 million ( $ 393.2 million ) and extending the term of the contract from 2020 to 2022.

In 2017, this agreement was amended by, among other things, increasing the amount of facility to € 350.0 million ($ 429.4 million) and extending the term of the contract from 2020 to 2022.

In 2020, the parties to the RCF agreement have agreed to extend the term of the agreement for one additional year, from March 2022 to March 2023, composed of a € 350 million ($ 429.4 million) commitment through March 2022, and a € 294 million ($ 360.8 million) commitment from the end of March 2022 through March 2023.

This multi-currency revolving credit facility bears interest rate at Euribor or the relevant Libor plus a margin to be adjusted on the basis of the leverage ratio.

3 unchanged sentences

At December 31, 2020, we were in compliance with the required leverage ratio.

Criteo intends to repay the BPI bank loans in 2021, prior to their settlement date.

The following table shows the maturity of our financial liabilities:

1 unchanged sentence

(in thousands)

Borrowings $ 1,505 $ 1,505

Other financial liabilities 845 459 45 — — 341 —

1 unchanged sentence

Financial liabilities 3,275 2,889 45 — — 341 —

On January 1, 2019, we adopted Accounting Standards Update No.

2016-02, Leases (Topic 842) which requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet.

We have adopted Topic 842 effective January 1, 2019 on a modified retrospective basis and elected not to restate comparative periods.

We chose to use certain practical expedients offered by the standard including:

We did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or the initial direct costs for any existing leases.

We do not recognize a lease liability or right of use asset for leases with a term of 12 months or less, and

We used hindsight in determining the lease term.

We lease space under non-cancellable operating leases for our offices as well as our data centers.

The company had no finance leases.

Our office leases typically include free rent periods or rent escalation periods, and may also include leasehold improvement incentives.

Leases for data centers may also include free rent periods or rent escalation periods.

These leases typically do not include residual value guarantees.

Both office and data center leases may contain both lease components (rent) and non-lease components (maintenance, electrical costs, and other service charges).

Non-lease components are accounted for separately.

Both office and data center leases typically contain options to renew, and/or early terminate.

We have evaluated management's expectations for these options as of December 31, 2019.

Options have been included in the lease term if management has determined it is reasonably certain it will be exercised.

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate at lease commencement to determine the present value of future payments.

We have a centralized treasury function, and the majority of our leases are negotiated and signed by representatives of Criteo SA.

As such, the incremental borrowing rate of Criteo SA is used for all of our contracts.

It is then adjusted in consideration of the currency of the lease and the lease term as of the lease commencement date.

Lease expense is recognized for minimum lease payments on a straight-line basis over the lease term.

Variable costs are expensed in the period incurred.

Variable expenses include changes in indexation.

Leases for data centers may have variable costs based on electrical usage.

The components of lease expense are as follows:

Three Months Ended

Twelve Months Ended

Three Months Ended Twelve Months Ended

Offices Data Centers Total Offices Data Centers Total

Lease expense $ 8,413 $ 5,331 $ 13,744 $ 29,183 $ 25,850 $ 55,033

3 unchanged sentences

Total operating lease expense $ 8,782 $ 5,556 $ 14,338 $ 29,690 $ 26,185 $ 55,875

Included in lease expense, are impairment related costs for the three months and the twelve months ended December 31, 2019, respectively, classified as Research and Development expenses $( 0.7 ) million , Sales and Operations expenses $( 6.4 ) million and General and Administrative expenses $( 1.8 ) million .

The impairment charge was recognized as a result of the Company's facilities right sizing program (Note 2).

Three Months Ended Twelve Months Ended

Offices Data Centers Total Offices Data Centers Total

Lease expense $ 11,833 $ 7,169 $ 19,002 $ 38,910 $ 24,596 $ 63,506

Short term lease expense 352 253 605 2,296 1,826 4,122

Variable lease expense 141 ( 958 ) ( 817 ) 599 — 599

Sublease income ( 378 ) — ( 378 ) ( 2,916 ) — ( 2,916 )

Total operating lease expense $ 11,948 $ 6,464 $ 18,412 $ 38,889 $ 26,422 $ 65,311

As of December 31, 2020, we had future minimum lease payments as follows:

Offices Data Centers Total

(in thousands)

2021 $ 29,463 $ 24,102 $ 53,565

2022 27,737 11,656 39,393

2023 17,818 4,427 22,245

2024 8,424 2,274 10,698

2025 7,211 380 7,591

Thereafter 2,424 — 2,424

Total minimum lease payments 93,077 42,839 135,916

1 unchanged sentence

Total Lease Liability $ 89,974 $ 41,421 $ 131,395

The weighted average remaining lease term and discount rates as of December 31, 2019 are as follows:

The weighted average remaining lease term and discount rates as of December 31, 2020 and 2019 are as follows:

2020 December 31,

Weighted average remaining lease term (years)

Offices 3.59 4.52

Data Centers 2.18 2.52

Weighted average discount rate

Supplemental cash flow information related to our operating leases is as follows for the period December 31, 2019:

Offices 1.97 % 2.47 %

Data Centers 1.51 % 1.85 %

Supplemental cash flow information related to our operating leases is as follows for the period December 31, 2020 and 2019:

Twelve Months Ended

3 unchanged sentences

Right of use assets obtained in exchange for new operating lease liabilities $ 57,550 $ 15,714

As of December, 2019, we have additional operating leases, primarily for offices, that have not yet commenced which will result in additional operating lease liabilities and right of use assets of approximately $ 11.8 million .

These operating leases will commence in 2020.

For periods prior to January 1, 2019, we accounted for our lease commitments in accordance with ASC 840.

We recognized rent expense for leases on a straight-line basis over the life of the lease.

For the three months ended December 31, 2018, we recognized expense for office leases of $ 9.3 million and data centers costs of $ 15.9 million .

For the twelve months ended December 31, 2018 we recognized expense for office leases of $ 37.9 million and data center costs of $ 54.8 million .

The rent expense recognized in prior periods included amounts which are now considered non-lease components such as maintenance services and electricity charges.

As of December 31, 2020, we have additional operating leases, that have not yet commenced which will result in additional operating lease liabilities and right of use assets:

Offices Data Centers

(in thousands)

Additional operating lease liabilities $ — $ 7,900

Additional right of use assets $ — $ 7,900

These operating leases will commence during the fiscal year ending December 31, 2021.

During the three months period ended December 31, 2020 and December 31, 2019, we incurred an impairment loss of $ 0.0 million and $ 8.9 million, respectively, on certain right of use assets due to the implementation of management's facilities right sizing program.

We used market quotes in determining the fair value of the right of use assets.

The impairment loss was classified between Research and Development expenses of $ 0.0 million, and $ 0.7 million, Sales and Operations expenses of $ 0.0 million and $ 6.4 million, and General and Administrative expenses of $ 0.0 million and $ 1.8 million.

During the year ended December 31, 2020 and December 31, 2019, we incurred an impairment loss of $ 1.6 million, and $ 8.9 million, respectively, on certain right of use assets due to the implementation of management's facilities right sizing program.

We used market quotes in determining the fair value of the right of use assets.

The impairment loss was classified between Research and Development expenses of $ 0.2 million and $ 0.7 million, Sales and Operations expenses of $ 1.1 million and $ 6.4 million, and General and Administrative expenses of $ 0.3 million and $ 1.8 million.

Other Current Liabilities

3 unchanged sentences

Clients' prepayments $ 12,234 $ 13,618

Credit notes 14,433 16,420

Accounts payable relating to capital expenditures 4,721 4,408

1 unchanged sentence

Deferred revenue 84 227

The changes in "accounts payable relating to capital expenditures" relate to significant data centers equipment and leasehold improvements acquisitions in 2018 paid during the year.

Total $ 33,390 $ 35,886

Employee Benefits

3 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

Projected benefit obligation present value - beginning of period

$ 8,485 $ 5,537 $ 5,149

2,232 1,556 1,690

Interest cost

Actuarial losses (gains)

( 5,214 ) 1,374 ( 1,235 )

Change in consolidation scope

Currency translation adjustment

569 ( 95 ) ( 251 )

Projected benefit obligation present value - end of period

$ 6,167 $ 8,485 $ 5,537

The Company does not hold any plan assets for any of the periods presented.

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Discount rate (Corp AA)

6 unchanged sentences

Estimated retirement age

Progressive table

TH-TF 2000-2002 shifted

Progressive table Progressive table Progressive table

TH-TF 2000-2002 shifted TH-TF 2000-2002 shifted TH-TF 2000-2002 shifted

Defined Contribution Plans

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

Defined contributions plans included in personnel expenses

Common shares

$ ( 16,211 ) $ ( 15,686 ) $ ( 16,912 )

Common shares and Treasury stock

Change in Number of Shares

1 unchanged sentence

Balance at January 1, 2019 64,249,084

of which Common shares 67,708,203

of which Treasury stock ( 3,459,119 )

Issuance of shares under share option and free share plans (1)

Balance at December 31, 2018 before Storetail deferred consideration and Share repurchase program

Storetail deferred consideration

Balance at December 31, 2018 after Storetail deferred consideration and before Share repurchase program

Share repurchase program

Treasury shares retired (2)

( 1,594,288 )

Share repurchase program (see Note 2)

Balance at December 31, 2019 62,293,508

of which Common shares 66,197,181

of which Treasury stock ( 3,903,673 )

Issuance of shares under share option and free share plans (3)

Treasury shares retired (3)

Balance at December 31, 2019 after Storetail deferred consideration and before Share repurchase program

Storetail deferred consideration ( 156,859 )

Share repurchase program (see Note 2)

( 1,728,863 )

Balance at December 31, 2020 60,639,570

(1) Adopted by the Board of Directors on March 1, 2018, March 16, 2018, April 25, 2018, June 26, 2018, July 26, 2018,, October 25, 2018 and December 12, 2018.

of which Common shares 66,272,106

of which Treasury stock ( 5,632,536 )

(1) Adopted by the Board of Directors on March 1, 2019, April 25, 2019, June 25, 2019, July 25, 2019, October 24, 2019 and December 11, 2019.

(2) On February 8th, 2019, the Board acknowledged the share capital decrease resulting from the cancellation of 1,594,288 shares and approved the related amendment of Article 6 of the Company’s by-laws reflecting such decrease.

Adoption of ASC Topic 606, “Revenue from contracts with customers”

On January 1, 2018, we adopted Topic 606 using the modified retrospective method.

The new standard had no significant impact on our Consolidated Financial Statements.

Revenue Recognition

We sell personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies.

More recently, we have expanded our solutions to address a broader range of marketing goals for our clients.

We offer two families of solutions to our commerce and brand clients:

Criteo Marketing Solutions allow commerce companies to address multiple marketing goals by engaging their consumers with personalized ads across the web, mobile and offline store environments.

Criteo Retail Media solutions allow retailers to generate advertising revenues from consumer brands, and/or to drive sales for themselves, by monetizing their data and audiences through personalized ads, either on their own digital property or on the open Internet, that address multiple marketing goals.

In conjunction with expanding our solutions, we have also started expanding our pricing models to now include a combination of cost-per-install and cost-per-impression for selected new solutions, in addition to cost-per-click.

For campaigns priced on a cost-per-click and cost-per-install basis, we bill our clients when a user clicks on an advertisement we deliver or installs an application by clicking on an advertisement we delivered, respectively.

For these pricing models, we recognize revenue when a user clicks on an advertisement or installs an application.

For campaigns priced on a cost-per-impression basis, we bill our clients based on the number of times an advertisement is displayed to a user.

For this pricing model, we recognize revenue when an advertisement is displayed.

We act as principal in our arrangements because (i) we control the advertising inventory (spaces on websites) before it is transferred to our clients;

(ii) we bear sole responsibility for fulfillment of the advertising promise and inventory risks and (iii) we have full discretion in establishing prices.

Therefore, based on these factors, we report revenue earned and the related costs incurred on a gross basis.

Disaggregation of revenue

The following tables disclose our consolidated revenue for each geographical area for each of the reported periods.

Revenue by geographical area is based on the location of advertisers’ campaigns.

(in thousands)

December 31, 2017

December 31, 2018

December 31, 2019

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

Customer Credit Notes

We offer credit notes to certain customers as a form of incentive, which are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and they are recognized as a reduction of revenue.

We believe that there will not be significant changes to our estimates of variable consideration.

Deferred Revenues

We record deferred revenues when cash payments are received or due in advance of our performance.

Our payment terms vary depending on the service or the type of customer.

For certain customers, we require payment before the services are delivered.

Practical Expedients

We generally expense sales commissions when incurred because the amortization period would have been one year or less.

These costs are recorded within sales and operating expenses.

(3) Adopted by the Board of Directors on March 3, 2020, April 23, 2020, June 22, 2020, July 23, 2020, October 23, 2020 and December 9, 2020

Nature of Expenses Allocated by Function

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(in thousands)

8 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

8 unchanged sentences

Marketing costs ( 2,135 ) ( 3,818 ) ( 4,976 )

Other ( 296 ) 766 507

Other non-cash operating expenses ( 11,873 ) ( 17,968 ) ( 11,448 )

4 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

16 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

7 unchanged sentences

Consulting and professional fees ( 20,081 ) ( 19,329 ) ( 18,163 )

Other ( 5,420 ) ( 2,866 ) ( 1,744 )

Other non-cash operating expenses ( 2,383 ) ( 11,882 ) ( 9,996 )

2 unchanged sentences

Total general and administrative expenses $ ( 116,395 ) $ ( 139,754 ) $ ( 135,159 )

Restructuring

Restructuring of our China Operations

In May 2017, the Company announced it would no longer continue to serve the domestic market in China and would refocus its China operations entirely on the export business.

As such, we have recorded $ 3.3 million in restructuring charges for the twelve months ended December 31, 2017, as follows:

Twelve Months Ended

December 31, 2017

(in thousands)

Severance costs

Facility Exit Costs

Total restructuring costs

For the twelve months ended December 31, 2017, $ 2.5 million was included in Other Cost of Revenue, $ 0.7 million in Sales and Operations expenses, and $ 0.1 million was included in General and Administrative expenses.

The following table summarizes restructuring activities as of December 31, 2017 included in other current liabilities on the balance sheet:

Restructuring Liability

(in thousands)

Restructuring liability - January 1, 2017

Restructuring charges

Restructuring liability - December 31, 2017

No additional charges related to restructuring were recorded in the twelve months ended December 31, 2018, and the remaining $ 0.4 million was paid during the period resulting in the extinguishment of the restructuring liability as of December 31, 2018.

Discontinuation of Criteo Predictive Search

On October 31, 2017, we announced that we decided to discontinue the product Criteo Predictive Search.

As such, we have recorded $ 4.1 million in restructuring charges for the twelve months ended December 31, 2017.

In 2018, we recognized a gain of $ 0.1 million .

This gain was due to a reduction of share-based compensation expenses due to forfeitures which was partially offset by additional charges for facilities and employee severance agreements.

Twelve Months Ended

December 31, 2017

December 31, 2018

(in thousands)

Severance costs

Facility Exit Costs

Total restructuring costs

For the twelve months ended December 31, 2017, $ 2.9 million was included in Research and Development expenses and $ 1.1 million in Sales and Operations expenses.

Other costs include the write-off of acquisition related intangible assets of $ 2.2 million slightly offset by a reduction of share based compensation expenses of $ 0.7 million due to forfeitures.

For the twelve months ended December 31, 2018, $ 0.2 million was included in Sales and Operations expenses and $( 0.3 ) million in Research and Development expenses.

Other costs relate to a reduction of share-based compensation expenses of $( 0.5 ) million due to forfeitures.

The following table summarizes restructuring activities as of December 31, 2018 included in other current liabilities on the balance sheet:

Restructuring Liability

(in thousands)

Restructuring liability - January 1

Restructuring charges

Restructuring liability - December 31

No additional charges related to restructuring were recorded in the twelve months ended December 31, 2019, and the remaining $ 0.5 million was paid during the period resulting in the extinguishment of the restructuring liability as of December 31, 2019.

Allocation of Personnel Expenses

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(in thousands)

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

28 unchanged sentences

The Board of Directors has authorized RSUs to Criteo employees subject to a presence condition and to members of management, subject to the achievement of internal performance objectives and a presence condition.

• 6,463,000 Share Options or RSUs, authorized at the General Meeting of Shareholders on June 25, 2020, such authorizations collectively referred to as “Plan 13”.

Upon the exercise of the BSPCEs or Share Options, we grant beneficiaries newly issued ordinary shares of the Parent.

17 unchanged sentences

Details of BSPCE / OSA / RSU plans

Dates of grant (Boards of Directors)

Oct 24, 2008 - Sept 14, 2010

Sept 9, 2009 - Sept 21, 2011

Nov 18, 2011 - May 22, 2012

Oct 25, 2012 -

April 18, 2013

Sept 3, 2013 - April 23, 2014

July 30, 2014 - June 28, 2016

July 28, 2016 - June 27, 2017

July 27, 2017 - June 26, 2018

July 26, 2018 - June 25, 2019

July 25, 2019 - December 11, 2019

Vesting period

Contractual life

Expected option life

1 & 2 Plan 3 Plan 5 Plan 6 Plan 7 Plan 8 Plan 9 Plan 10 Plan 11 Plan 12 Plan 13

Dates of grant (Boards of Directors) Oct 24, 2008 - Sept 14, 2010 Sept 9, 2009 - Sept 21, 2011 Nov 18, 2011 - May 22, 2012 Oct 25, 2012 Oct 25, 2012 -

April 18, 2013 Sept 3, 2013 - April 23, 2014 July 30, 2014 - June 28, 2016 July 28, 2016 - June 27, 2017 July 27, 2017 - June 26, 2018 July 26, 2018 - June 25, 2019 July 25, 2019 - June 24, 2020 June 25, 2020 - December 15, 2020

Vesting period 3.0 years

3.0 - 4.0 years

4.0 - 5.0 years

Contractual life 10.0 years

Expected option life 8.0 years

6.0 - 8.0 years

Number of instruments granted 1,819,120

Share Option (S.O.) / BSPCE / RSU

Share Option (S.O.) / BSPCE / RSU BSPCE BSPCE & OSA BSPCE & OSA BSPCE BSPCE & OSA BSPCE & OSA OSA RSU OSA RSU OSA RSU OSA RSU OSA RSU RSU

Share entitlement per option 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

4 unchanged sentences

€ 8.66 - € 15.67

€15.67 - €17.44

Valuation method

Black & Scholes

Valuation method Black & Scholes

Grant date share fair value € 0.2 -

5 unchanged sentences

€ 8.66 - € 15.67

€ 3.29 - € 17.44

€ 10.79 - € 15.57

Expected volatility (1)

8 unchanged sentences

40.7 % - 41.2 %

Discount rate (2)

39.2 % - 39.9 %

Discount rate (2)

2.74 % - 4.10 %

3 unchanged sentences

1.20 % - 2.40 %

Performance conditions

N/A N/A N/A 0.60 % - 0.70 %

N/A 0.10 % - 0.90 %

N/A — % - 0.25 %

Performance conditions No Yes (A) No Yes (B) No No No Yes (C) No Yes (D) (E) No No No Yes (F) No Yes (G) (H) Yes (H)

Fair value per option / RSU € 0.08 - € 0.45

5 unchanged sentences

€ 3.29 -€ 5.78

€ 8.66 -€ 17.44

€ 10.79 - € 15.57

(1) Based on similar listed entities.

23 unchanged sentences

Based on the assumptions known at December 31, 2019, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion.

(H) On March 3, 2020, October 23, 2020 and December 9, 2020 the Board of Directors of the Parent granted a total of 272,600 RSUs to members of the management, subject to the achievement of internal performance objectives and condition of presence.

Based on the assumptions known at December 31, 2020, we determined the share-based compensation expense by applying a probability ratio on performance objectives completion.

Change in Number of outstanding BSPCE / OSA / RSU

OSAs RSUs Total

Balance at January 1, 2018 3,192,708 4,212,508 7,405,216

Granted 1,013,065 3,133,644 4,146,709

Exercised (BSPCE and OSA) ( 137,348 ) — ( 137,348 )

Vested (RSU) — ( 1,362,873 ) ( 1,362,873 )

Forfeited ( 880,960 ) ( 1,203,142 ) ( 2,084,102 )

Expired — — —

Balance at December 31, 2018 3,187,465 4,780,137 7,967,602

Granted 438,347 3,147,751 3,586,098

Exercised (BSPCE and OSA) ( 83,266 ) — ( 83,266 )

Vested (RSU) — ( 1,219,112 ) ( 1,219,112 )

Forfeited ( 983,012 ) ( 1,729,789 ) ( 2,712,801 )

Expired — — —

Balance at December 31, 2019 2,559,534 4,978,987 7,538,521

Granted 140,513 2,684,402 2,824,915

Exercised (BSPCE and OSA) ( 223,934 ) — ( 223,934 )

Vested (RSU) — ( 1,478,894 ) ( 1,478,894 )

Forfeited ( 370,355 ) ( 1,230,404 ) ( 1,600,759 )

Expired ( 3,600 ) — ( 3,600 )

Balance at December 31, 2020 2,102,158 4,954,091 7,056,249

2 unchanged sentences

Number outstanding

$ 3,600 $ 67,751 $ 242,613 $ 41,338 $ 306,172 $ 1,599,033 $ 328,726 $ 532,732 $ 65,500 $ — $ 4,780,137 $ 7,967,602

Weighted-average exercise price

€ 0.70 € 4.43 € 5.95 € 9.26 € 17.95 € 30.99 € 41.75 € 25.79 € 18.72 € — € — € 26.94

Number exercisable

3,600 67,751 242,613 41,338 306,172 1,417,904 161,658 — — — — 2,241,036

Weighted-average exercise price

€ 0.70 € 4.43 € 5.95 € 9.26 € 17.95 € 30.04 € 41.37 € — € — € — € — € 25.39

Weighted-average remaining contractual life

1.2 years 2.4 years 3.3 years 4.0 years 4.9 years 6.2 years 8.2 years 9.3 years 9.8 years — — 6.7 years

Balance at December 31, 2019

Number outstanding

3,600 63,544 230,673 26,350 216,157 1,080,017 116,580 318,766 128,380 375,467 4,978,987 7,538,521

Weighted-average exercise price

€ 0.70 € 4.37 € 5.95 € 9.28 € 17.70 € 29.69 € 41.50 € 26.58 € 17.32 € 15.67 € — € 23.09

Number exercisable

3,600 63,544 230,673 26,350 216,157 1,066,670 80,966 129,908 16,375 — — 1,834,243

Weighted-average exercise price

€ 0.70 € 4.37 € 5.95 € 9.28 € 17.70 € 29.58 € 41.17 € 26.42 € — € — € — € 24.12

Weighted-average remaining contractual life

0.2 years 1.4 years 2.3 years 3.0 years 3.9 years 5.1 years 7.1 years 8.3 years 9.1 years 9.9 years — 6.2 years

Balance at December 31, 2020

Number outstanding

— 42,644 101,852 20,870 104,131 921,534 97,013 169,754 128,380 515,980 4,954,091 7,056,249

Weighted-average exercise price

€ — € 5.31 € 5.95 € 9.36 € 20.05 € 29.82 € 41.18 € 26.46 € 17.32 € 13.76 € — € 26.81

Number exercisable

— 42,644 101,852 20,870 104,131 921,534 97,013 169,754 56,330 93,867 — 1,607,995

Weighted-average exercise price

€ — € 5.31 € 5.95 € 9.36 € 20.05 € 29.82 € 41.18 € 26.46 € 17.52 € — € — € 24.87

Weighted-average remaining contractual life

— 0.5 years 1.3 years 2.1 years 2.9 years 4.2 years 6.1 years 7.3 years 8.1 years 9.0 years — 5.8 years

Non-Employee Warrants (Bons de Souscription d’Actions or BSA)

20 unchanged sentences

Details of Non-Employee Warrants

Plan A Plan B Plan C Plan D Plan E Plan F Plan G Plan H Plan I

Dates of grant

(Boards of Directors)

November 17, 2009

March 11, 2010

November 16, 2010 - September 21, 2011

October 25, 2012 - March 6, 2013

March 19, 2015 - October 29, 2015

April 20, 2016 - March 1, 2017

July 27, 2017 - October 26, 2017

October 25, 2018

October 24, 2019

Vesting period

Contractual life

(Boards of Directors) November 17, 2009 March 11, 2010 November 16, 2010 - September 21, 2011 October 25, 2012 - March 6, 2013 March 19, 2015 - October 29, 2015 April 20, 2016 - March 1, 2017 July 27, 2017 - October 26, 2017 October 25, 2018 October 24, 2019

Vesting period 2 years

Contractual life 10 years

Number of warrants granted 231,792

13 unchanged sentences

€ 35.80 - € 44.37

Valuation method

Binomial method

Valuation method Binomial method

Grant date share fair value € 0.2

6 unchanged sentences

40.6 % - 40.9 %

50.0% - 50.2%

40.6% - 40.9%

41.0% - 41.3%

Discount rate (2)

3 unchanged sentences

0.54 % - 0.6 %

Performance conditions

Performance conditions No Yes (A) No No No No No No No

Fair value per warrant € 0.05

11 unchanged sentences

Balance at January 1, 2018 186,276

Granted 125,000

Forfeited ( 19,606 )

Balance at December 31, 2018 291,670

Granted 105,680

Forfeited ( 33,583 )

Balance at December 31, 2019 363,767

Exercised ( 7,250 )

Forfeited ( 12,742 )

Balance at December 31, 2020 343,775

6 unchanged sentences

Weighted-average exercise price € 18.95

Weighted-average remaining contractual life

Weighted-average remaining contractual life 7.9 years

Balance at December 31, 2019

3 unchanged sentences

Weighted-average exercise price € 17.52

Weighted-average remaining contractual life

Weighted-average remaining contractual life 7.6 years

Balance at December 31, 2020

3 unchanged sentences

Weighted-average exercise price $ 17.33

Weighted-average remaining contractual life

Weighted-average remaining contractual life 6.8 years

Reconciliation with the Consolidated Statements of Income

Balance for the year ended December 31, 2017

Balance for the year ended December 31, 2018

Balance for the year ended December 31, 2019

Balance for the year ended December 31, 2020 Balance for the year ended December 31, 2019 Balance for the year ended December 31, 2018

(in thousands)

R&D S&O G&A Total R&D S&O G&A Total R&D S&O G&A Total

RSUs ( 9,771 ) ( 9,891 ) ( 6,619 ) ( 26,281 ) ( 9,742 ) ( 17,282 ) ( 11,109 ) ( 38,133 ) ( 20,499 ) ( 27,025 ) ( 12,179 ) ( 59,703 )

Share options / BSPCE — ( 398 ) ( 422 ) ( 820 ) 422 398 ( 2,300 ) ( 1,480 ) ( 860 ) ( 1,616 ) ( 2,938 ) ( 5,414 )

Plan 7 — — — — — — — — ( 2 ) ( 1 ) ( 1 ) ( 4 )

Plan 8 — — ( 20 ) ( 20 ) 131 90 ( 187 ) 34 169 ( 553 ) ( 493 ) ( 877 )

Plan 9 — — 231 231 202 258 ( 314 ) 146 ( 495 ) ( 461 ) ( 902 ) ( 1,858 )

Plan 10 — — 874 874 89 178 ( 1,454 ) ( 1,187 ) ( 532 ) ( 601 ) ( 1,485 ) ( 2,618 )

Plan 11 — ( 190 ) ( 118 ) ( 308 ) — ( 128 ) ( 269 ) ( 397 ) — — ( 57 ) ( 57 )

Plan 12 — ( 208 ) ( 1,389 ) ( 1,597 ) — — ( 76 ) ( 76 ) — — — —

Total share-based compensation ( 9,771 ) ( 10,289 ) ( 7,041 ) ( 27,101 ) ( 9,320 ) ( 16,884 ) ( 13,409 ) ( 39,613 ) ( 21,359 ) ( 28,641 ) ( 15,117 ) ( 65,117 )

BSAs — — ( 1,670 ) ( 1,670 ) — — ( 1,386 ) ( 1,386 ) — — ( 1,483 ) ( 1,483 )

Total equity awards compensation expense $ ( 9,771 ) $ ( 10,289 ) $ ( 8,711 ) $ ( 28,771 ) $ ( 9,320 ) $ ( 16,884 ) $ ( 14,795 ) $ ( 40,999 ) $ ( 21,359 ) $ ( 28,641 ) $ ( 16,600 ) $ ( 66,600 )

Financial Income and Expenses

Financial expense

The Consolidated Statements of Income line item “Financial income (expense)” can be broken down as follows:

Year Ended December 31,

2020 2019 2018

(in thousands)

2 unchanged sentences

Interest on debt ( 2,381 ) ( 1,756 ) ( 1,796 )

Foreign exchange (loss) gain

Fees ( 430 ) ( 627 ) ( 311 )

Foreign exchange loss ( 150 ) ( 4,425 ) ( 3,945 )

Other financial expense ( 95 ) ( 469 ) ( 87 )

Total financial income (expense)

Total financial expense $ ( 1,939 ) $ ( 5,749 ) $ ( 5,084 )

The $ 1.9 million financial expense for the period ended December 31, 2020 was mainly driven by the financial expense relating to the € 140 million drawing from May 2020 to November 2020 as part of our available Revolving Credit Facility (RCF) financing, the up-front fees amortization, the non-utilization costs, partially offset by income from cash & cash equivalent.

At December 31, 2020, our exposure to foreign currency risk was centralized at Criteo S.A.

and hedged using foreign currency swaps or forward purchases or sales of foreign currencies.

The $ 5.7 million financial expense for the period ended December 31, 2019 was mainly driven by the non-utilization costs and upfront fees amortization incurred as part of our available RCF financing and the recognition of a negative impact of foreign exchange reevaluations net of related hedging.

1 unchanged sentence

and hedged using foreign currency swaps or forward purchases or sales of foreign currencies.

The $ 5.1 million financial expense for the period ended December 31, 2018 was mainly driven by the non-utilization costs and upfront fees amortization incurred as part of our available RCF financing.

The intra-group position between Criteo S.A.

and its U.S subsidiary in the context of the funding of the Hooklogic acquisition is qualified as a net investment in a foreign operation from February 2018 and no longer requires hedging, resulting in reduced costs compared to the same period ended December 31, 2018.

Breakdown of Income Taxes

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(in thousands)

Current income tax $ ( 28,477 ) $ ( 24,078 ) $ ( 54,301 )

France ( 16,379 ) ( 8,410 ) ( 37,223 )

International ( 12,098 ) ( 15,668 ) ( 17,078 )

Net change in deferred taxes ( 3,720 ) ( 15,418 ) 8,157

France 4,548 ( 14,109 ) 11,155

International ( 8,268 ) ( 1,309 ) ( 2,998 )

1 unchanged sentence

As mentioned in Note 1 (Principles and Accounting Methods), the French Research Tax Credit is not included in the line item “Provision for income taxes” but is deducted from “Research and development expenses” (see Note 18 - Allocation of Personnel Expenses) unlike the U.S.

Research Tax Credit for an amount of $ 4.6 million , $ 6.4 million and $ 5.3 million and for the year ended December 31, 2017, 2018 and 2019 , respectively.

Research Tax Credit for an amount of nil , $ 5.3 million and $ 6.4 million and for the year ended December 31, 2020, 2019 and 2018, respectively.

French business tax, CVAE, is included in the current tax balance for an amount of $ 5.1 million, $ 5.5 million and $ 5.9 million, for the years ended December 31, 2020 , 2019 and 2018, respectively.

Income before taxes included income from France of $ 150.7 million , $ 130.7 million and $ 122.7 million for the periods ended December 31, 2017 , 2018 and 2019 respectively.

Income before taxes from countries outside of France totaled $( 22.4 ) million , $ 11.3 million and $ 12.8 million for the periods ended December 31, 2017 , 2018 and 2019 , respectively.

Income before taxes included income from France of $ 114.4 million, $ 122.7 million and $ 130.7 million for the periods ended 2020, 2019 and 2018 respectively.

Income (loss) before taxes from countries outside of France totaled $( 7.5 ) million, $ 12.8 million and $ 11.3 million for the periods ended December 31, 2020, 2019 and 2018, respectively.

Reconciliation between the Effective and Nominal Tax Expense

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(in thousands)

4 unchanged sentences

Research tax credit (1)

5,298 10,851 10,211

Net effect of shared-based compensation (2)

( 11,604 ) ( 13,432 ) ( 17,674 )

BEAT waiver election (3)

( 18,640 ) ( 15,962 ) —

Other permanent differences (4)

8,979 ( 7,667 ) ( 11,982 )

Non recognition of deferred tax assets related to tax losses and temporary differences (5)

( 6,026 ) ( 2,713 ) ( 11,664 )

Utilization or recognition of previously unrecognized tax losses (6)

2,511 20,636 4,461

French CVAE included in income taxes ( 3,464 ) ( 3,632 ) ( 3,849 )

Special tax deductions (7)

13,402 15,946 38,577

Effect of different tax rates 3,963 5,441 ( 377 )

16 unchanged sentences

The following table shows the changes in the major sources of deferred tax assets and liabilities:

(in thousands)

Year ended December 31, 2017

Change recognized

in profit or loss

Change recognized

Change in consolidation scope

Currency translation adjustments

Year ended December 31, 2018

Deferred tax assets:

(in thousands) Year ended December 31, 2018 Change recognized

in profit or loss Change recognized

in OCI Change in consolidation scope Other Currency translation adjustments Year ended December 31, 2019

Net deferred tax assets :

Net operating loss carryforwards $ 55,358 $ ( 27,680 ) $ — $ ( 330 ) $ — $ ( 371 ) $ 26,977

Intangibles ( 25,345 ) 7,214 — — — 91 ( 18,040 )

Stock compensation 14,400 ( 3,515 ) — — — — 10,885

4 unchanged sentences

Financial instruments ( 586 ) 1,014 — — — 15 443

Other 5,479 ( 9,472 ) — — 11,105 84 7,196

Valuation allowance ( 43,186 ) 17,808 ( 310 ) 330 — 69 ( 25,289 )

Net Deferred Income Taxes 23,124 ( 15,418 ) 163 — 11,105 ( 261 ) 18,713

On December 22, 2017, the 2017 Tax Cuts and Jobs Act was enacted into law and the new legislation contains several key tax provisions that affected us, including a reduction of the federal income tax rate to 21% effective January 1, 2018.

As a result of the reduction in the U.S.

corporate income tax rate, our U.S.

deferred taxes at December 31, 2017, were revalued and recognizes the effect of the tax law changes in the period of enactment.

(in thousands)

Year ended December 31, 2018

Change recognized

in profit or loss

Change recognized

Change in consolidation scope

Currency translation adjustments

Year ended December 31, 2019

Deferred tax assets:

(in thousands) Year ended December 31, 2019 Change recognized

in profit or loss Change recognized

in OCI Change in consolidation scope Other Currency translation adjustments Year ended December 31, 2020

Net deferred tax assets :

Net operating loss carryforwards $ 26,977 $ ( 3,991 ) $ — $ 1,150 $ — $ 443 $ 24,579

Intangibles ( 18,040 ) 4,646 — ( 34 ) — ( 527 ) ( 13,955 )

Stock compensation 10,885 ( 4,173 ) — — — — 6,712

4 unchanged sentences

Financial instruments 443 ( 199 ) — — — 25 269

Other 7,196 8,856 — 63 — ( 182 ) 15,933

Valuation allowance ( 25,289 ) ( 12,529 ) 986 ( 1,206 ) — 305 ( 37,733 )

2 unchanged sentences

As at December 31, 2020, 2019 and 2018, the valuation allowance against net deferred income taxes amounted to $ 37.3 million, $ 25.3 million and $ 43.2 million, which related mainly to Criteo Corp.

( $ 14.7 million , $ 18.6 million and $ 12.8 million , respectively), Criteo do Brasil ( $ 0.0 million , $ 3.6 million and $ 3.2 million , respectively), Criteo Ltd ( $ 6.3 million , $ 7.2 million and $ 7.5 million , respectively), Criteo China ( $ 6.5 million , $ 3.5 million and $ 3.3 million , respectively) and Criteo France ( $ 2.9 million , $ 3.9 million and $( 7.7 ) million , respectively).

Other changes in 2019 mainly relate to the transfer from current tax asset to deferred tax assets of the U.S.

research tax credit receivable ("Other").

($ 13.3 million, $ 12.8 million and $ 18.6 million, respectively), Criteo Brazil ($ 2.8 million, $ 3.2 million and $ 3.6 million, respectively), Criteo Ltd ($ 7.4 million, $ 7.5 million and $ 7.2 million, respectively), Criteo China ($ 3.3 million, $ 3.3 million and $ 3.5 million, respectively), Criteo Singapore ($ 3.3 million, $ 2.8 million and $ 2.9 million), Criteo Pty ($ 2.8 million, $ 2.6 million and $ 2.5 million) and Criteo France ($ 1.0 million, $( 7.7 ) million and $ 3.9 million, respectively).

In accordance with ASC 740 - Income taxes , no uncertain tax positions were identified as of December 31, 2020.

The Company has various net operating loss carryforwards in the U.S.

and China for $ 9.1 million and $ 3.2 million , respectively, which begin to expire in 2030 and 2021, respectively.

and China for $ 4.2 million and $ 3.3 million, respectively, which begin to expire in 2030 and in 2021, respectively.

The Company has net operating loss carryforwards in the United Kingdom of $ 7.7 million which have no expiration date.

Current tax assets and liabilities

The total amount of current tax assets mainly consists of prepayments of incomes taxes and credits of Criteo SA, Criteo Gmbh and Criteo Nordics.

The current tax liabilities mainly refer to the corporate tax payables of Criteo K.K and Criteo Korea.

The total amount of current tax assets mainly consists of prepayments of incomes taxes and credits of Criteo SA, Criteo Corp., and Criteo Gmbh.

The current tax liabilities mainly refer to the corporate tax payables of Criteo K.K.

Ongoing tax audits

3 unchanged sentences

Any unfavorable outcome of such a review or audit could have an adverse impact on our tax rate.

In September 27, 2017, we received a draft notice of proposed adjustment "NOPA" from the Internal Revenue Service ("IRS") audit of Criteo Corp.

On September 27, 2017, we received a draft notice of proposed adjustment (NOPA) from the Internal Revenue Service ("IRS") audit of Criteo Corp.

for the year ended December 31, 2014, confirmed by the definitive notice dated February 8, 2018.

Although we disagree with the IRS's position and are currently contesting this issue, the ultimate resolution of this litigation is uncertain and, if resolved in a manner unfavorable to us, could result in an additional federal tax liability of an estimated maximum aggregate amount of approximately $ 15.0 million , excluding related fees, interest and penalties.

We disagreed with the IRS's position and contested it.

On August 24, 2020, the IRS and the Company agreed to a settlement and closed the income tax audit for the year ended December 31, 2014.

The settlement provides for a disallowance of Criteo Corp's.

Net Operating Losses (NOLs) amounting to $ 9.2 million.

Earnings Per Share

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands, except share data)

Net income attributable to shareholders of Criteo S.A.

$ 71,679 $ 90,745 $ 88,644

Weighted average number of shares outstanding (note 16) 60,876,480 64,305,965 66,456,890

7 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands, except share data)

Net income attributable to shareholders of Criteo S.A.

$ 71,679 $ 90,745 $ 88,644

Weighted average number of shares outstanding of Criteo S.A.

60,876,480 64,305,965 66,456,890

Dilutive effect of :

6 unchanged sentences

Year Ended December 31,

2020 2019 2018

Restricted share awards 1,726,506 1,120,439 1,464,145

17 unchanged sentences

Related Parties

During its meeting on December 17, 2015, the Board of Directors decided to separate the functions of Chairman of the Board and Chief Executive Officer.

Effective January 1, 2016, Jean-Baptiste Rudelle became Executive Chairman and Eric Eichmann was appointed Chief Executive Officer.

On March 1, 2017, Mollie Spilman, Chief Operating Officer, and Dan Teodosiu, Chief Technical Officer were appointed Executive Officers.

On April 25, 2018, the Board appointed Jean-Baptiste Rudelle, the Executive Chairman of Criteo S.A., as the Company's Chairman and Chief Executive Officer.

On June 19, 2018 Criteo S.A.

entered into a transition and separation agreement with Mr.

Eric Eichmann, the Company's former Chief Executive Officer, pursuant to which Mr.

Eichmann's Management Agreement with the Company has been terminated, effective as of April 25, 2018 and Mr.

Eichmann continued employment with the Company in a non-executive capacity as advisor to the Chief Executive Officer to assist with transition duties from April 25, 2018 to August 31, 2018.

On July 5, 2019, Mollie Spilman resigned as Chief Operating Officer.

On July 26, 2019, Dan Teodosiu resigned as Chief Technical Officer with effect from September 30, 2019, replaced by Diarmuid Gill.

On November 25, 2019 the Board appointed Megan Clarken as the Company's Chief Executive Officer, Jean-Baptiste Rudelle became Chairman and remains Chairman of the Board of directors.

On March 2, 2020, the Group announced that Chief Financial Officer Benoit Fouilland planned to depart from Criteo at the end of the second quarter 2020.

On May 15, 2020, the Group announced the appointment of Dave Anderson as the Company’s Interim Chief Financial Officer for a six-month term in replacement of Benoit Fouilland, effective May 18, 2020.

During his engagement, Mr.

Anderson was also the Company’s Principal Financial Officer and Principal Accounting Officer.

Fouilland departed Criteo on June 30, 2020.

On August 31, 2020, the Group announced that Jean-Baptiste Rudelle, Criteo's co-founder and former CEO, had stepped down from Criteo's Board of Directors effective August 27, 2020.

Rudelle had previously stepped down from the day to day activities as CEO in November 2019, and as Chairman of the Board in July 2020.

Also effective August 27, 2020, CEO Megan Clarken was appointed to the Board of Directors.

On September 3, 2020, the Group announced the appointment of Sarah Glickman as the Company's Chief Financial Officer and Principal Accounting Officer, effective September 8, 2020, replacing Dave Anderson who served as interim Chief Financial Officer for four months.

The Executive Officers as of December 31, 2020 were:

Jean-Baptiste Rudelle - Chairman

• Megan Clarken - Chief Executive Officer

Benoit Fouilland - Chief Financial Officer

• Sarah Glickman - Chief Financial Officer and Principal Accounting Officer

• Ryan Damon - General Counsel and Corporate Secretary

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(in thousands)

Short-term benefits (1)

$ ( 3,380 ) $ ( 3,830 ) $ ( 3,150 )

Long-term benefits (2)

( 23 ) ( 44 ) ( 47 )

Shared-based compensation ( 2,103 ) ( 4,605 ) ( 8,016 )

Total $ ( 5,506 ) $ ( 8,479 ) $ ( 11,213 )

(1) wages, bonuses and other compensations

8 unchanged sentences

Revenue by geographical area is based on the location of advertisers’ campaigns.

Americas EMEA Asia-Pacific Total

(in thousands)

5 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

United States $ 815,476 $ 861,099 $ 848,378

Germany 184,183 200,025 203,020

United Kingdom 93,319 88,928 97,849

Japan $ 301,183 $ 342,298 $ 351,441

Other Information

1 unchanged sentence

The geographical information results from the locations of legal entities.

United States

Of which Of which

Holding Americas United States EMEA Asia-Pacific Japan Singapore Total

(in thousands)

2 unchanged sentences

Subsequent Events

As of December 31, 2019, the Company conducted its annual goodwill impairment test, based on a qualitative and quantitative assessment.

The test concluded that no impairment had occurred (Refer to “Goodwill” in Note 9).

Since December 31, 2019, the price of the Company’s common stock has declined.

A sustained decrease in the price of the Company’s common stock is one of the qualitative factors to be considered as part of an impairment test when evaluating whether events or changes in circumstances may indicate that it is more likely than not that a potential goodwill impairment exists.

The Company will continue monitoring the analysis of the qualitative and quantitative factors used as a basis for the goodwill impairment test during fiscal year 2020.

The Company evaluated all other subsequent events that occurred after December 31, 2019 through the date of issuance of the consolidated financial statements and determined there are no significant events that require adjustments or disclosure.

On February 5, 2021 Criteo announced that its Board of Directors has authorized a share repurchase program of up to $ 100 million of the Company’s outstanding American Depositary Shares.

The Company intends to use any repurchased shares under this new authorization to satisfy employee equity obligations in lieu of issuing new shares, which would limit future dilution for its shareholders.

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 9A. Controls and Procedures