What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-24 · 316 added, 345 removed, 414 unchanged (61% of the section changed)

1 unchanged sentence

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Form 10-K.

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States of America ("U.S.

GAAP"), we present Contribution ex-TAC, and Adjusted EBITDA, which are non-GAAP financial measures.

We define Contribution ex-TAC as a profitability measure akin to gross profit.

It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other costs of revenue.

Contribution ex-TAC is presented in the section entitled "Contribution excluding Traffic Acquisition Costs", which includes a reconciliation to its most directly comparable U.S.

GAAP financial measure, Gross Profit.

We define Adjusted EBITDA as our consolidated earnings before financial income (expense), income taxes, depreciation and amortization, adjusted to eliminate the impact of equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter.

Adjusted EBITDA is presented in the section entitled "Adjusted EBITDA", which includes a reconciliation to its most directly comparable U.S.

GAAP financial measure, Net Income.

We also present revenues, traffic acquisition costs and Contribution ex-TAC on a constant currency basis;

these measures exclude the impact of foreign currency fluctuations and are computed by applying the average exchange rates for the prior year to the current year figures.

A reconciliation is provided in the section entitled "Constant Currency Reconciliation".

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

As required by the rules of the SEC, we provide reconciliations of the non-GAAP financial measures contained in this document to the most directly comparable measures under GAAP.

We are a global technology company driving superior commerce outcomes for marketers and media owners through the world’s leading Commerce Media Platform.

2 unchanged sentences

We have accelerated and deeply transformed the Company from a single-product to a multi-solution platform provider, fast diversifying our business into new solutions.

We enable brands', retailers' and media owners’ growth by providing best-in-class marketing and monetization services and infrastructure on the open Internet, driving approximately $30 billion in ecommerce sales for our clients – in the form of product sales for retailers, brands and marketers and advertising revenues for media owners.

We differentiate ourselves by delivering high-performing commerce audiences at scale and we deliver this value by activating commerce data in a privacy-by-design way through proprietary AI technology to reach and engage consumers in real time with highly relevant digital advertisements ("ads") across all stages of the consumer journey.

Our data offers deep insights into consumer intent and purchasing habits.

Our focus is on commerce media.

Our clients include many of the largest and most sophisticated consumer brands, commerce companies and media owners in the world.

We partner with them to capture user activity on their websites and mobile applications ("apps"), which we define as digital properties, and leverage that data to deliver superior ad performance to help marketers, brands and agencies reach their campaign objectives.

This includes powering the retail media ecosystem as we enable brands to reach shoppers with relevant ads near the digital point of sale on retailer and marketplace websites while enabling retailers to add a new revenue stream.

Demonstrating the depth and scale of our data, we collected data on over $1 trillion in online sales transactions 1 on our clients' digital properties in the year ended December 31, 2022.

Based on this data and other assets, we delivered 1.8 trillion targeted ads in the year ended December 31, 2022.

As of December 31, 2022, we served approximately 22,000 clients and, in each of the last three years, our average client retention rate, as measured on a quarterly basis, was approximately 90%.

We serve a wide range of clients and our revenue is not concentrated within any single client or group of clients.

In 2022, 2021 and 2020, our largest client repre sented 7.7%, 7.0%, and 3.5% of our revenue, respectively, and in 2022, 2021 and 2020, our largest 10 clients represented 17.8%, 16.6% and 13.7% of our revenue in the aggregate, respectively.

There is no group of customers under common control or customers that are affiliates of each other constituting an aggregate amount equal to 10% or more of our consolidated revenues, the loss of which would have a material adverse effect on the Company.

We operate in 94 countries through a network of 27 offices located in Europ e, Middle East, Africa (EMEA), the Americas and Asia-Pacific.

As a result of our significant international operations, our revenue from outside of France, our home country, accounted for 94.5% of our revenue for year ended December 31, 2022.

The Company's foreign currency risk exposure to the British pound, the Japanese yen, the Brazilian real and the U.S.

dollar against the euro (the euro still remains the Company's functional currency) is described in Item 7 note B.

Liquidity and Capital Resources to our Management's Discussion and Analysis included elsewhere in this Form 10-K.

___________________________________________________

1 Excluding Criteo Retail Media

Our financial results include:

• Revenue of $2,017.0 million, $2,254.2 million and $2,072.6 million for the years ended December 31, 2022, 2021 and 2020, respectively;

• Gross profit of $795.2 million, $781.9 million and $688.0 million for the years ended December 31, 2022, 2021 and 2020, respectively;

• Contribution ex-TAC, which is a non-U.S.

GAAP financial measure, of $928.2 million, $920.8 million and $825.0 million for the years ended December 31, 2022, 2021 and 2020, respectively;

• Net Income of $10.9 million, $137.6 million and $74.7 million for the years ended December 31, 2022, 2021 and 2020, respectively;

• Adjusted EBITDA, which is a non-U.S.

GAAP financial measure, of $267.3 million, $322.5 million and $251.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Please note that reconciliations of Gross Profit to Contribution ex-TAC and Net Income to Adjusted EBITDA - in each case the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States or "U.S.

GAAP," are presented in the Non-GAAP Financial Measures section of this filing.

We are focused on maximizing Contribution ex-TAC.

We believe this focus builds sustainable long-term value for our business and fortifies a number of our competitive strengths, including a highly liquid marketplace for digital advertising inventory.

As part of this focus, we seek to maximize our percentage of overall marketing spend in the digital advertising market over the long-term.

In addition, this focus enriches liquidity for both advertisers and publishers resulting in more effective advertising for clients, better monetization for publishers and more relevant advertisements for consumers.

We believe our results of operations reflect this focus.

In August 2022, we closed the acquisition of IPONWEB, a market-leading AdTech company with world-class media trading capabilities, for $250 million comprised of a mix of cash and treasury shares of the Company, with an earn-out consideration of up to $100 million subject to certain financial and performance milestones.

This strategic acquisition is expected to accelerate our Commerce Media Platform strategy by adding scale, complementary products, and stronger first-party data capabilities, further reducing our reliance on third-party cookies and other identifiers.

We have reported our results as three reportable segments:

Marketing Solutions, Retail Media and Iponweb.

Beginning in the first quarter of 2024 – following the completion of the integration of our Iponweb acquisition – our Chief Operating Decision Maker, who is our Chief Executive Officer (“CEO”), no longer receives disaggregated information for Iponweb.

As such, we will update our segment financial reporting structure in line with how our CEO assesses performance and allocates resources.

We will have two segments:

Retail Media and Performance Media.

Performance Media combines our former Marketing Solutions and Iponweb segments.

Full Year 2023 financial highlights

For the year ended December 31, 2023, revenue was $1,949.4 million, down 3% compared to the prior year, reflecting growth in Retail Media and Iponweb offset by lower revenue in Marketing Solutions.

At constant currency, revenue was down 3%.

Gross profit for the year ended December 31, 2023 increased by 9% to $863.0 million, compared to the prior year, primarily due to lower traffic acquisition costs.

Contribution ex-TAC for the year ended December 31, 2023 increased by 10% to $1,022.6 million, compared to the prior year, driven by growth in Retail Media and Iponweb.

At constant currency, Contribution ex-TAC increased by 11%.

In Q4 2023, new solutions represented approximately 56% of Contribution excluding Traffic Acquisition Costs, or Contribution ex-TAC, which is a non-U.S.

GAAP financial measure, compared to 47% in Q4 2022.

Net income for the year ended December 31, 2023 increased by 402% to $54.6 million, compared to the prior year, primarily due to lower traffic acquisition costs and lower operating expenses.

Adjusted EBITDA for the year ended December 31, 2023 increased by 13% to $301.8 million, compared to the prior year, primarily due to higher Contribution ex-TAC and planned cost reduction actions.

Cash flow from operating activities was $224.2 million for the year ended December 31, 2023, compared to $256.0 million in the prior year.

Trends, Opportunities and Challenges

We believe our performance and future success depend on several factors that present significant opportunities but also pose risks and challenges, including those referred to in Part I, Item 1A.

Develop and Scale our Commerce Media Platform

Our future growth depends upon our ability to retain and scale our existing clients and increase the usage of our Commerce Media platform as well as adding new customers.

We believe that we are in a leading position in the Commerce Media space as we have unique commerce data at scale, deep integrations with retailers, a large client base, differentiated technology and a R&D powerhouse.

By unifying the Commerce Media ecosystem with a multi-retailer, multi-channel, multi-format approach and providing full funnel closed loop measurement to our clients, we believe we are well positioned to capture more ad budgets and market share.

Business and Macroeconomic Conditions

Global economic and geopolitical conditions have been increasingly volatile due to factors such as the conflicts in Ukraine and the Middle East, inflation, and high interest rates.

The economic uncertainty resulting from these factors has negatively impacted advertising demand, consumer behavior, and to some extent our performance.

These factors, among others, including the impact of persistent inflation, make it difficult for Criteo and our clients to accurately forecast and plan future business activities, and could cause the company's clients to reduce or delay their advertising spending or increase their cautiousness, which, in turn, could have an adverse impact on our business, financial condition and results of operations.

We are monitoring these macroeconomic conditions closely and may continue to take actions in response to such conditions to the extent they adversely affect our business.

In the advertising industry, companies commonly experience seasonal fluctuations in revenue, as many marketers allocate the largest portion of their budgets to the third and fourth quarter of the calendar year in order to coincide with increased back-to-school and holiday purchasing.

Historically, the fourth quarter has reflected our highest level of advertising activity for the year.

We generally expect the subsequent first quarter to reflect lower activity levels, but this trend may be masked due to the growth of our business.

In addition, historical seasonality may not be predictive of future results given the potential for changes in advertising buying patterns and consumer activity due to the potential impacts of the evolving macroeconomic and geopolitical conditions discussed above.

We expect our revenue to continue to fluctuate based on seasonal factors that affect the advertising industry as a whole.

Privacy Trends and Government Regulations

We are subject to U.S.

and international laws and regulations regarding privacy, data protection, digital advertising and the collection of user data.

In addition, large Internet and technology companies such as Google and Apple are making their own decisions as to how to protect consumer privacy with measures resulting in signal loss, which impact the entire digital ecosystem.

Google’s web browser, Chrome, announced plans to deprecate support for third-party cookies in the second half of 2024, which will follow a one-percent deprecation of third-party cookies for Chrome users globally in the first quarter of 2024.

These developments could cause instability in the advertising technology industry.

We have developed a multi-pronged addressability strategy to enhance our resilience post third-party identifiers.

Operating Results.

Basis of Presentation

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities, costs and expenses.

We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances.

We evaluate our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements.

We believe estimates associated with (1) gross vs net assessment in revenue recognition, (2) 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, (3) assumptions used in valuing long-lived assets including intangible assets, and goodwill, and (4) assumptions surrounding the recognition and valuation of contingent liabilities and losses, are critical as they are made based on assumptions about matters which are uncertain.

Principles and Accounting Methods to our audited consolidated financial statements beginning on page F-1 for a description of our other significant accounting policies.

Revenue Recognition - Gross vs Net Assessment

For revenue generated from arrangements that involve purchasing inventory from media owners, there is significant judgment in evaluating whether we are the principal, and report revenue on a gross basis, or the agent, and report revenue on a net basis.

In this assessment, we consider if we obtain control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the determination of the party primarily responsible for fulfillment of the promised service, inventory risk, and discretion in establishing price.

The assessment of whether we are considered the principal or the agent in a transaction could impact our revenue and cost of revenue recognized in the consolidated statements of income.

For additional information regarding revenue and the assumptions used for determining our revenue recognition refer to Note 1.

Principles and Accounting Methods of our financial statements.

We are subject to income taxes in France and numerous foreign jurisdictions.

We record deferred taxes on all temporary differences between the financial reporting and tax bases of assets and liabilities, and on tax losses, using the liability method.

The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized.

If future taxable profits are considerably different from those forecasted that support recording deferred tax assets, we will have to revise downwards or upwards the amount of the deferred tax assets, which could have a significant impact on our financial results.

We also recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

These uncertain tax positions include our estimates for transfer pricing that have been developed based upon analyses of appropriate arms-length prices.

Similarly, our estimates related to uncertain tax positions concerning research and development tax credits are based on an assessment of whether our available documentation corroborating the nature of our activities supporting the tax credits will be sufficient.

Valuation of Long-lived Assets including Goodwill, and Intangible Assets

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, estimated replacement costs and future expected cash flows from acquired users, acquired technology, acquired patents, and trade names from a market participant perspective, useful lives, and discount rates.

Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.

During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value.

Goodwill has been allocated to segments using a relative fair value allocation approach.

As of December 31, 2023, no impairment of goodwill has been identified.

Long-lived assets, including property and equipment and finite-lived intangible assets are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

The evaluation is performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition.

If such review indicates that the carrying amount of property and equipment and intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value.

Contingent Losses and Liabilities

With respect to litigation, claims and non-income tax risks, that may result in a provision to be recognized, we exercise significant judgment in measuring and recognizing provisions or determining exposure to contingent liabilities that are related to pending litigation, other outstanding claims and non income tax audits.

These judgment and estimates are subject to change as new information becomes available.

Components of Results of Operations

The key elements of our results of operations include:

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.

As part of our Company transformation, we have expanded our solutions to address a broader range of marketing goals for our clients.

We offer three 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 allows 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.

• Iponweb specializes in building real-time advertising technology and trading infrastructure, delivering advanced media buying, selling, and packaging capabilities for media owners, agencies, performance advertisers, and 3rd-party ad tech platforms.

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

We report revenues on a gross basis for our Marketing Solutions segment, and primarily on a net basis for our Retail Media and Iponweb segments.

For Marketing Solutions, we generate revenues by delivering personalized display advertisements featuring product-level recommendations either directly to clients or to advertising agencies.

Such products are generally sold based on a cost-per-click or cost-per-impression pricing models.

Revenues are recognized when an ad is clicked on or displayed to the end user as that is when we transfer control of promised services directly to our clients in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services.

The cost-per-click or cost-per-impression we charge to the customers, varies depending on the optimization strategy of the Criteo engine, the dynamics and performance of the market, amongst other factors.

Marketing solutions revenue is primarily recognized on a gross basis as we act as a principal in the transaction.

For Retail Media, we generate revenue by providing our platform to brands, agencies and retailers for the purchase and sale of digital advertising inventory.

Generally, our revenue is based on a percentage of working media spend that runs through our platform.

We earn revenue by applying a margin to the amount of working media spend that runs through the platform.

The working media spend running through the platform depends on various factors, such as but not limited to, the number of customers using the platform and the budgets allocated by brands and agencies to the Criteo platform.

The margin applied by Criteo to the working media spend is dependent on the market dynamics, sector and industry of the customers.

Retail Media revenue is primarily recognized on a net basis, as we act as an agent in the transaction.

We act as agent in Iponweb as we (i) do not control the advertising inventory before it is transferred to our clients, (ii) do not have inventory risks because we do not purchase the inventory upfront and (iii) have limited discretion in establishing prices as we charge a fee based on a percentage of the digital advertising inventory traded through our solutions.

Therefore, we report the revenue earned and related costs incurred by the Iponweb solutions on a net basis.

Refer to Note 1.

Principles and Accounting Methods of our financial statements for a description of our revenue recognition policies.

Cost of Revenue

Our cost of revenue primarily includes traffic acquisition costs and other cost of revenue.

Traffic Acquisition Costs.

Traffic acquisition costs consist primarily of purchases of impressions from publishers on a CPM basis, incurred to generate our revenues.

Our cost of revenue includes traffic acquisition costs and other cost of revenue.

Traffic acquisition costs consist primarily of purchases of impressions from publishers on a CPM basis, incurred to generate our revenues, for the Marketing Solutions segment.

We purchase impressions directly from publishers or third-party intermediaries, such as advertisement exchanges.

1 unchanged sentence

Costs owed to publishers but not yet paid are recorded in our Consolidated Statements of Financial Position as trade payables.

For solutions within Criteo Retail Media, we pay for the inventory of our retailer partners on a revenue sharing basis, effectively paying the retailers a portion of the click-based revenue generated by user clicks on the sponsored products advertisements or impressions on the commerce display advertisements displaying the products of our consumer brand clients.

For a discussion of the trends we expect to see in traffic acquisition costs, see the section entitled " - Highlights and Trends - Contribution ex-TAC" in Item 7.D - Trend Information below.

For a discussion of the trends we expect to see in traffic acquisition costs, see the section entitled " - Highlights and Trends - Contribution ex-TAC" in Item 7.E -Trend Information below.

Other Cost of Revenue.

17 unchanged sentences

Financial and Other Income (Expense) primarily consists of:

• Positive impact of foreign exchange derivatives entered-into to secure the cash consideration of the Iponweb acquisition

• Exchange differences arising on the settlement or translation into local currency of monetary balance sheet items labeled in euros (the Company's functional currency).

We are exposed to changes in exchange rates primarily in the U.S., the United Kingdom, Japan, Korea and Brazil.

dollar, the British pound, the Korean won, and the Japanese yen are our most significant foreign currency exchange risks.

At December 31, 2023, our exposure to foreign currency risk was centralized at parent company level and hedged.

3 unchanged sentences

• Interest received on our cash and cash equivalents and interest incurred on outstanding borrowings under our debt loan agreements and revolving credit facilities ("RCFs").

• Proceeds from sale of data center equipment to third-parties, made as part of Criteo's data center update program.

We monitor foreign currency exposure and look to mitigate exposures through normal business operations and hedging strategies.

• Other income (expense) mainly arising from gains and losses on investments.

Provision for Income Taxes

6 unchanged sentences

In France, we benefit from a reduced tax rate of 10% on a large portion of this technology royalty income.

(See Note 17).

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S.

The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities, costs and expenses.

We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances.

We evaluate our estimates and assumptions on an ongoing basis.

Our actual results may differ from these estimates.

We believe estimates associated with (1) gross vs net assessment in revenue recognition,, (2) allowances for credit losses, (3) 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, (4) assumptions used in valuing acquired assets and assumed liabilities in business combinations, (5) assumptions used in the valuation of goodwill, intangible assets and right of use assets - operating lease, (6) assumptions used in the valuation model to determine the fair value of share-based compensation plan and (7) assumptions surrounding the recognition and valuation of contingent liabilities and losses, are critical as they are made based on assumptions about matters which are uncertain..

Principles and Accounting Methods to our audited consolidated financial statements beginning on page F-1 for a description of our other significant accounting policies.

Revenue Recognition - Gross vs Net Assessment

In this assessment, we consider if we obtain control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price.

The assessment of whether we are considered the principal or the agent in a transaction could impact our revenue and cost of revenue recognized on the consolidated statements of income.

Trade Receivables, Net of Allowances for Doubtful Accounts

We apply Accounting Standards Update No.

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 that an entity does not expect to collect over the asset's contractual life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions.

For accounts receivable measured at amortized cost, we use aging analysis, and probability of default methods to evaluating and estimating the expected credit losses.

Deferred Tax Assets

Deferred taxes are recorded on all temporary differences between the financial reporting and tax bases of assets and liabilities, and on tax losses, using the liability method.

Differences are defined as temporary when they are expected to reverse within a foreseeable future.

We may only recognize deferred tax assets if we determine that it is probable that future taxable profit will be available against which the unused tax losses and tax credits can be utilized.

As a result, the measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits which are not expected to be realized.

This determination requires many estimates and judgments by our management for which the ultimate tax determination may be uncertain.

Uncertain Tax Positions

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

These uncertain tax positions include our estimates for transfer pricing that have been developed based upon analyses of appropriate arms-length prices.

Assumptions Used in the Valuation of Intangible Assets

In order to value our intangible assets, management prepares multi-year projections of revenue, TAC, gross profit, operating expenses, taxes and after tax margins relating to the operations associated with the intangible assets being valued.

These projections are based on the estimates of management at the time they are prepared and include subjective assumptions regarding industry growth and other matters.

Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In the course of 2022, the Company has reassessed its operating and reportable segments in accordance with ASC 280 and now reports its results of operations through three segments:

Marketing Solutions, Retail Media and Iponweb.

Goodwill has been allocated to these segments using a relative fair value allocation approach.

The Company has selected December 31 as the date to perform its annual impairment test.

The test is performed at the reporting unit level, which we have determined to be Marketing Solutions, Retail Media and Iponweb.

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 reporting unit.

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.

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.

There is also significant judgement in the allocation of the net book value of the Company to each of its segments, as many of the assets are not directly attributable to the Company's operating segments.

Contingent Losses and Liabilities

These judgment and estimates are subject to change as new information becomes available.

Equity Awards Compensation

We account for share-based compensation in accordance with ASC 718 - Compensation - Stock Compensation .

Under the fair value recognition provisions of this guidance, share-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense, over the requisite service period, which is generally the vesting period of the respective award.

Determining the fair value of share-based awards at the grant date requires judgment.

The determination of the grant date fair value of RSUs is based on the share price on the grant date.

We use the Black-Scholes option-pricing model to determine the fair value of share options.

The determination of the grant date fair value of options using an option-pricing model is affected by our estimated ordinary share fair value as well as assumptions regarding a number of other complex and subjective variables.

These variables include the fair value of our ordinary shares, the exercise price of the option, the expected term of the options, our expected share price volatility, risk-free interest rates, and expected dividends, which are estimated as follows:

• Fair value of our ordinary shares.

Following our initial public offering, we established a policy of using the closing sales price per ADS as quoted on Nasdaq on the date of grant for purposes of determining the fair value of ordinary shares.

• Exercise price of the option.

Following our initial public offering, we established a policy of using the closing sales price per ADS as quoted on Nasdaq on the date of grant for purposes of determining the exercise price with a floor value of 95% of the average of the closing sales price per ADS for the 20 trading days preceding the grant.

• Expected term.

The expected term represents the period that our share-based awards are expected to be outstanding.

As we do not have sufficient historical experience for determining the expected term of the ordinary share option awards granted, we have based our expected term on the simplified method, which represents the average period from vesting to the expiration of the award.

• Expected volatility.

Prior to our initial public offering, as we did not have a trading history for our ordinary shares, the expected share price volatility for our ordinary shares was estimated by taking the average historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the ordinary share option grants.

From the initial public offering, the expected share price volatility takes into account the Criteo closing share price from the initial public offering date to the grant date and closing share price of industry peers for the remaining expected term of the ordinary share option grant.

• Risk-free rate .

The risk-free interest rate is based on the yields of France Treasury securities with maturities similar to the expected term of the options for each option group.

• Dividend yield.

We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future.

Consequently, we use an expected dividend yield of zero.

If any of the assumptions used in the Black-Scholes model changes significantly, share-based compensation for future awards may differ materially compared with the awards granted previously.

The following table presents the range of assumptions used to estimate the fair value of options granted during the periods presented:

Year Ended December 31,

2022 2021 2020

—% — % 39.2% - 39.9%

Risk-free interest rate

— % —% 0.00% - 0.25%

Expected life (in years)

Dividend yield

There were no grants of share options during the year ended December 31, 2022.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements applicable to us, see Note 1 to our audited consolidated financial statements beginning on page F-1.

Non-GAAP Financial Measures

As required by the rules of the Securities and Exchange Commission (“SEC”), we provide reconciliations of the non-GAAP financial measures contained in this document to the most directly comparable measures under GAAP, which are set forth in the financial tables below.

Reconciliation of Contribution ex-TAC to Gross Profit

We define Contribution ex-TAC as a profitability measure akin to gross profit.

It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue.

Contribution ex-TAC is not a measure calculated in accordance with U.S.

We have included Contribution ex-TAC because it is a key measure used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions.

In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business.

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

Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently;

(b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S.

GAAP financial result measures.

The below table provides a reconciliation of Contribution ex-TAC to gross profit:

Twelve Months Ended

2022 2021 2020

(in thousands)

Gross Profit 795,200 781,944 688,018

Other Cost of Revenue 133,024 138,851 137,028

Contribution ex-TAC $ 928,224 $ 920,795 $ 825,046

Reconciliation of Adjusted EBITDA to Net Income

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

We have included Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short-term and long-term operational plans.

In particular, we believe that the elimination of equity awards compensation expense, pension service costs, certain restructuring, integration and transformation costs, certain acquisition costs and a loss contingency related to a regulatory matter in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our business.

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

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

(b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

(d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S.

GAAP financial results, including net income.

Twelve Months Ended

2022 2021 2020

(in thousands)

Net income $ 10,875 $ 137,647 $ 74,689

Financial (Income) expense (17,053) 1,044 1,939

Provision for income taxes 31,186 16,169 32,197

Equity awards compensation expense 65,035 44,955 31,425

Pension service costs 1,756 1,324 2,232

Depreciation and amortization expense 89,018 88,402 88,238

Acquisition-related costs 12,584 11,256 286

Loss contingency on regulatory matter 63,221 — —

Restructuring, integration and transformation (gain) costs 10,677 21,698 19,989

Total net adjustments 256,424 184,848 176,306

Adjusted EBITDA $ 267,299 $ 322,495 $ 250,995

Twelve Months Ended

2022 2021 2020

(Gain) from forfeitures of share-based compensation awards — (427) (2,655)

Facilities related (gain) costs 1,452 16,020 12,975

Payroll related (gain) costs 7,373 4,480 5,911

Consulting costs related to transformation 1,852 1,625 3,758

Total restructuring, integration and transformation (gain) costs $ 10,677 $ 21,698 $ 19,989

Results of Operations for the Years Ended December 31, 2023, 2022 and 2021

Revenue breakdown by segment

We report our segments results as Marketing Solutions, Retail Media and Iponweb:

• 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.

Year Ended December 31,

2022 2021 2020 2022 vs 2021 2021 vs 2020

2023 2022 2021 2023 vs 2022

(in thousands)

15 unchanged sentences

$ 207,864 $ 207,292 $ 243,794 3 % (16) %

Iponweb revenue as reported $ 52,169 $ — $ — N/A N/A

Iponweb revenue as reported $ 122,465 $ 52,169 $ — 135 % N/A

Conversion impact U.S.

dollar/other currencies $ (899)

Iponweb revenue at constant currency $ 52,169 $ — $ — N/A N/A

(1) Information herein with respect to results presented on a constant currency basis is computed by applying prior period average exchange rates to current period results.

We have included results on a constant currency basis because it is a key measure used by our management and board of directors to evaluate operating performance.

Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends.

The table above reconciles the actual results presented in this section with the results presented on a constant currency basis.

(2) In all arrangements running on Criteo's Commerce Media platform, the Company recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions were accounted for on a gross basis.

Most clients using Criteo’s legacy Retail Media solutions transitioned to this platform by the end of 2022.

During the transition period, Revenue declined but Contribution ex-TAC margin increased.

Contribution ex-TAC was not impacted by this transition.

Iponweb revenue at constant currency $ 121,566 $ 52,169 $ — 133 % N/A

2023 Compared to 2022

Revenue in 2023 decreased $(67.6) million, or (3)% (or (3)% on a constant currency basis) to $2.0 billion compared to 2022.

Year-over-year decrease in revenue was driven by our existing clients, partly offset by net new clients accounted for approximately 6% of 2022 organic revenue and positive contribution from Iponweb.

Excluding Iponweb, our total number of clients was stable year-over-year across regions.

The y ear-over-year decrease in revenue was driven by lower Marketing Solutions revenue, partially offset by the increase in Retail Media and Iponweb revenue.

Marketing Solutions revenue decreased (8)% (or (8)% on a constant currency basis) to $1.6 billion for 2023, reflecting decreased spend from large clients, notably on our retargeting solutions, as they adjusted their advertising budgets to the uncertain macro economic environment.

Retail Media revenue increased 3% (or 3% on a constant currency basis) to $209.0 million for 2023, reflecting the strong performance with large retailers across the U.S.

and EMEA, partially offset by the technical and transitory impact related to the client migration to the Company's platform.

Criteo's platform accounted for most of Retail Media revenue for the year ended December 31, 2023, and its revenue is accounted for on a net basis.

In 2022, close to 79% of Retail Media revenue was accounted for on a net basis, and as a result of this transition to a full platform business, the growth of Retail Media revenue was temporarily impacted.

Reflecting the underlying economic performance, Retail Media's Contribution ex-TAC increased 26% (or 26% on a constant currency basis) in the year ended December 31, 2023, mainly driven by strength in the U.S.

2022 compared to 2021

Revenue in 2022 decreased $(237.2) million, or (11)% (or (4)% on a constant currency basis) to $2.0 billion compared to 2021.

The year-over-year decrease in revenue was driven by lower Marketing Solutions revenue and the technical impact of the Retail Media transition to a full platform business , partially offset by the positive contribution from Iponweb.

Marketing Solutions revenue decreased (12)% (or (5)% on a constant currency basis) to $1.8 billion for 2022, reflecting decreased spend from large clients, notably on our retargeting solutions, as they adjusted their advertising budgets to the current uncertain macro economic environment.

Retail Media revenue decreased (18)% (or (16)% on a constant currency basis) to 202.3 million for 2022, as the strong performance with large retailers across the U.S.

and EMEA was more than offset was more than offset by the technical and transitory impact related to the ongoing client migration to the Company's platform.

and EMEA was more than offset by the technical and transitory impact related to the ongoing client migration to the Company's platform.

Criteo's platform accounted for the majority of Retail Media revenue, or close to 79% for the year ended December 31, 2022, and its revenue is accounted for on a net basis.

1 unchanged sentence

Reflecting the underlying economic performance, Retail Media's Contribution ex-TAC increased 29% (or 33% on a constant currency basis) in the year ended December 31, 2022, mainly driven by continued strength in Retail Media onsite, particularly in the U.S.

2021 compared to 2020

Revenue in 2021 increased $181.6 million, or 9% (or 8% on a constant currency basis) to $2,254.2 million compared to 2020.

84% of the year-over-year increase in revenue was driven by the contribution from our existing clients, and 16% of the year-over-year increase was driven by the contribution from new clients.

We added 285 net new clients year-over-year across regions.

The year-over-year increase in revenue on a constant currency basis was largely attributable to the increase in the average price charged to advertisers, and partially offset by the decreased number of impressions delivered by us.

Marketing Solutions revenue increased 11% (or 10% on a constant currency basis) to $2,007.2 million for 2021, reflecting increased spend from Retail clients, both on our retargeting, audience targeting and omnichannel solutions, partially offset by incremental identity and privacy changes, as expected.

Retail Media revenue decreased (7)% (or (8)% on a constant currency basis) to $246.9 million for 2021, as the strong performance with large retailers across the U.S.

and EMEA was more than offset by the technical and transitory impact related to the ongoing client migration to the Company's platform.

Criteo's platform accounted for a fast-growing share of Retail Media revenue, or about 50% for the year ended December 31, 2021, and its revenue is accounted for on a net basis.

In 2020, less than 5% of Retail Media revenue was accounted for on a net basis, and as a result of this transition to a full platform business, the growth of Retail Media revenue was temporarily impacted.

Reflecting the underlying economic performance, Retail Media's Contribution ex-TAC increased 59% (or 58% on a constant currency basis) in the year ended December 31, 2021, driven by continued strength in Retail Media onsite, in particular in the U.S.

market, and growing network effects of the platform.

Revenue breakdown by region

Information in this Form 10-K with respect to results presented on a constant currency basis was calculated by applying prior period average exchange rates to current period results.

Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends.

Below is a table which reconciles the actual results presented in this section with the results presented on a constant currency basis.

Year Ended December 31, % change

2022 2021 2020 2022 vs 2021 2021 vs 2020

(in thousands)

19 unchanged sentences

$ 429,583 $ 480,520 $ 496,329 3 % (3) %

(*) Revenue at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the average exchange rates for the prior year to the following year figures.

2023 Compared to 2022

Our revenue in the Americas region decreased $(4.0) million or (0.5)% (or (1)% on a constant currency basis) to $887.2 million for 2023 compared to 2022.

This reflects negative retail trends in Marketing Solutions and the impact of recognizing revenue on a net basis for clients transitioning to the Company's platform, partially offset by the continued strong performance of Retail Media, as the platform continues to scale with consumer brands and large retailers and growing network effects of the platform.

Our revenue in the EMEA region decreased $(34.3) million, or (5)% (or (9%) on a constant currency basis) to $672.6 million for 2023 compared to 2022.

This decrease was driven by negative retail trends in Marketing Solutions, in particular in the UK and France, and the suspension of our business in Russia effective as of March 2022, partially offset by the positive performance of Retail Media across the region.

Our revenue in the Asia-Pacific region decreased $(29.3) million, or (7)% (or increased 3% on a constant currency basis) to $390 million for 2023 compared to 2022.

The increase was driven by higher spend from retail clients in the region, in particular in Thailand and South Korea.

Additionally, $1,949 million of revenue for 2023 was negatively impacted by $8.9 million of currency fluctuations, particularly as a result of the appreciation of the Euro compared to the U.S.

2022 Compared to 2021

Our revenue in the Americas region decreased $(25.6) million, or (3)% (or (3)% on a constant currency basis) to $891.3 million for 2022 compared to 2021.

This decrease was driven by negative retail trends, in particular with large customers across Marketing Solutions and by the impact of recognizing revenue on a net basis for clients transitioning to the Company's platform, partially offset by the continued strong performance of Retail Media, as the platform continues to scale with consumer brands and large retailers and growing network effects of the platform.

4 unchanged sentences

Additionally, $2,017 million of revenue for 2022 was negatively impacted by $147.6 million of currency fluctuations, particularly as a result of the depreciation of the Euro, the Japanese Yen and the British pound sterling compared to the U.S.

2021 Compared to 2020

Our revenue in the Americas region increased $22.0 million, or 2% (or 3% on a constant currency basis) to $916.8 million for 2021 compared to 2020.

This increase was driven by continued positive retail trends, in particular with large clients across Marketing Solutions, and continued strong performance of Retail Media, as the Company's platform continues to scale with consumer brands and large retailers, partially offset by the impact of recognizing revenue on a net basis for clients transitioning to the platform.

Our revenue in the EMEA region increased $94.6 million, or 13% (or 9% on a constant currency basis) to $844.3 million for 2021 compared to 2020.

This increase was driven by positive retail trends in our main markets, in particular in Germany and emerging markets, positive traction with large clients across our retargeting and new solutions, and continued strong performance of Retail Media across the region.

Our revenue in the Asia-Pacific region increased $65.0 million, or 15% (or 16% on a constant currency basis) to $493.1 million for 2021 compared to 2020.

The increase was driven by the recovery of our large clients in the region, in particular in Japan, as well as positive contributions from Retail clients in South-East Asia.

Additionally, $2,254 million of revenue for 2021 was positively impacted by $(19.7) million of currency fluctuations, particularly as a result of the depreciation of the Turkish Lira, Russian Ruble, Japanese Yen and the Brazilian real, partially offset by the appreciation of the Euro and the British pound sterling, compared to the U.S.

Cost of Revenue

Year Ended December 31, % change

2022 2021 2020 2022 vs 2021 2021 vs 2020

2023 2022 2021 2023 vs 2022

(in thousands, except percentages)

Traffic acquisition costs $ (926,839) $ (1,088,779) $ (1,333,440) (15)% (18)%

$ (1,088,779) $ (1,333,440) $ (1,247,571) (18)% 7%

Other cost of revenue (159,562) (133,024) (138,851) 20% (4)%

(133,024) (138,851) (137,028) (4)% 1%

Total cost of revenue $ (1,086,401) $ (1,221,803) $ (1,472,291) (11)% (17)%

2 unchanged sentences

Year Ended December 31, % change

2022 2021 2020 2022 vs 2021 2021 vs 2020

2023 2022 2021 2023 vs 2022

(in thousands, except percentages)

2 unchanged sentences

Traffic Acquisition Costs $ (926,839) $ (1,088,779) $ (1,333,440) (15)% (18)%

(1) There are no traffic acquisition costs associated with the Iponweb solutions as we are acting as agent in all the arrangements.

Refer to Note 1.

Principles and Accounting Methods for a detailed description of our accounting policies.

2023 Compared to 2022

Cost of revenue for 2023 decreased $(135.4) million, or (11)%, compared to 2022.

This decrease was primarily the result of a $(244.7) million, or (18)% decrease in traffic acquisition costs (or (14)% on a constant currency basis), and by a $(5.8) million, or (4)% decrease in other cost of revenue.

The 13% decrease in Marketing Solutions' traffic acquisition costs related primarily to the (25)% decrease (or (14)% increase on a constant currency basis) in the average CPM for inventory purchased, including lower CPMs for signal-limited environments where Criteo continues to perform, partially offset by a 15% increase in the number of impressions we purchased, reflecting our expanding relationships with existing and new publisher partners, in particular through direct connections, to support client demand for advertising campaigns.

Traffic acquisition costs in Retail Media decreased by 67% reflecting the technical and transitory impact related to the ongoing client migration due to the transitioning of our platform because we recognize revenue on a net basis in all arrangements running on the platform.

The decrease in other cost of revenue includes a $10.2 million decrease in allocated depreciation and amortization expense and a $0.2 million in data acquisition costs, partially offset by $(3.3) million increase in hosting costs, $(1.3) million increase in other cost of sales mainly due to the digital tax and proceeds from disposal of datacenter equipments.

This decrease was primarily the result of a $(161.9) million, or (15)% decrease in traffic acquisition costs (or (14)% on a constant currency basis), partially offset by a $(26.5) million, or 20% increase in other cost of revenue.

The decrease in Marketing Solutions' traffic acquisition costs of (12)% (or (11)% decrease on a constant currency basis) related primarily to the (13)% decrease in the average CPM for inventory purchased, including lower CPMs for signal-limited environments where Criteo continues to perform, partially offset by a 1% increase in the number of impressions we purchased, reflecting our expanding relationships with existing and new publisher partners, in particular through direct connections, to support client demand for advertising campaigns.

Traffic acquisition costs in Retail Media decreased by (86)% reflecting the technical and transitory impact related to the client migration of our platform, as we recognize revenue on a net basis.

The increase in other cost of revenue includes an increase in hosting costs of $27.9 million and other cost of sales of $3.7 million mostly related to Iponweb offset by a decrease of $(5.1) million in depreciation of data center servers.

2022 Compared to 2021

Cost of revenue for 2021 increased $87.7 million, or 6%, compared to 2020.

This increase was primarily the result of a $85.9 million, or 7% increase in traffic acquisition costs (or 6% on a constant currency basis), and by a $1.8 million, or 1% (or 2% on a constant currency basis), increase in other cost of revenue.

The 14% increase in Marketing Solutions' traffic acquisition costs related primarily to the 6% increase (and 5% increase on a constant currency basis) in the average CPM for inventory purchased, reflecting the year-over-year recovery in the digital advertising market following the trough of the pandemic-related recession in the second quarter of 2020 and our preferred relationships with media owners, as well as the 8% increase in the number of impressions we purchased, reflecting our expanding relationships with existing and new publisher partners, in particular through direct connections, to support client demand for advertising campaigns.

Traffic acquisition costs in Retail Media decreased by 35% reflecting the technical and transitory impact related to the ongoing client migration due to the transitioning of our RMP.

Because we recognize revenue on a net basis in all arrangements running on the RMP, we expect our Traffic acquisition costs for Retail Media to decrease over time as all of our clients are transitioned to the RMP.

The increase in other cost of revenue includes a $(5.2) million increase in allocated depreciation and amortization expense, $(3.0) million increase in other cost of sales mainly due to the digital tax, partially offset by $5.7 million in hosting costs and $0.8 million in data acquisition costs.

Cost of revenue for 2022 decreased $(250.5) million, or (17)%, compared to 2021.

The decrease in Marketing Solutions' traffic acquisition costs of (13)%, related primarily to the (25)% decrease (or (14)% decrease on a constant currency basis) in the average CPM for inventory purchased, including lower CPMs for signal-limited environments where Criteo continues to perform, partially offset by a 15% increase in the number of impressions we purchased, reflecting our expanding relationships with existing and new publisher partners, in particular through direct connections, to support client demand for advertising campaigns.

Traffic acquisition costs in Retail Media decreased by (67)% reflecting the technical and transitory impact related to the client migration of our platform, as we recognize revenue on a net basis.

Contribution excluding Traffic Acquisition Costs

We consider Contribution ex-TAC as a key measure of our business activity.

Our strategy focuses on maximizing our Contribution ex-TAC on an absolute basis over maximizing our near-term gross margin.

We believe this focus builds sustainable long-term value for our business by fortifying a number of our competitive strengths, including access to advertising inventory, breadth and depth of data and continuous improvement of the Criteo AI Engine’s performance, allowing it to deliver more relevant advertisements at scale.

As part of this focus, we continue to invest in building preferred relationships with direct publishers and pursue access to leading advertising exchanges.

We define Contribution excluding Traffic Acquisition Costs, "Contribution ex-TAC", as a profitability measure akin to gross profit.

It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other costs of revenue.

Contribution ex-TAC is not a measure calculated in accordance with U.S.

In particular, we believe that this measure can provide useful measures for period-to-period comparisons of our business.

Our use of Contribution ex-TAC has limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(a) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently;

(b) other companies may report Contribution ex-TAC or similarly titled measures but calculate them differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Contribution ex-TAC alongside our other U.S.

GAAP financial measures.

The below table provides a reconciliation of Contribution ex-TAC to gross profit:

Year Ended December 31, % change

2023 2022 2021 2023 vs 2022 2022 vs 2021

(in thousands)

863,044 795,200 781,944 9 % 2 %

Other Cost of Revenue

159,562 133,024 138,851 20 % (4) %

Contribution ex-TAC

1,022,606 928,224 920,795 10 % 1 %

The following table sets forth our revenue and Contribution ex-TAC by segment:

Year Ended December 31,

Segment 2022 2021 2020

Year Ended December 31, % change

Segment 2023 2022 2021 2023 vs 2022

(in thousands)

6 unchanged sentences

Retail Media 203,460 161,360 124,643 26 % 29 %

122,465 52,169 — 135 % — %

Total 1,022,606 928,224 920,795 10 % 1 %

(1) R efer to the "Non-GAAP Financial Measures" section for a definition of this Non-GAAP metric.

(2) There are no traffic acquisition costs associated with the Iponweb solutions as we are acting as agent in all the arrangements.

Refer to Note 1.

Principles and Accounting Methods for a detailed description of our accounting policies.

Gross Profit increased $67.8 million, or 9% for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022, and Contribution ex-TAC increased $94.4 million, or 10% for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022.

The increase in Gross Profit and Contribution ex-TAC was primarily due to the growth in Retail Media and the contribution from Iponweb.

This was partially offset by a decline in Marketing Solutions.

Gross Profit increased $13.3 million, or 2% for the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021, and Contribution ex-TAC increased $7.4 million, or 1% for the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021.

The increase in Gross Profit and Contribution ex-TAC was primarily due to the growth in Retail Media, partially offset by a decline in Marketing Solutions.

Constant Currency Reconciliation

Information in this Form 10-K with respect to results presented on a constant currency basis was calculated by applying prior period average exchange rates to current period results.

Management reviews and analyzes business results excluding the effect of foreign currency translation because they believe this better represents our underlying business trends.

Below is a table which reconciles the actual results presented in this section with the results presented on a constant currency basis:

Year Ended December 31, % change

20 unchanged sentences

Research and development expenses $ (242,289) $ (187,596) $ (151,817) 29% 24%

$ (187,596) $ (151,817) $ (132,513) 24% 15%

(9) % (7) % (6) %

% of revenue (12) % (9) % (7) %

2023 Compared to 2022

Research and development expenses for 2023 increased $54.7 million, or 29%, compared to 2022.

This increase mainly related to an increase in headcount-related expenses and the amortization of Iponweb acquisition-related intangible assets.

This increase mainly related to an increase in stock based compensation related to Iponweb acquisition, amortization of Iponweb acquisition-related intangible assets and the headcount-related expenses

2022 Compared to 2021

Research and development expenses for 2022 increased $35.8 million, or 24%, compared to 2021.

This increase mainly related to an increase in headcount-related expenses driven by the negative impact of our increasing stock price.

This increase mainly related to an increase in headcount-related expenses and the amortization of Iponweb acquisition-related intangible assets.

Sales and Operations Expenses

6 unchanged sentences

Sales and operations expenses for 2023 increased $28.0 million, or 7%, compared to 2022.

This increase was mainly driven by an increase in headcount-related costs and the amortization of Iponweb acquisition-related intangible assets.

This increase was mainly driven by an increase in headcount-related costs and stock based compensation offset by a decrease in marketing expenses.

2022 Compared to 2021

Sales and operations expenses for 2021 decreased $(4.7) million, or (1)%, compared to 2020.

This decrease was mainly driven by lower net bad debt expense, lower depreciation and amortization costs and lower rent and facilities costs due to the right-sizing of our real estate footprint, partially offset by the reversal of a provision that was settled in 2020 and the negative impact of our increasing stock price on headcount-related expenses.

Sales and operations expenses for 2022 increased $52.4 million, or 16%, compared to 2021.

This increase was mainly driven by an increase in headcount-related costs and the amortization of Iponweb acquisition-related intangible assets.

General and Administrative Expenses

5 unchanged sentences

2023 Compared to 2022

General and administrative expenses for 2022 increased $52.7 million, or 35%, compared to 2021.

This increase was mainly related to the loss contingency related to the CNIL matter as described in Note 19 and an increase in headcount-related costs.

General and administrative expenses for 2023 decreased $(67.8) million, or (33)%, compared to 2022.

This decrease was mainly related to the partial reversal of the loss contingency related to the CNIL matter from the prior year as described in Note 20.

2022 Compared to 2021

General and administrative expenses for 2022 increased $52.7 million, or 35%, compared to 2021.

This increase was mainly related to an increase in third-party services as part of our on-going transformation program and an increase in headcount related costs including the negative impact of our increasing stock price on compensation expense.

This increase was mainly related to the loss contingency related to the CNIL matter as described in Note 20 and an increase in headcount-related costs.

Financial and Other Income (Expense)

5 unchanged sentences

2023 Compared to 2022

Financial and Other Income for 2023 decreased by $(20.3) million, or (114)% compared to 2022.

The $(2.5) million financial and other expense for the period ended December 31, 2023 was mainly driven by proceeds from disposal of non consolidated investments fully offset by the recognition of a negative impact of foreign exchange, the accretion of earn-out liability related to Iponweb acquisition and financial expense relating to our €407 million available Revolving Credit Facility (RCF).

At December 31, 2023, 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.

2022 Compared to 2021

Financial and Other Income for 2022 increased by $15.8 million, or 817% compared to 2021.

4 unchanged sentences

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

2021 Compared to 2020

Financial and Other Income for 2021 decreased by $(3.9) million, or (200)% compared to 2020.

The $(1.9) million financial and other income for the period ended December 31, 2021 was mainly driven by the financial expense relating to our $350 million available Revolving Credit Facility (RCF), including up-front fees amortization and non-utilization costs, partially offset by income from cash and cash equivalent.

Financial and Other income for the period ended December 31, 2021 was supported by $3.0 million in proceeds from disposal of servers and equipments and $2.4 million in dividends received from a minority interest.

At December 31, 2021, our exposure to foreign currency risk was centralized at Criteo S.A.

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

Provision for Income Taxes

6 unchanged sentences

2023 Compared to 2022

The provision for income taxes for 2022 increased by $15.0 million, or 93%, compared to 2021.

The provision for income taxes for 2023 decreased by $(11.1) million, or (36)%, compared to 2022, due to the non deductible loss contingency related to the CNIL matter as described in Note 20.

The annual effective tax rate for 2023 was 26.9%, compared to an annual effective tax rate of 74.1% for 2022.

The annual effective tax rate differs from the statutory rates primarily due to the impact of the domestic tax deduction applicable to technology royalty income we received from our subsidiaries, differences in tax rates in foreign jurisdictions, tax loss carryforwards in certain foreign subsidiaries, non-recognition of deferred tax assets related to tax losses and temporary differences, recognition of previously unrecognized tax losses and equity awards compensation expense.

In 2022, our income before taxes decreased by $111.8 million to $42.1 million, compared to 2021, generating a $10.9 million theoretical income tax expense at a nominal standard French tax rate of 25.82%.

In 2023, our income before taxes increased by $32.7 million to $74.7 million, compared to 2022, generating a $19.3 million theoretical income tax expense at a nominal standard French tax rate of 25.82%.

This theoretical tax expense is impacted mainly by the following items contributing to a $20.1 million effective tax expense and a 26.9% effective tax rate:

$1.7 million of deferred tax assets on which we recognized a valuation allowance, $16.9 million resulting from the non-tax deductible provision following the loss contingency on regulatory matters (refer to Note 19) , $6.2 million of permanent differences (mainly employee costs and intercompany transactions), $1.6 million related to the French business tax, Cotisation sur la Valeur Ajoutée des Entreprises, or “CVAE”, and $2.9 million of net effect of share-based compensation offset by a $6.7 million tax deduction resulting from technology royalty income we received from our subsidiaries, $2.9 million Research and Development tax credit in France, and the recognition or reversal of valuation allowance on deferred tax assets of $1.3 million.

$8.8 million of net effect of share-based compensation, $2.8 million of permanent differences mainly employee costs, $0.9 million of deferred tax assets on which we recognized a valuation allowance, offset by $4.3 million tax deduction resulting from technology royalty income we received from our subsidiaries, $5.5 million resulting from the non-tax deductible provision following the loss contingency on regulatory matters (refer to Note 20), and the recognition or reversal of valuation allowance on deferred tax assets of $1.8 million.

Please see Note 18 to our audited consolidated financial statements for more detailed information on the provision for income taxes.

1 unchanged sentence

As at December 31, 2023, 2022 and 2021, the valuation allowance against net deferred income taxes amounted to $29.8 million, $31.1 million and $35.0 million, which related mainly to Criteo Corp.

($5.7 million, $5.7 million and $13.3 million, respectively), Criteo Brazil ($3.3 million, $2.7 million and $2.8 million, respectively), Criteo Ltd ($8.1 million, $7.6 million and $7.4 million, respectively), Criteo China ($1.1 million, $3.3 million and $3.3 million, respectively), Criteo Singapore ($1.5 million, $4.2 million and $3.3 million), Criteo Pty ($2.6 million, $2.7 million and $2.8 million) and Criteo France ($6.5 million, $6.2 million and $1.0 million, respectively).

($5.7 million, $5.7 million and $5.7 million, respectively), Criteo Brazil ($2.7 million, $3.3 million and $2.7 million, respectively), Criteo Ltd ($10.7 million, $8.1 million and $7.6 million, respectively), Criteo Singapore ($1.2 million, $1.5 million and $4.2 million), Criteo Pty ($2.9 million, $2.6 million and $2.7 million) and Criteo France ($5.0 million, $6.5 million and $6.2 million, respectively).

2022 Compared to 2021

The provision for income taxes for 2021 decreased by $(16.0) million, or (50)%, compared to 2020.

The provision for income taxes for 2022 increased by $15.0 million, or 93%, compared to 2021, due to the non deductible loss contingency related to the CNIL matter as described in Note 20.

The annual effective tax rate for 2022 was 74.1%, compared to an annual effective tax rate of 10.5% for 2021.

The annual effective tax rates differs from the statutory rates primarily due to the impact of the domestic tax deduction applicable to technology royalty income we received from our subsidiaries, differences in tax rates in foreign jurisdictions, tax loss carryforwards in certain foreign subsidiaries, non-recognition of deferred tax assets related to tax losses and temporary differences, recognition of previously unrecognized tax losses and equity awards compensation expense.

In 2021, our income before taxes increased by $46.9 million to $153.8 million, compared to 2020, generating a $43.7 million theoretical income tax expense at a nominal standard French tax rate of 28.40%.

This theoretical tax expense is impacted mainly by the following items contributing to a 31.2 million effective tax expense and a 74.1% effective tax rate:

$1.7 million of deferred tax assets on which we recognized a valuation allowance, $6.6 million resulting from the BEAT expense, $6.5 million of permanent differences (mainly based on employee costs, depreciation expenses and intercompany transactions), $2.2 million related to the French business tax, Cotisation sur la Valeur Ajoutée des Entreprises, or “CVAE”, offset by a $25.7 million tax deduction resulting from technology royalty income we received from our subsidiaries, $4.8 million Research and Development tax credit, the recognition or reversal of valuation allowance on deferred tax assets of $10.4 million and $1.4 million of net effect of share-based compensation.

$1.7 million of deferred tax assets on which we recognized a valuation allowance, $16.9 million resulting from the non-tax deductible provision following the loss contingency on regulatory matters (refer to Note 20) , $6.2 million of permanent differences (mainly employee costs and intercompany transactions), $1.6 million related to the French business tax, Cotisation sur la Valeur Ajoutée des Entreprises, or “CVAE”, and $2.9 million of net effect of share-based compensation offset by a $6.7 million tax deduction resulting from technology royalty income we received from our subsidiaries, $2.9 million Research and Development tax credit in France, and the recognition or reversal of valuation allowance on deferred tax assets of $1.3 million.

Please see Note 18 to our audited consolidated financial statements for more detailed information on the provision for income taxes.

2 unchanged sentences

Adjusted EBITDA

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

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under U.S.

Some of these limitations are:

(b) Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

(d) Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;

and (e) other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA alongside our U.S.

GAAP financial results, including net income.

Year Ended December 31, % change

2023 2022 2021 2023 vs 2022 2022 vs 2021

(in thousands, except percent information)

Net Income (loss) $ 54,644 $ 10,875 $ 137,647 402% (92)%

Financial (Income) expense $ 2,805 $ (17,053) 1,044 (116)% (1,733)%

Provision for income taxes (benefit) $ 20,084 $ 31,186 16,169 (36)% 93%

Equity awards compensation expense $ 99,222 $ 65,035 44,955 53% 45%

Pension service costs $ 401 $ 1,756 1,324 (77)% 33%

Depreciation and amortization expense $ 99,653 $ 89,018 88,402 12% 1%

Acquisition-related costs $ 1,894 $ 12,584 11,256 (85)% 12%

Net loss contingency on regulatory matters $ (21,632) $ 63,221 — (134)% NM

Restructuring, integration and transformation costs $ 44,727 $ 10,677 21,698 319% (51)%

Total net adjustments $ 247,154 $ 256,424 $ 184,848 (4)% 39%

Adjusted EBITDA

$ 301,798 $ 267,299 $ 322,495 13% (17)%

The following table presents our Adjusted EBITDA on a comparative basis:

Year Ended December 31, % change

2023 2022 2021 2023 vs 2022 2022 vs 2021

(in thousands, except percent information)

$ 54,644 $ 10,875 $ 137,647 402% (92)%

Adjusted EBITDA

$ 301,798 $ 267,299 $ 322,495 13% (17)%

Net income increased $43.8 million, or 402% for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022, and Adjusted EBITDA increased $34.5 million, or 13% for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022.

The increase in Net Income and Adjusted EBITDA was primarily due to higher Contribution ex-TAC, cost reduction actions and less income taxes, and by higher Contribution ex-TAC and cost reductions actions, respectively.

Net income decreased $(126.8) million, or (92)% for the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021, and Adjusted EBITDA decreased $(55.2) million, or (17)% for the twelve months ended December 31, 2022 compared to the twelve months ended December 31, 2021.

The decrease in Net Income was primarily due to the CNIL penalty and increased income taxes offset by financial income.

The adjusted EBITDA decrease was mainly due to our Iponweb acquisition.

Unaudited Quarterly Results of Operations

18 unchanged sentences

Total operating expenses (188,308) (193,693) (198,823) (205,002) (197,950) (175,129) (241,481) (156,362)

Income from operations 48,644 4,478 (56,506) 27,662 65,744 32,185 19,729 34,219

Income (loss) from operations

88,318 11,434 959 (23,493) 48,644 4,478 (56,506) 27,662

Financial and Other income (expense) (4,498) (2,967) (1,852) 6,827 (6,144) 3,485 16,412 4,030

Income before taxes 42,500 7,963 (40,094) 31,692 69,074 32,031 19,210 33,501

Income (loss) before taxes

83,820 8,467 (893) (16,666) 42,500 7,963 (40,094) 31,692

Provision for income taxes (21,769) (1,832) (1,078) 4,595 (26,451) (1,442) 7,121 (10,414)

Net income $ 16,049 $ 6,521 $ (32,973) $ 21,278 $ 74,938 $ 24,230 $ 15,029 $ 23,450

Net income available to shareholders of Criteo S.A.

Net income (loss)

$ 62,051 $ 6,635 $ (1,971) $ (12,071) $ 16,049 $ 6,521 $ (32,973) $ 21,278

(1) In all arrangements running on Criteo's Commerce Media Platform, the Company recognizes revenue on a net basis, whereas revenue from arrangements running on legacy Retail Media solutions and on Marketing Solution solutions are accounted for on a gross basis.

Refer to Note 1.

Principles and Accounting Methods for a detailed description of our accounting policies.

Net income (loss) available to shareholders of Criteo S.A.

61,017 6,927 (2,876) (11,809) 15,400 6,579 (33,614) 20,587

Liquidity and Capital Resources.

11 unchanged sentences

Foreign Currency Risk

A 10% increase or decrease of the British pound, the euro, the Japanese yen or the Brazilian real against the U.S.

dollar would have impacted the Consolidated Statements of Income including non-controlling interests as follows:

A hypothetical 10% increase or decrease of the Pound Sterling, the Euro, the Japanese yen or the Brazilian real against the U.S.

dollar would have impacted the Condensed Consolidated Statements of Income as follows:

Year Ended December 31,

1 unchanged sentence

(in thousands)

+10% -10% +10% -10% +10% -10%

GBP/USD +10% -10% +10% -10% +10% -10%

Net income impact $ (86) $ 86 $ (444) $ 444 $ (351) $ 351

$ (444) $ 444 $ (351) $ 351 $ 116 $ (116)

Year Ended December 31,

1 unchanged sentence

(in thousands)

+10% -10% +10% -10% +10% -10%

BRL/USD +10% -10% +10% -10% +10% -10%

Net income impact $ 220 $ (220) $ (235) $ 235 $ (38) $ 38

$ (235) $ 235 $ (38) $ 38 $ (41) $ 41

Year Ended December 31,

11 unchanged sentences

We utilize cash pooling arrangements, reinforcing cash management centralization.

Investment and financing decisions are carried out by our internal central treasury function.

We only deal with counterparties with high credit ratings.

In addition, under our Investment and Risk Management Policy, our central treasury function ensures a balanced distribution between counterparties.

Investment and financing decisions are governed by our Investment and Risk Management Policy and carried out by our internal central treasury function, ensuring investments are entered into with high credit ratings, balanced counterparties.

Liquidity Risk

7 unchanged sentences

Nominal/ Authorized amounts

(RCF Only) Amount drawn as of December 31, 2022 (RCF only) Amount Outstanding as of December 31, 2022

(RCF Only) Amount drawn as of December 31, 2023 (RCF only)

Amount Outstanding as of December 31, 2023

Nature (in thousands) Interest rate Settlement date

9 unchanged sentences

Our banks have the ability to terminate such facilities on short notice.

Our cash and cash equivalents are invested primarily in demand deposit accounts and term deposits that primarily aim at preserving capital.

Our cash, and cash equivalents at December 31, 2022 were held for working capital and general corporate purposes, which could include acquisitions, and amounted to $348.2 million as of December 31, 2022.

The $(67.3) million decrease in cash and cash equivalents compared with December 31, 2021 primarily resulted from an increase of $256.0 million in cash from operating activities partially offset by a decrease of $(166.1) million in cash used for investing activities and a decrease of $(113.0) million in cash used for financing activities.

Our cash and cash equivalents and restricted cash at December 31, 2023 were held for working capital and general corporate purposes, which could include acquisitions, and amounted to $411.3 million as of December 31, 2023.

The $(36.9) million decrease in cash and cash equivalents compared with December 31, 2022 primarily resulted from a decrease of $(31.7) million in cash from operating activities and a $57.4 million decrease in cash used for investing activities, partially offset by an increase of $34.2 million in cash used for financing activities.

In addition, the cash flows were also negatively impacted by $(5.2) million due to foreign exchange rates impact on our consolidated cash position in USD over the period.

2 unchanged sentences

Accordingly, our cash and cash equivalents are invested primarily in demand deposit accounts and term deposit accounts.

Furthermore, Criteo had financial liquidity of approximately $835.0 million, including its cash position, short term investments and its Revolving Credit Facility as of December 31, 2022.

Furthermore, Criteo had financial liquidity of approximately $837.4 million, including its cash position, short term investments, its Revolving Credit Facility and treasury shares available for acquisitions as of December 31, 2023.

Overall, we believe that our current financial liquidity, combined with our expected cash-flow generation in 2023, enables financial flexibility and the meeting of all material contractual obligations.

We have also reserved $100m in cash (classified as Restricted cash on our Consolidated Statements of Financial Position) to fund the earn-out liability obligations, resulting from the Iponweb acquisition.

We have also reserved $75 million in cash (classified as Restricted cash on our Consolidated Statements of Financial Position) to fund the earn-out liability obligations, resulting from the Iponweb acquisition (refer to Note 2).

Share Buy-back Programs

In December 2021, we completed a $100 million share repurchase program.

In 2022, we completed an additional $136 million share repurchase.

In 2022, we completed an additional $136 million share repurchase, and in 2023, we completed an additional $125 million share repurchase program.

All above programs have been implemented under our multi-year authorization granted by Board of Directors.

On December 7, 2022, this authorization was extended to a total amount of $480 million.

On February 1, 2024, this authorization was extended to a total amount of $630 million.

Other than these repurchase programs, we intend to retain all available funds and any future earnings to fund our growth.

2 unchanged sentences

We expect our capital expenditures to remain at, or slightly below, 5% of revenue for 2024, as we plan to continue to build, reshape and maintain additional data center equipment capacity in all regions and increase our investments supporting our new work from home policy as part of our office right sizing program.

On August 1st, 2022 we entered into a definitive purchase agreement which resulted in the Iponweb acquisition for $(135.5) million of cash consideration paid.

On March 2023, we acquired all of the outstanding shares of Brandcrush Pty Ltd.

In 2022 we entered into a definitive purchase agreement which resulted in the Iponweb acquisition for $(135.5) million of cash consideration paid.

In 2021 we acquired all of the outstanding shares of Doobe In Site Ltd.

21 unchanged sentences

In 2023, net cash flows provided by operating activities were $224.2 million and consisted of net income of $54.6 million, $103.4 million in adjustments for non-cash and non-operating items and $66.2 million of cash flows from working capital.

Adjustments for non-cash and non-operating items mainly consisted of depreciation and amortization expense of $72.3 million, equity awards compensation expense of $97.2 million, partially offset by a $(43.3) million payment of a contingent liability for regulatory matters.

In 2023, our cash generated by operating activities benefited from strong working capital leverage.

The $66.2 million increase in cash resulting from changes in working capital primarily consisted of a $(0.7) million decrease due to changes in operating lease liabilities and right of use assets, a $(8.5) million increase in other current assets (including prepaid expenses and VAT receivables) and a $(56.3) million increase in accounts receivable partially offset by a $43.8 million increase in accrued expenses such as payroll and payroll related expenses and VAT payables and a $87.9 million increase in accounts payable.

The increase in accounts receivable and in accounts payable is mainly due to seasonality.

In 2022, net cash flows provided by operating activities were $256.0 million and consisted of net income of $10.9 million, $185.0 million in adjustments for noncash and non-operating items and $60.1 million of cash flows from working capital.

Adjustments for non-cash and non-operating items primarily consisted of depreciation and amortization expense of $150.3 million, equity awards compensation expense of $65.0 million, changes in deferred tax assets of $3.6 million, partially offset by $(11.0) million of accrued income taxes net of income tax paid and $(22.9) million of other non-cash and non-operating items.

4 unchanged sentences

The $(41.6) million decrease in cash resulting from changes in working capital primarily consisted of a $(2.6) million decrease due to changes in operating lease liabilities and right of use assets, a $(19.7) million increase in other current assets (including prepaid expenses and VAT receivables) and a $(135.0) million increase in accounts receivable partially offset by a $33.6 million increase in accrued expenses such as payroll and payroll related expenses and VAT payables and $82.7 million increase in accounts payable.

In 2020, net cash flows provided by operating activities were $185.4 million and consisted of net income of $74.7 million, $154.6 million in adjustments for non-cash and non-operating items and $(44.0) million of cash flows from working capital.

Adjustments for non-cash and non-operating items primarily consisted of depreciation and amortization expense of $106.6 million, equity awards compensation expense of $28.8 million, changes in deferred tax assets of $3.7 million, $2.7 million generated on disposal of non-current assets, $1.9 million from other non-operating items, and by $10.9 million of accrued income taxes net of income tax paid.

The $(44.0) million decrease in cash resulting from changes in working capital primarily consisted of a $(33.3) million decrease in accounts payable, a $(5.8) million decrease due to changes in operating lease liabilities and right of use assets, a $(7.2) million increase in other current assets (including prepaid expenses and VAT receivables) and a $(4.0) million increase in accounts receivable partially offset by a $6.3 million increase in accrued expenses such as payroll and payroll related expenses and VAT payables.

Investing Activities

Our investing activities to date have consisted primarily of purchases of servers and other data-center equipment and business acquisitions.

In 2023, net cash flows used in investing activities were $108.7 million and consisted of $114.3 million for purchases of servers and other data-center equipment and capitalized software development costs, $6.8 million payment for a business acquisition, partially offset by a $3.6 million change in other non-current financial assets resulting from investments in Marketable Securities (see Note 4), and $8.8 million in proceeds from the sale of a non consolidated investment.

In 2022, net cash flows used in investing activities were $166.1 million and consisted of $55.8 million for purchases of servers and other data-center equipment and capitalized software development costs, $138.0 million for business acquisitions and $27.8 million change in other non-current financial assets resulting from investments in Marketable Securities (see Note 5).

In 2021, net cash flows used in investing activities were $76.4 million and consisted of $53.0 million for purchases of servers and other data-center equipment and capitalized software development costs, $10.4 million for business acquisitions and $12.9 million change in other non-current financial assets resulting from investments in Marketable Securities (see Note 5).

In 2020, net cash flows used in investing activities were $101.1 million and consisted of $65.5 million for purchases of servers and other data-center equipment, $1.2 million for business acquisitions and $34.4 million change in other non-current financial assets resulting from investments in Marketable Securities (see Note 2 and 3).

Financing Activities

In 2022, net cash used in financing activities was $113.0 million mainly resulting from the $135.7 million impact from our share repurchase program, partially offset by $21.9 million change relating to the recognition of a positive impact of foreign exchange reevaluations net of related hedging and $1.0 million proceeds from stock-options exercises.

In 2023, net cash used in financing activities was $147.3 million mainly resulting from the $125.5 million impact from our share repurchase program, a $(22.0) million payout of the current portion of the earn-out liability resulting from the Iponweb Acquisition, partially offset by $1.9 million in proceeds from stock-options exercises.

In 2 021, net cash used in financing activities was $80.1 million mainly resulting from the $25.2 million proceeds from stock-options exercises and the $100.0 million impact from our share repurchase program.

In 2020, net cash used in financing activities was $57.7 million mainly resulting from the $10.9 million impact of the €140 million drawing from May 2020 to November 2020 as part of our available Revolving Credit Facility (RCF) and the $43.7 million impact from our share repurchase program.

Off-balance Sheet Arrangements.

11 unchanged sentences

Total $ 90,744 $ 81,256 $ 16,156 $ 188,156

Material Cash Requirements

We currently anticipate that our available funds and cash flow from operations and financing activities will be sufficient to meet our operational cash needs and fund our share repurchase program for at least the next 12 months and thereafter for the foreseeable future.

We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital requirements.

Leases and Contractual Commitments

Our operating lease obligations mostly include offices and data centers.

Our finance lease obligations mostly include certain network infrastructure.

Our restructuring efforts to sublease, early terminate or abandon several office buildings under operating leases did not materially change our operating lease obligations.

Our contractual commitments are primarily related to our investments in network infrastructure, servers, and consumer hardware products in Reality Labs.

Contingent Consideration

As part of the Iponweb Acquisition that was completed in August 2022, the Sellers are entitled to contingent consideration of a maximum of $ 100.0 million, which is conditioned upon the achievement of certain revenue targets by the Iponweb business for the 2022 and 2023 fiscal years.

The related earn out liability is valued and discounted using management's best estimate of the consideration that will be paid in 2024 (current portion).

See Note 13 - Other Current Liabilities.

Contingencies

We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations.

We record a liability when we believe that it is both probable that a liability has been incurred, and that the amount can be reasonably estimated.

If we determine there is a reasonable possibility that we may incur a loss and the loss or range of loss can be estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements to the extent material.

Significant judgment is required to determine both probability and the estimated amount of loss.

Such matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control.

Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows.

Other Current Liabilities and Non Current Liabilities , 20.

Commitments and contingencies, and 18.

Income Taxes in the notes to the consolidated financial statements included in Part II, Item 8, and "Legal Proceedings" contained in Part I, Item 3 of this Form 10-K for additional information regarding leases and contractual commitments, long-term debt, taxes, and contingencies.

Trend Information

7 unchanged sentences

Number of clients (1)

18,197 18,990 N/A

Contribution ex-TAC $ 1,022,606 $ 928,224 $ 920,795

Adjusted EBITDA $ 301,798 $ 267,299 $ 322,495

(1) In the first quarter of 2023, we streamlined our client count methodology which is now based on unique billing accounts while the previous methodology included clients from whom Criteo has received a signed contract or an insertion order during the previous 12 months.

The new methodology led to the consolidation of some clients accounts but does not change the underlying activity or the overall trends.

Number of Clients

10 unchanged sentences

Contribution ex-TAC

Contribution ex-TAC as a profitability measure akin to gross profit.

We define Contribution excluding Traffic Acquisition Costs, "Contribution ex-TAC", as a profitability measure akin to gross profit.

It is calculated by deducting traffic acquisition costs from revenue and reconciled to gross profit through the exclusion of other cost of revenue.

21 unchanged sentences

Highlights and Trends

Contribution ex-TAC

Our Contribution ex-TAC for 2022 was $928 million, a 10% increase over 2021, at constant currency.

This performance was driven by growth in Retail Media and Commerce Audiences, offsetting lower Retargeting.

It also reflects significant headwinds from foreign exchange rates and the wind down of operations in Russia.

We are focused on maximizing our Contribution ex-TAC on an absolute basis.

We believe this focus builds sustainable long-term value for our business by fortifying a number of our competitive strengths, including access to digital advertising inventory, breadth and depth of data and continuous improvement of the Criteo AI Engine’s performance, allowing us to deliver more relevant advertisements at scale.

Our Adjusted EBITDA for 2022 was $267.3 million, a (17)% decrease over 2021.

Our decrease in Adjusted EBITDA for 2022 compared to 2021 was primarily the result of the 1% increase in Contribution ex-TAC over the period, partly offset by a 11% increase in our Non-GAAP operating expenses.

This drove a 29% adjusted EBITDA margin in 2022.

Our 2022 investments in the strategic growth areas of our business, such as Retail Media, our first-party media network, acquisition solutions, video, Connected TV and Commerce Insights to accelerate growth drove a lower Adjusted EBITDA margin as a percentage of Contribution ex-TAC compared to 2021.

Over time, we expect to continue to invest in the growth areas of our business and to maintain a healthy profitability as we continue to deliver sustainable revenue growth and as we benefit from operating leverage, rightsizing our cost base and continued discipline in our expense management.

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

Please see above for a discussion of the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most comparable U.S.

GAAP measure.

Number of Clients

Since our inception, we have significantly grown the number of clients with which we do business.

We had close to 22,000 clients as of December 31, 2022, flat compared to our client base as of December 31, 2021.

We had approximately 18,200 clients as of December 31, 2023, down slightly compared to our client base as of December 31, 2022.

In recent years, the expansion of our clients has been driven our global footprint and our commercial expansion in existing markets, our continued development of large clients in the Retail vertical, especially in ecommerce, our expansion of midmarket clients and our penetration into the consumer brand vertical through some of our Criteo Retail Media offerings.

We believe that our ability to increase our number of clients is a leading indicator of our ability to grow revenue over time.

We expect to continue to focus our attention and investment on further growing our client base across all regions, client categories and verticals, with continued strong focus on ecommerce.

4 unchanged sentences

We measure our client satisfaction through our ability to retain them and the revenue they generate quarter after quarter.

We define client retention rate as the percentage of live clients during the previous quarter that continued to be live clients during the current quarter.

This metric is calculated on a quarterly basis, and for annual periods, we use an average of th e quarterly metrics.

We define client r etention rate as the percentage of live clients during the previous quarter that continued to be live clients during the current quarter.

This metric is calculated on a quarterly basis, and for annual periods, we use an average of the quarterly metrics.

We define a live client as a client whose advertising campaign has or had been generating revenue for us on any day over the relevant measurement period.

2 unchanged sentences

In the digital Retail industry and the consumer brand verticals in particular, many businesses devote the largest portion of their advertising spend to the fourth quarter of the calendar year, to coincide with increased holiday spending by consumers.

With respect to Criteo Retail Media, the concentration of advertising spend in the fourth quarter of the calendar year is particularly pronounced.

With respect to Criteo Retail Media and Iponweb, the concentration of advertising spend in the fourth quarter of the calendar year is particularly pronounced.

Our Retail clients typically conduct fewer advertising campaigns in the first and second quarters than they do in other quarters, while our Travel clients typically increase their travel campaigns in the first and third quarters and conduct fewer advertising campaigns in the second quarter.

1 unchanged sentence

If the seasonal fluctuations become more pronounced, our operating cash flows could fluctuate materially from period to period.

___________________________________________________

1 Excluding Criteo Retail Media.

Contribution ex-TAC

Our Contribution ex-TAC for 2023 was 1,022.6 million, a 11% increase over 2022, at constant currency.

This performance was mainly driven by growth in Retail Media and the contribution from Iponweb.

We are focused on maximizing our Contribution ex-TAC on an absolute basis.

Adjusted EBITDA

Our Adjusted EBITDA for 2023 was $301.8 million, a 13% increase over 2022.

Our increase in Adjusted EBITDA for 2023 compared to 2022 was primarily the result of the 10% increase in Contribution ex-TAC over the period, partly offset by a 5% increase in our Non-GAAP operating expenses.

This drove a 30% adjusted EBITDA margin in 2023.

We delivered $70 million in cost savings, while continuing to invest for growth, which drove a higher Adjusted EBITDA margin as a percentage of Contribution ex-TAC compared to 2022.

Going forward, we intend to continue to right size our organization and optimize our operating model while continuing investments in our multi-pronged addressability strategy and scaling Retail Media capabilities.

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

Please see above for a discussion of the limitations of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, the most comparable U.S.

GAAP measure.

This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and as defined in the Private Securities Litigation Reform Act of 1995.

1 unchanged sentence

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 7. Management’s Discussion and Analysis