Criteo reports strong results for Q3 2017
Criteo S.A. (NASDAQ: CRTO), a leading commerce marketing technology company, announced its financial results for the third quarter ended September 30, 2017.
"Criteo Commerce Marketing Ecosystem is seeing very positive acceptance from chief marketing officers worldwide," said Eric Eichmann, CEO.
- Revenue increased 33 per cent (or 32 per cent at constant currency) to $564 million.
- Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, grew 33 per cent (or 32 per cent at constant currency) to $234 million, or 42 per cent of revenue.
- Adjusted EBITDA2 grew 48 per cent (or 45 per cent at constant currency) to $79 million, or 34 per cent of Revenue ex-TAC.
- Cash flow from operating activities increased 41 per cent to $62 million.
- Free Cash Flow2 increased 43 per cent to $34 million.
- Net Income increased 51 per cent to $22 million.
- Adjusted Net Income per diluted share2 increased 37 per cent to $0.65.
"Our open ecosystem approach brings large opportunities for us. Our solid Q3 results and increased profitability outlook for 2017 highlight the strengths of our business. We are confident in our position and growth prospects," said Benoit Fouilland, CFO.
- The growth in same-client Revenue ex-TAC3 remained strong with 14 per cent at constant currency, the result of better technology and inventory access.
- We added a total of 930 net clients, ending the quarter with over 17,000 commerce and brand clients, while maintaining a 90 per cent client retention for the core product.
- Criteo Identity Graph continued to grow in scale and efficiency, providing as good or better CRM onboarding rates than the largest internet players.
- Criteo Direct Bidder, our next generation header bidding technology, is now connected to 950 large publishers worldwide.
- We recently introduced two new products in beta version to the Criteo Commerce Marketing Ecosystem with very promising results: Criteo Audience Match and Criteo Customer Acquisition.
Revenue and Revenue ex-TAC
Revenue grew 33 per cent, or 32 per cent at constant currency, to $564 million (Q3 2016: $424 million).
Revenue ex-TAC grew 33 per cent, or 32 per cent at constant currency, to $234 million (Q3 2016: $177 million). This increase was primarily driven by continued innovation across existing and new products, a broader and improved access to publisher inventory and new clients of various sizes across regions and products.
- In the Americas, Revenue ex-TAC grew 36 per cent, or 35 per cent at constant currency, to $86 million and represented 37 per cent of total Revenue ex-TAC.
- In EMEA, Revenue ex-TAC grew 29 per cent, or 24 per cent at constant currency, to $92 million and represented 39 per cent of total Revenue ex-TAC.
- In Asia-Pacific, Revenue ex-TAC grew 33 per cent, or 40 per cent at constant currency, to $56 million and represented 24 per cent of total Revenue ex-TAC.
Revenue ex-TAC margin as a percentage of revenue was 42 per cent, in line with expectations and the prior year.
Net Income and Adjusted Net Income
Net income increased 51 per cent to $22 million (Q3 2016: $15 million). Net income available to shareholders of Criteo S.A. was $20 million, or $0.29 per share on a diluted basis (Q3 2016: $14 million, or $0.21 per share on a diluted basis). Net income in the period was impacted by the acquisition of HookLogic, which was completed in the fourth quarter 2016, including the one-time grant of equity awards in connection with the acquisition, the amortisation of intangible assets identified as a result of the preliminary purchase price allocation, and increased financial expense related to the funding of 30 per cent of the purchase price. Excluding non-cash accounting impacts from the HookLogic acquisition on equity awards compensation and amortisation of intangible assets, net income increased 98 per cent to $29 million.
Adjusted Net income, or net income adjusted to eliminate the impact of equity awards compensation expense, amortisation of acquisition-related intangible assets, acquisition-related costs and deferred price consideration, restructuring costs and the tax impact of these adjustments, increased 42 per cent to $44 million, or $0.65 per share on a diluted basis (Q3 2016: $31 million, or $0.48 per share on a diluted basis).
Adjusted EBITDA and Operating Expenses
Adjusted EBITDA grew 48 per cent, or 45 per cent at constant currency, to $79 million (Q3 2016: $54 million). This increase in Adjusted EBITDA was primarily driven by the strong Revenue ex-TAC performance across all regions, as well as continued operating leverage across the organisation.
Adjusted EBITDA margin as a percentage of Revenue ex-TAC was 34 per cent (Q3 2016: 30 per cent).
Operating expenses increased 31 per cent to $171 million (Q3 2016: $131 million). Operating expenses, excluding the impact of equity awards compensation expense, pension costs, restructuring costs, depreciation and amortisation and acquisition-related costs and deferred price consideration, which we refer to as Non-GAAP Operating Expenses, increased 26 per cent to $140 million (Q3 2016: $111 million). This increase is primarily related to the year-over-year growth in headcount in Research and Development (37 per cent), Sales and Operations (18 per cent) and General and Administrative (21 per cent), as we continued to grow the organisation.
Cash Flow and Cash Position
Cash flow from operating activities increased 41 per cent to $62 million (Q3 2016: $44 million).
Free Cash Flow, defined as cash flow from operating activities less acquisition of intangible assets, property, plant and equipment and change in accounts payable related to intangible assets, property, plant and equipment, grew by 43 per cent to $34 million (Q3 2016: $24 million).
Total cash and cash equivalents were $358 million as of September 30, 2017 (December 31, 2016: $270 million).