Criteo SA

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

We are a global technology company that enables marketers and media owners to drive better commerce outcomes through the world’s leading Commerce Media Platform. We bring richer experiences to every consumer by supporting a fair and open internet that enables discovery, innovation, and choice — powered by trusted and impactful advertising from the world’s marketers and media owners.

We are leading the way in commerce media — a new approach to advertising that combines commerce data and machine learning to target consumers throughout their shopping journey and help marketers and media owners drive commerce outcomes (sales, leads, advertising revenue).

Our strategy is to help marketers and media owners activate 1st-party, privacy-safe data and drive better commerce outcomes through our Commerce Media Platform, which includes a suite of products:

•that offer marketers (brands, retailers, and agencies) the ability to easily reach consumers anywhere throughout their shopping journey and measure their advertising campaigns

•that offer media owners (publishers and retailers) the ability to monetize their advertising and promotions inventory for commerce anywhere where consumers spend their time

•that are underpinned by our advanced AI engine, analyzing large sets of commerce data in real-time to drive hyper personalization and budget efficiency.

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

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements (the "Unaudited Condensed Consolidated Financial Statements") have been prepared by Criteo in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC"), including regarding interim financial reporting. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 28, 2025.

The unaudited condensed consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year ending December 31, 2025.

Use of Estimates

The preparation of our Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenue and expenses during the period. 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. Actual results may differ from these estimates.

On an on-going basis, management evaluates its estimates, primarily those related to: (1) revenue recognition (2) income taxes, (3) assumptions used in the valuation of long-lived assets including intangible assets, and goodwill, and (4) assumptions surrounding the recognition and valuation of contingent liabilities and losses.

Significant Accounting Policies

In January 2025, we completed an assessment of the useful lives of our servers and network equipment, resulting in a change in the estimated useful life of certain servers and network equipment from five to six years. This change in accounting estimate is effective beginning fiscal year 2025.

There have been no other significant changes to our accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Reclassifications

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the notes to condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The new standard is effective for annual periods beginning after December 15, 2024. We do not expect the adoption of this standard to have an impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires disaggregated disclosure of income statement expenses. This standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

Note 2. Segment information

The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments. The Company reports its results of operations through the followingtwo segments: Retail Media and Performance Media.

–Retail Media: This segment encompasses revenue generated from brands, agencies and retailers for the purchase and sale of retail media digital advertising inventory and audiences, and services.

–Performance Media: This segment encompasses commerce activation, monetization, and AdTech services including our media trading marketplace.

The Company's chief operating decision maker ("CODM"), our Chief Executive Office ("CEO"), allocates resources to and assesses the performance of each operating segment using information about Contribution ex-TAC, which is Criteo's segment profitability measure and reflects our gross profit plus other costs of revenue. The CODM only reviews revenues and corresponding TAC for each segment, and does not regularly review any other expense nor financial information for ourtwo segments.

The following table shows revenue by reportable segment:

The following table shows TAC by reportable segment:

The following table shows Contribution ex-TAC by reportable segment and its reconciliation to the Company’s Consolidated Statements of Operation:

Note 3. Cash, Cash Equivalents, and Marketable Securities

Fair Value Measurements

The following tables summarize our assets measured at fair value on a recurring basis and the classification by level of input within the fair value hierarchy:

Marketable Securities

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

The gross unrealized gains or (loss) on our marketable securities were not material as of March 31, 2025.

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

The following table classifies our marketable debt securities by contractual maturities:

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Note 4. Trade Receivables

The following table shows the breakdown in trade receivables net book value for the presented periods:

Note 5. Goodwill

Goodwill allocated to thetwo reportable segments and the changes in the carrying amount for the quarter-ended March 31, 2025 were as follows:

Note 6. Other Current and Noncurrent Assets

The following table shows the breakdown in other current assets net book value for the presented periods:

Prepayments to suppliers include amounts related to SaaS arrangements and licenses and other prepayments to suppliers of good and services.

Other current assets as of March 31, 2025 and December 31, 2024, include restricted cash of $0.3 million and of $0.3 million, respectively.

Other noncurrent assets as of March 31, 2025 and December 31, 2024 of $60.7 million and $61.2 million are primarily comprised of the indemnification asset of $50.2 million and $50.0 million recorded against certain tax liabilities related to the Iponweb Acquisition.

Note 7. Other Current and Noncurrent Liabilities

Other current liabilities are presented in the following table:

Other noncurrent liabilities are presented in the following table:

The uncertain tax positions are primarily related to the Iponweb Acquisition.

Note 8. Leases

The components of lease expense are as follows:

Note 9. Employee Benefits

Defined Benefit Plans

According to French law and the Syntec Collective Agreement, French employees are entitled to compensation paid on retirement, equal to up to twelve months of their salary based on term of employment.

The following table summarizes the changes in the projected benefit obligation:

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

The main assumptions used for the purposes of the actuarial valuations are listed below:

Defined Contribution Plans

The total expense represents contributions payable to these plans by us at specified rates.

In some countries, the Group’s employees are eligible for pension payments and similar financial benefits. The Group provides these benefits via defined contribution plans. Under defined contribution plans, the Group has no obligation other than to pay the agreed contributions, with the corresponding expense charged to income for the year. The main contributions relate to France, the United States (for 401k plans), and the United Kingdom.

Note 10. Share-Based Compensation

Equity Awards Compensation Expense

Equity awards compensation expense recorded in the consolidated statements of operations was as follows:

(1) The three months ended March 31, 2025 and March 31, 2024 are presented net of, $1.3 million and $1.1 million, respectively, capitalized stock-based compensation relating to internally developed software.

The breakdown of the equity award compensation expense by instrument type was as follows:

(1) The three months ended March 31, 2025 and March 31, 2024 are presented net of, $1.3 million and $1.1 million, respectively, capitalized stock-based compensation relating to internally developed software.

A detailed description of each instrument type is provided below.

Stock Options

Stock options granted under the Company’s stock incentive plans generally vest over four years, subject to the holder’s continued service through the vesting date and expire no later than 10 years from the date of grant.

The aggregate intrinsic value represents the difference between the exercise price of the options and the fair market value of common stock on the date of exercise. The aggregate intrinsic value of the stock options exercised was $0.9 million and $0.8 million for the period ended March 31, 2025, and December 31, 2024, respectively.

No new stock options were granted in the period ending March 31, 2025. As of March 31, 2025, there wasno remaining unrecognized stock-based compensation related to unvested stock options.

Restricted Stock Units and Performance Stock Units

During the three months ended March 31, 2025, the Company granted new equity awards under our current equity compensation plans, which were comprised of restricted stock units (“RSU”), and performance-based awards for the Company’s senior executives, which are subject to the achievement of certain performance goals (“Financial PSU”) or to share price metrics tied to total shareholder return (“TSR PSU”).

Restricted Stock Units

Restricted stock units generally vest over four years, subject to the holder’s continued service and/or certain performance conditions through the vesting date. The grant date fair value is determined by the Company's Nasdaq share price the day prior to the grant.

The RSUs are subject to a vesting period offour years, over which the expense is recognized on a straight-line basis. A total of 271,970 shares have been granted under this plan, with a weighted-average grant-date fair value of $38.26.

As of March 31, 2025, the Company had unrecognized stock-based compensation relating to restricted stock of approximately $68.6 million, which is expected to be recognized over a weighted-average period of 3.2 years.

Performance Stock Units

Performance stock units (PSUs) are subject to either internal financial performance conditions or external market conditions.

Financial PSUs are earned based on the achievement of certain financial metrics, including Contribution ex-TAC, Contribution ex-TAC of Retail Media and Adjusted EBITDA. A total of 215,764 shares have been granted at target with a vesting period ofthree years. The target shares are subject to a range of vesting from 0% to 200% based on the performance of internal financial metrics, for a maximum number of shares of 431,524. The grant date fair value is determined by the Company's Nasdaq share price the day prior to the grant. The weighted average grant-date fair value of those plans is $38.26 per share for a total fair value of approximately $8.3 million, to be expensed on a straight-line basis over the respective vesting period.

The number of shares granted, vesting and outstanding subject to performance conditions is as follows:

As of March 31, 2025, the Company had unrecognized stock-based compensation related to performance stock units of approximately $13.2 million, which is expected to be recognized over a weighted-average period of 3.6 years.

TSR PSUs are earned based on the Company’s total shareholder return relative to the Nasdaq Composite Index, and certain other vesting conditions. A total of 215,764 shares have been granted at target under this plan, to be earned intwo equal tranches over a term oftwo andthree years, respectively. The target shares are subject to a range of vesting from 0% to 200% for each tranche based on the TSR, for a maximum number of shares of 431,528. The grant-date fair value is approximately $12.3 million, to be expensed on a straight-line basis over the respective vesting period.

The grant-date fair value was determined based on a Monte-Carlo valuation model using the following key assumptions:

The number of shares granted, vested and outstanding subject to market conditions is as follows:

As of March 31, 2025, a total of $1.8 million expense has been recognized and the Company had unrecognized stock-based compensation related to performance stock units based of market conditions of $19.2 million, which is expected to be recognized over a period from April 1, 2025 to March 1, 2028.

Nonemployee warrants

Nonemployee warrants generally vest over four years, subject to the holder’s continued service through the vesting date.

The aggregate intrinsic value represents the difference between the exercise price of the nonemployee warrants and the fair market value of common stock on the date of exercise. The aggregate intrinsic value of nonemployee warrants exercised was $1.6 million, and $0.0 million for the year and quarter ended December 31, 2024, and March 31, 2025, respectively. During the period ended March 31, 2025, there wereno exercises of nonemployee warrants.

No new nonemployee warrants were granted in the period ending March 31, 2025. As of March 31, 2025 all instruments have fully vested.

Note 11. Financial and Other Income and Expenses

The condensed consolidated statements of income line item “Financial and Other Income” can be broken down as follows:

The $2.3 million in financial and other income for the three months ended March 31, 2025, were mainly driven by financial income from cash equivalents and a positive impact of foreign exchange losses.

Note 12. Income Taxes

The tax provision for interim periods is determined using an estimate of our annual effective tax rate (“AETR”), adjusted for discrete items arising in the period. To calculate our estimated AETR, we estimate our income before taxes and the related tax expense or benefit for the full fiscal year (total of expected current and deferred tax provisions), excluding the effect of significant unusual or infrequently occurring items or comprehensive income items not recognized in the statement of income. Each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate does change, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors, including our ability to accurately predict our income (loss) before provision for income taxes in multiple jurisdictions. Our effective tax rate in the future will depend on the portion of our profits earned within and outside of France.

In December 2021, the Organization for Economic Cooperation and Development (OECD) released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of a minimum rate of 15% for multinational companies with consolidated revenue above €750 million. Numerous jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate. While the adoption of Pillar Two did not have a material impact on the three months ended March 31, 2025, the Company will continue to assess the ongoing impact as additional guidance becomes available.

The following table presents provision for income taxes:

For the three months ended March 31, 2025, the provision for income taxes differs from the nominal standard French rate of 25.0% primarily due to the application of the reduced income tax rate on the majority of the technology royalties income in France.

Note 13. Earnings Per Share

Basic Earnings Per Share

We calculate basic earnings per share ("EPS") by dividing the net income or loss for the period attributable to shareholders of the Parent by the weighted average number of shares outstanding.

Diluted Earnings Per Share

We calculate diluted earnings per share by dividing the net income or loss attributable to shareholders of the Parent by the weighted average number of shares outstanding plus any potentially dilutive shares not yet issued from share-based compensation plans (refer to Note 10). There were no other potentially dilutive instruments outstanding as of March 31, 2025 and 2024. Consequently all potential dilutive effects from shares are considered.

For each period presented, a contract to issue a certain number of shares ((i.e., share option, nonemployee warrant, was assessed as potentially dilutive if it was “in the money” (i.e., the exercise or settlement price is lower than the average market price).

The weighted average number of securities that were anti-dilutive for diluted EPS for the periods presented but which could potentially dilute EPS in the future are as follows:

Note 14. Commitments and contingencies

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

The amount of the provisions represents management’s latest estimate of the expected impact.

Legal and Regulatory matters

Following a complaint from Privacy International against a number of advertising technology companies with certain data protection authorities, including in France, France's Commission Nationale de l'Informatique et des Libertés (the "CNIL") opened a formal investigation in January 2020 against Criteo. In June 2023, the CNIL issued its decision, which retained alleged European Union's General Data Protection Regulation ("GDPR") violations but reduced the financial sanction against Criteo from the original amount of €60 million ($64.2 million) to €40 million ($43.3 million). Criteo issued the required sanction payment during the third quarter of 2023. The decision relates to past matters and does not include any obligation for Criteo to change its current practices. Criteo has appealed this decision before the French Council of State (Conseil d’Etat).

We are party to a claim (Doe v. GoodRx Holdings, Inc. et al. in the U.S. District Court for the Northern District of California), alleging violations of various state and federal laws. We intend to vigorously defend our position, but we are unable to predict the potential outcome at this time.

Non-income tax risks

We have recorded a $31.9 million provision related to certain non-income tax items accounted for under ASC 450 Contingencies. These risks were identified and recognized as part of the Iponweb Acquisition in 2022. We have recorded an indemnification asset in the full amount of the provision as the Company is indemnified against certain tax liabilities under the purchase agreement for the Iponweb Acquisition. The indemnification asset is recorded as part of "Other noncurrent assets" on the consolidated statement of financial position.

Note 15. Disaggregation of Revenue and Noncurrent Assets

The following table presents the Company's revenue disaggregated by major product for the period ended March 31, 2025 and March 31, 2024 :

The Company operates inthree geographical markets:

•Americas: North and South America;

•Europe, Middle-East and Africa; and

•Asia-Pacific.

The following table discloses our consolidated revenue for each geographical area for each of the reported periods. Revenue by geographical area is based mainly on the location of advertisers’ campaigns.

Revenue generated in other significant countries where we operate is presented in the following table:

For each reported period, non-current assets (corresponding to the net book value of tangible and intangible assets) are presented in the table below. The geographical information includes results from the locations of legal entities.

Note 16. Subsequent Events

Update on Chrome Third-Party Cookie Policy

On April 23, 2025, Google announced that it will maintain its current approach for offering users control over third-party cookies in the Chrome browser. This decision follows a 2024 proposal to implement a new framework and standalone prompt for collecting user consent regarding third-party cookie usage across web browsing activity. Google confirmed it will not proceed with the proposed standalone consent prompt and instead will continue with its existing mechanisms for user choice. We expect this to have positive near-term and long-term implications.

Commercial Update

On April 30, 2025, our largest customer notified us that they will curtail the scope of services to be provided commencing November 1, 2025, which will reduce the expected revenue from that date onwards. This event does not have an impact on the balance sheet as of the period end March 31, 2025.