CORRESP 1 filename1.htm

VIA EDGAR

October 20, 2021

U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Trade & Services
100 F Street, N.E.
Washington, D.C. 20549
Attention: Keira Nakada and Suying Li


 RE:
Criteo S.A.
Form 10-K for the Fiscal Year Ended December 31, 2020
Filed February 26, 2021
Form 10-Q for the Quarterly Period Ended June 30, 2021
Filed August 4, 2021
Item 2.02 on Form 8-K
Filed August 4, 2021
File No. 001-36153

Ladies and Gentlemen:

Criteo S.A. (the “Company”) is hereby responding to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) set forth in the letter dated September 21, 2021 with respect to the above-referenced Form 10-K, Form 10-Q and Form 8-K.  For your convenience, the comments from the comment letter are repeated here, followed by the Company’s responses and the paragraph numbering below corresponds to the numbering in the comment letter.

Form 10-K for the Fiscal Year Ended December 31, 2020

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Revenue Excluding Traffic Acquisition Costs, page 67

1.
Your non-GAAP performance measures Revenue ex-TAC on a consolidated basis and by region disclosed in this section and throughout your filing, and Revenue ex-TAC margin disclosed in your earnings release appear to be more akin to gross profit. Please:


•
Revise the titles of these non-GAAP measures to reflect their nature;


•
Reconcile Revenue ex-TAC to gross profit, which appears to be the most directly comparable GAAP financial measure on the consolidated and regional bases;


•
Disclose the most directly comparable GAAP measure with equal or greater prominence wherever the consolidated and regional Revenue ex-TAC non-GAAP measures are disclosed; and






•
Disclose the ratio or measure as calculated using the most directly comparable GAAP financial measure wherever Revenue ex-TAC margin is disclosed.

We refer you to Item 10(e)(1)(i) of Regulation S-K, footnote 27 of SEC Final Rule Release No. 33-8176, and Question 102.10 of the Division’s Non-GAAP Financial Measures Compliance and Disclosure Interpretations. This comment also applies to your Form 10-Q and Item 2.02 Form 8-K for the fiscal quarter ended June 30, 2021.

Description of Revenue ex-TAC

The Company strives to ensure that its financial statements and disclosures are transparent and in compliance with applicable requirements, including Regulation G and Item 10(e) of Regulation S-K.  Historically, the Company has presented the non-GAAP measure Revenue excluding Traffic Acquisition Costs, or Revenue ex-TAC, because it is a key measure used by the Company’s management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding allocation of capital.  Moreover, Revenue ex-TAC has been used by other companies in the Company’s industry and is followed by analysts and investors as a key measure to evaluate the Company’s performance.  While the Company believes that its use of this measure has been consistent with both market practice and applicable regulations, the Company respectfully acknowledges the Staff’s comment and advises the Staff that in future filings it will revise the title of this non-GAAP measure to Contribution ex-TAC.  Similarly, the Company also will revise the title of Revenue ex-TAC margin to Contribution ex-TAC margin.

Reconciliation

The Company is a global technology company that operates in over 100 countries, and the Company accounts for many costs that are not allocated to any particular region.  For instance, a large portion of the Company’s other cost of revenue consists of data center costs, such as hosting costs and depreciation of servers.  Moreover, some of the Company’s data centers serve multiple geographic areas as well as general corporate operations.  Because other cost of revenue is not allocated by region it would be impracticable for the Company to calculate gross profit on a regional basis for the purpose of reconciling Contribution ex-TAC by region.  Accordingly, the Company does not intend to reconcile Contribution ex-TAC by region to gross profit by region.  However, the Company does intend to reconcile Contribution ex-TAC to gross profit on a consolidated level, and will also present Contribution ex-TAC by region in a table with consolidated other cost of revenue, reconciling to consolidated gross profit.  The Company continues to believe that Contribution ex-TAC by region is useful information to investors due to the global nature of the Company’s business.  In addition, the Company will no longer compare these measures to revenue, which the Company believes addresses the Staff’s comment.  An example of the Company’s proposed approach is provided in Annex A at the end of this letter for the Staff’s consideration.



2


Disclosure of Most Comparable GAAP Measure

The Company also respectfully advises the Staff that in future filings it will continue to comply with Item 10(e) of Regulation S-K by disclosing the most directly comparable GAAP measure, gross profit, with equal or greater prominence wherever Contribution ex-TAC is disclosed on a consolidated basis.  As described above, however, it would be impracticable for the Company to present a comparable GAAP measure to Contribution ex-TAC by region.  However, the Company will refrain from comparing these measures to revenue.

Margin Presentation

Finally, the Company respectfully advises the Staff that in future filings it will disclose the most directly comparable GAAP ratio or measure to Contribution ex-TAC margin, gross profit margin, wherever Contribution ex-TAC margin is disclosed.

The Company expects that it will revise the disclosures described above beginning with its annual report on Form 10-K for the fiscal year ended December 31, 2021.

Thank you for your consideration.  Please do not hesitate to contact me if you have any questions.

 
Sincerely,
  
     
     
  /s/ Ryan Damon  
 
Ryan Damon
  
 
EVP, General Counsel & Corporate Secretary
  
 
Criteo S.A.
  


cc:
Ryan J. Adams
Skadden, Arps, Slate, Meagher & Flom LLP



3


Annex A


Reconciliation of Contribution ex-TAC by Region to Gross Profit

    
Three months ended
          
Six months ended
        
   
30 June
          
30 June
        
Region
  
2021
    
2020
    
YoY Change
    
2021
    
2020
    
YoY Change
  
                                     
Revenue
    
551,311
      
437,614
      
26.0
%
    
1,092,388
      
940,990
      
16.1
%
Americas
    
221,227
      
185,674
      
19.1
%
    
425,127
      
377,419
      
12.6
%
 EMEA
    
209,303
      
159,621
      
31.1
%
    
421,399
      
349,735
      
20.5
%
Asia-Pacific
    
120,781
      
92,319
      
30.8
%
    
245,862
      
213,836
      
15.0
%
                                                 
Traffic Acquisition Costs
    
(331,078
)
    
(257,698
)
    
28.5
%
    
(658,745
)
    
(555,062
)
    
18.7
%
Americas
    
(134,332
)
    
(115,317
)
    
16.5
%
    
(261,960
)
    
(235,339
)
    
11.3
%
 EMEA
    
(124,747
)
    
(90,153
)
    
38.4
%
    
(251,395
)
    
(198,550
)
    
26.6
%
Asia-Pacific
    
(71,999
)
    
(52,228
)
    
37.9
%
    
(145,390
)
    
(121,173
)
    
20.0
%
                                                 
Contribution ex-TAC
    
220,233
      
179,916
      
22.4
%
    
433,643
      
385,928
      
12.4
%
Americas
    
86,894
      
70,357
      
23.5
%
    
163,167
      
142,080
      
14.8
%
 EMEA
    
84,556
      
69,468
      
21.7
%
    
170,004
      
151,185
      
12.4
%
Asia-Pacific
    
48,783
      
40,091
      
21.7
%
    
100,472
      
92,663
      
8.4
%
                                                 
Other Cost of revenue
    
(37,364
)
    
(33,914
)
    
10.2
%
    
(72,076
)
    
(67,720
)
    
6.4
%
                                                 
Gross Profit
    
182,869
      
146,002
      
25.3
%
    
361,567
      
318,208
      
13.6
%