UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM ~~10-Q/A~~

~~(Amendment No.1)~~10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

for the quarterly period ended ~~September~~June 30, ~~2017~~2018



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from _________ to _________

Commission file number: 001-36153

Criteo S.A.

(Exact name of registrant as specified in its charter)



France		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

32, rue Blanche, Paris-France		75009
(Address of principal executive offices)		(Zip Code)

+33 1 40 40 22 90

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	x	Accelerated Filer	¨
Non-accelerated Filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has not elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~October~~July 31, ~~2017,~~2018, the registrant had ~~65,993,182~~67,006,234 ordinary shares, nominal value €0.025 per share, outstanding.

~~EXPLANATORY NOTE~~

This Amendment No.1 on Form 10-Q/A (this “Amendment”) amends the Quarterly Report on Form 10-Q of Criteo S.A. (the “Company”) for the quarterly period ended September 30, 2017 (the “Original Report”) solely to correct figures in Note 15. ~~Breakdown of Revenue and Non-Current Assets by Geographical Areas~~ for the Revenue breakdown by Region for the three months ended September 30, 2017. The Original report was initially filed with the Securities and Exchange Commission (the “SEC”) on November 8, 2017.

Other than correcting the figures described above, the Amendment does not amend, update or change any other statement or amount contained in the Original Report. This Amendment does not reflect events occurring after the filing date of the Original Report.

TABLE OF CONTENTS

General

Except where the context otherwise requires, all references in this Quarterly Report on Form ~~10-Q/A~~10-Q ("Form ~~10-Q/A"~~10-Q") to the "Company," "Criteo," "we," "us," "our" or similar words or phrases are to Criteo S.A. and its subsidiaries, taken together. In this Form ~~10-Q/A,~~10-Q, references to "$" and "US$" are to United States dollars. Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or "U.S. GAAP."

Trademarks

“Criteo,” the Criteo logo and other trademarks or service marks of Criteo appearing in this Form ~~10-Q/A~~10-Q are the property of Criteo. Trade names, trademarks and service marks of other companies appearing in this Form ~~10-Q/A~~10-Q are the property of their respective holders.

Special Note Regarding Forward-Looking Statements

This Form ~~10-Q/A~~10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than present and historical facts and conditions contained in this Form ~~10-Q/A,~~10-Q , including statements regarding our future results of operations and financial position, business strategy, plans and objectives for future operations, are forward-looking statements. When used in this Form ~~10-Q/A,~~10-Q, the words “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is designed to,” “may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of these and similar expressions identify forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

the ability of the Criteo Engine to accurately predict engagement by a user;

our ability to predict and adapt to changes in widely adopted industry platforms and other new technologies;

our ability to continue to collect and utilize data about user behavior and interaction with advertisers;

our ability to acquire an adequate supply of advertising inventory from publishers on terms that are favorable to us;

our ability to meet the challenges of a growing and international company in a rapidly developing and changing industry, including our ability to forecast accurately;

our ability to maintain an adequate rate of revenue growth and sustain profitability;

our ability to manage our international operations and expansion and the integration of our acquisitions;

the effects of increased competition in our market;

our ability to adapt to regulatory, legislative or self-regulatory developments regarding internet privacy matters;

our ability to protect users’ information and adequately address privacy concerns;

our ability to enhance our brand;

our ability to enter new marketing channels and new geographies;

our ability to effectively scale our technology ~~platform in new industry verticals;~~platform;

our ability to attract and retain qualified employees and key personnel;

our ability to maintain, protect and enhance our brand and intellectual property; and

failures in our systems or infrastructure.

You should refer to Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, and to Part II, Item 1A "Risk Factors" of this Form ~~10-Q/A,~~10-Q, for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Form ~~10-Q/A~~10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read this Form ~~10-Q/A~~10-Q and the documents that we reference in this Form ~~10-Q/A~~10-Q and have filed as exhibits to this Form ~~10-Q/A~~10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This Form ~~10-Q/A~~10-Q may contain market data and industry forecasts that were obtained from industry publications. These data and forecasts involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified any third-party information. While we believe the market position, market opportunity and market size information included in this Form ~~10-Q/A~~10-Q is generally reliable, such information is inherently imprecise.

PART I

Item 1. Financial Statements.

CRITEO S.A.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)


	Notes	December 31, 2016			September 30, 2017			Notes	December 31, 2017			June 30, 2018

		(in thousands)							(in thousands)
Assets
Current assets:
Cash and cash equivalents	3	$	270,317		357,983			4	$	414,111		480,285
Trade receivables, net of allowances	4	397,244			373,922
Trade receivables, net of allowance								5	484,101			372,906
Income taxes		2,741			5,295				8,882			11,921
Other taxes		52,942			46,095				58,346			42,076
Other current assets	5	19,340			26,945			6	26,327			26,114
Total current assets		742,584			810,240				991,767			933,302
Property, plant and equipment, net		108,581			134,885				161,738			146,904
Intangible assets, net	6	102,944			99,714			7	96,223			87,031
Goodwill	7	209,418			236,363			7	236,826			235,950
Non-current financial assets	3	17,029			19,350				19,525			20,226
Deferred tax assets		30,630			57,642				25,221			33,129
Total non-current assets		468,602			547,954				539,533			523,240
Total assets		$	1,211,186		$	1,358,194			$	1,531,300		$	1,456,542
Liabilities and shareholders' equity
Current liabilities:
Trade payables		$	365,788		$	350,690			$	417,032		$	321,295
Contingencies	14	654			1,553			14	1,798			1,811
Income taxes		14,454			16,341				9,997			9,346
Financial liabilities - current portion	9	7,969			7,943			9	1,499			1,055
Other taxes		44,831			42,713				58,783			46,947
Employee - related payables		55,874			59,661				66,219			65,832
Other current liabilities	8	30,221			26,802			8	65,677			30,803
Total current liabilities		519,791			505,703				621,005			477,089
Deferred tax liabilities		686			28,719				2,497			3,251
Retirement benefit obligation		3,221			3,690				5,149			5,472
Financial liabilities - non current portion	9	77,611			2,525			9	2,158			1,758
Other non-current liabilities		—			4,290				2,793			4,104
Total non-current liabilities		81,518			39,224				12,597			14,585
Total liabilities		601,309			544,927				633,602			491,674
Commitments and contingencies
Shareholders' equity:
Common shares, €0.025 par value, 63,978,204 and 65,551,174 shares authorized, issued and outstanding at December 31, 2016 and September 30, 2017, respectively.		2,093			2,137
Common shares, €0.025 par value, 66,085,097 and 66,861,045 shares authorized, issued and outstanding at December 31, 2017 and June 30, 2018, respectively.								Common shares, €0.025 par value, 66,085,097 and 66,861,045 shares authorized, issued and outstanding at December 31, 2017 and June 30, 2018, respectively.	2,152			2,177
Additional paid-in capital		488,277			568,171				591,404			630,772
Accumulated other comprehensive (loss)		(88,593		)	(21,386		)		(12,241		)	(20,722		)
Retained earnings		198,355			247,821				300,210			333,725
Equity-attributable to shareholders of Criteo S.A.		600,132			796,743				881,525			945,952
Non-controlling interests		9,745			16,524				16,173			18,916
Total equity		609,877			813,267				897,698			964,868
Total equity and liabilities		$	1,211,186		$	1,358,194			$	1,531,300		$	1,456,542

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

CRITEO S.A.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


			Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	Notes		September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2017			Notes	June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018
		(in thousands, except share per data)														(in thousands, except share per data)

Revenue			$	423,867		$	563,973		$	1,232,321		$	1,622,661		2	$	542,022		$	537,185		$	1,058,688		$	1,101,349

Cost of revenue:
Traffic acquisition costs			(247,310		)	(329,576		)	(727,034		)	(958,469		)		(322,200		)	(306,963		)	(628,893		)	(630,709		)
Other cost of revenue			(22,332		)	(29,951		)	(60,950		)	(89,914		)		(32,808		)	(29,957		)	(59,963		)	(60,016		)

Gross profit			154,225			204,446			444,337			574,278				187,014			200,265			369,832			410,624

Operating expenses:
Research and development expenses			(30,701		)	(43,860		)	(88,097		)	(126,992		)		(43,611		)	(47,544		)	(83,132		)	(92,862		)
Sales and operations expenses			(68,164		)	(95,184		)	(201,862		)	(283,815		)		(97,900		)	(92,726		)	(188,631		)	(188,375		)
General and administrative expenses			(32,492		)	(32,389		)	(85,839		)	(96,143		)		(32,239		)	(35,644		)	(63,754		)	(70,235		)
Total operating expenses			(131,357		)	(171,433		)	(375,798		)	(506,950		)		(173,750		)	(175,914		)	(335,517		)	(351,472		)
Income from operations			22,868			33,013			68,539			67,328				13,264			24,351			34,315			59,152
Financial (expense)	11		(570		)	(2,886		)	(1,982		)	(7,313		)
Financial income (expense), net															11	(2,094		)	(1,006		)	(4,427		)	(2,331		)
Income before taxes			22,298			30,127			66,557			60,015				11,170			23,345			29,888			56,821
Provision for income taxes	12		(7,574		)	(7,858		)	(19,968		)	(15,724		)	12	(3,665		)	(8,638		)	(7,866		)	(21,024		)
Net income			$	14,724		$	22,269		$	46,589		$	44,291			$	7,505		$	14,707		$	22,022		$	35,797

Net income available to shareholders of Criteo S.A.			$	13,539		$	19,774		$	42,869		$	38,185			$	5,970		$	13,726		$	18,411		$	33,535
Net income available to non-controlling interests			$	1,185		$	2,495		$	3,720		$	6,106			$	1,535		$	981		$	3,611		$	2,262

Net income allocated to shareholders of Criteo S.A. per share:
Basic	13		$	0.21		$	0.30		$	0.68		$	0.59		13	$	0.09		$	0.21		$	0.28		$	0.51
Diluted	13		$	0.21		$	0.29		$	0.66		$	0.56		13	$	0.09		$	0.20		$	0.27		$	0.50

Weighted average shares outstanding used in computing per share amounts:
Basic	13		63,628,351			65,412,326			63,163,922			64,881,751			13	65,027,985			66,347,599			64,611,237			66,254,476
Diluted	13		65,816,422			68,200,343			65,429,757			67,876,791			13	68,131,274			67,488,311			67,709,789			67,479,513

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

CRITEO S.A.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2017			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018
	(in thousands)												(in thousands)

Net income	$	14,724		$	22,269		$	46,589		$	44,291		$	7,505		$	14,707		$	22,022		$	35,797
Foreign currency translation differences, net of taxes	2,649			20,972			12,677			66,826			36,762			(34,555		)	45,854			(8,671		)
Foreign currency translation differences	2,649			20,972			12,677			66,826			36,762			(34,555		)	45,854			(8,671		)
Income tax effect	—			—			—			—			—			—			—			—
Actuarial (losses) gains on employee benefits, net of taxes	(73		)	155			(282		)	745			337			413			590			413
Actuarial losses on employee benefits	(90		)	184			(341		)	882
Actuarial gains on employee benefits													401			413			698			413
Income tax effect	17			(29		)	59			(137		)	(64		)	—			(108		)	—
Comprehensive income (loss)	$	17,300		$	43,396		$	58,984		$	111,862		$	44,604		$	(19,435	)	$	68,466		$	27,539
Attributable to shareholders of Criteo S.A.	$	15,991		$	41,002		$	54,113		$	105,391		$	43,097		$	(19,705	)	$	64,390		$	25,051
Attributable to non-controlling interests	$	1,309		$	2,394		$	4,871		$	6,471		$	1,507		$	270		$	4,076		$	2,488

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

CRITEO S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended							Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017				September 30, 2016			September 30, 2017			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018
	(in thousands)													(in thousands)
Net income	$	14,724		$	22,269			$	46,589		$	44,291		$	7,505		$	14,707		$	22,022		$	35,797
Non-cash and non-operating items	36,609			61,995				96,235			146,443			42,974			54,021			84,448			107,987
- Amortization and provisions	16,030			25,990				45,555			72,681
- Amortization, depreciation and provisions														24,376			25,099			46,692			51,149
- Equity awards compensation expense ⁽¹⁾	13,965			22,028				30,030			51,887			14,918			20,241			29,858			39,070
- Interest accrued and non-cash financial income and expenses	(960		)	(25		)		638			7			15			21			32			44
- Change in deferred taxes	(3,121		)	(8,164		)		(7,545		)	(20,569		)	(5,536		)	(4,389		)	(12,405		)	(7,535		)
- Income tax for the period	10,695			16,022				27,557			36,293			9,201			13,028			20,271			28,560
- Other(2)	—			6,144				—			6,144			—			21			—			(3,301		)
Changes in working capital related to operating activities	4,576			(12,372		)		(22,860		)	13,418			25,860			(10,043		)	25,790			13,644
- (Increase)/decrease in trade receivables	(2,160		)	(991		)		(4,528		)	35,220
- Increase/(decrease) in trade payables	11,218			(5,031		)		(3,931		)	(31,284		)
- (Increase)/decrease in other current assets	(2,856		)	4,001				(18,633		)	6,581
- Increase/(decrease) in other current liabilities	(1,626		)	(10,351		)		4,232			2,901
- (Increase) / Decrease in trade receivables														(23,358		)	10,154			36,211			101,446
- Increase / (Decrease) in trade payables														48,776			(26,745		)	(26,254		)	(89,690		)
- (Increase) / Decrease in other current assets														(3,493		)	5,821			2,580			13,779
- Increase/(Decrease) in other current liabilities ⁽²⁾														3,935			727			13,253			(11,891		)
Income taxes paid	(12,278		)	(10,165		)		(38,152		)	(37,696		)	(15,848		)	(18,344		)	(27,531		)	(32,560		)
CASH FROM OPERATING ACTIVITIES	43,631			61,727				81,812			166,456			60,491			40,341			104,729			124,868
Acquisition of intangible assets, property, plant and equipment	(15,792		)	(20,999		)		(54,970		)	(74,275		)	(30,008		)	(18,880		)	(53,275		)	(26,293		)
Change in accounts payable related to intangible assets, property, plant and equipment	(4,115		)	(6,774		)		570			(8,760		)	2,953			1,033			(1,986		)	(24,121		)
Payments for acquired business, net of cash acquired	—			73				(5,074		)	1,125
Payment for (Disposal of) business, net of cash acquired (disposed)														1,089			—			1,052			(10,811		)
Change in other non-current financial assets	(377		)	(157		)		197			1,117			1,668			154			1,274			42
CASH USED FOR INVESTING ACTIVITIES	(20,284		)	(27,857		)		(59,277		)	(80,793		)	(24,298		)	(17,693		)	(52,935		)	(61,183		)
Issuance of long-term borrowings	739			2,220				3,798			3,674			1,454			—			1,454			—
Repayment of borrowings	32			(4,672		)		(5,416		)	(83,893		)	(77,168		)	(235		)	(79,221		)	(473		)
Proceeds from capital increase	1,600			5,164				17,182			29,619			11,517			396			24,454			562
Change in other financial liabilities(2)	(25		)	15,082			²	(196		)	15,346			145			(35		)	264			16,810
CASH FROM (USED FOR) FINANCING ACTIVITIES	2,346			17,794				15,368			(35,254		)
CASH (USED FOR) FROM FINANCING ACTIVITIES														(64,052		)	126			(53,049		)	16,899

CHANGE IN NET CASH AND CASH EQUIVALENTS	25,693			51,664				37,903			50,409			(27,859		)	22,774			(1,255		)	80,584
Net cash and cash equivalents at beginning of period	377,407			308,185				353,537			270,317			303,813			483,874			270,317			414,111
Effect of exchange rates changes on cash and cash equivalents(2)	4,058			(1,866		)	²	15,718			37,257			32,231			(26,363		)	39,123			(14,410		)
Net cash and cash equivalents at end of period	$	407,158		$	357,983			$	407,158		$	357,983		$	308,185		$	480,285		$	308,185		$	480,285

⁽¹⁾ Of which ~~$13.1~~$14.7 million and ~~$21.4~~$19.8 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the ~~quarter~~three months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively, and ~~$28.6~~$29.3 million and ~~$50.7~~$38.2 million of equity awards compensation expense consisted of share-based compensation expense according to ASC 718 Compensation - stock compensation for the ~~nine~~six month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

⁽²⁾During the three months ended ~~September~~and six months ended June 30, ~~2017,~~2018, the Company reported the cash impact of the settlement of hedging derivatives related to financing activities in cash from (used for) financing activities in the unaudited consolidated statements of cash flows. This resulted in a $9.0 million reclassification from the line "Effect of exchange rates changes on cash and cash equivalents" to "Change in other financial liabilities" and a $6.0 million movement on the line "Change in other financial liabilities" for the quarter ended September 30, 2017.

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

CRITEO S.A.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Criteo S.A. is a global commerce marketing technology ~~company specialized in digital performance marketing.~~company. We help commerce companies and brand manufacturers acquire, convert and re-engage their customers, using shopping data, predictive technology and large consumer reach. We strive to deliver post-click sales at scale to our ~~advertiser~~ clients ~~at scale and according~~across different marketing objectives to ~~the client's~~meet their targeted return on investment. Our data is pooled among our clients and offers deep insights into consumer intent and purchasing habits. To drive sales for our clients, we activate our data assets through proprietary machine-learning algorithms to engage consumers in real time through the pricing and delivery of highly relevant digital advertisements, across devices and environments. By pricing our offering on a cost-per-click and measuring our value based on post-click sales, we make the return on investment transparent and easy to measure for our clients. 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". The Company uses its proprietary predictive software algorithms coupled with its deep insights into expressed consumer intent and purchasing habits to price and deliver highly relevant and personalized performance advertisements to consumers in real time.

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements included herein (the "Unaudited Condensed Consolidated Financial Statements") have been prepared by Criteo S.A. pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. 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 filed on Form 10-K for the year ended December 31, ~~2016,~~2017, filed with the SEC on March 1, ~~2017.~~2018. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which 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.

Conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses in the condensed consolidated financial statements and accompanying notes. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. Our actual results may differ from these estimates. U.S. GAAP requires us to make estimates and judgments in several areas, including, but not limited to: (1) the recognition of revenue and particularly, the determination as to whether revenue should be reported on a gross or a net basis; (2) the evaluation of our trade receivables and the recognition of a valuation allowance for doubtful accounts; (3) the recognition of our deferred tax assets considering the subsidiaries projected taxable profit for future years (4) the evaluation of uncertain tax positions considering our transfer pricing policies and research tax credits in the United States and France; (5) the recognition and measurement of income tax positions considering the 2017 Tax Cuts and Jobs Act enacted in December 2017 in the U.S., and particularly the measurement of the base erosion anti-avoidance tax ("BEAT"); (6) the recognition and measurement of goodwill and intangible assets and particularly costs capitalized in relation to our customized internal-use software; ~~(4)~~and (7) the measurement of share-based compensation and ~~(5) the tax provision determination and particularly the estimate of our annual effective tax rate based on applicable tax rates.~~related expenses.

There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016 that have had a material impact on our unaudited condensed consolidated financial statements and related notes.~~2017, except for the accounting pronouncements adopted below.

Accounting Pronouncements adopted in ~~2017~~2018

~~From~~In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605), and requires the Company to recognize revenue when control of promised services is transferred to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those services. We adopted the new standard effective January 1, ~~2017, we adopted ASU 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting~~ ~~issued by~~2018 using the ~~Financial Accounting Standards Board (FASB), which among other items, simplifies certain aspects of the accounting for share-based payment transactions to employees.~~modified retrospective method. The new standard ~~particularly requires excess tax benefits and tax deficiencies to be recorded in the statements of income as a component of the provision~~had no significant impact on our Unaudited Condensed Consolidated Financial Statements, except for income taxes when stock awards vest or are settled. The effective date is January 1, 2017. Upon adoption, a cumulative effect of $10.0 million of this change has been recognized through retained earnings. The adoption of the standard also resulted in a current year tax expense of $1.4 million which previously would have been recognized in the current period in additional paid-in capital.related disclosures (see Note 2 for further details).

~~Accounting Pronouncements not yet adopted~~

In January 2017, the FASB issued ~~ASU~~Accounting Standards Update No. 2017-01 ~~Business~~(ASU 2017-01) “Business Combinations (Topic 805) ~~("ASU 2017-01")~~: Clarifying the ~~purpose of which is to change the definition~~Definition of a ~~business~~Business.” ASU 2017-01 provides guidance to ~~assist entities~~evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. If substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in ~~evaluating when~~ a ~~set~~single asset or a group of ~~transferred~~similar assets, ~~and activities is~~the assets acquired (or disposed of) are not considered a business. ~~This update will be effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The adoption of~~We adopted ASU 2017-01 isas of January 1, 2018 on a prospective basis and it did not ~~expected to~~ have a material impact on our financial position, results of operations or cash flows.

In May 2017, the FASB issued ASU 2017-09 Compensation - Stock Compensation (Topic 718). ASU 2017-09 was issued to provide clarity and reduce diversity in practice and complexity when applying the guidance in Topic 718 to a change in terms or conditions of a share based payment award. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. We adopted ASU 2017-09 as of January 1, 2018 on a prospective basis and it did not have a material impact on our financial position, results of operations or cash flows.

In March 2017, FASB issued ASU 2017-07 Compensation-Retirements Benefits (Topic 715). ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. We adopted ASU 2017-07 as of January 1, 2018 and it did not have a material impact on our financial position, results of operations or cash flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). Among other clarifications, ASU 2016-15 clarifies certain items, including the classification of payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, excluding accrued interest, which will now be included in the Financing Activities section in the Consolidated Statement of Cash Flows. We adopted ASU 2016 - 15 as of January 1, 2018 and it did not have a material impact on our financial position, results of operations or cash flows, including classification as operating, financing, or investing activities.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16), which requires companies to recognize the income-tax consequences of an intra-entity transfer of an asset other than inventory. We adopted ASU 2016-16 as of January 1, 2018 on a modified retrospective basis. It did not have a material impact on our Consolidated Financial Statements.

Recently Issued Accounting Pronouncements not yet adopted

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet for operating leases with terms of more than 12 months, in addition to those currently recorded. We have selected a lease accounting system and are currently implementing this system as well as modifying our processes in conjunction with our review of existing lease agreements. Our implementation of this system is on schedule. We will adopt Topic 842 effective January 1, 2019 and expect to elect certain available transitional practical expedients. We anticipate this standard will have a material impact on our financial position and results of operations. While we are continuing to assess all potential impacts of the new standard, we currently believe the most significant impact relates to the accounting for office and datacenter operating leases.

In January 2017, the FASB issued ASU 2017-04 Goodwill and Other (Topic 350). ASU 2017-04 simplifies the subsequent measurement of goodwill and reduces the cost and complexity of evaluating goodwill for impairment. It eliminates the need for entities to calculate the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Under this amendment, an entity will perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying value exceeds the reporting unit's fair value. This update will be effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of ASU 2017-04 is not expected to have a material impact on our financial position or results of operations.

~~In March 2017, FASB issued ASU 2017-07~~ ~~Compensation-Retirements Benefits (Topic 715).~~ ASU 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. The amendments also provide explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. The amendments in ASU 2017-07 improve the consistency, transparency, and usefulness of financial information to users that have communicated that the service cost component generally is analyzed differently from the other components of net benefit cost. This update will be effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The amendments in ASU 2017-07 should be applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic post-retirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic post-retirement benefit in assets. We intend to adopt the standard on the effective date of January 1, 2018. The adoption of ASU 2017-07 is not expected to have a material impact on our financial position or results of operations.

~~In May 2017, the FASB issued ASU 2017-09~~ ~~Compensation - Stock Compensation (Topic 718). ASU 2017-09 was issued to provide clarity and reduce diversity in practice and complexity when applying the guidance in Topic 718 to a change in terms or conditions of a share based payment award.~~ ~~Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions.~~ The amendments are effective for annual periods and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted and should be applied prospectively to an award modified on or after the adoption date. To date, Criteo has not yet had any modifications of its share-based awards. We intend to adopt the standard on the effective date of January 1, 2018. The adoption of ASU 2017-09 is not expected to have a material impact on our financial position or results of operations.

~~In August 2017, the FASB issued ASU 2017-12~~ ~~Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities.~~ ~~ASU 2017-12~~was issued with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in it’s financial statements as well as to simply the application of hedge accounting guidance in current GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2017-12 on its consolidated financial statements.

Note 2. ~~Significant Events and Transactions~~Revenue

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

On January 1, 2018, we adopted Topic 606 using the modified retrospective method. The new standard had no significant impact on our Consolidated Financial Statements, except for related disclosures which are presented under Topic 606 for reporting periods beginning after January 1, 2018, while prior period disclosures are reported in accordance with previous Topic 605.

Nature of services

We generate revenues from our performance marketing service portfolio currently comprised of the ~~Period~~following services:

Criteo Dynamic Retargeting drives post-click sales for our commerce clients by engaging consumers with personalized advertisements offering products or services for which they have already expressed shopping intent.

Criteo Sponsored Products drives post-click sales for our brand clients by pricing and delivering in real time sponsored product advertisements to consumers demonstrating intent, or actively searching for a specific product or product category, on the websites of retailers selling such brand product.

Criteo Customer Acquisition drives post-click sales for our commerce clients by helping them to acquire new prospective customers, using intent information across a large pool of retailers and engaging such prospective customers with personalized advertisements offering products or services that are predicted to be of interest to them.

Criteo Audience Match drives more post-click sales for our commerce clients by accurately targeting and re-engaging their existing customers with personalized advertisements offering new products or services that they have not yet purchased.

Excluding our core product, Criteo Dynamic Retargeting, no other product accounted for more than 10% of total consolidated revenue for the periods presented.

Disaggregation of revenue

The following table presents our revenues disaggregated by geographical area:



	Americas		EMEA		Asia-Pacific		Total
For the three months ended	(in thousands)

June 30, 2017	$	229,392	$	191,682	$	120,948	$	542,022
June 30, 2018	$	212,781	$	201,080	$	123,324	$	537,185



	Americas		EMEA		Asia-Pacific		Total
For the six months ended	(in thousands)

June 30, 2017	$	437,405	$	380,774	$	240,509	$	1,058,688
June 30, 2018	$	425,476	$	423,691	$	252,182	$	1,101,349

Revenue recognition accounting policies

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

All our services consist mainly in serving relevant advertising and banner to clients’ users, using Criteo’s technology, when client’s users are surfing on the web. Our contracts typically include a single promise to stand ready, to display the advertising or banner until a client’s user clicks. This represents a series of distinct repetitive services (units of time) that are substantially the same, with the same pattern of transfer to the client. Accordingly, the promise to stand ready is accounted for as a single performance obligation.

Each performance obligation is satisfied over time as the client continuously receives and consumes the benefits of the services in continue. We generally price our advertising campaigns on a cost per click basis (CPC) model based on the number of clicks generated by users on each advertisement we deliver in our advertising campaigns (variable consideration). Which means that we have a right to invoice our clients when a user clicks on an advertisement displayed by us. Advertising campaigns are billed and paid on a monthly basis. This amount is representative of the value of the service delivered to the client and therefore, applying the right-to-bill practical expedient, we recognize revenue over time based on the users’ clicks.

We act as principal in our arrangements because (i) we control the advertising inventory (spaces on websites) before it is transferred to our clients; (ii) we bear sole responsibility for fulfillment of the advertising promise and inventory risks and (iii) we have full discretion in establishing prices. Therefore, based on these factors, we report revenue earned and the costs incurred related on a gross basis.

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

Note 3. Restructuring

Restructuring of our China Operations

In May 2017, the Company announced it would no longer continue to serve the domestic market in China and would refocus its China operations entirely on the export business. ~~As such,~~For the three months ended June 30, 2017, we ~~have recorded~~recognized $3.3 million in restructuring charges ~~for the nine months ended September 30, 2017,~~ as ~~follows:~~

detailed below:

Nine Months Ended

September 30, 2017

(in thousands)
Severance costs $ 802
Facility Exit Costs 2,265
Other 232
Total restructuring costs $ 3,299



	Three Months and Six Months Ended
	June 30, 2017
	(in thousands)
Severance costs	$802
Facility exit costs	2,265
Other	232
Total restructuring costs	$3,299

For the three months ~~ended September 30, 2017, no additional restructuring costs have been recorded in the period.~~

~~For the nine~~and six months ended ~~September~~June 30, 2017, $2.5 million was included in Other Cost of Revenue, $0.7 million in Sales and Operations expenses, and $0.1 million was included in General and Administrative expenses.

As of December 31, 2017, we had a restructuring liability of $0.4 million included in other current liabilities on the consolidated statement of financial position. No additional expenses were recorded related to this restructuring in the six months ended June 30, 2018 and the remaining $0.4 million was paid during the period resulting in the extinguishment of the restructuring liability as of June 30, 2018.

Discontinuation of Criteo Predictive Search

On October 31, 2017, the Company announced that it had decided to discontinue the Criteo Predictive Search product. $4.1 million was recognized as restructuring charges in 2017. For the three months ended June 30, 2018, we recognized restructuring costs of $0.2 million due to variances in the terms of actual settlement and facility sublease agreements from those used to determine our original estimate.



	Three Months Ended
	June 30, 2018
	(in thousands)
Severance costs	$321
Facility exit costs	(122)
Total restructuring costs / (gain)	$199

For the three months ended June 30, 2018, $0.2 million was included in Sales and Operations expenses.



	Six Months Ended
	June 30, 2018
	(in thousands)
Severance costs	$127
Facility exit costs	297
Other	(477)
Total restructuring costs / (gain)	$(53)

For the six months ended June 30, 2018, we recognized a gain of $0.1 million. This gain

was due to employees being relocated within the company rather than being terminated and a reduction of share based compensation expenses which was partially offset by additional charges for facilities and employee severance agreements.

For the six months ended June 30, 2018, $0.2 million was included in Sales and Operations expenses and $(0.3) million in Research and Development expenses. Other costs relate to a reduction of share based compensation expenses of $(0.5) million due to forfeitures.

The following table summarizes restructuring activities as of ~~September~~June 30, ~~2017~~2018 included in other current liabilities on the balance sheet:

Nine Months Ended
September 30, 2017
(in thousands)
Restructuring liability - January 1, 2017 $ —
Restructuring charges 3,299
Amounts paid $ (1,200 )
Other (231 )
Restructuring liability - September 30, 2017 $ 1,868



	Restructuring Liability
	(in thousands)
Restructuring liability - January 1, 2018	$2,351
Restructuring costs / (gain)	(53)
Amounts paid	(1,808)
Other	472
Restructuring liability - June 30, 2018	$962

~~Repayment of the amount drawn on the Group Revolving Credit Facility agreement~~

As of December 31, 2016, $75.0 million was drawn on the Multicurrency Revolving Facility Agreement relating to the acquisition of HookLogic. This amount was re-paid in full during the second quarter of 2017 resulting in a nil balance as of September 30, 2017.

Note 3.4. Financial Instruments

Credit Risk

The maximum exposure to credit risk at the end of each reported period is represented by the carrying amount of financial assets, and summarized in the following table:


	December 31, 2016		September 30, 2017		December 31, 2017		June 30, 2018
					(in thousands)
Cash and cash equivalents	$	270,317	$	357,983	$	414,111	$	480,285
Trade receivables, net of allowance	397,244		373,922		484,101		372,906
Other taxes	52,942		46,095		58,346		42,076
Other current assets	19,340		26,945		26,327		26,114
Non-current financial assets	17,029		19,350		19,525		20,226
Total	$	756,872	$	824,295	$	1,002,410	$	941,607

As of December 31, ~~2016~~2017 and ~~September~~June 30, ~~2017,~~2018, no customer accounted for 10% or more of trade receivables.

We perform ongoing credit evaluations of our customers and do not require collateral. We maintain an allowance for estimated credit losses. During the ~~twelve-month period~~year ended December 31, ~~2016~~2017 and the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2017,~~2018, our allowance for doubtful accounts increased by ~~$5.4~~$9.2 million and ~~$5.1~~$2.5 million, respectively.

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

Trade Receivables

Credit risk is defined as an unexpected loss in cash and earnings if the client is unable to pay its obligations in due time. We perform internal ongoing credit risk evaluations of our clients. When a possible risk exposure is identified, we require prepayments.

For each period presented, the aging of trade receivables and allowances for potential losses is as follows:



	December 31, 2017									June 30, 2018
	Gross value		%		Allowance			%		Gross value		%		Allowance			%
	(in thousands)				(in thousands)					(in thousands)				(in thousands)

Not yet due	$	304,233	60.3	%	$	(168	)	0.8	%	$	306,148	77.3	%	$	(31	)	0.1	%
0 - 30 days	121,957		24.2	%	—			—	%	10,629		2.7	%	—			—	%
31 - 60 days	29,325		5.8	%	(21		)	0.1	%	18,169		4.6	%	(29		)	0.1	%
61 - 90 days	7,498		1.5	%	(35		)	0.2	%	13,984		3.5	%	(77		)	0.3	%
> 90 days	41,906		8.3	%	(20,594		)	98.9	%	47,356		11.9	%	(23,243		)	99.5	%
Total	$	504,919	100	%	$	(20,818	)	100	%	$	396,286	100	%	$	(23,380	)	100	%

Financial Liabilities



	December 31, 2017		June 30, 2018

	(in thousands)
Trade payables	$	417,032	$	321,295
Other taxes	58,783		46,947
Employee-related payables	66,219		65,832
Other current liabilities	65,677		30,803
Financial liabilities	3,657		2,813
Total	$	611,368	$	467,690

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

Fair Value Measurements

We measure the fair value of our cash equivalents, which include money market funds and interest bearing deposits, as level 1 and level 2 measurements because they are valued using quoted market prices and observable market data, respectively.

Financial assets or liabilities include derivative financial instruments used to manage our exposure to the risk of exchange rate fluctuations. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

~~Trade Receivables~~

~~For each period presented, the aging of trade receivables and allowances for potential losses is as follows:~~

December 31, 2016 September 30, 2017
Gross value % Allowance % Gross value % Allowance %
(in thousands) (in thousands) (in thousands) (in thousands)

Not yet due $ 265,600
65.0 % $ —
— % $ 318,476
81.6 % $ (8 ) — %
0 - 30 days 92,163
22.5 % (49 ) 0.4 % 11,370
2.9 % —
— %
31 - 60 days 19,747
4.8 % (182 ) 1.6 % 20,100
5.1 % (534 ) 3.2 %
61 - 90 days 6,055
1.5 % (191 ) 1.6 % 8,136
2.1 % (100 ) 0.6 %
> 90 days 25,277
6.2 % (11,176 ) 96.4 % 32,560
8.3 % (16,078 ) 96.2 %
Total $ 408,842
100.0 % $ (11,598 ) 100.0 % $ 390,642
100.0 % $ (16,720 ) 100.0 %

~~Financial Liabilities~~

December 31, 2016
Carrying Value Fair value

(in thousands)
Trade payables $ 365,788
$ 365,788
Other taxes 44,831
44,831
Employee-related payables 55,874
55,874
Other current liabilities 30,221
30,221
Financial liabilities 85,580
85,580
Total $ 582,294
$ 582,294

September 30, 2017
Carrying Value
Fair value

(in thousands)
Trade payables $ 350,690
$ 350,690
Other taxes 42,713
42,713
Employee-related payables 59,661
59,661
Other current liabilities 26,802
26,802
Financial liabilities 10,468
10,468
Total $ 490,334
$ 490,334

Derivative Financial Instruments

Derivatives consist of foreign currency forward contracts that we use to hedge intercompany transactions and other monetary assets or liabilities denominated in currencies other than the local currency of a subsidiary. We recognize gains and losses on these contracts in financial income (expense), and their position on the balance sheet is based on their fair value at the end of each respective period. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.


	December 31, 2016
	Carrying Value		Fair value		December 31, 2017		June 30, 2018

	(in thousands)				(in thousands)
Derivative Assets:
Included in other current assets	$	—	$	—	$	5,159	$	877

Derivative Liabilities:
Included in financial liabilities - current portion	$	1,968	$	1,968	$	—	$	—

September 30, 2017
Carrying Value
Fair value

(in thousands)
Derivative Assets:
Included in other current assets $ —
$ —

Derivative Liabilities:
Included in financial liabilities - current portion $ 2,106
$ 2,106

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

Cash and Cash Equivalents

Cash and cash equivalents include investments in money market funds and interest–bearing bank deposits which meet ASC 230—Statement of Cash flows criteria: short-term, highly liquid investments, for which the risks of changes in value are considered to be insignificant. Money market funds are considered level 1 financial instruments as they are valued using quoted market prices. Interest-bearing bank deposits are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.


	December 31, 2016				December 31, 2017		June 30, 2018
	Carrying Value		Fair value
					(in thousands)
	(in thousands)
Cash	$	31,688	$	31,688
Cash and cash equivalents					$	267,236	$	308,070
Money market funds	88,091		88,091		—		—
Interest-bearing bank deposits	150,538		150,538		146,875		172,215
Total cash and cash equivalents	$	270,317	$	270,317	$	414,111	$	480,285

September 30, 2017
Carrying Value
Fair value

(in thousands)
Cash $ 243,895
$ 243,895
Money market funds —
—
Interest-bearing bank deposits 114,088
114,088
Total cash and cash equivalents $ 357,983
$ 357,983
For our cash and cash equivalents, the fair value approximates the carrying amount, given the nature of the cash and cash equivalents and the maturity of the expected cash flows.

Note 4.5. Trade Receivables

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


	December 31, 2016			September 30, 2017
							December 31, 2017			June 30, 2018
	(in thousands)						(in thousands)
Trade accounts receivables	$	408,842		$	390,642		$	504,919		$	396,286
(Less) Allowance for doubtful accounts	(11,598		)	(16,720		)
(Less) allowance for doubtful accounts							(20,818		)	(23,380		)
Net book value at end of period	$	397,244		$	373,922		$	484,101		$	372,906

Changes in allowance for doubtful accounts are summarized below:


	2016			2017			2017			2018

	(in thousands)						(in thousands)
Balance at January 1	$	(6,264	)	$	(11,598	)	$	(11,598	)	$	(20,818	)
Allowance for doubtful accounts	(7,733		)	(7,849		)	(3,686		)	(6,315		)
Reversal of provision	2,760			3,378			2,142			3,303
Currency translation adjustment	(10		)	(651		)	(87		)	450
Balance at September 30	$	(11,247	)	$	(16,720	)
Balance at June 30							$	(13,229	)	$	(23,380	)

The change in allowance for doubtful accounts during the ~~first nine~~six months ~~of 2017~~ended June 30, 2018 related mainly to increased business with categories of clients associated with a higher credit risk.

Note 5.6. Other Current Assets

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


	December 31, 2016		September 30, 2017		December 31, 2017		June 30, 2018

	(in thousands)				(in thousands)
Prepayments to suppliers	$	2,439	$	6,056	$	3,244	$	4,367
Employee-related receivables					—		154
Other debtors	3,263		4,491		5,694		4,151
Prepaid expenses	13,638		16,398		12,230		16,565
Derivative instruments					5,159		877
Gross book value at end of period	19,340		26,945		26,327		26,114
(Less) Allowance for doubtful accounts					$	—	$	—
Net book value at end of period	$	19,340	$	26,945	$	26,327	$	26,114

Prepaid expenses mainly consist of office ~~rentals.~~rental advance payments.

Derivative financial instruments include foreign currency swaps or forward purchases or sales contracts used to manage our exposure to the risk of exchange rate fluctuations. These instruments are considered level 2 financial instruments as they are measured using valuation techniques based on observable market data.

Note 6.7. Intangible assets and Goodwill

~~The~~There have been no significant changes in intangible assets or goodwill since December 31, 2016 mainly relate to purchase accounting adjustments to technology and customer relationships following the finalization of the Monsieur Drive (acquired on May 31, 2016) purchase price allocation as well as the preliminary purchase price allocation for HookLogic (acquired on November 9, 2016) in which technology and customer relationships were identified as intangible assets. A change in this preliminary valuation may also impact the income tax related accounts. The amounts shown below may change in the near term as management continues to assess the fair value of acquired assets and liabilities within the twelve-month purchase price allocation period.

December 31, 2016 September 30, 2017

Useful Lives
(Years)

Amounts recognized as of Acquisition Date
(in millions)

Useful Lives
(Years)

Amounts recognized as of Acquisition Date
(in millions)
Technology 3-5 years $ 34.1
3-5 years $ 30.3
Customer relationships 5-9 years 65.5
5-9 years 84.5
Total identifiable intangible assets acquired $ 99.6
$ 114.8

2017. In addition, no triggering events have occurred ~~during the period which~~that would indicate impairment in the balance of either intangible ~~assets.~~assets or goodwill.

The estimated amortization expense related to intangible assets for the next five years and thereafter is as follows:


	Software		Technology and customer relationships		Total		Software		Technology and customer relationships		Total
From October 1 to December 31, 2017	$	1,883	$	3,961	$	5,844
2018	6,546		15,678		22,224
							(in thousands)
From July 1 to December 31, 2018							$	5,964	$	7,561	$	13,525
2019	3,960		13,972		17,932		4,864		13,035		17,899
2020	1,577		8,628		10,205		3,368		8,700		12,068
2021	430		8,628		9,058		1,253		8,700		9,953
2022							166		8,700		8,866
Thereafter	715		33,736		34,451		—		24,720		24,720
Total	$	15,111	$	84,603	$	99,714	$	15,615	$	71,416	$	87,031

~~Note 7. Goodwill~~

Goodwill
(in thousands)
Balance at January 1, 2017 $ 209,418
Additions to goodwill 23,738
Currency translation adjustment 3,207
Balance at September 30, 2017 $ 236,363

Changes in goodwill since December 31, 2016 relate to purchase accounting adjustments to intangible assets regarding HookLogic, further to the preliminary purchase price allocation as well as the finalization of the Monsieur Drive purchase price allocation (note 6).

~~In addition, no triggering events have occurred during the period which would indicate impairment in the balance of goodwill.~~

Note 8. Other Current Liabilities

Other current liabilities are presented in the following table:


	December 31, 2016		September 30, 2017		December 31, 2017		June 30, 2018

	(in thousands)				(in thousands)
Clients' prepayments	$	9,176	$	17,407	$	33,495	$	22,268
Accounts payable relating to capital expenditures	15,484		7,198		30,736		6,738
Other creditors	2,440		1,749		740		1,490
Deferred revenue	3,121		448		706		307
Total	$	30,221	$	26,802	$	65,677	$	30,803

The changes in "Client's prepayments" mainly related to the customers' cash advances for the Criteo Sponsored Products travel business disposed in Q1 2018. The changes in "accounts payable relating to capital expenditures" relate to significant data centers equipment and leasehold improvements acquisitions in 2017 paid during the six-month period ended June 30, 2018.

Note 9. Financial Liabilities

The changes in current and non-current financial liabilities during the period ended ~~September 30, 2017~~March 31, 2018 are illustrated in the following schedules:


	As of January 1, 2017		New borrowings		Repayments			Change in scope		Other ⁽¹⁾			Currency translation adjustment		As of September 30, 2017		As of January 1, 2018		New borrowings		Repayments			Change in scope		Other ⁽¹⁾			Currency translation adjustment			As of June 30, 2018

	(in thousands)																(in thousands)
Borrowings	$	5,524	$	3,867	$	(84,086	)	$	—	$	79,880		$	310	$	5,495	$	982	$	—	$	(473	)	$	—	$	363		$	(23	)	$	849
Other financial liabilities	477		3		(241		)	—		69			34		342		517		—		(307		)	—		—			(4		)	206
Derivative instruments	1,968		—		—			—		(92		)	230		2,106		—		—		—			—		—			—			—
Current portion	7,969		3,870		(84,327		)	—		79,857			574		7,943		1,499		—		(780		)	—		363			(27		)	1,055
Borrowings	77,397		—		—			—		(79,880		)	4,482		1,999		1,798		—		—			—		(363		)	(37		)	1,398
Other financial liabilities	214		360		—			—		(69		)	21		526		360		—		—			—		—			—			360
Non current portion	77,611		360		—			—		(79,949		)	4,503		2,525		2,158		—		—			—		(363		)	(37		)	1,758
Borrowings	82,921		3,867		(84,086		)	—		—			4,792		7,494		2,780		—		(473		)	—		—			(60		)	2,247
Other financial liabilities	691		363		(241		)	—		—			55		868		877		—		(307		)	—		—			(4		)	566
Derivative instruments	1,968		—		—			—		(92		)	230		2,106		—		—		—			—		—			—			—
Total	$	85,580	$	4,230	$	(84,327	)	$	—	$	(92	)	$	5,077	$	10,468	$	3,657	$	—	$	(780	)	$	—	$	—		$	(64	)	$	2,813

⁽¹⁾Includes reclassification from non-current to current portion based on maturity of the financial liabilities.

Borrowings are financial liabilities at amortized cost and are measured using level 2 fair value measurements.

We are party to several loan agreements and revolving credit facilities, or RCF, with third-party financial institutions. ~~The only~~There have been no significant changes from what was disclosed in Note 1413 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 are the amendment to the revolving credit facility entered into in September 2015, which, among other things, increased the facility amount from €250.0 million to €350.0 million and the amendment of the HSBC Chinese RCF which increased the facility amount from RMB 40.0 million to RMB 50.0 million.2017.

Note 10. Share-Based Compensation

The board of directors has been authorized by the general meeting of the shareholders to grant employee warrants (Bons de Souscription de Parts de Créateur d’Entreprise or "BSPCEs"), share options (Options de Souscription d'Actions or "OSAs"), restricted share units ("RSUs") and non-employee warrants (Bons de Souscription d'Actions or "BSAs").

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, there were ~~three~~four grants of RSUs and ~~one grant~~two grants of OSAs under the Employee Share Option Plan ~~9 and one grant of BSAs under the Plan F,~~10 as defined in Note 1918 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

On March 1, ~~2017, 231,460~~2018, 122,448 RSUs were granted to Criteo employees subject to continued ~~employment and 10,825 BSAs~~employment.

On March 16, 2018, 1,295,513 RSUs were granted to ~~a board member~~Criteo employees subject to continued ~~engagement on the board of directors.~~employment.

On March 16, 2018, 794,733 OSAs were granted to senior management subject to continued employment.

On April ~~27, 2017, 139,386~~25, 2018, 101,377 RSUs were granted to Criteo employees subject to continued employment.

On June ~~27, 2017, 135,500~~26, 2018 142,390 RSUs were granted to Criteo employees and 152,833 OSAs were granted to senior management subject to ~~achievement of internal performance objectives and~~ continued employment. Based on the assumptions known as of June 30, 2016, we determined share-based compensation expense by applying the probability of performance objectives completion. In addition, on June 27, 2017, 896,586 RSUs and 355,010 OSAs were granted to Criteo employees subject to continued employment.

On June 28, 2016, the general meeting of the shareholders authorized the board of directors (i) to grant up to 4,600,000 OSAs and/or RSUs, each representing the right to receive one ordinary share and (ii) to grant up to 120,000 BSAs, each representing the right to receive one ordinary share (any BSAs granted will also be deducted from the 4,600,000 limit), such authorizations collectively referred to as "Plan 10". On July 27, 2017, the board of directors granted 227,680 RSUs to Criteo employees subject to continued employment and 9,790 BSAs to board members subject to continued engagement on the board of directors under the Plan 10.

There have been no changes in the vesting and method of valuation of the BSPCEs, OSAs, RSUs, or BSAs from what was disclosed in Note 1918 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, filed with the SEC on March 1, ~~2017.~~2018, except for one grant of OSAs to a member of senior management which will vest as follows:

up to a half of OSAs at the expiration of a two (2) year period from the date hereof,

as from the expiration of the initial aforementioned two (2) year period, in increments of 1/16th at the end of each elapsed quarter (i.e., per successive three-month periods), for 2 years from that date.

Change in Number of BSPCE/OSA/RSU/BSA


	OSA/BSPCE		RSU		BSA		Total		OSA/BSPCE		RSU		BSA		Total
Balance at January 1, 2017	4,960,092		3,243,279		188,125		8,391,496
Balance at January 1, 2018									3,192,708		4,212,508		186,276		7,591,492
Granted	355,010		1,630,612		20,615		2,006,237		947,566		1,661,728		—		2,609,294
Exercised	(1,515,081	)	—		(57,889	)	(1,572,970	)
Exercised (OSA/BSPCE/BSA)									(96,739	)	—		—		(96,739	)
Vested (RSU)									—		(679,159	)	—		(679,159	)
Forfeited	(288,854	)	(347,411	)	—		(636,265	)	(548,792	)	(395,587	)	(3,040	)	(947,419	)
Expired	—		—		—		—		—		—		—		—
Balance at September 30, 2017	3,511,167		4,526,480		150,851		8,188,498
Balance at June 30, 2018									3,494,743		4,799,490		183,236		8,477,469

Breakdown of the Closing Balance

OSA/BSPCE
RSU
BSA
Number outstanding 3,511,167
4,526,480
150,851
Weighted-average exercise price € 27.66
NA
€ 25.87
Number vested 2,111,897
NA
75,247
Weighted-average exercise price € 22.06
NA
€ 14.04
Weighted-average remaining contractual life of options outstanding, in years 7.13
NA
7.26



	OSA/BSPCE		RSU	BSA
Number outstanding	3,494,743		4,799,490	183,236
Weighted-average exercise price	€	27.20	NA	€	23.93
Number vested	2,156,137		—	88,833
Weighted-average exercise price	€	24.79	NA	€	16.70
Weighted-average remaining contractual life of options outstanding, in years	7.11		NA	7.10

Reconciliation with the Unaudited Consolidated Statements of Income

Three Months Ended
September 30, 2016 September 30, 2017

(in thousands)
R&D
S&O
G&A
Total
R&D
S&O
G&A
Total
RSUs $ (3,295 ) $ (4,154 ) $ (2,471 ) $ (9,920 ) $ (5,929 ) $ (9,896 ) $ (3,956 ) $ (19,781 )
Share options / BSPCE (986 ) (720 ) (1,505 ) (3,211 ) (432 ) (1 ) (1,169 ) (1,602 )
Total share-based compensation (4,281 ) (4,874 ) (3,976 ) (13,131 ) (6,361 ) (9,897 ) (5,125 ) (21,383 )
BSAs —
—
(834 ) (834 ) —
—
(645 ) (645 )
Total equity awards compensation expense $ (4,281 ) $ (4,874 ) $ (4,810 ) $ (13,965 ) $ (6,361 ) $ (9,897 )
$ (5,770 ) $ (22,028 )


	Nine Months Ended																								Three Months Ended
	September 30, 2016												September 30, 2017												June 30, 2017												June 30, 2018

	(in thousands)																								(in thousands)
	R&D			S&O			G&A			Total			R&D			S&O			G&A			Total			R&D			S&O			G&A			Total			R&D			S&O			G&A			Total
RSUs	$	(6,010	)	$	(7,638	)	$	(4,755	)	$	(18,403	)	$	(13,443	)	$	(23,028	)	$	(9,354	)	$	(45,825	)	$	(4,040	)	$	(6,875	)	$	(2,667	)	$	(13,582	)	$	(6,446	)	$	(8,059	)	$	(4,101	)	$	(18,606	)
Share options / BSPCE	(2,852		)	(3,114		)	(4,276		)	(10,242		)	(1,295		)	19			(3,570		)	(4,846		)	(419		)	469			(1,172		)	(1,122		)	(326		)	(602		)	(284		)	(1,212		)
Total share-based compensation	(8,862		)	(10,752		)	(9,031		)	(28,645		)	(14,738		)	(23,009		)	(12,924		)	(50,671		)	(4,459		)	(6,406		)	(3,839		)	(14,704		)	(6,772		)	(8,661		)	(4,385		)	(19,818		)
BSA	—			—			(1,385		)	(1,385		)	—			—			(1,216		)	(1,216		)
BSAs																									—			—			(214		)	(214		)	—			—			(423		)	(423		)
Total equity awards compensation expense	$	(8,862	)	$	(10,752	)	$	(10,416	)	$	(30,030	)	$	(14,738	)	$	(23,009	)	$	(14,140	)	$	(51,887	)	(4,459		)	(6,406		)	(4,053		)	(14,918		)	(6,772		)	(8,661		)	(4,808		)	(20,241		)



	Six Months Ended
	June 30, 2017												June 30, 2018

	(in thousands)
	R&D			S&O			G&A			Total			R&D			S&O			G&A			Total
RSUs	$	(7,512	)	$	(13,135	)	$	(5,395	)	$	(26,042	)	$	(11,063	)	$	(14,930	)	$	(9,249	)	$	(35,242	)
Share options / BSPCE	(863		)	19			(2,401		)	(3,245		)	(391		)	(962		)	(1,619		)	(2,972		)
Total share-based compensation	(8,375		)	(13,116		)	(7,796		)	(29,287		)	(11,454		)	(15,892		)	(10,868		)	(38,214		)
BSAs	—			—			(571		)	(571		)	—			—			(856		)	(856		)
Total equity awards compensation expense	$	(8,375	)	$	(13,116	)	$	(8,367	)	$	(29,858	)	$	(11,454	)	$	(15,892	)	$	(11,724	)	$	(39,070	)

Note 11. Financial ~~Income and Expenses~~income (expense), net

The condensed consolidated statements of income line item “Financial income (expense)”, net” can be broken down as follows:


	Three Months Ended
	September 30, 2016			September 30, 2017			Three Months Ended
	(in thousands)						June 30, 2017			June 30, 2018
							(in thousands)
Financial income from cash equivalents	$	295		$	189		$	202		$	279
Interest and fees	(555		)	(830		)	(656		)	(488		)
Interest on debt	(372		)	(635		)	(650		)	(546		)
Fees	(183		)	(195		)	(6		)	58
Foreign exchange gain (loss)	(301		)	(2,227		)	(1,625		)	(777		)
Other financial expense	(9		)	(18		)	(15		)	(20		)
Total financial income (expense)	$	(570	)	$	(2,886	)
Total financial income (expense), net							$	(2,094	)	$	(1,006	)

The ~~$2.9~~$1.0 million financial expense for the three months ended ~~September~~June 30, ~~2017~~2018 was mainly driven by the non-utilization costs and up-front fees amortization incurred as part of our available RCF financing. The intra-group position between Criteo S.A. and its U.S subsidiary in the context of the funding of the HookLogic acquisition is qualified as a net investment in a foreign operation from February 2018 and no longer requires hedging, ~~cost~~resulting in reduced costs compared to the three months ended June 30, 2017.



	Six Months Ended
	June 30, 2017			June 30, 2018
	(in thousands)
Financial income from cash equivalents	$	449		$	504
Interest and fees	(1,412		)	(1,044		)
Interest on debt	(1,218		)	(1,033		)
Fees	(194		)	(11		)
Foreign exchange gain (loss)	(3,433		)	(1,747		)
Other financial expense	(31		)	(44		)
Total financial income (expense), net	$	(4,427	)	$	(2,331	)

The $2.3 million financial expense for the six months ended June 30, 2018 was mainly driven by the non-utilization costs and up-front amortization incurred as part of our available RCF financing and hedging costs related to an intra-group position between Criteo S.A. and its U.S. subsidiary in the context of the funding of the HookLogic ~~acquisition~~acquisition. As of February 2018, this position qualified as a net investment in ~~November 2016~~a foreign operation and no longer requires hedging resulting in reduced costs compared to the ~~non-utilization fees incurred as part of our available RCF financing. The $0.6 million~~ ~~financial expense for the three~~six months ended ~~September~~June 30, 2016 was mainly the result of a limited impact of foreign exchange reevaluations and related hedging together with the recognition of the fees related to the revolving credit facility entered into in September 2015.2017.

Nine Months Ended
September 30,
2016
September 30,
2017
(in thousands)

Financial income from cash equivalents $ 1,165
$ 639
Interest and fees (1,643 ) (2,242 )
Interest on debt (1,155 ) (1,853 )
Fees (488 ) (389 )
Foreign exchange gain (loss) (1,476 ) (5,660 )
Other financial expense (28 ) (50 )
Total financial income (expense) $ (1,982 ) $ (7,313 )

The $7.3 million financial expense for the nine months ended September 30, 2017 was driven by the interest accrued as a result of the $75 million drawn on the revolving credit facility entered into in September 2015 (as amended in March 2017) and the hedging cost related to an intra-group position between Criteo S.A. and its U.S. subsidiary, both in the context of the funding of the HookLogic acquisition in November 2016, as well as the non-utilization fees incurred as part of our available RCF financing. The $2.0 million financial expense for the nine months ended September 30, 2016 was mainly a result of the recognition of negative impact of foreign exchange reevaluations and related hedging recorded during the first quarter, together with the fees related to the revolving credit facility entered into in September 2015.

Note 12. Income Taxes

Breakdown of Income Taxes

Our tax provision for interim periods is determined using an estimate of our annual effective tax rate (“AETR”), adjusted for discrete items arising in that quarter. 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 ~~changes,~~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 and the changes in foreign exchange rates. Our effective tax rate in the future will depend on the portion of our profits earned within and outside of France.

The condensed consolidated statements of income line item “Provision for income taxes” can be broken down as follows:

Nine Months Ended
September 30,
2016
September 30,
2017
(in thousands)
Current income tax $ (27,513 ) $ (36,293 )
France (12,511 ) (14,164 )
International (15,002 ) (22,129 )
Net change in deferred taxes 7,545
20,569
France 7,087
271
International 458
20,298
Provision for income taxes $ (19,968 ) $ (15,724 )



	Six Months Ended
	June 30, 2017			June 30, 2018
	(in thousands)
Current income tax	$	(20,271	)	$	(28,559	)
Net change in deferred taxes	12,405			7,535
Provision for income taxes	$	(7,866	)	$	(21,024	)

For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, we used an annual estimated tax rate of 30% and ~~30%~~37%, respectively, to calculate the provision for income taxes. The increase in the annual estimated tax rate is primarily due to our preliminary estimates of the impact of the U.S. Tax Act. The effective tax rate was ~~30.0%~~26% and ~~26.2%~~37% for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively. The difference between the annual estimated tax rate and the effective tax rate for ~~nine~~six months ended ~~September~~June 30, 2017 iswas due to the tax impact of discrete items such as share-based compensation in the United States. Discrete items were immaterial for the six months ended June 30, 2018 resulting in no difference between the annual estimated tax rate and the effective tax rate.

Our estimated annual effective tax rate includes our preliminary estimates for the impact of the U.S. Tax Cuts and Jobs Act (the "Tax Act") which was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. federal income tax rate from 35% to 21% and creates new taxes on certain related-party payments, referred to as a base erosion anti-avoidance tax, or “BEAT”. The Tax Act also modifies the limitation on the amount of deductible interest expense and the limitation on the deductibility of certain executive compensation. Our estimates are preliminary, and our effective tax rate may be impacted as more information becomes available regarding the tax reform.

Current tax assets and liabilities

The total amount of current tax assets consists mainly of prepayments of income taxes byand credits of Criteo S.A., Criteo Corp., Criteo do Brasil LTDA, and Criteo ~~Brazil.~~B.V.. The current tax liabilities refers mainly to the net corporate tax payables of ~~Criteo Italy,~~ Criteo K.K. and Criteo Deutschland.

Ongoing tax inspection in the United States

On September 27, 2017, we received a draft notice of proposed adjustment "NOPA" from the Internal Revenue Service ("IRS") audit of Criteo Corp. for the year ended December 31, ~~2014. The~~2014, confirmed by the definitive notice dated February 8, 2018. If the IRS prevails in its position, it could result in an additional federal tax liability of an estimated maximum aggregate amount of adjustments that may be asserted by the IRS in the final notice of proposed adjustment cannot be quantified at this time; however, based on the draft notice received, the amount to be assessed may be material.approximately $15.0 million, excluding related fees, interest and penalties. We strongly disagree with the IRS's position as asserted in the ~~draft~~ notice of proposed adjustment and intend to contest it.

Note 13. Earnings Per Share

Basic Earnings Per Share

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


	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		Three Months Ended				Six Months Ended
	(in thousands, except share and per share data)								June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
									(in thousands, except share amount and per data)
Net income attributable to shareholders of Criteo S.A.	$	13,539	$	19,774	$	42,869	$	38,185	$	5,970	$	13,726	$	18,411	$	33,535
Weighted average number of shares outstanding	63,628,351		65,412,326		63,163,922		64,881,751		65,027,985		66,347,599		64,611,237		66,254,476
Basic earnings per share	$	0.21	$	0.30	$	0.68	$	0.59	$	0.09	$	0.21	$	0.28	$	0.51

Diluted Earnings Per Share

We calculate diluted earnings per share by dividing the net income 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 (see Note 10). There were no other potentially dilutive instruments outstanding as of ~~September~~June 30, ~~2016~~2017 and ~~2017.~~2018. 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, non-employee warrant ("BSA"), restricted share unit ("RSU") or ~~non-employee~~employee warrant ("BSPCE") is assessed as potentially dilutive if it is “in the money” (i.e., the exercise or settlement price is lower than the average market price).


	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		Three Months Ended				Six Months Ended
	(in thousands, except share and per share data)								June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
									(in thousands, except share amount and per data)
Net income attributable to shareholders of Criteo S.A.	$	13,539	$	19,774	$	42,869	$	38,185	$	5,970	$	13,726	$	18,411	$	33,535
Weighted average number of shares outstanding of Criteo S.A.	63,628,351		65,412,326		63,163,922		64,881,751		65,027,985		66,347,599		64,611,237		66,254,476
Dilutive effect of :
Restricted share awards ("RSUs")	266,970		1,615,344		152,317		1,497,121		1,598,093		721,154		1,438,010		793,096
Share options and BSPCE	1,841,080		1,116,117		2,030,088		1,421,857		1,427,448		382,066		1,574,728		394,936
Share warrants	80,021		56,556		83,430		76,062		77,748		37,492		85,814		37,005
Weighted average number of shares outstanding used to determine diluted earnings per share	65,816,422		68,200,343		65,429,757		67,876,791		68,131,274		67,488,311		67,709,789		67,479,513
Diluted earnings per share	$	0.21	$	0.29	$	0.66	$	0.56	$	0.09	$	0.20	$	0.27	$	0.50

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:


	Three Months Ended		Nine Months Ended		Three Months Ended		Six Months Ended
	September 30, 2016	September 30, 2017	September 30, 2016	September 30, 2017	June 30, 2017	June 30, 2018	June 30, 2017	June 30, 2018

Restricted share awards	32,176	1,168,812	345,732	470,125	11,834	2,651,262	120,782	2,276,195
Share options and BSPCE	455,474	516,668	426,777	362,861	129,005	—	285,958	—
Share warrants	—	—	—	—
Weighted average number of anti-dilutive securities excluded from diluted earnings per share	487,650	1,685,480	772,509	832,986	140,839	2,651,262	406,740	2,276,195

Note 14. Commitments and contingencies

Commitments

Leases

We are party to various contractual commitments mainly related to our offices as well as hosting services. There have been no significant changes in future payment obligations for these contractual commitments from what was disclosed in Note 2322 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.

Rent expenses relating to our offices totaled ~~$8.3~~$8.6 million and ~~$8.9~~$9.5 million for the three-month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively and ~~$23.3~~$17.4 million and ~~$26.3~~$19.2 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

Hosting costs totaled ~~$10.6~~$17.1 million and ~~$13.1~~$12.4 million for the three-month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively and ~~$30.4~~$31.0 million and ~~$44.2~~$24.7 million for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

Revolving Credit Facilities, Credit Line Facilities and Bank Overdrafts

As mentioned in Note 9, we are party to ~~two RCFs including~~ one ~~with HSBC for which we can draw up to RMB 50.0 million ($7.5 million) and one~~RCF with a syndicate of banks which allow us to draw up to €350.0 million ($~~413.2~~408.0 million)~~, further to the amendment signed in March 2017 increasing the facility amount from €250.0 million to €350.0 million and extending the term of the contract from 2020 to 2022.~~. As of ~~September~~June 30, ~~2017, RMB 30.0 million ($4.5 million), and €0.0 million ($0.0 million), respectively, were~~2018, there was no amount drawn on the ~~RCFs.~~RCF.

~~Both of these~~This credit ~~facilities are~~facility is unsecured and ~~contain~~contains customary events of default ~~but do not contain any affirmative, financial or negative covenants, with the exception of the €350.0 million ($413.2 million) RCF which~~and contains covenants, including compliance with a total net debt to adjusted EBITDA ratio and restrictions on incurring additional indebtedness. As of ~~September~~June 30, ~~2017,~~2018, we were in compliance with the required leverage ratio.

Contingencies

Changes in provisions during the presented periods are summarized below:


	Provision for employee-related litigation			Other provisions			Total			Provision for employee-related litigation			Other provisions			Total
	(in thousands)									(in thousands)
Balance at January 1, 2017	$	485		$	169		$	654
Balance at January 1, 2018										$	545		$	1,253		$	1,798
Increase	275			964			1,239			149			960			1,109
Provision used	(250		)	—			(250		)	(352		)	(221		)	(573		)
Provision released not used	(100		)	(58		)	(158		)	—			(456		)	(456		)
Currency translation adjustments	36			32			68			(21		)	(46		)	(67		)
Balance at September 30, 2017	$	446		$	1,107		$	1,553
Balance at June 30, 2018										$	321		$	1,490		$	1,811
- of which current	446			1,107			1,553			321			1,490			1,811

The amount of the provisions represent management’s best estimate of the future outflow. As of ~~September~~June 30, ~~2017,~~2018, provisions are mainly in relation to employee-related litigations and ~~business and~~other operating ~~risks.~~provisions.

Note 15. Breakdown of Revenue and Non-Current Assets by Geographical Areas

The Company operates in the following three geographical markets:

Americas (North and South America);

EMEA (Europe, Middle-East and Africa); and

Asia-Pacific.

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

Americas
EMEA
Asia-Pacific
Total
For the three months ended: (in thousands)

September 30, 2016 $ 160,739
$ 157,921
$ 105,207
$ 423,867
September 30, 2017 $ 228,326
$ 207,168
$ 128,479
$ 563,973



	Americas		EMEA		Asia-Pacific		Total
For the three months ended:	(in thousands)

June 30, 2017	$	229,392	$	191,682	$	120,948	$	542,022
June 30, 2018	$	212,781	$	201,080	$	123,324	$	537,185

Revenue generated in France, the country of incorporation of the Parent company, amounted to ~~$31.8~~$36.1 million and ~~$38.2~~$37.0 million for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

Americas
EMEA
Asia-Pacific
Total
For the nine months ended: (in thousands)

September 30, 2016 $ 464,435
$ 471,226
$ 296,660
$ 1,232,321
September 30, 2017 $ 665,731
$ 587,942
$ 368,988
$ 1,622,661



	Americas		EMEA		Asia-Pacific		Total
For the six months ended:	(in thousands)

June 30, 2017	$	437,405	$	380,774	$	240,509	$	1,058,688
June 30, 2018	$	425,476	$	423,691	$	252,182	$	1,101,349

Revenue generated in France ~~the country of incorporation of the Parent,~~ amounted to ~~$95.2~~$73.6 million and ~~$111.8~~$78.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

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


	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		Three Months Ended				Six Months Ended
	(in thousands)								June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
									(in thousands)
Americas
United States	$	134,504	$	198,342	$	395,769	$	578,806	$	200,801	$	187,368	$	380,464	$	373,420
EMEA
Germany	$	33,692	$	48,318	$	98,278	$	132,814	$	41,882	$	48,632	$	84,496	$	103,147
United Kingdom	$	24,285	$	28,352	$	80,024	$	82,971	$	26,422	$	22,544	$	54,619	$	48,778
Asia-Pacific
Japan	$	76,841	$	94,103	$	209,404	$	266,813	$	87,400	$	84,060	$	172,710	$	176,324

As of ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, our largest client represented ~~2.5%~~2.1% and ~~2.1%~~2.4%, respectively, of our consolidated revenue.

Other Information

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 results from the locations of legal entities.

Of which
Of which
Of which

Holding
Americas
United States
EMEA
Asia-Pacific
Singapore
Japan
Total
(in thousands)

December 31, 2016 $ 55,052
$ 123,308
$ 122,474
$ 7,132
$ 26,033
$ 11,574
$ 8,965
$ 211,525
September 30, 2017 $ 68,176
$ 131,611
$ 131,197
$ 8,319
$ 26,493
$ 11,388
$ 10,499
$ 234,599



					Of which						Of which		Of which
	Holding		Americas		United States		EMEA		Asia-Pacific		Japan		Singapore		Total
(in thousands)

December 31, 2017	$	100,819	$	113,272	$	112,685	$	18,850	$	25,020	$	10,141	$	10,085	$	257,961
June 30, 2018	$	92,926	$	105,119	$	104,736	$	16,785	$	19,105	$	7,900	$	6,680	$	233,935

Note 16. Related Parties

There were no significant related-party transactions during the period nor any change in the nature of the transactions as described in Note 2423 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2017 except as follows:

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

On June 19, 2018 Criteo S.A. entered into a transition and separation agreement with Mr. Eric Eichmann, the Company's former Chief Executive Officer, pursuant to which Mr. Eichmann's Management Agreement with the Company has been terminated, effective as of April 25, 2018 and Mr. Eichmann will continue employment with the Company in a non-executive capacity as advisor to the Chief Executive Officer to assist with transition duties from April 25, 2018 to August 31, 2018.

Note 17. Subsequent Events

~~On October 31, 2017, we announced~~Criteo has entered into a definitive agreement to acquire Storetail, a pioneering retail media technology platform that ~~we decided~~enables retailers to ~~discontinue~~monetize native placements on their ecommerce sites on a CPM basis. Criteo expects the ~~product Criteo Predictive Search. We expect that this will result~~deal to close in ~~approximately $4.5 million in total restructuring costs, of which $2.0 million relates to~~ the ~~write-off of acquisition related intangible assets, across the fourth~~third quarter of ~~2017 and the first quarter of 2018.~~this year, subject to certain conditions precedent.

The Company evaluated all other subsequent events that occurred after ~~September~~June 30, ~~2017~~2018 through the date of issuance of the unaudited condensed consolidated financial statements and determined there are no other significant events that require adjustments or disclosure.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form ~~10-Q/A~~10-Q and the audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, filed with the Securities and Exchange Commission, or "SEC", on March 1, ~~2017.~~2018.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Annual Report filed on Form 10-K for the year ended December 31, ~~2016.~~2017, except for the adoption of ASC 606 as of January 1, 2018. Please refer to Note 1,"Summary of Significant Accounting Policies," of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of the changes in accounting policies due to the adoption of this standard.

Recently Issued Pronouncements

See "Recently Issued Accounting Standards" under Note 1, "Summary of Significant Accounting Policies," of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of certain accounting standards that have been issued during ~~2017.~~2018.

Use of Non-GAAP Financial Measures

This Form 10-Q includes the following financial measures defined as non-GAAP financial measures by the SEC: Revenue ex-TAC, Adjusted EBITDA and Adjusted Net Income. These measures are not calculated in accordance with U.S. GAAP.

Revenue ex-TAC is our revenue excluding Traffic Acquisition Costs ("TAC") generated over the applicable measurement period and Revenue ex-TAC by Region reflects our Revenue ex-TAC by our core geographies. Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our core business and across our core geographies. Accordingly we believe that Revenue ex-TAC, Revenue ex-TAC by Region and Revenue ex-TAC margin provide useful information to investors and the market generally in understanding and evaluating our operating results in the same manner as our management and board of directors.

Adjusted EBITDA is 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, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA 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‑ and long-term operational plans. In particular, we believe that by eliminating equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration, Adjusted EBITDA can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Adjusted Net Income is our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration, and the tax impact of these adjustments. Adjusted Net Income and Adjusted Net Income per diluted share are key measures used by our management and board of directors to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that by eliminating equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration and the tax impact of these adjustments, Adjusted Net Income and Adjusted Net Income per diluted share can provide useful measures for period-to-period comparisons of our business. Accordingly, we believe that Adjusted Net Income and Adjusted Net Income per diluted share provide useful information to investors and the market generally in understanding and evaluating our results of operations in the same manner as our management and board of directors.

Please refer to the supplemental financial tables provided for a reconciliation of Revenue ex-TAC to revenue, Adjusted EBITDA to net income, and Adjusted Net Income to net income in each case, the most comparable U.S. GAAP measurement. Our use of non-GAAP financial measures 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. GAAP. Some of these limitations are: (1) other companies, including companies in our industry which have similar business arrangements, may address the impact of TAC differently; and (2) other companies may report Revenue ex-TAC, Adjusted EBITDA, Adjusted Net Income, or similarly titled measures but calculate them differently or over different regions, which reduces their usefulness as comparative measures. Because of these and other limitations, you should consider these measures alongside our U.S. GAAP financial results, including revenue and net income.

Condensed Consolidated Statements of Income Data (Unaudited):


	Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2017				June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018
	(in thousands, except share and per share data)												(in thousands, except share and per share data)

Revenue	$	423,867		$	563,973		$	1,232,321		$	1,622,661			$	542,022		$	537,185		$	1,058,688		$	1,101,349

Cost of revenue ⁽²⁾:
Traffic acquisition costs	(247,310		)	(329,576		)	(727,034		)	(958,469		)		(322,200		)	(306,963		)	(628,893		)	(630,709		)
Other cost of revenue	(22,332		)	(29,951		)	(60,950		)	(89,914		)		(32,808		)	(29,957		)	(59,963		)	(60,016		)
Gross profit	154,225			204,446			444,337			574,278				187,014			200,265			369,832			410,624

Operating expenses
Research and development expenses ⁽²⁾	(30,701		)	(43,860		)	(88,097		)	(126,992		)		(43,611		)	(47,544		)	(83,132		)	(92,862		)
Sales and operations expenses ⁽²⁾	(68,164		)	(95,184		)	(201,862		)	(283,815		)		(97,900		)	(92,726		)	(188,631		)	(188,375		)
General and administrative expenses ⁽²⁾	(32,492		)	(32,389		)	(85,839		)	(96,143		)		(32,239		)	(35,644		)	(63,754		)	(70,235		)
Total operating expenses	(131,357		)	(171,433		)	(375,798		)	(506,950		)		(173,750		)	(175,914		)	(335,517		)	(351,472		)
Income from operations	22,868			33,013			68,539			67,328				13,264			24,351			34,315			59,152
Financial income (expense)	(570		)	(2,886		)	(1,982		)	(7,313		)
Financial income (expense), net														(2,094		)	(1,006		)	(4,427		)	(2,331		)
Income before taxes	22,298			30,127			66,557			60,015				11,170			23,345			29,888			56,821
Provision for income taxes	(7,574		)	(7,858		)	(19,968		)	(15,724		)		(3,665		)	(8,638		)	(7,866		)	(21,024		)
Net income	$	14,724		$	22,269		$	46,589		$	44,291			$	7,505		$	14,707		$	22,022		$	35,797
Net income available to shareholders of Criteo S.A. ⁽¹⁾	$	13,539		$	19,774		$	42,869		$	38,185			$	5,970		$	13,726		$	18,411		$	33,535
Net income available to shareholders of Criteo S.A. per share:
Basic	$	0.21		$	0.30		$	0.68		$	0.59			$	0.09		$	0.21		$	0.28		$	0.51
Diluted	$	0.21		$	0.29		$	0.66		$	0.56			$	0.09		$	0.20		$	0.27		$	0.50

Weighted average shares outstanding used in computing per share amounts:
Basic	63,628,351			65,412,326			63,163,922			64,881,751				65,027,985			66,347,599			64,611,237			66,254,476
Diluted	65,816,422			68,200,343			65,429,757			67,876,791				68,131,274			67,488,311			67,709,789			67,479,513

⁽¹⁾For the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, this excludes ~~$1.2~~$1.5 million and ~~$2.5~~$1.0 million, respectively, ~~and for~~of net income attributable to non-controlling interests held by Yahoo! Japan in our Japanese subsidiary Criteo KK. For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, this excludes ~~$3.7~~$3.6 million and ~~$6.1~~$2.3 million, respectively, of net income attributable to non-controlling interests held by Yahoo! Japan in our Japanese subsidiary Criteo KK.

⁽²⁾ Cost of revenue and operating expenses include equity awards compensation expense, pension service costs, depreciation and amortization expense, restructuring costs, acquisition-related costs and deferred price consideration as follows:

Detailed Information on Selected ~~Items:~~Items (unaudited):


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017			June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
	(in thousands)									(in thousands)
Equity awards compensation expense
Research and development expenses		$	4,667	$	6,361	$	9,248	$	14,738		$	4,461	$	6,771	$	8,377	$	11,326
Sales and operations expenses		5,143		9,897		11,021		23,009			6,401		8,668		13,111		16,499
General and administrative expenses		4,155		5,770		9,761		14,140			4,056		4,806		8,370		11,723
Total equity awards compensation expense		$	13,965	$	22,028	$	30,030	$	51,887		$	14,918	$	20,245	$	29,858	$	39,548

Pension service costs
Research and development expenses		55		161		160		459			151		212		297		432
Sales and operations expenses		38		65		107		184			60		75		119		154
General and administrative expenses		39		94		125		267			88		132		173		267
Total pension service costs ^(a)		$	132	$	320	$	392	$	910		$	299	$	419	$	589	$	853

Depreciation and amortization expense
Cost of revenue		10,406		14,320		27,846		38,419			13,003		15,050		24,094		30,299
Research and development expenses ^(b)		1,640		2,822		5,105		8,857			3,092		2,245		6,036		4,466
Sales and operations expenses ^(c)		1,813		5,102		5,604		14,988			4,925		4,518		9,886		8,972
General and administrative expenses		912		1,511		2,033		3,968			1,286		1,747		2,457		3,469
Total depreciation and amortization expense		$	14,771	$	23,755	$	40,588	$	66,232		$	22,306	$	23,560	$	42,473	$	47,206

Acquisition-related costs
General and administrative expenses		1,793		—		1,941		—			—		—		6		—
Total acquisition-related costs		$	1,793	$	—	$	1,941	$	—		$	—	$	—	$	6	$	—

Acquisition-related deferred price consideration
Research and development expenses		3		—		88		—
Total acquisition-related deferred price consideration		$	3	$	—	$	88	$	—

Restructuring
Cost of revenue		—		—		—		2,497			2,497		—		2,497		—
Research and development expenses											—		16		—		(332		)
Sales and operations expenses		—		—		—		690			690		183		690		290
General and administrative expenses		—		—		—		112			112		—		112		(11		)
Total Restructuring		$	—	$	—	$	—	$	3,299		$	3,299	$	199	$	3,299	$	(53	)

(a) Effective January 1, 2012, actuarial gains and losses are recognized in other comprehensive income.

(b) Includes acquisition-related amortization of intangible assets of ~~$1.0~~$2.3 million and ~~$1.9~~$1.3 million for the three months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively, and ~~$3.5~~$4.5 million and ~~$6.4~~$2.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively.

(c) Includes acquisition-related amortization of intangible assets of $2.5 million and $2.2 million for the three months ended ~~September~~June 30, 2017 and ~~$7.4~~2018, respectively, and $5.0 million and $4.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2017 and 2018, respectively. .

Consolidated Statements of Financial Position Data (Unaudited):


	December 31, 2016		September 30, 2017		December 31, 2017		June 30, 2018

	(in thousands)				(in thousands)
Cash and cash equivalents	$	270,317	$	357,983	$	414,111	$	480,285
Total assets	1,211,186		1,358,194		1,531,300		1,456,542
Trade receivables, net of allowances for doubtful accounts	397,244		373,922
Trade receivables, net of allowance for doubtful accounts					484,101		372,906
Total financial liabilities	85,580		10,468		3,657		2,813
Total liabilities	601,309		544,927		633,602		491,674
Total equity	$	609,877	$	813,267	$	897,698	$	964,868

Other Financial and Operating Data (Unaudited):


	Three Months Ended				Nine Months Ended
	September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		Three Months Ended				Six Months Ended
									June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
	(in thousands)								(in thousands, except client data)
Number of clients	12,882		17,299		12,882		17,299		16,370		18,936		16,370		18,936
Revenue ex-TAC ⁽³⁾	$	176,557	$	234,397	$	505,287	$	664,192	$	219,822	$	230,222	$	429,795	$	470,640
Adjusted Net Income ⁽⁴⁾	$	31,299	$	44,416	$	81,277	$	101,476	$	26,244	$	35,482	$	57,065	$	76,001
Adjusted EBITDA⁽⁵⁾	$	53,532	$	79,116	$	141,578	$	189,656	$	54,086	$	68,774	$	110,540	$	146,706

⁽³⁾We define Revenue ex-TAC (Traffic Acquisition Costs) as our revenue excluding traffic acquisition costs, or TAC, generated over the applicable measurement period. Revenue ex-TAC is not a measure calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC in this Form 10-Q 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 regarding the allocation of capital. In particular, we believe that the elimination of TAC from revenue can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Revenue 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 Revenue ex-TAC 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. GAAP. 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 Revenue 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 Revenue ex-TAC alongside our other U.S. GAAP financial results, including revenue. The following table presents a reconciliation of Revenue ex-TAC to revenue, the most directly comparable U.S. GAAP measure, for each of the periods indicated:


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2017			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018

	(in thousands)												(in thousands)
Revenue	$	423,867		$	563,973		$	1,232,321		$	1,622,661		$	542,022		$	537,185		$	1,058,688		$	1,101,349
Adjustment:
Traffic acquisition costs	(247,310		)	(329,576		)	(727,034		)	(958,469		)	(322,200		)	(306,963		)	(628,893		)	(630,709		)
Revenue ex-TAC	$	176,557		$	234,397		$	505,287		$	664,192		$	219,822		$	230,222		$	429,795		$	470,640

⁽⁴⁾We define Adjusted Net Income as our net income adjusted to eliminate the impact of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration, and the tax impact of the foregoing adjustments. Adjusted Net Income is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted Net Income in this Form 10-Q 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 regarding the allocation of capital. In particular, we believe that the elimination of equity awards compensation expense, amortization of acquisition-related intangible assets, restructuring costs, acquisition-related costs and deferred price consideration, and the tax impact of the foregoing adjustments in calculating Adjusted Net Income can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted Net Income 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 Net Income 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. GAAP. Some of these limitations are: (a) Adjusted Net Income does not reflect the potentially dilutive impact of equity-based compensation or the impact of certain acquisition related costs; and (b) other companies, including companies in our industry, may calculate Adjusted Net Income or similarly titled measures differently, which reduces their usefulness as a comparative measure. Because of these and other limitations, you should consider Adjusted Net Income alongside our other U.S. GAAP financial results, including net income. The following table presents a reconciliation of Adjusted Net Income to net income, the most directly comparable U.S. GAAP measure, for each of the periods indicated:


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017			September 30, 2016			September 30, 2017			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018

	(in thousands)												(in thousands)
Net income	$	14,724		$	22,269		$	46,589		$	44,291		$	7,505		$	14,707		$	22,022		$	35,797
Adjustments:
Equity awards compensation expense	13,965			22,028			30,030			51,887			14,918			20,245			29,858			39,548
Amortization of acquisition-related intangible assets	943			4,428			3,145			13,879			4,777			3,448			9,451			6,905
Acquisition-related costs	1,793			—			1,941			—			—			—			6			—
Acquisition-related deferred price consideration	3			—			88			—
Restructuring	—			—			—			3,299			3,299			199			3,299			(53		)
Tax impact of the above adjustments	(129		)	(4,309		)	(516		)	(11,880		)	(4,255		)	(3,117		)	(7,571		)	(6,196		)
Total net adjustments													18,739			20,775			35,043			40,204
Adjusted Net Income	$	31,299		$	44,416		$	81,277		$	101,476		$	26,244		$	35,482		$	57,065		$	76,001

⁽⁵⁾ 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, restructuring costs, acquisition-related costs and deferred price consideration. Adjusted EBITDA is not a measure calculated in accordance with U.S. GAAP. We have included Adjusted EBITDA in this Form 10-Q 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 and long-term operational plans. In particular, we believe that the elimination of equity awards compensation expense, pension service costs, restructuring costs, acquisition-related costs and deferred price consideration in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core 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. GAAP. 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; (c) Adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; (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 other U.S. GAAP financial results, including net income. The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable U.S. GAAP measure, for each of the periods indicated:


	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30, 2016		September 30, 2017		September 30, 2016		September 30, 2017		June 30, 2017		June 30, 2018		June 30, 2017		June 30, 2018
	(in thousands)								(in thousands)
Net income	$	14,724	$	22,269	$	46,589	$	44,291	$	7,505	$	14,707	$	22,022	$	35,797
Adjustments:
Financial expense (income)	570		2,886		1,982		7,313
Financial expense (income), net									2,094		1,006		4,427		2,331
Provision for income taxes	7,574		7,858		19,968		15,724		3,665		8,638		7,866		21,024
Equity awards compensation expense	13,965		22,028		30,030		51,887		14,918		20,245		29,858		39,548
Pension service costs	132		320		392		910		299		419		589		853
Depreciation and amortization expense	14,771		23,755		40,588		66,232		22,306		23,560		42,473		47,206
Acquisition-related costs	1,793		—		1,941		—		—		—		6		—
Acquisition-related deferred price consideration	3		—		88		—
Restructuring	—		—		—		3,299		3,299		199		3,299		(53		)
Total net adjustments	38,808		56,847		94,989		145,365		46,581		54,067		88,518		110,909
Adjusted EBITDA	$	53,532	$	79,116	$	141,578	$	189,656	$	54,086	$	68,774	$	110,540	$	146,706

Results of Operations for the Periods Ended ~~September 30, 2016 and 2017 (Unaudited)~~

~~The tables as of September~~June 30, 2017 ~~presented below include the contribution of HookLogic Inc. (acquisition of the company completed on November 9, 2016).~~and 2018 (Unaudited)

Revenue

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017


	Three Months Ended							Three Months Ended
	September 30, 2016		September 30, 2017			2017 vs 2016		June 30, 2017		June 30, 2018			2017 vs 2018

	(in thousands)							(in thousands)
Revenue as reported	$	423,867	$	563,973		33.1	%	$	542,022	$	537,185		(1	)%
Conversion impact U.S dollar/other currencies			(2,509		)					(11,393		)
Revenue at constant currency ⁽¹⁾	423,867		561,464			32.5	%	542,022		525,792			(3	)%
Americas
Revenue as reported	160,739		228,326			42.0	%	229,392		212,781			(7	)%
Conversion impact U.S dollar/other currencies			(1,021		)					1,416
Revenue at constant currency ⁽¹⁾	160,739		227,305			41.4	%	229,392		214,197			(7	)%
EMEA
Revenue as reported	157,921		207,168			31.2	%	191,682		201,080			5	%
Conversion impact U.S dollar/other currencies			(8,226		)					(10,702		)
Revenue at constant currency ⁽¹⁾	157,921		198,942			26.0	%	191,682		190,378			(1	)%
Asia-Pacific
Revenue as reported	105,207		128,479			22.1	%	120,948		123,324			2	%
Conversion impact U.S dollar/other currencies			6,738							(2,107		)
Revenue at constant currency⁽¹⁾	$	105,207	$	135,217		28.5	%	$	120,948	$	121,217		0.2	%

⁽¹⁾Growth at constant currency excludes the impact of foreign currency fluctuations and is computed by applying the ~~2016~~2017 average exchange rates for the relevant period to ~~2017~~2018 figures. We have included revenue at constant currency in this Form 10-Q 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.

Revenue for the three months ended ~~September~~June 30, ~~2017 increased to $564.0~~2018 were $537.2 million, ~~growing 33.1%~~declining by (1)% (or ~~32.5%~~(3)% on a constant currency basis), compared to the three months ended ~~September~~June 30, ~~2016. Revenue from new clients contributed 67.1% to the~~2017. The year-over-year ~~revenue growth , while revenue from existing clients contributed 32.9% to the year-over-year revenue growth. This increase~~decline in revenue was ~~primarily~~entirely driven by ~~continued innovation across devices,~~ our ~~broader and improved access~~business with existing clients, negatively impacted by significant user coverage limitations, namely Apple’s Intelligent Tracking Prevention (“ITP”) feature, compared to ~~publisher inventory, and~~ the ~~addition~~prior year, while new clients' contribution to revenue growth was not strong enough to offset the negative contribution of ~~over 4,400~~existing clients. Over the period, we added 2,566 net new clients across regions and client sizes, and ~~products. Technology improvements and broader inventory reach helped generate more revenue from~~expanded our business with existing clients ~~at constant currency. Our ability to convert and maintain a large portion of our clients to uncapped budgets was a key driver~~through the increasing adoption of the ~~increase~~Criteo Customer Acquisition and Criteo Audience Match products, a growing presence in ~~revenue per~~mobile applications, and more direct connections with publishers through Criteo Direct Bidder. However, the strong headwind we experienced from user coverage limitations more than offset the various factors driving our business with existing ~~client across large and midmarket~~ clients.

~~The year-over-year increase was the result of our growth across all regions.~~ Revenue in the Americas region ~~increased 42.0%~~decreased (7)% (or ~~41.4%~~(7)% on a constant currency basis) to ~~$228.3~~$212.8 million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016,~~2017, and the region ~~remained~~was the largest contributor to our global ~~growth. Revenue~~revenue. We saw strength with both large and midmarket clients and the continued ramp up of our newest products, in particular in the ~~U.S., our largest~~US. This was partly offset by the negative impact of user coverage limitations across the region, as well as continued difficult market ~~worldwide, increased 47% at constant currency over the period. We continued to add clients~~conditions in ~~both Tier-1 and midmarket and further grew Criteo Sponsored Products with retailers and brands in the U.S. market.~~Latin America. Revenue in EMEA increased ~~31.2%~~5% (or ~~26.0%~~decreased (1)% on a constant currency basis) to ~~$207.2~~$201.1 million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016. This was largely driven by~~2017. We acquired new clients across the ~~growth in our existing clients' spending with us, across verticals and client sizes,~~region, in particular in ~~large European markets,~~the midmarket, but our business with existing clients was negatively impacted by external factors, including user coverage limitations, as well as short-term friction related to the ~~early deployment~~implementation of ~~Criteo Sponsored Products in~~our new go-to-market model across the region.

Revenue in the Asia-Pacific region increased ~~22.1%~~2% (or ~~28.5%~~0.2% on a constant currency basis) to ~~$128.5~~$123.3 million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016. This growth continued~~2017.

Our business in Korea was strong, in particular in mobile applications, while the Japan market faced some headwinds primarily due to ~~be led by existing Tier-1 clients in Japan~~industry one-off changes on the supply side and ~~Korea and new midmarket clients across~~softer demand from the ~~region.~~

classified vertical.

Additionally, our ~~$564.0~~$537.2 million of revenue for the three months ended ~~September~~June 30, ~~2017~~2018 was positively impacted by ~~$2.5~~$11.4 million as a result of changes in foreign currency against the U.S. dollar compared to the three months ended ~~September~~June 30, ~~2016.~~2017.

The year-over-year ~~growth~~decline in revenue on a constant currency basis is primarily attributable to ~~an increased number of clicks delivered on the advertising banners displayed by us.~~

~~The release of Apple's Intelligent Tracking Prevention~~ ~~feature, or ITP, on September 19, 2017 had~~ a ~~minimal net negative impact on our Revenue and Traffic Acquisition Costs ("TAC")~~decrease in the third quarter of 2017 of less than $1.0 million. Given our expectations for the iOS 11 roll out and our coverage of Safari users, we expect ITP will have a net negative impact on our Revenue and TAC in the fourth quarter of 2017 between 8% and 10% relativeaverage cost-per-click charged to our base case projections for the quarter. Factored into our 2018 plans, we currently expect ITP could have a net negative impact on our Revenue and TAC ranging from 9% to 13% next year relative to our base case projections as the roll out of iOS11 continues and we improve our ability to mitigate a larger portion of the ITP impact. Refer to Part II Item 1A. "Risk Factors".advertisers.

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017


	Nine Months Ended							Six Months Ended
	September 30, 2016		September 30, 2017			2017 vs 2016		June 30, 2017		June 30, 2018			2017 vs 2018

	(in thousands)							(in thousands)
Revenue as reported	$	1,232,321	$	1,622,661		31.7	%	$	1,058,688	$	1,101,349		4	%
Conversion impact U.S dollar/other currencies			10,107							(42,480		)
Revenue at constant currency ⁽¹⁾	1,232,321		1,632,768			32.5	%	1,058,688		1,058,869			—	%
Americas
Revenue as reported	464,435		665,731			43.3	%	437,405		425,476			(3	)%
Conversion impact U.S dollar/other currencies			(5,739		)					1,619
Revenue at constant currency ⁽¹⁾	464,435		659,992			42.1	%	437,405		427,095			(2	)%
EMEA
Revenue as reported	471,226		587,942			24.8	%	380,774		423,691			11	%
Conversion impact U.S dollar/other currencies			8,507							(36,388		)
Revenue at constant currency ⁽¹⁾	471,226		596,449			26.6	%	380,774		387,303			2	%
Asia-Pacific
Revenue as reported	296,660		368,988			24.4	%	240,509		252,182			5	%
Conversion impact U.S dollar/other currencies			7,339							(7,711		)
Revenue at constant currency⁽¹⁾	$	296,660	$	376,327		26.9	%	$	240,509	$	244,471		2	%

Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased to ~~$1,622.7~~$1,101.3 million, growing ~~31.7%~~4% (or ~~32.5%~~0.0% on a constant currency basis), compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. Revenue from new clients contributed ~~50.5%~~92.8% to the year-over-year revenue growth, , while revenue from existing clients contributed ~~49.5%~~7.2% to the year-over-year revenue ~~growth. This increase in revenue was primarily driven~~growth, impacted by ~~continued innovation across our core technology and new initiatives, our broader and improved access to publisher inventory, and~~user coverage limitations. Over the ~~addition of over 4,400~~period, the company added 2,566 net new clients across regions and client sizes, and ~~products. Technology improvements and broader inventory reach continued to help generate more revenue from~~expanded its business with existing clients ~~at constant currency. Our ability to convert and maintain a large portion of our clients to uncapped budgets remained a key driver~~through the increasing adoption of the ~~increase~~Criteo Customer Acquisition and Criteo Audience Match products, a growing presence in ~~revenue per existing client across large~~mobile applications, and ~~midmarket clients.~~more direct connections with publishers through Criteo Direct Bidder.

~~The year-over-year increase was the result of our growth across all regions.~~

Revenue in the Americas region ~~increased 43.3%~~decreased (3)% (or ~~42.1%~~(2)% on a constant currency basis) to ~~$665.7~~$425.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016, and the region remained the largest contributor to our global~~

~~growth.~~2017. We saw ~~a continued high pace of new business and additions in~~strength with both ~~Tier-1~~large and midmarket clients ~~partly driven by higher-level client discussions enabled by new product initiatives, like CRM onboarding~~ and ~~store-to-web retargeting campaigns. The deployment~~continued ramp-up of ~~Criteo Sponsored Products with new retailers and brands~~our newest products, in particular in the ~~U.S.~~US, offset by the negative impact of user coverage limitations across the region, as well as continued ~~to foster the growth~~difficult market conditions in ~~the region.~~Latin America. Revenue in EMEA increased ~~24.8%~~11% (or ~~26.6%~~2% on a constant currency basis) to ~~$587.9~~$423.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. Our business with existing clients,~~2017.

This was largely driven by solid growth in ~~particular~~Germany and Middle-East and Africa, as well as the ~~largest ones, continued~~higher adoption of our newest products, Criteo Customer Acquisition and Criteo Audience Match, offset by the negative impact of external factors, including user coverage limitations, as well as some short-term friction related to ~~be strong over~~ the ~~period. Our large Western European markets, in particular Germany, continued to post solid double-digit growth~~implementation of our new go-to-market model across ~~Tier 1 and midmarket clients. We continued to deploy Criteo Sponsored Products in the largest markets in~~ the region. Revenue in the Asia-Pacific region increased ~~24.4%~~5% (or ~~26.9%~~2% on a constant currency basis) to ~~$369.0~~$252.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016. Japan and~~2017. Our business in Korea ~~continued to post solid growth,~~was strong, in particular ~~with existing large clients,~~in mobile applications and ~~midmarket growth remained strong~~we introduced Criteo Customer Acquisition in some markets across the ~~various markets in the region.~~region, while Japan faced some industry-related challenges.

Additionally, our ~~$1,622.7~~$1,101.3 million of revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 was ~~negatively~~positively impacted by ~~$10.1~~$42.5 million as a result of changes in foreign currency against the U.S. dollar compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

The year-over-year growth in revenue on a constant currency basis is primarily attributable to an increased number of clicks delivered on the advertising banners displayed by us.

~~As discussed above, Revenue and Traffic Acquisition Costs in the nine months ended September 30, 2017 were also affected by the roll out of iOS 11.~~

Cost of Revenue

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017


	Three Months Ended						% change	Three Months Ended						% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Traffic acquisition costs	$	(247,310	)	$	(329,576	)	33.3%	$	(322,200	)	$	(306,963	)	(5	)%
Other cost of revenue	$	(22,332	)	$	(29,951	)	34.1%	$	(32,808	)	$	(29,957	)	(9	)%
Total Cost of Revenue								$	(355,008	)	$	(336,920	)	(5	)%
% of revenue	(63.6		)%	(63.7		)%		(65		)%	(63		)%
Gross profit %	36.4		%	36.3		%		35		%	37		%

Cost of revenue for the three months ended ~~September~~June 30, ~~2017 increased $89.9~~2018 decreased $(18.1) million, or ~~33.3%~~(5)%, compared to the three months ended ~~September~~June 30, ~~2016.~~2017. This ~~increase~~decrease was primarily the result of ~~an increase~~a decrease of ~~$82.3~~$(15.2) million, or ~~33.3%~~(5)% (or ~~32.7%~~(7)% on a constant currency basis), in traffic acquisition costs and a ~~$7.6~~decrease of $(2.9) million, or ~~34.1%~~(9)% (or ~~34.8%~~(8)% on a constant currency basis), ~~increase~~ in other cost of revenue.

The ~~increase~~decrease in traffic acquisition costs related primarily to ~~an increase of 31%~~a (3.2)% decrease in the number of impressions we purchased, driven by both publishers with whom we have direct relationships, including through the Criteo Publisher Marketplace and our Criteo Direct Bidder, the main real-time bidding exchanges, both global and local, as well as large retailers working with Criteo Sponsored Products. . Over the period, the average cost per thousand impressions (or "CPM")~~, including Criteo Sponsored Products, increased by 1.8%~~ (or ~~1.3%~~(5.3)% on a constant currency basis)., in large part due to the broader deployment of Criteo Direct Bidder, which allows us to remove intermediary fees, and the growing share, in our overall business, of inventory purchased in mobile applications, which tend to come at lower price per unit or CPM, relative to web-based inventory. In addition, the number of impressions we purchased over the period decreased by (2)%, driven by changes in the way we are charged for purchased impressions in mobile applications from certain publisher partners, as well as user coverage limitations.

~~The year-over year growth in traffic acquisition costs was the result of our strong growth across all geographies.~~ Traffic acquisition costs in the Americas region ~~increased 45.9%~~decreased (14)% (or ~~45.0%~~(13)% on a constant currency basis) to ~~$141.9~~$(125.5) million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016, as we deployed our~~2017, in part due to the broader deployment of Criteo Direct Bidder ~~solution with new large publishers, maintained strong direct relationships with large premium publishers~~in the region, and ~~saw~~ the ~~purchases~~growing share of ~~impressions from the main real-time bidding exchanges also increase.~~ inventory purchased in mobile applications.

Traffic acquisition costs in EMEA increased ~~32.6%~~6% (or ~~27.0%~~(0.1)% on a constant currency basis) to ~~$115.4~~$(112.6) million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016,~~2017, as ~~our purchases of impressions from both large publishers with whom~~ we ~~have direct relationships, including through~~further deployed Criteo Direct Bidder ~~and the main real-time bidding exchanges increased across markets~~ in the ~~region. In the quarter, we incurred exceptional publisher costs to seed the future growth~~region and increased our share of ~~Criteo Sponsored Products~~inventory purchased in ~~the region.~~mobile applications. Traffic acquisition costs in the Asia-Pacific region ~~increased 14.7%~~decreased (2)% (or ~~21.0%~~(4)% on a constant currency basis) to ~~$72.3~~$(68.9) million for the three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016,~~2017, as we ~~continued to deploy Criteo Direct Bidder~~increased our share of inventory purchased in ~~the region, increased our~~

~~purchases of impressions from global and local real-time bidding exchanges~~mobile applications, and maintained strong relationships with large premium publishers in the region, in particular in Japan.

The ~~increase~~decrease in other cost of revenue includes a ~~$2.5~~$4.7 million ~~increase~~decrease in hosting costs partially offset by a ~~$3.9~~$1.8 million increase in allocated depreciation and amortization ~~expense and a $1.2 million increase in other cost of sales, including additional purchases of third-party data.~~expense.

We consider Revenue ex-TAC as a key measure of our business activity. Our strategy focuses on maximizing the growth of our Revenue 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 Engine’s performance, allowing it to deliver more relevant advertisements at scale. As a part of this focus, we continue to invest in building relationships with direct publishers and pursuing access to leading advertising exchanges. Our performance-based business model provides us with significant control over our level of Revenue ex-TAC margin, which we seek to optimize in order to maximize Revenue ex-TAC growth on an absolute basis in accordance with our strategic focus.

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017


	Nine Months Ended						% change	Six Months Ended						% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Traffic acquisition costs	$	(727,034	)	$	(958,469	)	31.8%	$	(628,893	)	$	(630,709	)	0.3	%
Other cost of revenue	$	(60,950	)	$	(89,914	)	47.5%	$	(59,963	)	$	(60,016	)	0.1	%
Total Cost of Revenue								$	(688,856	)	$	(690,725	)	0.3	%
% of revenue	(63.9		)%	(64.6		)%		(65		)%	(63		)%
Gross profit %	36.1		%	35.4		%		35		%	37		%

Cost of revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased ~~$260.4~~$1.9 million, or ~~33.0%~~0.3%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. This increase was primarily the result of an increase of ~~$231.4~~$1.8 million, or ~~31.8%~~0.3% (or ~~33.0%~~(3)% on a constant currency basis), in traffic acquisition costs and a ~~$29.0~~$0.1 million, or ~~47.5%~~0.1% (or ~~49.1%~~(1)% on a constant currency basis), increase in other cost of revenue.

The ~~increase~~decrease in traffic acquisition costs at constant currency related primarily to ~~an increase~~a (3.7)% decrease in the average cost per thousand impressions (or "CPM") (or (5.3)% on a constant currency basis), in large part due to the broader deployment of ~~34%~~Criteo Direct Bidder, which allows us to remove intermediary fees, and the growing share, in our overall business, of inventory purchased in mobile applications, which tend to come at lower price per unit or CPM, relative to web-based inventory. In addition, the number of impressions we purchased over the period increased by 4%, driven by both publishers with whom we have direct relationships, including through the Criteo Publisher Marketplace and our Criteo Direct Bidder, the main real-time bidding exchanges, both global and local, as well as large retailers working with Criteo Sponsored Products. Over the period, the average cost per thousand impressions (or "CPM"), including Criteo Sponsored Products, decreased by 1.5% (or 0.9% on a constant currency basis).

The year-over year growth in traffic acquisition costs was the result of our strong growth across all geographies. Traffic acquisition costs in the Americas region increased 46.1% (or 45.0% on a constant currency basis) to $416.0 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, as we deployed our Criteo Direct Bidder solution with new large publishers, maintained strong direct relationships with large premium publishers and saw the purchases of impressions from the main real-time bidding exchanges also increase. Traffic acquisition costs in EMEA increased 24.3% (or 26.0% on a constant currency basis) to $329.6 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, as our purchases of impressions from both large publishers with whom we have direct relationships, including through Criteo Direct Bidder, and the main real-time bidding exchanges, ~~increased across several markets~~on both the web and mobile applications.

Traffic acquisition costs in the ~~region.~~Americas region decreased (6)% (or (6)% on a constant currency basis) to $(257.0) million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, in part due to the broader deployment of Criteo Direct Bidder in the region, and the growing share of inventory purchased in mobile applications. Traffic acquisition costs in EMEA increased 9% (or decreased by (1)% on a constant currency basis) to $(232.5) million for the six months ended June 30, 2018 compared to the six months ended June 30, 2017, as we further deployed Criteo Direct Bidder in the region and increased our share of inventory purchased in mobile applications. Traffic acquisition costs in the Asia-Pacific region increased ~~20.1%~~0.5% (or ~~23.0%~~decreased by (3)% on a constant currency basis) to ~~$212.8~~$(141.2) million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, as we ~~continued to deploy Criteo Direct Bidder in the region,~~ increased our ~~purchases~~share of ~~impressions from global and local real-time bidding exchanges~~inventory purchased in mobile applications, and maintained strong relationships with large premium publishers in the region, in particular in Japan.

The increase in other cost of revenue includes a ~~$13.8 million increase in hosting costs, a $10.8~~$6.0 million increase in allocated depreciation and amortization expense and a ~~$4.4~~$0.4 million increase in other cost of sales, including additional purchases of third-party ~~data.~~

data partially offset by a $6.3 million decrease in hosting costs.

Research and Development Expenses

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017


	Three Months Ended						% change	Three Months Ended						% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Research and development expenses	$	(30,701	)	$	(43,860	)	42.9%	$	(43,611	)	$	(47,544	)	9%
% of revenue	(7.2		)%	(7.8		)%		(8		)%	(9		)%

Research and development expenses for the three months ended ~~September~~June 30, ~~2017~~2018 increased ~~$13.2~~$3.9 million, or ~~42.9%~~9%, compared to the three months ended ~~September~~June 30, ~~2016.~~2017. This increase was the result of a growth in headcount to ~~649~~682 employees resulting in ~~$12.3~~$5.4 million of additional headcount related costs, a $0.6 million increase in rent and facilities costs, and a ~~$1.2~~$1.1m increase in other costs, partially offset by a $1.4m decrease in costs for internal events, a $0.8 million ~~increase~~decrease in amortization and depreciation of assets ~~partially offset by~~and an increase in the French Research Tax Credit of ~~$0.4~~$1.0 million.

~~Nine~~Six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017


	Nine Months Ended						% change	Six Months Ended						% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Research and development expenses	$	(88,097	)	$	(126,992	)	44.2%	$	(83,132	)	$	(92,862	)	12%
% of revenue	(7.1		)%	(7.8		)%		(8		)%	(8		)%

Research and development expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 increased ~~$38.9~~$9.7 million, or ~~44.2%~~12%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. This increase was the result of a growth in headcount to ~~649~~682 employees resulting in ~~$35.1~~$11.3 million of additional headcount related costs and a ~~$0.4~~$1.5 million increase in ~~allocated~~ rent and facilities costs, and a ~~$3.7~~$1.2m increase in other costs, partially offset by a $1.4m decrease in costs for internal events, a $1.6 million ~~increase~~decrease in amortization and depreciation of assets ~~a $0.2 million increase in consulting~~ and ~~professional fees and a $0.4 million increase in other costs, partially offset by~~ an increase in the French Research Tax Credit of ~~$1.0~~$1.3 million.

Sales and Operations Expenses

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017


	Three Months Ended						% change	Three Months Ended						% change
	September 30, 2016			September 30, 2017			2016 vs 2017	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Sales and operations expenses	$	(68,164	)	$	(95,184	)	39.6%	$	(97,900	)	$	(92,726	)	(5)%
% of revenue	(16.1		)%	(16.9		)%		(18		)%	(17		)%

Sales and operations expenses for the three months ended ~~September~~June 30, ~~2017 increased $27.0~~2018 decreased $(5.2) million, or ~~39.6%~~(5)%, compared to the three months ended ~~September~~June 30, ~~2016.~~2017. This decrease was the result of a $5.4 million decrease in costs for internal events, a $1.0 million decrease in costs for marketing events, a $0.4 million decrease in allocated depreciation and amortization expense, a $0.2 million decrease in allocated rent and facilities costs, and a $0.5 million decrease in other costs. This decrease was only partially offset by a slight increase in headcount-related costs of $1.0 million due to a delay of hiring resulting in 1,527 employees as of June 30, 2018 and a $1.3 million increase in allowance for potential losses.

Six months ended June 30, 2018 compared to the six months ended June 30, 2017



	Six Months Ended						% change
	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)
Sales and operations expenses	$	(188,631	)	$	(188,375	)	(0.1)%
% of revenue	(18		)%	(17		)%

Sales and operations expenses for the six months ended June 30, 2018 decreased $(0.3) million, or (0.1)%, compared to the six months ended June 30, 2017. This decrease was the result of a $5.8 million decrease in costs for internal events, a $1.0 million decrease in costs for marketing events, a $0.9 million decrease in allocated depreciation and amortization expense, a $0.2 million decrease in allocated rent and facilities costs, and a $1.4 million decrease in other costs. This decrease was only partially offset by an increase in headcount-related costs of $5.8 due to a delay of hiring resulting in 1,527 employees as of June 30, 2018 and a $3.2 million increase in allowance for potential losses.

General and Administrative Expenses

Three months ended June 30, 2018 compared to the three months ended June 30, 2017



	Three Months Ended						% change
	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)
General and administrative expenses	$	(32,239	)	$	(35,644	)	11%
% of revenue	(6		)%	(7		)%

General and administrative expenses for the six months ended June 30, 2018 increased $3.4 million, or 11%, compared to the three months ended June 30, 2017. This increase was the result of a growth in headcount to ~~1,601~~469 employees resulting in ~~$19.7~~$2.6 million of additional ~~headcount-related~~headcount related costs, a ~~$1.8~~$0.2 million increase in ~~marketing events,~~allocated rent and facilities costs, a ~~$3.3~~$0.5 million increase in allocated depreciation and amortization expense, a ~~$0.8~~$0.5 million increase in other consulting and professional fees and a $0.7 million increase in other costs offset by a $1.1m decrease in costs for internal events.

Six months ended June 30, 2018 compared to the six months ended June 30, 2017



	Six Months Ended						% change
	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)
General and administrative expenses	$	(63,754	)	$	(70,235	)	10%
% of revenue	(6		)%	(6		)%

General and administrative expenses for the six months ended June 30, 2018 increased $6.5 million, or 10%, compared to the six months ended June 30, 2017. This increase was the result of a growth in headcount to 469 employees resulting in $6.7 million of additional headcount related costs, a $0.6 million increase in allocated rent and facilities costs, a $1.0 million increase in ~~consulting and professional fees and an increase of $0.6 million in provisions for doubtful receivables and bad debts, partially offset by a $0.1 million decrease in other costs.~~

~~Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

Nine Months Ended % change
September 30, 2016
September 30, 2017
2017 vs 2016

(in thousands,
except percentages)
Sales and operations expenses $ (201,862 ) $ (283,815 ) 40.6%
% of revenue (16.4 )% (17.5 )%

Sales and operations expenses for the nine months ended September 30, 2017 increased $82.0 million, or 40.6%, compared to the nine months ended September 30, 2016. This increase was the result of a growth in headcount to 1,601 employees resulting in $60.2 million of additional headcount related costs, a $4.2 million increase in marketing events, a $9.4 million increase in allocated depreciation and amortization expense, a ~~$2.5 million increase in allocated rent and facilities costs, a $2.5 million increase in consulting and professional fees, a $2.2 million increase in other taxes and a $1.4 million~~$0.2m increase in other costs, partially offset by a ~~$0.5 million~~$1.2m decrease in ~~provisions~~costs for ~~doubtful receivables~~internal events and ~~bad debts.~~a $0.8m decrease in other consulting and professional fees.

~~General and Administrative Expenses~~Financial income (expense), net

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017

Three Months Ended % change
September 30, 2016
September 30, 2017
2016 vs 2017

(in thousands,
except percentages)
General and administrative expenses $ (32,492 ) $ (32,389 ) (0.3)%
% of revenue (7.7 )% (5.7 )%

General and administrative expenses for the three months ended September 30, 2017 decreased $(0.1) million, or (0.3)%, compared to the three months ended September 30, 2016. This decrease was the result of a $2.7 million decrease in consulting and professional fees due to legal fees incurred in the third quarter of 2016 in relation to the HookLogic acquisition and a litigation. This was partially offset by a growth in headcount to 462 employees resulting in $1.3 million of additional headcount related costs, a $0.3 million increase in allocated rent and facilities costs, a $0.6 million increase in allocated depreciation and amortization expense and a $0.4 million increase in other costs.

~~Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

Nine Months Ended % change
September 30, 2016
September 30, 2017
2017 vs 2016

(in thousands,
except percentages)
General and administrative expenses $ (85,839 ) $ (96,143 ) 12.0%
% of revenue (7.0 )% (5.9 )%

General and administrative expenses for the nine months ended September 30, 2017 increased $10.3 million, or 12.0%, compared to the nine months ended September 30, 2016. This increase was the result of a growth in headcount to 462 employees resulting in $7.0 million of additional headcount related costs, a $0.9 million increase in allocated rent and facilities costs, a $1.9 million increase in allocated depreciation and amortization expense, a $0.5 million increase in consulting and professional fees, and a $0.1 million increase in other costs.

~~Financial Income (Expense)~~

~~Three months ended September 30, 2017 compared to the three months ended September 30, 2016~~


	Three Months Ended						% change	Three Months Ended				% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017		June 30, 2018		2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Financial income (expense)	$	(570	)	$	(2,886	)	406.3%
Financial income (expense), net								(2,094	)	(1,006	)	(52)%
% of revenue	(0.1		)%	(0.5		)%		(0.4	)%	(0.2	)%

Financial expense for the three months ended ~~September~~June 30, ~~2017 increased~~2018 decreased by ~~$2.3~~$(1.1) million, or ~~406.3%~~(52.0)%, compared to the three months ended ~~September~~June 30, ~~2016.~~2017. The ~~$2.9~~$1.0 million financial expense for the three months ended ~~September~~June 30, 2018 was mainly driven by the non-utilization costs and up-front fees amortization incurred as part of our available RCF financing. The intra-group position between Criteo S.A. and its U.S subsidiary in the context of the funding of HookLogic acquisition is qualified as a net investment in a foreign operation from February 2018 and no longer requires hedging, resulting in reduced costs compared to the three months ended June 30, 2017.

Six months ended June 30, 2018 compared to the six months ended June 30, 2017



	Six Months Ended						% change
	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)
Financial income (expense), net	$	(4,427	)	$	(2,331	)	(47)%
% of revenue	(0.4		)%	(0.2		)%

Financial expense for the six months ended June 30, 2018 decreased by $(2.1) million, or (47)%, compared to the six months ended June 30, 2017. The $2.3 million financial expense for the three months ended June 30, 2018 was driven by the non-utilization costs and up-front fees amortization incurred as part of our available RCF financing and hedging ~~cost~~costs related to an intra-group position between Criteo S.A. and its U.S. subsidiary in the context of the funding of the HookLogic ~~acquisition~~acquisition. As of February 2018, this position qualified as a net investment in ~~November 2016~~a foreign operation and ~~the non-utilization fees incurred as part of our available RCF financing. The $0.6 million financial expense for~~no longer requires hedging resulting in reduced costs compared to the three months ended ~~September~~June 30, 2016 was mainly as a result of a limited impact of foreign exchange reevaluations and related hedging, together with the recognition of the fees related to the revolving credit facility entered into in September 2015.2017.

~~Nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~

Nine Months Ended % change
September 30, 2016
September 30, 2017
2017 vs 2016

(in thousands,
except percentages)

Financial income (expense) $ (1,982 ) $ (7,313 ) 269.0%
% of revenue (0.2 )% (0.5 )%

Financial expense for the nine months ended September 30, 2017 increased by $5.3 million, or 269.0%, compared to the nine months ended September 30, 2016. The $7.3 million financial expense for the nine months ended September 30, 2017 was driven by the interest accrued as a result of the $75.0 million drawn on the revolving credit facility entered into in September 2015 (as amended in March 2017) and the hedging cost related to an intra-group position between Criteo S.A. and its U.S. subsidiary, both in the context of the funding of HookLogic acquisition in November 2016, as well as the non-utilization fees incurred as part of our available RCF financing. The $2.0 million financial expense for the nine months ended September 30, 2016 was mainly a result of the recognition of the negative impact of foreign exchange reevaluations and related hedging recorded during the first quarter, together with the fees related to the revolving credit facility entered into in September 2015.

Provision for Income Taxes

~~Nine~~Our estimated annual effective tax rate includes our preliminary estimates for the impact of the U.S. Tax Cuts and Jobs Act (the "Tax Act") which was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. federal income tax rate from 35% to 21% and creates new taxes on certain related-party payments, referred to as a base erosion anti-avoidance tax, or “BEAT”. The Tax Act also modifies the limitation on the amount of deductible interest expense and the limitation on the deductibility of certain executive compensation. Our estimates are preliminary, and our effective tax rate may be impacted as more information becomes available regarding the tax reform.

Six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017


	Nine Months Ended						% change	Six Months Ended						% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018			2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Provision for income taxes	$	(19,968	)	$	(15,724	)	(21.3)%	$	(7,866	)	$	(21,024	)	167%
% of revenue	(1.6		)%	(1.0		)%		(1		)%	(2		)%
Effective tax rate	30.0		%	26.2		%		26		%	37		%

For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~June 30, 2018, we ~~utilized~~used an annual estimated tax rate of 30% and ~~30%~~37%, respectively, to calculate the provision for income taxes. The increase in the annual estimated tax rate is primarily due to our preliminary estimates of the impact of the U.S. Tax Act. The effective tax rate was ~~30.0%~~26% and ~~26.2%~~37% for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, respectively. The difference between the annual estimated tax rate and the effective tax rate for ~~the nine~~six months ended ~~September~~June 30, 2017 iswas due to the tax impact of discrete items such as share-based compensation in the United States. Discrete items were immaterial for the six months ended June 30, 2018 resulting in no difference between the annual estimated tax rate and the effective tax rate.

Net Income

Three months ended ~~September~~June 30, ~~2017~~2018 compared to the three months ended ~~September~~June 30, ~~2016~~2017


	Three Months Ended					% change	Three Months Ended					% change
	September 30, 2016			September 30, 2017		2017 vs 2016	June 30, 2017			June 30, 2018		2017 vs 2018

	(in thousands, except percentages)						(in thousands, except percentages)
Net income	$	14,724		22,269		51.2%	$	7,505		14,707		96%
% of revenue	3.5		%	3.9	%		1		%	3	%

Net income for the three months ended ~~September~~June 30, ~~2017~~2018 increased ~~$7.5~~$7.2 million, or ~~51.2%~~96%, compared to the three months ended ~~September~~June 30, ~~2016.~~2017. This increase was the result of the factors discussed above, in particular, a ~~$10.1~~$11.1 million increase in income from operations and a $1.1 million decrease in financial expense partially offset by a ~~$2.3 million increase in financial expense and a $0.3~~$5.0 million increase in provision for income taxes compared to the three months ended ~~September~~June 30, ~~2016.~~2017.

~~Nine~~

Six months ended ~~September~~June 30, ~~2017~~2018 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017


	Nine Months Ended						% change	Six Months Ended					% change
	September 30, 2016			September 30, 2017			2017 vs 2016	June 30, 2017			June 30, 2018		2017 vs 2018

	(in thousands, except percentages)							(in thousands, except percentages)
Net income	$	46,589		$	44,291		(4.9)%	$	22,022		35,797		63%
% of revenue	3.8		%	2.7		%		2		%	3	%

Net income for the ~~nine~~six months ended ~~September~~June 30, ~~2017 decreased $2.3~~2018 increased $13.8 million, or ~~(4.9)%~~63%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017. This ~~decrease~~increase was the result of the factors discussed above, in particular, a ~~$1.2~~$24.8 million ~~decrease~~increase in income from operations and a ~~$5.3~~$2.1 million ~~increase~~decrease in financial expense partially offset by a ~~$4.2~~$13.1 million ~~decrease~~increase in provision for income taxes compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2017.

Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region

The following table sets forth our revenue, traffic acquisition costs and Revenue ex-TAC by geographic region, including the Americas (North and South America), Europe, Middle East and Africa, or EMEA, and Asia-Pacific.


		Three Months Ended								Nine Months Ended									Three Months Ended								Six Months Ended
	Region	September 30, 2016			September 30, 2017			Year over Year Change		September 30, 2016			September 30, 2017			Year over Year Change		Region	June 30, 2017			June 30, 2018			Year over Year Change		June 30, 2017			June 30, 2018			Year over Year Change

Revenue:	Revenue:	(amounts in thousands, except percentages)																Revenue:	(amounts in thousands, except percentages)
	Americas	$	160,739		$	228,326		42	%	$	464,435		$	665,731		43	%	Americas	$	229,392		$	212,781		(7	)%	$	437,405		$	425,476		(3	)%
	EMEA	157,921			207,168			31	%	471,226			587,942			25	%	EMEA	191,682			201,080			5	%	380,774			423,691			11	%
	Asia-Pacific	105,207			128,479			22	%	296,660			368,988			24	%	Asia-Pacific	120,948			123,324			2	%	240,509			252,182			5	%
	Total	423,867			563,973			33	%	1,232,321			1,622,661			32	%	Total	542,022			537,185			(1	)%	1,058,688			1,101,349			4	%

Traffic acquisition costs:	Traffic acquisition costs:																	Traffic acquisition costs:
	Americas	(97,239		)	(141,869		)	46	%	(284,728		)	(416,025		)	46	%	Americas	(145,289		)	(125,502		)	(14	)%	(274,156		)	(257,023		)	(6	)%
	EMEA	(87,092		)	(115,446		)	33	%	(265,097		)	(329,635		)	24	%	EMEA	(106,605		)	(112,577		)	6	%	(214,189		)	(232,470		)	9	%
	Asia-Pacific	(62,979		)	(72,261		)	15	%	(177,209		)	(212,809		)	20	%	Asia-Pacific	(70,306		)	(68,884		)	(2	)%	(140,548		)	(141,216		)	0.5	%
	Total	(247,310		)	(329,576		)	33	%	(727,034		)	(958,469		)	32	%	Total	(322,200		)	(306,963		)	(5	)%	(628,893		)	(630,709		)	0.3	%

Revenue ex-TAC⁽¹⁾:	Revenue ex-TAC⁽¹⁾:																	Revenue ex-TAC⁽¹⁾:
	Americas	63,500			86,457			36	%	179,707			249,706			39	%	Americas	84,103			87,279			4	%	163,249			168,453			3	%
	EMEA	70,829			91,722			29	%	206,129			258,307			25	%	EMEA	85,077			88,503			4	%	166,585			191,221			15	%
	Asia-Pacific	42,228			56,218			33	%	119,451			156,179			31	%	Asia-Pacific	50,642			54,440			7	%	99,961			110,966			11	%
	Total	$	176,557		$	234,397		33	%	$	505,287		$	664,192		31	%	Total	$	219,822		$	230,222		5	%	$	429,795		$	470,640		10	%

⁽¹⁾We define Revenue ex-TAC as our revenue excluding traffic acquisition costs generated over the applicable measurement period. Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region are not measures calculated in accordance with U.S. GAAP. We have included Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region in this Form 10-Q because they are key measures used by our management and board of directors to evaluate operating performance and generate future operating plans. In particular, we believe that the elimination of TAC from revenue and review of these measures by region can provide useful measures for period-to-period comparisons of our core business. Accordingly, we believe that Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region 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 Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region 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. GAAP. 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 Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region or similarly titled measures but define the regions differently, which reduces their effectiveness as a comparative measure; and (c) other companies may report Revenue 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 Revenue ex-TAC and Revenue, Traffic Acquisition Costs and Revenue ex-TAC by Region alongside our other U.S. GAAP financial results, including revenue. The above table provides a reconciliation of revenue ex-TAC by region to revenue by region. Please also refer to footnote 3 to the Other Financial and Operating Data table in "Item 2—Management's Discussion and Analysis" of this Form 10-Q for a reconciliation of revenue ex-TAC to revenue, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Constant Currency Reconciliation

Information in this Form 10-Q with respect to results presented on a constant currency basis was calculated by applying the ~~2016~~2017 average exchange rates for the relevant period to ~~2017~~2018 figures. We have included information with respect to our results presented 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. Below is a table which reconciles the actual results presented in this section with the results presented on a constant currency basis:


	Three Months Ended								Nine Months Ended								Three Months Ended								Six Months Ended
	September 30, 2016			September 30, 2017			YoY Change		September 30, 2016			September 30, 2017			YoY Change		June 30, 2017			June 30, 2018			YoY Change		June 30, 2017			June 30, 2018			YoY Change
	(amounts in thousands, except percentages)																(amounts in thousands, except percentages)
	(amounts in thousands, except percentages)																(amounts in thousands, except percentages)
Revenue as reported	$	423,867		$	563,973		33	%	$	1,232,321		$	1,622,661		32	%	$	542,022		$	537,185		(1	)%	$	1,058,688		$	1,101,349		4	%
Conversion impact U.S. dollar/other currencies				(2,509		)						10,107								(11,393		)						(42,480		)
Revenue at constant currency	$	423,867		$	561,464		32	%	$	1,232,321		$	1,632,768		32	%	$	542,022		$	525,792		(3	)%	$	1,058,688		$	1,058,869		—	%

Traffic acquisition costs as reported	$	(247,310	)	$	(329,576	)	33	%	$	(727,034	)	$	(958,469	)	32	%	$	(322,200	)	$	(306,963	)	(5	)%	$	(628,893	)	$	(630,709	)	0.3	%
Conversion impact U.S. dollar/other currencies				1,299								(6,074		)						6,487								23,356
Traffic Acquisition Costs at constant currency	$	(247,310	)	$	(328,277	)	33	%	$	(727,034	)	$	(964,543	)	33	%	$	(322,200	)	$	(300,476	)	(7	)%	$	(628,893	)	$	(607,353	)	(3	)%

Revenue ex-TAC as reported	$	176,557		$	234,397		33	%	$	505,287		$	664,192		31	%	$	219,822		$	230,222		5	%	$	429,795		$	470,640		10	%
Conversion impact U.S. dollar/other currencies				(1,210		)						4,033								(4,906		)						(19,124		)
Revenue ex-TAC at constant currency	$	176,557		$	233,187		32	%	$	505,287		$	668,225		32	%	$	219,822		$	225,316		2	%	$	429,795		$	451,516		5	%
Revenue ex-TAC/Revenue as reported	42		%	42		%			41		%	41		%			41		%	43		%			41		%	43		%

Other cost of revenue as reported	$	(22,332	)	$	(29,951	)	34	%	$	(60,950	)	$	(89,914	)	48	%	$	(32,808	)	$	(29,957	)	(9	)%	$	(59,963	)	$	(60,016	)	0.1	%
Conversion impact U.S. dollar/other currencies				(146		)						(973		)						(73		)						603
Other cost of revenue at constant currency	$	(22,332	)	$	(30,097	)	35	%	$	(60,950	)	$	(90,887	)	49	%	$	(32,808	)	$	(30,030	)	(8	)%	$	(59,963	)	$	(59,413	)	(1	)%

Adjusted EBITDA as reported	$	53,532		$	79,116		48	%	$	141,578		$	189,656		34	%	$	54,086		$	68,774		27	%	$	110,540		$	146,706		33	%
Conversion impact U.S. dollar/other currencies				(1,414		)						1,189								(3,786		)						(13,099		)
Adjusted EBITDA at constant currency	$	53,532		$	77,702		45	%	$	141,578		$	190,845		35	%	$	54,086		$	64,988		20	%	$	110,540		$	133,607		21	%

Liquidity and Capital Resources

Our principal sources of liquidity are our cash and cash equivalents and cash generated from operating activities. We also benefited to a much lesser extent from the proceeds of the exercise of share options and warrants and expect to continue to do so in the future, as such securities are exercised by holders. We have never declared or paid any cash dividends on our ordinary shares. We do not anticipate paying cash dividends on our equity securities in the foreseeable future and intend to retain all available funds and any future earnings to fund our growth. As discussed in Note 9 to the unaudited condensed consolidated financial statements in Item 1 to this Form 10-Q, we are party to several loan agreements and revolving credit facilities with third-party financial institutions.

Our cash and cash equivalents are invested primarily in demand deposit accounts ~~and money market funds~~ that are currently providing only a minimal return. Our cash and cash equivalents at ~~September~~June 30, ~~2017~~2018 were held for working capital and general corporate purposes, which could include acquisitions, and amounted to ~~$358.0~~$480.3 million as of ~~September~~June 30, ~~2017.~~2018. The ~~$87.7~~$66.2 million increase in cash and cash equivalents compared with December 31, ~~2016~~2017 primarily resulted from ~~$166.5~~$124.9 million in cash from operating activities and $16.9 million in cash from financing activities. This was partially offset by ~~$80.8~~$61.2 million used for investing ~~activities and $35.3 million of cash used for financing~~ activities over the period. The cash used for investing activities is mainly related to ~~$83.0~~$50.4 million in capital ~~expenditures.~~expenditures and $10.8 million upon disposal of an activity. The cash used for financing activities is primarily related to ~~the payment~~$17.1 million cash impact of the ~~$75.0 million drawn on the RCF for the acquisition~~settlement of ~~HookLogic offset by $29.6 million from the exercise of stock options.~~hedging derivatives related to financing activities. In addition, the increase in cash includes a ~~$37.3~~$14.4 million ~~positive~~negative impact of changes in foreign exchange rates on our cash position over the period. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Accordingly, our cash and cash equivalents are invested primarily in demand deposit accounts ~~and money market funds~~ that are currently providing only a minimal return.

Operating and Capital Expenditure Requirements

For the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2017 and ~~2017,~~2018, our capital expenditures were ~~$54.4~~$55.3 million and ~~$83.0~~$50.4 million, respectively. In ~~2017,~~2018, these capital expenditures were primarily related to the acquisition of data center and server equipment for our data centers ~~in Amsterdam and the US~~ as well as furnishing and leasehold improvements of new offices and office expansions. We believe our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months. Our future working capital requirements will depend on many factors, including the rate of our revenue growth, the amount and timing of our investments in personnel and capital equipment, and the timing and extent of our introduction of new products and product enhancements. If our cash and cash equivalents balances and cash flows from operating activities are insufficient to satisfy our liquidity requirements, we may need to raise additional funds through equity, equity-linked or debt financings to support our operations, and such financings may not be available to us on acceptable terms, or at all. We may also need to raise additional funds in the event we determine in the future to effect one or more acquisitions of businesses, technologies, assets or products. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing ~~will~~could be dilutive to our shareholders.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. We therefore believe that we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Historical Cash Flows

The following table sets forth our cash flows for the ~~nine~~six month period ended ~~September~~June 30, ~~2016~~2017 and ~~2017:~~2018:


	Nine Months Ended						Six Months Ended
	September 30, 2016			September 30, 2017			June 30, 2017			June 30, 2018

	(in thousands)						(in thousands)
Cash from operating activities	$	81,812		$	166,456		$	104,729		$	124,868
Cash used in investing activities	$	(59,277	)	$	(80,793	)	$	(52,935	)	$	(61,183	)
Cash from (used for) financing activities	$	15,368		$	(35,254	)
Cash (used for) from financing activities							$	(53,049	)	$	16,899

Operating Activities

Cash provided by operating activities is primarily impacted by the increase in the number of clients using our solution and by the amount of cash we invest in personnel and infrastructure to support the anticipated growth of our business. Cash provided by operating activities has typically been generated from net income and by changes in our operating assets and liabilities, particularly in the areas of accounts receivable and accounts payable and accrued expenses, adjusted for certain ~~operating~~non-cash and non-operating items such as depreciation, amortization and share-based compensation, deferred tax assets and income taxes.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, net cash provided by operating activities was ~~$166.5~~$124.9 million and consisted of net income of ~~$44.3~~$35.8 million, ~~$146.5~~$108.0 million in adjustments for certain ~~operating~~non-cash and non-operating items and changes in working capital of ~~$13.4~~$13.6 million partially offset by ~~$37.7~~$32.6 million of income taxes paid during the first ~~nine~~six months of ~~2017.~~2018. Adjustments for certain operating items primarily consisted of depreciation and amortization expense of ~~$72.7~~$51.1 million, equity awards compensation expense of ~~$51.9~~$39.1 million, ~~$36.3~~$28.6 million of accrued income taxes ~~and $6.2~~partially offset by $3.3 million for other items ~~partially offset~~and by ~~$20.6~~$7.5 million of changes in deferred tax assets. The ~~$13.4~~$13.6 million increase in cash from changes in working capital primarily consisted of a ~~$35.2~~$101.4 million decrease in trade receivables, a ~~$2.9~~$13.8 million ~~increase~~decrease in other current assets including prepaid expenses and VAT receivables partially offset by a $89.7 million decrease in trade payables and a $11.9 million decrease in other current liabilities such as payroll and payroll related expenses and value-added tax ("VAT") ~~payables, and a $6.6 million decrease in other current assets including prepaid expenses and VAT receivables. This was partially offset by a $31.3 million decrease in trade~~ payables.

Investing Activities

Our investing activities to date have consisted primarily of purchases of property and equipment and business acquisitions.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, net cash used in investing activities was ~~$80.8~~$61.2 million and consisted of ~~$83.0~~$50.4 million for purchases of property and equipment ~~partially offset by $1.1~~and $10.8 million for ~~various lease deposits and $1.1 million in payments for acquired business due to a change in~~ the ~~purchase price for HookLogic.~~disposal of an activity.

Financing Activities

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, net cash ~~used for~~from financing activities was ~~$35.3~~$16.9 million resulting from ~~$83.9~~the $17.1 million ~~in repayment of borrowings (mainly due to the repayment~~cash impact of the ~~$75.0 million drawn on the RCF) partially offset by $29.6~~settlement of hedging derivatives related to financing activities and $0.6 million of share option exercises, ~~$3.7~~partially offset by $0.5 million in repayments of ~~additional~~ borrowings ~~on the Chinese RCF,~~ and ~~$15.3~~a $0.3 million ofchange in other financial liabilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

We are mainly exposed to foreign currency exchange rate fluctuations. There have been no material changes to our exposure to market risk during the first ~~nine~~six months of ~~2017.~~2018.

For a description of our foreign exchange risk, please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - B. Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

A 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:


	Nine Months Ended										Six Months Ended
	September 30, 2016					September 30, 2017					June 30, 2017					June 30, 2018

	(in thousands)										(in thousands)
GBP/USD	+10%			-10%		+10%			-10%		+10%		-10%			+10%			-10%
Net income impact	$	(138	)	$	138	$	(192	)	$	192	$	115	$	(115	)	$	(550	)	$	550


	Nine Months Ended										Six Months Ended
	September 30, 2016					September 30, 2017					June 30, 2017					June 30, 2018

	(in thousands)										(in thousands)
BRL/USD	+10%		-10%			+10%			-10%		+10%			-10%		+10%			-10%
Net income impact	$	429	$	(429	)	$	(52	)	$	52	$	(17	)	$	17	$	(200	)	$	200


	Nine Months Ended										Six Months Ended
	September 30, 2016					September 30, 2017					June 30, 2017					June 30, 2018

	(in thousands)										(in thousands)
JPY/USD	+10%		-10%			+10%		-10%			+10%		-10%			+10%		-10%
Net income impact	$	722	$	(722	)	$	1,061	$	(1,061	)	$	701	$	(701	)	$	439	$	(439	)


	Nine Months Ended										Six Months Ended
	September 30, 2016					September 30, 2017					June 30, 2017					June 30, 2018

	(in thousands)										(in thousands)
EUR/USD	+10%		-10%			+10%		-10%			+10%		-10%			+10%		-10%
Net income impact	$	4,397	$	(4,397	)	$	6,800	$	(6,800	)	$	4,192	$	(4,192	)	$	5,428	$	(5,428	)

Credit Risk and Trade receivables

For a description of our credit risk and trade receivables, please see "Note 3.4. Financial instruments" in the Notes to the Consolidated Financial Statements.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Based on their evaluation as of ~~September~~June 30, ~~2017,~~2018, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective to provide reasonable assurance that (i) the information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitation on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Criteo have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error of fraud may occur and not be detected.

PART II

Item 1. Legal Proceedings.

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, financial condition, results of operations 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.

Item 1A. Risk Factors.

You should carefully consider the risks described below and under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017 and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. If any such risks materialize, our business, financial condition and results of operations could be materially harmed and the trading price of our ADSs could decline. These risks are not exclusive and additional risks and uncertainties that we are unaware of, or that we currently believe are not material, also may become important factors that affect us. There have been no material changes to the Risk Factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, except as set forth below.~~2017 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018.

Tracking prevention and “ad-blocking” software, including on mobile devices, could significantly impair our ability to collect the data we use to optimize display advertisements for our clients, which could have a material impact on our business and ability to generate revenue.

Our revenue depends on our ability to access and leverage user data. Notably, Apple has launched its Intelligent Tracking Prevention feature, or ITP, as part of its new version of the Safari browser included in the release of iOS 11. This feature makes it more difficult for third-party providers like Criteo to access data on Safari users and is enabled by default on mobile and desktop. We have adapted our solution to be able to collect anonymized commerce data across sites on Safari users, which based on current trends, we expect our solution will allow us to mitigate approximately half of the potential impact from the release of iOS 11. We will continue to improve and deploy our solution for Safari users over the coming quarters. As iOS 11 was released on September 19, 2017, it had a minimal net negative impact on our Revenue and Traffic Acquisition Costs ("TAC") in the third quarter of 2017 of less than $1.0 million. Given our expectations for the iOS 11 roll out and our coverage of Safari users, we expect ITP will have a net negative impact on our Revenue and TAC in the fourth quarter of 2017 between 8% and 10% relative to our base case projections for the quarter. Factored into our 2018 plans, we currently expect ITP could have a net negative impact on our Revenue and TAC ranging from 9% to 13% next year relative to our base case projections as the roll out of iOS11 continues and we improve our ability to mitigate a larger portion of the ITP impact. Despite our efforts, it is possible that we will not be able to successfully mitigate the short- and long-term impacts of ITP on our business. In addition, if and to the extent that Apple, or another software developer, releases technology that further inhibits our ability to collect anonymized commerce data, our business and results of operations could be materially impacted.

Internet users also are able to download free or paid “ad-blocking” software that prevents third-party cookies from being stored on a user’s computer and blocks advertisements from being displayed to such user. If the availability of ad-blocking software increases and its use becomes more prevalent on computers and mobile devices, fewer of our cookies or our clients’ cookies may be set in browsers. As a result, the number of users to whom we could serve our clients’ advertisements could be materially restricted, and the Criteo Engine would be denied the benefits of the data and impressions we could have otherwise collected from such users, which would adversely affect our business. If a significant number of web browser users download such “ad-blocking” software, our business could be materially impacted.

Item 6. Exhibits.

Exhibit Index



		Incorporated by Reference
Exhibit	Description	Schedule/ Form	File Number	Exhibit	File Date
31.1#	Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
31.2#	Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended
32.1*	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

# Filed herewith.

* Furnished herewith.

SIGNATURES

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



		CRITEO S.A.
		(Registrant)

	By:	/s/ Benoit Fouilland
Date: ~~November 13, 2017~~August 2, 2018	Name:	Benoit Fouilland
	Title:	Chief Financial Officer
		(Principal financial officer and duly authorized signatory)

5054



PART I	FINANCIAL INFORMATION	2
Item 1	Financial Statements	2
	Condensed Consolidated Statements of Financial Position (Unaudited)	23
	Condensed Consolidated Statements of Income (Unaudited)	34
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	45
	Condensed Consolidated Statements of Cash Flows (Unaudited)	56
	Notes to Condensed Consolidated Financial Statements (Unaudited)	67
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	2529
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4550
Item 4	Controls and Procedures	4651
PART II	OTHER INFORMATION	4752
Item 1	Legal Proceedings	4752
Item 1A	Risk Factors	4752
Item 6	Exhibits	4953
Signatures		5054



	December 31, 2016			September 30, 2017

	Useful Lives (Years)	Amounts recognized as of Acquisition Date (in millions)		Useful Lives (Years)	Amounts recognized as of Acquisition Date (in millions)
Technology	3-5 years	$	34.1	3-5 years	$	30.3
Customer relationships	5-9 years	65.5		5-9 years	84.5
Total identifiable intangible assets acquired		$	99.6		$	114.8