Business & finance · also called CexT
Contribution ex-TAC
Contribution ex-TAC is a non-GAAP metric, headlined notably by Criteo, that measures revenue after subtracting traffic acquisition costs and other direct costs of delivering the service.
Contribution ex-TAC goes one step further than revenue ex-TAC. It starts with revenue, subtracts traffic acquisition costs paid to publishers, and also subtracts other direct costs of revenue, such as certain data and delivery costs, to show the value a company creates from its own platform. Criteo, the commerce media company, adopted it as its main top-line performance measure, and reconciles it to gross profit in its SEC filings.
The metric exists because gross revenue can be dominated by money that passes straight through to partners. By stripping out pass-through costs, it better reflects the economic activity the company controls, and it is closer to what a net-reporting company would call revenue.
As with all non-GAAP measures, the exact definition is chosen by the company, can change, and must be reconciled to a GAAP measure under SEC rules. When comparing companies, confirm that the metrics subtract the same cost categories.
Think of it like this
Contribution ex-TAC is like a caterer's earnings after paying both the venue and the ingredient suppliers: what is left reflects the caterer's own work.
An example
A company has US$500M revenue, US$250M TAC and US$30M other direct costs. Contribution ex-TAC = 500 - 250 - 30 = US$220M.
Related terms
Revenue ex-TAC
Revenue ex-TAC is revenue minus traffic acquisition costs (TAC), the amounts paid to publishers and partners for the ad space or traffic, showing what an ad company keeps.
Gross vs net revenue
Gross vs net revenue is the accounting choice between reporting everything customers pay (gross) or only what a company keeps after paying partners (net), which complicates comparisons.
Adjusted EBITDA
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortisation, further adjusted by the company to exclude items such as stock-based compensation and one-time costs; it is a non-GAAP measure.
Earnings report
An earnings report is the periodic announcement, usually quarterly, in which a public company discloses its revenue, profit and other key results, often with an investor call and updated guidance.
Form 10-K
Form 10-K is the comprehensive annual report that US public companies must file with the Securities and Exchange Commission, including audited financial statements, business description and risk factors.