Criteo Q2 2025 Earnings Call Transcript

Key Takeaways

  • Positive Sentiment: Unified full-funnel platform strategy announced, leveraging proprietary commerce data, AI and global scale to deliver cross-channel, outcome-based self-service advertising for the next decade.
  • Positive Sentiment: Commerce Go adoption surged with 200% quarter-over-quarter campaign volume growth, while social spend rose 30% sequentially and CTV partnerships delivered strong performance metrics (e.g., Jewelry Television campaign drove 93% new users).
  • Positive Sentiment: Retail Media spend reached $400 million (+20% YoY) across 230+ retailers, powered by new on-site video and auction-based display offerings (16 live retailers so far) and 30% of Commerce Grid inventory running programmatically.
  • Positive Sentiment: Strong financial performance in Q2: $483 million revenue, $292 million contribution ex-TAC (+7% constant currency) and $89 million adjusted EBITDA, leading to raised full-year contribution ex-TAC growth guidance of 3%–4%.
  • Negative Sentiment: Some segments faced headwinds as U.S. ad budgets softened in discretionary categories, CPG and fashion spend declined, and ad tech services revenue was impacted by lower activity from a major trading client.
AI Generated. May Contain Errors.
Earnings Conference Call
Criteo Q2 2025
00:00 / 00:00

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Operator

Good morning, and welcome to Criteo's Second Quarter twenty twenty five Earnings Call. All participants will be in listen only mode. After the prepared remarks, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Melanie D'Ambre, Vice President, Investor Relations. Please go ahead.

Melanie Dambre
Melanie Dambre
VP - IR at Criteo

Good morning, everyone, and welcome to Criteo's second quarter twenty twenty five earnings call. Joining us on the call today, Chief Executive Officer, Michael Komatsinski and Chief Financial Officer, Sarah Glickman, are going to share some prepared remarks. Todd Parsons, our Chief Product Officer and President, Performance Media, will join us for the Q and A session. As usual, you will find our investor presentation on our Investor Relations website now as well as our prepared remarks and transcripts after the call. Before we get started, I would like to remind you that our remarks will include forward looking statements, which reflect Criteo's judgments, assumptions and analysis only as of today.

Melanie Dambre
Melanie Dambre
VP - IR at Criteo

Our actual results may differ materially from current expectations based on a number of factors affecting Crudeo's business. Except as required by law, we do not undertake any obligation to update any forward looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10 ks and 10 Q filed with the SEC. We will also discuss non GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today.

Melanie Dambre
Melanie Dambre
VP - IR at Criteo

Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year. With that, let me now hand it over to Michael.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Thanks, Melanie, and good morning, everyone. Thanks for joining us today. After immersing myself in the business over the past few months, I'm encouraged by what I see. Incredibly resilient company with unique assets and enormous potential. That time has reinforced my conviction in our strategy and in the talent and innovation that will drive our next chapter.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Now I'd like to share how we're thinking about the future and positioning our business to address the opportunities ahead. Our vision is ambitious and focused on delivering full funnel, cross channel, self-service advertising that performs. It's anchored by a solid foundation and grounded in a clear path to execution. We're building a unified outcome based advertising platform designed for the next decade of commerce, one that connects demand and supply, optimized for performance at every stage of the buyer journey. All of this is underpinned by a deep competitive moat coming from the combination of our unique commerce data set, cutting edge AI, and global reach.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Starting with the demand side of our business. We're advancing intuitive, self-service solutions to attract a broad range of budgets, from performance and trade marketing to national media, and serve all types of buyers, including agencies, brands and SMB advertisers. Our strategy is built on three key levers to re accelerate growth: cross channel, full funnel, and self-service. First, we're meeting consumers where they are, whether that's on-site, off-site, increasingly on connected TV, or soon, through AI assistants and agents. Second, we're extending our full funnel capabilities, building on the success of Commerce Audiences, which is our set of precision targeting tactics to leverage commerce data and advanced AI for customer acquisition and retention.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

And we expect our full funnel approach to unlock a larger share of advertiser spend, as we deliver measurable outcomes from discovery to purchase. Third, we're moving towards self-service to drive scale and efficiencies. These initiatives are already expanding our serviceable market, and they're key to long term sustainable growth. Moving to the supply side of our business. We offer retailers and traditional publishers best in class tools to deliver superior advertising performance and maximize yield across retail media and the open web.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We have the industry's most expansive retail media footprint, giving us exclusive access to premium global on-site inventory. Our strategy is focused on bringing programmatic flexibility into retail environments, advancing holistic page optimization, and scaling curated supply with retailer data deals easily accessible through any DSP. Together, our demand and supply capabilities create synergies that deliver better outcomes, simplify workflows, and reduce the tech tax. This convergence is already taking shape. The more we scale advertiser demand, the more value we create for media owners.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

The more exclusive or commerce enriched supply we bring to market, the more differentiated our performance becomes for advertisers. That flywheel is working, and we see tremendous opportunities to accelerate it. We see momentum in our platform strategy, reflected in deeper, more strategic partnerships with leading agencies. Last month, we announced an expanded global partnership with Dentsu, marking the first time a holding company is leveraging our complete commerce media platform stack. Today, we're thrilled to announce the recent renewal and expansion of our multi year global partnership with another major holding company, now also using all of our platform's powerful commerce solutions.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

These milestones signal growing confidence in our unified offering. Lastly, we're executing with discipline as we lay the foundation for sustainable long term growth with accelerated innovation. We're embracing the AgenTic AI opportunity, which we see as an exciting new frontier for commerce where our scale and differentiated commerce data positions us to deliver real value. Wherever shopping happens, advertising inevitably follows. As AI assistants and agents change how consumers discover and decide, the ability to surface the right product at the right time becomes even more critical.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

And that's exactly where we come in. Driving scalable performance in AI powered environments starts with data. Data that's high quality, structured, and constantly refreshed. In commerce, that requires far more than static product listings. It means access to real time, actionable data such as inventory levels, pricing, availability, and sourcing standardized across thousands of retailers.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We believe this is where Criteo has a unique and durable advantage. We bring product data and shopper journey signals at a scale and precision that differentiates us, powered by a reinforcement loop that continually improves performance. To enable this, we're developing model context protocol, or MCP, support for delivering product and shopper information to AI agents in a way that is real time, structured, and controlled. Prompt based recommendations are a natural extension of our strategy, and we're actively engaging with LLM vendors to explore how to best shape the next wave of consumer interaction. We're also advancing how audiences are built and activated, as we're moving toward real time, intelligent audience creation that eliminates the friction of traditional workflows.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Our goal is to enable brands and agencies to generate the right audience instantly, without delays from manual queries or data handoffs. At the same time, we're expanding where and how media can be activated, as we're embedding marketing capabilities into new environments, including agent interfaces. Ultimately, we're building tools for marketplaces and merchant networks to run full funnel, cross channel campaigns with simplicity and scale. Turning vision into impact, we're realigning the organization to sharpen our focus and align execution with opportunity. Our business has strong fundamentals, and we're ambitious in our long term outlook.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We're renewing our focus on performance media with an expanded market approach and accelerated AI innovation to drive our next phase of growth. We're also focused on unlocking the next generation of demand to realize retail media's full potential. Our new structure consolidates product, R and D, and commercial strategy under two seasoned leaders who will take on expanded executive roles: Todd Parsons, as Chief Product Officer and President, Performance Media, and Sherry Smith, as President, Retail Media. This streamlined organization will help us operate with greater agility, clearer accountability, and set the stage for long term sustainable growth. While we believe it will take a few quarters to reaccelerate growth, we have a world class team to execute against our strategy, and we're confident the foundations we're putting in place will bring multi year benefits.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Now turning to our second quarter performance. We delivered solid results, reflecting our team's strong execution. Starting with Performance Media. We're encouraged by the sequential improvement in our growth compared to Q1. We're building for durable growth and laying the groundwork for several multi year growth opportunities that we believe will accelerate as we scale.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Commerce Go continues to gain momentum as we simplify how advertisers plan, buy, and optimize across formats and channels. Powered by AI, Commerce Go automates decisions around audiences, channels, and creative, driving better results and lowering our cost to serve. Campaign volume grew 200% quarter over quarter, largely driven by increasing adoption from SMB advertisers and lower churn. We see Commerce Go as a multi year revenue growth driver, and we're focused on scaling this momentum by implementing an end to end self-service, streamlined workflow in the coming quarters. As part of our cross channel strategy, we expanded our social capabilities last quarter, enabling advertisers to activate Facebook and Instagram inventory at the SKU level for global commerce audience campaigns.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We have good traction with spend on social campaigns, growing nearly 30% sequentially this quarter. As we expand our full funnel capabilities, we're leaning into brand performance, and early results in CTV show strong potential as a powerful performance marketing channel. A great example is our recent partnership with Jewelry Television. We delivered CTV campaigns that drove 93% new users, a 20% increase in average order value, and more than doubled qualified site visits, clearly demonstrating CTV's ability to deliver measurable outcomes at scale. In addition, we recently announced a new partnership with WPP Media to reach high intent shoppers at scale across premium connected TV inventory, starting with Roku, Samsung, and Scripps.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We're making it easier for advertisers to run audience led CTV campaigns using curated deal IDs with Commerce Grid, our supply side platform. By combining rich commerce and identity data, we're helping them reach the right audiences and drive measurable results from initial exposure to purchase. Overall, our business remains resilient, supported by diversification across markets, verticals and products. We experienced notable strength in APAC again this quarter, largely led by full funnel activation and the success of our Marketplace offering, which allows Marketplaces to offer their merchants Criteo's targeting and retargeting tools. We continue to gain market share in travel, up 28% in the second quarter, driven by continued momentum in EMEA and in The Americas.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

A great example of the measurable impact of our platform is Itaka, Poland's leading travel brand. By activating full funnel reach with cross channel precision across web, app and meta, Itaka achieved a 5x return on ad spend, and nearly 5x higher click through rate. A key differentiator for us is our Commerce Grid supply side platform. It uniquely enables access to commerce audiences with full DSP interoperability, and provides the only programmatic path to retail media at scale. It's a growing contributor to our business as agencies and brands ramp up investments to activate commerce audience deals, and several leading retailers now use it to power off-site monetization.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Today, over 30% Commerce Growth inventory buys run through our SSP, with meaningful upside as adoption continues to grow in the years ahead. All these synergies across our platform are driving more scale, more flexibility, and more value for our partners. Moving on to Retail Media, which is a long term growth engine and differentiator for Criteo. As this category evolves, retailers are looking for strategic partners who bring global scale, flexible technology, and deep connections to brand and agency demand. Criteo delivers on all fronts, which enables us to keep adding new retailers and new brands while outpacing market spend growth quarter after quarter.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We continue to win RFPs, including returning clients, and we're pleased with the traction of our new product launches. After launching shoppable video ads in April, we launched our auction based display technology in June. Retailer adoption is ramping up rapidly, with 16 retailers already live across all regions in just a month, and this number is expected to double in the coming weeks. Auction based display is a great example of how we're making retail media easier to buy at scale. It's purpose built to bring programmatic flexibility to retail environments, giving retailers more robust media capabilities like biddable trading optionality, flexible pricing, efficient workflows, and advanced controls for ad relevancy.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

It complements reservation based deals to give retailers more flexibility and access to national media budgets. Today, on-site display makes up less than 10% of our retail media business, and represents approximately 30 to 40% of our clients' media mix, which shows significant growth potential. We drove close to $400,000,000 in media spend this quarter, up 20% year over year with over 4,000 brands globally. We continue to see substantial growth from our multi year partnerships with leading agencies, well above market growth rates, and we're incorporating new demand sources. Our new partnership with Miracle is expected to unlock demand from mid to long tail advertisers.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Together with Miracle, we enable third party sellers to easily launch campaigns, boosting product variety without adding operational complexity to retailers. We're deepening agency and API partnerships, and expect to incorporate more demand sources moving forward, including through Microsoft, which is progressing well, and other partnerships. We're expanding globally with new wins across all regions including Thermo Fisher, BJ's Wholesale Club, and Grocers Weiss Markets, Winn Dixie and Harvey's Supermarkets via our digital commerce partner, Mercottis, in The US. In closing, we're confident in the strength of our business and the momentum we're driving. We're operating at the intersection of powerful market trends with the assets, capabilities and strategy to lead and create lasting value for our shareholders.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

With that, I'll hand it over to Sarah, who will provide more details on our financial results and our outlook.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Thank you, Michael, and good morning, everyone. We delivered strong Q2 results with significant operating leverage enabled by top line growth and disciplined cost management. Revenue was $483,000,000 and contribution ex TAC increased to $292,000,000 This includes a year over year tailwind from foreign currencies of $6,000,000 At constant currency, Q2 contribution ex TAC grew by 7% year over year, representing growth of 21% on a two year stack basis. As previously communicated, we experienced a slow start to the quarter. We observed better macro trends in May and the environment has remained relatively stable since.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Client retention remains high at close to 90%. In Performance Media, revenue was $422,000,000 and contribution ex TAC was $232,000,000 up 6% at constant currency or 17% on a two year stack basis. We leverage our large scale commerce data and AI powered audience modeling technology to find in market shoppers. We saw continued strong growth for commerce audiences and retail bidding grew at a mid single digit rate. We benefited from further AI driven performance enhancements despite lapping a tough comparison with the significant AI improvements implemented last year.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

The growth of our commerce grid SSP is primarily driven by the traction of commerce audiences packaged with publisher inventory to deliver highly targeted campaigns. Lastly, ad tech services continue to be negatively impacted by lower spend by a large client in our media trading marketplace. Overall, we benefit from a global diversified client base. By region, we delivered high single digit growth in media spend in Asia Pac and low single digit growth in EMEA, while we saw lower budgets in The US. By vertical, travel remains our fastest growing vertical, up 28%, followed by Classifiers and Marketplaces performing well.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Broadly, there was lower spending in Retail, including Fashion, which was down 6%. In Retail Media, revenue was $61,000,000 and contribution ex TAC grew 11% at constant currency to $60,000,000 in line with our expectation. That's a 35% increase on a two year stack. As a reminder, quarter over quarter trends reflect lapping a tough comparison on tiered fees in January. Our growth was driven by continued strength in Retail Media On-site and traction for Off-site campaigns.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

We benefited from the contribution of newly signed retailers and growth from existing clients remained strong, with same retailer contribution ex pat retention at 112%. We saw continued expansion with CPG and smaller brands, and we onboarded 200 new brands this quarter. Our media spend in Q2 grew 20% year over year above market, demonstrating share gains. Momentum with our agency partners remains strong, and our 4,000 global brands are prioritizing retail media as a key channel given its close connection to the point of sale. We continue to win new retailers globally, including former Microsoft advertising retailers.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

We delivered adjusted EBITDA of $89,000,000 in Q2 twenty twenty five, reflecting strong operational leverage from top line growth and cost discipline, planned growth investments, including investments in our people and marketing events and lower than expected social charges for RSUs. Non GAAP operating expenses increased to $175,000,000 in Q2, including product investments, marketing events like CannLions and our long planned in person company wide event, partially offset by our rigor on resource allocation. We are building on our strong operational fitness to enable greater scale and efficiency. This means disciplined investments in growth areas, further optimization of our operating model, including the expansion of our lower cost hub in India and unlocking productivity gains through commerce, go, and AI driven tools. Moving down the P and L, depreciation and amortization increased to $36,000,000 in Q2 twenty twenty five, which includes approximately $9,000,000 largely related to accelerated amortization of privacy sandbox assets.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Equity related compensation expense was $22,000,000 Our income from operations was $30,000,000 and our net income was $23,000,000 in Q2 twenty twenty five. Our weighted average diluted share count was 55,100,000, which resulted in diluted earnings per share of $0.39 Our adjusted diluted EPS was $0.92 in Q2 twenty twenty five. As expected, free cash flow was negative by $36,000,000 in Q2, reflecting seasonality and payment of 2024 income taxes. Our trailing 12 free cash flow was $194,000,000 We anticipate positive free cash flow generation in the second half of the year and a free cash flow conversion rate of above 45% of adjusted EBITDA before any non recurring items this year. We benefit from a strong financial position and pristine balance sheet with solid cash generation and no long term debt.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

We had sorry, $746,000,000 in total liquidity as at the June, which gives us significant financial flexibility to execute on our strategy and enable disciplined and balanced capital allocation. Our priorities are to invest in high ROI organic investments and value enhancing acquisitions and to return capital to shareholders via our share buyback program. We are confident in our business strategy and we are committed to driving shareholder value. We deployed $48,000,000 for share repurchases this quarter, which included the repurchase of 1,700,000.0 shares. Year to date, we have allocated a $104,000,000 to share repurchases, and we had a $115,000,000 remaining in our board share buyback authorization as at the June.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Turning to our financial outlook, which reflects our expectations as of today, 07/30/2025. We have raised our guidance for the year while keeping a prudent approach given the remaining uncertainties in the macro environment and potentially lower ad budgets in discretionary categories. For 2025, we now expect contribution ex TAC to grow 3% to 4% year over year at constant currency, with growth in each of our segments. We now estimate ForEx changes to drive a positive year over year impact of about $1,000,000 to $3,000,000 on contribution ex TAC for the full year. In Performance Media, we now expect contribution ex TAC to be up mid single digits in 2025, raised from our prior expectation of low single digit growth.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

This reflects our solid performance in the first half of the year, continued traction with advertisers to drive performance throughout the buyer journey and the continued ramp up of Commerce Go. In Retail Media, our growth projection for 2025 remains unchanged and is projected to be in the low to mid single digits range at constant currency. As previously communicated, this includes the unchanged negative impact related to specific client dynamics mostly affecting Q4 twenty twenty five. Excluding these two clients, our underlying growth for 2025 is expected to be in the ballpark of 20%. Overall, we continue to anticipate an adjusted EBITDA margin of approximately 33 to 34% for 2025.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

We expect strong margins and cash flow generation, while continuing to invest in the growth of our commerce media platform, including investments in Agencik AI innovation. We believe these investments will position us for continued top line growth and strong cash flow generation for the coming years. We expect a normalized tax rate of 22% to 27% under the current rules. Our overall CapEx is expected to be approximately a $100,000,000 to a $110,000,000. For q three twenty twenty five, we expect contribution ex TAC of $277,000,000 to $283,000,000, up 5% to 7% at constant currency.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Our range takes into account uncertainty in the macro environment. We estimate ForEx changes to have a minimal year over year impact from contribution to ex TAC in Q3. We expect adjusted EBITDA between $81,000,000 and $87,000,000 This reflects continued high ROI growth investments in our platform and foreign exchange rate headwinds for our European cost base. Anticipate a slower pace of hiring and less discretionary spend for the remainder of the year. In closing, our strong Q2 results demonstrate the strength of our platform and resilience of our business model.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

We expect to continue to deliver growth, healthy profitability, and solid cash generation to drive shareholder value. We're confident in our strategy and uniquely positioned with the commerce data that powers our AI driven performance and relevance at scale across the buyer journey. And with that, I'll turn it over to the operator to begin the Q and A session.

Operator

Thank you. And our first question comes from Mark Kelley with Stifel. Please go ahead.

Mark Kelley
Mark Kelley
MD - Internet at Stifel Financial

Great. Thanks very much. Good morning, everyone. I just had a couple on the AgenTic AI, you know, product that you highlighted on the call and, you know, a handful of weeks ago. I guess the the first one would be, what's the right way to think about monetization or, I guess, the, you know, the the payment mechanism for a product like that?

Mark Kelley
Mark Kelley
MD - Internet at Stifel Financial

That's the first one. And then I guess, you know, as consumers start to use agents more frequently, you know, in the coming years, I guess, in your mind, is that a negative for retail media as we know know it today and and some of those budgets maybe flow towards, you know, this GenSeq AI product? Any thoughts there would be really helpful. Thank you.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Great. Thanks for the question. Hey, I'll start with a couple of quick thoughts and then I'll hand it over to Todd to take those. Look, we definitely look at AgenTic as a big opportunity for Criteo. Again, that perspective is grounded in the unique data assets that we have.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

The way that the money would flow into products like that is still being determined. The LLM vendors have yet to declare monetization strategies. Those could range from affiliate programs to sponsored citations, or even commerce transactions, product recommendation inside their platform. So there's quite a range of options of how that could evolve. So our sort of commercial models for those would vary from calls to our API, could be on a CPM or CPC basis.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

So I think there's quite a few varieties that we're looking at. But we're confident that we really bring a pretty unique capability to those discussions. I'll let Todd comment a little more on that and the retail question as well.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

Yeah, let me start with the retail question, Mark. So right now, obviously we observe traffic globally and what we're seeing more of is AI systems being used for discovery and less for conversion, which is good for the time being. What Michael said is true. We're setting up our back end, meaning our product recommendation capabilities, our audience capabilities, and our full funnel capabilities to be called by agents through MCP in order for us to be able to monetize in whatever the selected or winning hand ends up being. As Michael said, and we know this from partnering with and speaking with all of the major players in the space, the prevailing pricing model has not been defined.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

So our job from a product perspective is to make sure that our MCP setup is flexible enough to accommodate that winning hand. And so far, we haven't seen it. But what we have seen is tremendous interest in our partners getting to product recommendation, getting to commerce audiences, and getting the full funnel cross channel campaign setup through MCP. And we think being very concrete about those use cases will help us get to a pricing model very quickly that can be tailored to each individual partner. But the setup is most important.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

And just to emphasize Michael's point about our data and what we've been doing to structure it for years being useful in this new environment as being job one.

Mark Kelley
Mark Kelley
MD - Internet at Stifel Financial

Perfect. Thank you, Todd. Thank you, Michael.

Operator

And your next question comes from Ygal Arounian with Citi. Please go ahead.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Hey. Good morning, guys. Just just a follow-up on on that AgenTek AI and AgenTek Commerce. Just so I understand, your your clients, retailers, brands, think you mentioned the MLMs, are they actively spending on this or working with you guys on this? Where are we at in the opportunity to monetize this?

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Thanks for the question. Again, I'll just tee this up and then let Todd expand. It is early days in these discussions. I think what you see with retailers as an example is them really thinking about what their agentic front end looks like and wanting to make sure that they can control the data flows and their IP and that they retain a position in the shopper journey that keeps them relevant. As I said very directly, we definitely do not want to be disintermediated and turned into online fulfillment centers.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

So I definitely see a lot of discussion there about protecting data, setting up agentic front ends, and wanting to control and add value to the shopping experience. When it comes to brands, I think they're all sort of looking at sort of the changes in search behavior and wanting to make sure that they understand how to be discovered. And I'll let Todd sort of expand on the rest of that.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

Yeah, so whether it's a branded agent that sits on a retailer or a marketplace that we partner with, or whether it's an LLM that is trying to do product recommendation, we're setting up to serve either or and go beyond. So everything Michael said is true. Brands need discoverability in this new workflow for consumers. We see a lot of organic traffic coming through agents and it varies. It varies where they come from.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

But the setup for us is that we can serve all agents regardless of where they're domiciled. And that's exciting because whether a consumer chooses a retailer's agent, a brand's agent or an LLM, we're there with a product recommendation and a way to monetize that discovery, and later on the conversion that we expect to result.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Okay, that's an hitting topic. I'm sure there'll be a lot more on that. And then I wanted to dig a little bit deeper into the broader agency relationships as well. Called out the one with Dentsu and you're also seems like an opportunity that's still pretty early. As you as you go to these go to agencies and holdcos and kind of move to the broader set of products that you're pitching, like you did with Dentsu.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Can you talk about that motion, like the sales motion, the go to market motion and the competitive differentiation and what you're offering now as a full end to end suite? And is there any way to help frame how this is flowing through the financials and what the impact is on that front? Thank you.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Sure. Hey, thanks for the question. Happy to start this and have Sarah give a little extra color on the flow through. In terms of the go to market, which I think is the great way to ask that, we start those conversations at the highest level and really take a look at what is the sort of partnership set up with the agency. And I always say it's really three things.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Do we have a commercial agreement that creates shared economics for both parties? Do we have a data integration strategy where our data can flow to theirs or be matched to create value? And do we have a co development strategy where we are building tools that help our agency partners differentiate themselves around our services. So it's always for me the three legged stool of how we approach an agency relationship. Specifically on products, we're seeing really good traction with the bundling of the Commerce Growth Platform, our performance offering, Commerce Max, our retail media DSP, and Commerce Grid, our SSP, where agencies oftentimes want to go direct to curated audience buys.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

And it's really bundling those three things together. And then we really get deep into the agency as well in terms of training, how we provide customer service. We even sometimes will co locate people on-site. Because really what we're trying to do is drive adoption at the user level and make sure that our tools are the preferred choice for the people that are hands on keyboard using them. And that's what gives us greater share of wallet inside of those agencies once we've created the partnership or commercial framework that frames it. Sarah?

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Yeah, mean in terms of how the money flows through our financials, effectively it goes to the product that it relates to. So retail media would obviously be reported in retail media, performance media and forward media. But just in terms of the growth, I mean, this is the fastest growing part of our business. The deals that we just announced are going are spending across the entire platform, as Michael said. For example, in retail media, we had about 38% of our business in 2025 coming from agencies versus 30% the year before.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

So really strong traction across the board and now we've got to get the dollars through, which we see very much so with C grid at the front end as well. That's been well adopted.

Ygal Arounian
Ygal Arounian
Director - Internet Equity Research at Citigroup

Great. Thanks, guys.

Operator

Your next question comes from Justin Patterson with KeyBanc. Please go ahead.

Justin Patterson
Justin Patterson
Managing Director at KeyBanc Capital Markets

Great. Thank you very much and good morning. I wanted to hit on CTV a little bit. The partnership looked pretty interesting that was announced yesterday. I'm just curious how you think that the timeline to ramping up this channel and providing value to advertisers will take there. Thank you.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Yeah, thanks Justin. Definitely excited to talk about this. We had a couple of, I think, great pieces of content in this earnings cycle around CTV case study with jewelry television, which really demonstrates the efficacy of performance in CTV. And then as you referenced in the question, the partnership with WPP media. I would say, look, we're at the early stages still of assessing how CTV sits for us and really how we build connections, I would say, between the living room and other channels.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

But the partnership with WPP Media flows through our Commerce Grid SSP, and we're able to create those curated deal IDs that enable advertisers to connect essentially commerce first CTV strategies. And it's quite flexible, so it's with the DSP of their choice, which I think that the agencies like, because it gives them flexibility to drive those solutions across clients that have embedded DSPs on the front end. So I would say it's early days, we continue to make traction with partnerships like the one announced and some others that we're working on. And it continues to be a more meaningful mix of our supply base overall. And I think it'll continue to ramp and accelerate as we go into '26.

Justin Patterson
Justin Patterson
Managing Director at KeyBanc Capital Markets

Thank you.

Operator

Your next question comes from Alec Brondelow with Wells Fargo. Please go ahead.

Alec Brondolo
Alec Brondolo
Director - Equity Research at Wells Fargo

Yeah, thanks so much. We know that a significant percent of Amazon's Retail Media business is with longer tail marketplace sellers. Could you maybe just walk us through how the Miracle deal helps you penetrate that market? And then maybe a second question, if I could. After the two customer challenges in Retail Media last quarter, I think there's lot of angst in the investor community that it might beget future issues.

Alec Brondolo
Alec Brondolo
Director - Equity Research at Wells Fargo

How confident are you that you're going to be able to retain the rest of the retailer base? And can you provide an update on the retailer count? I think it was two twenty five at the end of last year. Thanks.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Sure, I'm happy to take those. But the miracle partnership is super exciting. As we've described in the release, Miracle is one of the real fastest growing providers of marketplace support, which is also one of the big secular trends inside of retail media, as retailers look to add third party products and demand to their sites. So it's a really good match, fast growing category with one of the fastest growing providers in the space. And really, we're there to unlock demand from third party sellers in the mid to long tail.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

For Miracle, it gives them a value proposition to allow them to drive demand generation with targeting and retargeting tools from Criteo in a really easy setup. Really enhances their value proposition quite a bit. And so and obviously it's great for Criteo because it drives demand and usage of our platforms. It's quite a mutually beneficial partnership. And Miracle, I think, is well competitively positioned against Amazon because again we have the thesis that many retailers are not going to want to work with Amazon, whether it's in marketplace support, retail media, or anything else, including AWS support.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

And so it really I think it's a great fit with our client base, especially in that mid to long tail of retailer sets. The second question I think you had was on retail media and Sarah can comment a little bit on how we're thinking about that.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Yeah, well I think the question is on the number of retailers, unless I missed part of the question. So, I mean we don't keep updating the numbers, but just to to update the number, we now have we now partner with over 230 retailers, and we did roll off some less possible players over the last year that represented less than 2% of our CXT, so just to size that. I would say what's important here is that for those retailers, we have a sizable base in The US. We have we partner with 70% of the top 30 retailers in The US and 50% of the top 30 retailers in Europe. So we we feel very good about being complementary to Amazon and continuing to drive our footprint across globally and across Europe as well as Asia Pac.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

And then we did add some of the new Microsoft partnerships this quarter as we disclosed as well.

Alec Brondolo
Alec Brondolo
Director - Equity Research at Wells Fargo

Perfect. Thank you.

Operator

Next question comes from Thomas White with D. A. Davidson. Please go ahead.

Tom white
Managing Director, Senior Equity Research Analyst at D.A. Davidson Companies

Great. Thanks for taking my question. Just a follow-up on CTV. It seems like you guys are talking about the potential for CTV to be more of a performance based kind of accountable medium. Can you maybe just talk a little bit about you know, what is it about your offering in that channel, you know, that, you know, positions you to to maybe, you know, crack into a space where there are already some, you know, decently entrenched competitors, specifically around that angle of sort of performance based or making it more accountable? Thanks.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Thanks, Thomas. I'll have Todd take this one.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

Hey, Thomas, I think it's pretty simple. CTV has shown a huge amount of promise for awareness advertising and for discovery, product discovery. But it's been very difficult for advertisers to tie their advertising to SalesLift or to a better cost per order. And that's something that we do quite well. So when you think about our unique value proposition relative to CTV, and what Michael said before, which is there's a brand performance sort of veil on that.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

That's what makes us special. For us to be able to show incremental return on ad spend, for us to show sales lift organically is coming from those CTV sessions is a pretty special thing. And so that's the way we enter the market. And when you think about the buyer journey and we talk about discovery advertising at the top of the funnel being so important, CTV gives us a huge swath of of surfaces to reach consumers and then to tie that reach back to incremental sales lift, CPO, etcetera.

Tom white
Managing Director, Senior Equity Research Analyst at D.A. Davidson Companies

Thank you.

Operator

Your next question comes from Richard Kramer with Arete Research. Please go ahead.

Richard Kramer
Founder & Senior Analyst at Arete Research

Thanks very much. Michael, we've seen total Activated Media spend around $1,000,000,000 a quarter for the past four quarters with very limited growth. Can you parse out what the lower ad tech trading portion of that might explain that? And more importantly, can you speak to the drivers that might bring a step up in total activated media? Do the two announced Holdco deals with Dentsu and WPP include any firm spending commitments?

Richard Kramer
Founder & Senior Analyst at Arete Research

Or would you open up retail media SSP inventory solutions to third party DSPs? Thanks.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Thanks, Richard. Yeah, growing activated media spend really is a top priority. So it's something that we're very focused on. We believe that the strategy for performance media, right, this full funnel cross channel self-service is really the key to reverse that trend of that being flattish for the last couple of years. And we're really focused on that.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Obviously, we have great top line media growth with retail media. And then there has been a little bit of a drag from our ad tech services units, which Sarah could expand on as needed. Agreements with agencies typically are an endeavor or a commit. And they definitely do have sort of volume expectations. I think it varies a little bit agency to agency, but certainly there are numbers that are talked about in terms of what we're mutually trying to drive towards.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

And look, I really think it comes back to the performance products. So driving Commerce Go, continuing to build into additional channels, developing the mid and upper funnel offerings, and that's what's going to start bringing in an increase in activated media spend to complement the strong growth that we've had in CXT over the last couple of years. But it's definitely a top priority for the management team.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Yeah, and just

Richard Kramer
Founder & Senior Analyst at Arete Research

to Okay, and then a quick sorry, go ahead.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Sorry. Yeah. Just to unpack. I mean, ad tech services was down by, I would say, double digit millions, you know, kind of quite significantly year on year, and that was due to self preference seen from the largest ad tech player. Retail media spend is up 20%.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

It's significantly up in The US. We did have a marketplace in in Europe that had, I would say, high spend but very low CXT, and that's, so there's some, you know, some change in the numbers there in in retail media Europe. But overall, fee growth is stable but growing where we want it to grow and with, you know, good CPMs on the other side. So we we we feel good about the the focus on the acceleration of growth for the performance media segment. Ad tech services has been impacted by lower traffic.

Richard Kramer
Founder & Senior Analyst at Arete Research

And and maybe a quick follow-up for Sarah. You you know, there's obviously intense competition for AI and engineering talent. Can you talk about your strategy for attracting and retaining that talent? And do you expect it could impact future margins to ensure that you're able to staff up to address your AI opportunities?

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

I think Michael's dying to talk, but I'll but maybe if you ask me, I'll say we well, first of we attracted we attracted, first of all, fantastic for the new promotions that we just announced, so that gives focus, including including on on product side. Second, we we announced Will, who is gonna be the head of our product activation team, and that's, I would say, a fantastic hire, so really excited about that. We have a really strong base in Paris of, you know, I would say the best engineering talent there is in AI in our Paris hub, and we continue to have massive amounts of resumes coming in for people that wanna work on in Criteo. We actually have 60 new engineers in seats. I will add that, you know, teams love working at Criteo, so just more broadly, you know, we we have really strong retention of our of our engineering talent, including in those very high sought after areas.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

And, we we do interesting work, and we have fun as well.

Richard Kramer
Founder & Senior Analyst at Arete Research

Okay. Thanks.

Operator

Your next question comes from Doug Anmuth Please go ahead.

Maggie Hoffman
Equity Research Analyst at JP Morgan Chase & Co

Hi, this is Maggie Hoffman on for Doug. Thanks for taking the question. I just had two quick ones. So one on macro, is there any more color you can provide on what you're seeing across budgets? I know you mentioned lower retail and some lower US ad budgets as well.

Maggie Hoffman
Equity Research Analyst at JP Morgan Chase & Co

So just any additional color there would be great. And then more so on the Microsoft partnership. I know you mentioned some progress there. So curious if there's anything else you can share across retailer wins or, what's left to do with the demand integration. Thank you.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Yeah. I mean, just to share more color on the verticals, so we talked about 28% increase in travel and that's obviously off, I'd say quarter after quarter significant increases. Classifieds for us was a really good vertical. That's actually up on activated media spend about just under 30% year on year. And where we see, you know, challenges in our biggest sectors, we certainly see CPG being down just broadly, you know, kind of depending on the category, food and grocery slightly down to tech being down by 8%, and then non food, actually more discretionary items down double digit, 20 plus percent in some categories.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Home and garden's down about 12%, and then in terms of areas that we're seeing really good traction, yeah, travel and classifieds would be the key ones. So the benefit of our business is we're diversified globally and so there's obviously very different stories to that depending on the region and depending on the size of customers. Department stores in The US and fashion are the two categories where it's slightly more challenged.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

I can jump in on the Microsoft partnership. Obviously, has been a great multi year partner for us and this is just really expanding the envelope of that. As far as retail media is concerned, we're continuing to progress well on both fronts. On the supply side, we're preparing the launch of several important retailers across regions in the coming months and we talked about a couple of those wins. On the demand side, we are tracking, as we talked about before, to get the first real time set up broadly in retail media, we hope by the end of the year.

Todd Parsons
Todd Parsons
Chief Product Officer at Criteo

And so we're working together on that. It is a complicated technical challenge, to meet retailers' requirements for brand safety, for latency, and the variety of controls that that that they operate with today. But again, we're making great progress with that demand solution, which should be a real unlock for our retail media network partners.

Maggie Hoffman
Equity Research Analyst at JP Morgan Chase & Co

Great. Thank you.

Operator

Your next question comes from Mark Zugiewicz with Benchmark Company. Please go ahead.

Mark Zgutowicz
Equity Research Analyst at The Benchmark Company LLC

Thank you. Good morning, everyone. Two quick questions. Just on retail media broadly, a lot of conjecture out there in terms of the pace of growth. And I'm just hoping maybe you could update us on key drivers over the next twelve months in terms of your core CPG and retail versus commerce media, newer commerce media verticals that is.

Mark Zgutowicz
Equity Research Analyst at The Benchmark Company LLC

And then on the standardization front, perhaps an update on when that visually could become perhaps a tailwind versus a headwind for retail media growth? And then separately, just hoping you can maybe quantify initial demand that you're seeing for auction based display and on-site video and whether either will have a noticeable contribution to second half revenue. Thanks.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Yeah, Mark, happy to get this started. So the outlook for retail media growth over the next twelve months will continue to be driven, I'd say, multi fold. One, we continue to win new suppliers like the ones we announced here in this call like BJ's, Thermo Fisher, etcetera, and we have other announcements pending for next quarter. It'll come through the scaling of some of the new products that we've launched, like the on-site video product that we launched in April and the programmatic display product that we launched in June. Specifically to your question on programmatic display, that's a great uptake, right?

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

We have 16 retailers live and we think that that's gonna double in the coming weeks. So it's really taking off. And I think we mentioned in the prepared remarks the gap between the current spend level on our product versus what it is as a total mix for retailers, which really shows the kind of the opportunity that we're chasing with scaling that product. And so that will continue to ramp up over the next twelve months, both of those. I'd say the biggest and longer term one that'll probably be more of a 2026 growth driver will be what Todd was talking about when he answered Microsoft question, which is, as we start to develop the technology to unlock real open RTB for retail supply, I think it's really like the next leg of growth, not just for Criteo, but for the entire And we're really looking forward to leading the charge on that.

Michael Komasinski
Michael Komasinski
CEO & Director at Criteo

Criteo will absolutely be at the front of developing that capability for the industry. And again, it'll scale because it'll improve fill rates and really normalizes what is still a lot of demand that doesn't make its way into retail media networks even today at the stage of maturity that we've achieved.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

And just just in terms of activated media spend, we we do see that there is some impact with certain retailers that are more mature in our base, there's less growth. All all the all the factors that Michael spoke about are all key drivers for our growth in media spend. So we're seeing traction, I would say, across the board, lower some slower start ups of new retailers that have been signed, so that will be more a 26 driver versus 25, and then continued traction on especially on large brand spend in retail media in North America.

Operator

Your next question comes from Brian Pitts with BMO Capital Markets.

Brian Pitz
Brian Pitz
Managing Director at BMO Capital Markets

Question. Any additional color based on commentary from your advertisers on how they're really thinking about tariffs in the second half and on holiday demand? So if it's let's say we settle at 15% across the board, will that be a positive or negative? Where do they kinda think about getting more bullish? And then separately, I I believe same retailer contribution ex TAC for retail media was a 112%.

Brian Pitz
Brian Pitz
Managing Director at BMO Capital Markets

That was actually down a bit from 120 last quarter. If you consider the expected second half churn, how are you thinking about the durability of same retailer contribution ex TAC for the rest of the year? Thank you.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

So in terms of our outlook, I would say we've been prudent in our outlook. We do see the color related to Americas versus Europe. We do not have a significant, as you know, China base. It's very, very small for us, and we tend to focus more on in country larger brands. We we do see some impact for the tariffs in The US more for consumer sentiment versus the impact of tariffs, although there is some impact clearly on certain categories and certain retailers, largely on the Performance Media side.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

In terms of same retailer TXT, yes, it's still strong and we obviously have some tougher comps on that as well and we expect that to continue to grow with our existing base and then adding the new retailers over time.

Brian Pitz
Brian Pitz
Managing Director at BMO Capital Markets

Great. Thanks, Sarah.

Sarah Glickman
Sarah Glickman
Chief Financial Officer at Criteo

Thank you, Michael, Sarah, Todd. That concludes our call for today. Thanks again, everyone, for joining. If you have any follow-up questions, the Investor Relations team is available to assist. Have a great day.

Operator

The conference has now concluded. Thank you so much for attending today's presentation. You may now disconnect.

Executives
    • Melanie Dambre
      Melanie Dambre
      VP - IR
    • Michael Komasinski
      Michael Komasinski
      CEO & Director
    • Sarah Glickman
      Sarah Glickman
      Chief Financial Officer
    • Todd Parsons
      Todd Parsons
      Chief Product Officer
Analysts
    • Mark Kelley
      MD - Internet at Stifel Financial
    • Ygal Arounian
      Director - Internet Equity Research at Citigroup
    • Justin Patterson
      Managing Director at KeyBanc Capital Markets
    • Alec Brondolo
      Director - Equity Research at Wells Fargo
    • Tom white
      Managing Director, Senior Equity Research Analyst at D.A. Davidson Companies
    • Richard Kramer
      Founder & Senior Analyst at Arete Research
    • Maggie Hoffman
      Equity Research Analyst at JP Morgan Chase & Co
    • Mark Zgutowicz
      Equity Research Analyst at The Benchmark Company LLC
    • Brian Pitz
      Managing Director at BMO Capital Markets