Criteo Q2 2026 Earnings Report

Criteo EPS Results

• Actual EPS: $0.80
• Consensus EPS: $0.71
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $0.92

Criteo Revenue Results

• Actual Revenue: $428.02 million
• Expected Revenue: $263.40 million
• Beat/Miss: Beat by +$164.62 million
• YoY Revenue Growth: -11.30%

Criteo Announcement Details

• Quarter: Q2 2026
• Date: 8/5/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 8:00AM ET

Criteo (NASDAQ:CRTO) is a global technology company specializing in digital performance advertising and commerce media solutions. The company provides a range of AI-driven ad products designed to help brands, retailers, and agencies deliver personalized promotional messages to consumers across web, mobile, and connected TV environments. By leveraging large-scale data analytics and machine learning algorithms, Criteo’s platform optimizes the timing, placement, and creative of ads to drive engagement and conversions.

At the core of Criteo’s offering is its dynamic retargeting solution, which enables advertisers to automatically generate and display personalized product recommendations based on user behavior. Alongside dynamic retargeting, the company offers unified shopping experiences, audience targeting, and bidding services that span display, social, video, and native ad formats. More recently, Criteo has expanded into commerce media, connecting brands with consumers via retailer-owned channels such as on-site display ads, sponsored products, and full-funnel marketing campaigns.

Founded in 2005 in Paris, Criteo went public on the Nasdaq in October 2013, marking a key milestone in its growth from a startup focused on real-time bidding for display ads to a leading independent ad tech platform. The company maintains a diverse leadership team, with Megan Clarken serving as Chief Executive Officer since 2019. Under her guidance, Criteo has pursued strategic partnerships with major retail and publishing partners, while investing in identity resolution and privacy-compliant advertising solutions.

Headquartered in New York City and operating offices across North America, Europe, Asia-Pacific, and Latin America, Criteo serves thousands of advertisers and publishers of all sizes. Its client base spans retail, travel, finance, consumer packaged goods, and automotive sectors, among others. As data privacy regulations and consumer expectations evolve, Criteo continues to enhance its platform with industry-leading measurement tools, proprietary identity capabilities, and flexible deployment options to support performance-driven marketing worldwide.

Criteo Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Q2 missed expectations as several large enterprise Performance Media clients reduced spending, leading to a 12% constant-currency decline in Contribution ex-TAC and a revised 2026 outlook for a 10%–12% decline.
• Negative Sentiment: Management now assumes no recovery from affected enterprise clients through year-end and expects Q3 Contribution ex-TAC of $237 million–$241 million, down 14%–15% year over year; adjusted EBITDA margin guidance was reduced to approximately 30% for 2026.
• Positive Sentiment: The OpenAI partnership is scaling rapidly, with more than 2,000 brands now running campaigns and ChatGPT traffic converting at roughly 1.5–2 times the rate of traditional referral traffic; management expects OpenAI and broader agentic-AI initiatives to become meaningful growth drivers in 2027.
• Positive Sentiment: Underlying Retail Media Contribution ex-TAC grew 20% excluding previously announced client scope reductions, while retail media spend rose 31% and Auction-Based Display expanded to more than 85 retailers globally.
• Positive Sentiment: Cost discipline supported $73 million of Q2 adjusted EBITDA despite weaker revenue, and Criteo ended the quarter with no long-term debt, $180 million in trailing-12-month free cash flow, and $160 million remaining under its share-repurchase authorization.

Presentation

[Operator]

Morning, and welcome to Criteo's second quarter 2026 earnings call. All participants will be in listen-only mode. Should you need assistance, please press the star key followed by zero. After the prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then the number one. To withdraw your question, please press star then the number two. Please note that this event is being recorded. I would now like to turn the conference over to Mélanie Dambre, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.

[Mélanie Dambre, SVP of Investor Relations and Corporate Communications at Criteo]

Good morning, everyone, and welcome to Criteo's second quarter 2026 earnings call. Joining us on the call today, Chief Executive Officer Michael Komasinski and Chief Financial Officer Sarah Glickman are going to share some prepared remarks. Joining us for the Q&A session is Todd Parsons in his role as Chief Product Officer. 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. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today.

[Mélanie Dambre, SVP of Investor Relations and Corporate Communications at Criteo]

For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Form 10-K and 10-Q filed with the SEC. We'll 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. 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, CEO at Criteo]

Thanks, Mélanie. Good morning, everyone. Before we begin, I'd like to share an important leadership update. After six years as Chief Financial Officer, Sarah Glickman will be stepping down from her role on August 10th and will remain with Criteo as an advisor through the end of September. On behalf of our board and everyone at Criteo, I want to thank Sarah for her exceptional leadership and many contributions to Criteo. She's been instrumental in strengthening our financial foundation and driving greater operational discipline during a period of significant transformation for the company, and we are grateful that she will continue to support the business and ensure a seamless transition. I am also pleased to announce that Connor McGogney has been appointed Chief Financial Officer effective August 10th.

[Michael Komasinski, CEO at Criteo]

Currently serving as Chief Strategy Officer, Connor brings a unique combination of finance, strategy, and capital markets experience together with deep knowledge of our business and our financial operations. Having served in senior finance and strategy leadership roles across the company, he has been a key partner in shaping our long-term strategy, capital allocation priorities, and transformation. His broad perspective across the business and strong relationships throughout the organization make him exceptionally well-positioned to lead our finance organization as we execute against our strategy. Connor looks forward to meeting many of you in the weeks and months ahead. With that, let me turn to our quarterly results. The second quarter was a challenging one for Criteo. We did not meet the expectations we set for ourselves, and we will be transparent about the factors behind our revised outlook and the actions we are taking.

[Michael Komasinski, CEO at Criteo]

Primary drivers were the client-specific Performance Media dynamics that we discussed last quarter, which became more pronounced during the quarter. Several large enterprise clients further reduced spending, primarily driven by client-specific decisions and softer demand in specific verticals. While the vast majority of our client base remained resilient, these spending decisions more than offset the progress we made across the broader business. While we are confident in the actions underway to improve the performance of the business, we have taken a more conservative approach to our outlook. Our guidance reflects what we see in the business today and assumes no improvement in spending from those large enterprise clients through the balance of the year. We believe this provides a prudent and achievable baseline for the remainder of 2026. Our focus is on consistently delivering against the commitments we make.

[Michael Komasinski, CEO at Criteo]

While we are not providing any outlook beyond this year, in Performance Media, we are focused on commercial execution while continuing to advance our full-funnel, cross-channel, and self-service strategy. We believe these initiatives will improve the trajectory of our business over time, although our current outlook does not assume any meaningful benefit from them this year. In Retail Media, the previously communicated client scope reductions are largely behind us after Q3, providing a more supportive backdrop for the business as we move beyond those headwinds. Even as we face these top-line headwinds in the second quarter, we delivered strong Adjusted EBITDA through disciplined cost management and productivity gains without reducing investment in our strategic priorities. Importantly, while our near-term assumptions have changed, our long-term strategy has not.

[Michael Komasinski, CEO at Criteo]

The progress we are seeing across our strategic priorities reinforces our conviction that we are investing in the right opportunities We remain committed to disciplined execution while continuing to evaluate every opportunity to maximize shareholder value. At the core of that strategy is Commerce Intelligence, combining large-scale commerce data with AI decisioning to predict shopper intent and optimize outcomes across increasingly fragmented shopper journeys. We believe AI is creating a new commerce paradigm, and Criteo is uniquely positioned to help brands and retailers navigate that transition. The rapid evolution of AI is creating entirely new opportunities for Criteo, and our partnership with OpenAI is a great example. Only a few months ago, we became OpenAI's first advertising technology partner. Today, that partnership continues to exceed our expectations, attracting new advertisers and expanding our addressable market.

[Michael Komasinski, CEO at Criteo]

The number of brands running campaigns through OpenAI has now surpassed 2,000, more than double the 1,000 brands we announced at the end of April. We continue to attract incremental budgets from both existing advertisers and new clients, making OpenAI both our fastest-growing partnership and our fastest-growing channel. Advertisers benefit from dedicated support for campaign setup, prompt strategy, and ongoing optimization. We are quickly expanding internationally, and our demand integration is now available across seven countries, with additional country launches planned, including Mexico and Brazil. This follows our recent launches in Japan and South Korea. We've also integrated OpenAI directly into Criteo GO, enabling advertisers to activate ChatGPT alongside display, social, and other channels through our self-service platform. The early performance validates the opportunity.

[Michael Komasinski, CEO at Criteo]

Traffic from ChatGPT converts at approximately one and a half to two times the rate of traditional referral traffic, while roughly 80% of paid traffic is new to the brand. This demonstrates that AI is creating an entirely new discovery channel that complements existing media rather than replacing it, expanding advertisers' reach and unlocking incremental budgets. We are also pioneering a new category of Retail Media. With Metro Inc., we became the first to bring AI-enriched retailer product catalogs into ChatGPT. We believe this opens an entirely new source of demand for brands and a new monetization opportunity for retailers. We are particularly excited about OpenAI's new Custom Audiences capability because it reinforces one of Criteo's core differentiators.

[Michael Komasinski, CEO at Criteo]

We bring rich commerce audiences built on years of investment in commerce data and identity, enabling advertisers to activate AI campaigns with a level of relevance and scale that is difficult to replicate. We believe this combination represents a durable competitive advantage as AI advertising continues to scale. Beyond our OpenAI partnership, we are embedding agentic capabilities across our platform. Our AI-powered conversational ad format transforms advertising across the open web into guided shopping experiences, helping brands engage consumers earlier in the discovery journey while generating richer intent signals that improve relevance over time. We're also unlocking a new Retail Media monetization opportunity through sponsored recommendations in retailer AI assistants. Albertsons became the first retailer to launch this capability with us, and we expect additional retailers to follow as conversational shopping is gaining traction.

[Michael Komasinski, CEO at Criteo]

Together, these innovations show how agentic AI is reshaping commerce and helping brands engage consumers earlier in their shopping journey while enabling retailers to participate in the next generation of AI-powered shopping experiences. We are also seeing encouraging adoption of our MCP capabilities across agencies. Major agency holding companies have now integrated our MCP server into their workflows, enabling planners to build and activate campaigns using natural language. This is making campaign execution faster and more efficient while embedding Criteo more deeply into our clients' day-to-day workflows. Turning to Performance Media, our near-term challenges do not change the actions we are taking to restore growth. We remain focused on expanding self-service, increasing cross-channel activation, and extending performance further up the funnel. We are also taking targeted actions to enhance our measurement capabilities, further strengthening our platform and the value we deliver to clients.

[Michael Komasinski, CEO at Criteo]

Starting with our self-service offering, GO is making encouraging progress in strengthening our ability to serve the large and under-penetrated SMB market. Adoption among our existing clients is progressing faster than we anticipated. Today, more than half of our small clients globally have adopted GO, driving accelerated productivity gains while lowering our cost to serve. While it remains early for new client acquisition, we are beginning to see encouraging leading indicators. Account creation in June was approximately 3x higher than during the initial months following launch, giving us confidence that awareness and adoption continue to build. Client feedback has also been positive. Advertisers consistently tell us they value the platform's ease of use, enterprise-grade targeting capabilities, and AI-powered creative automation, which enable them to launch and optimize campaigns with minimal manual effort.

[Michael Komasinski, CEO at Criteo]

Just as importantly, advertisers are embracing the platform's cross-channel capabilities. Close to 80% of our revenue from GO in the U.S. is already cross-channel, demonstrating that advertisers increasingly value managing display, social, video, and AI platforms through a single interface rather than separate point solutions. GO is more than a self-service platform. It is becoming an increasingly important part of our full funnel strategy. During the quarter, we introduced Discovery Audiences, enabling advertisers to engage consumers earlier in the shopping journey while optimizing performance from discovery through conversion. We are already seeing encouraging client results. For example, Agape Diamonds used Criteo GO to expand beyond traditional retargeting, combining AI-powered customer acquisition with performance campaigns across the open web and social channels. This approach increased return on ad spend and conversion rate by 20% while increasing average cart value by 13%. This is what commerce intelligence looks like in practice.

[Michael Komasinski, CEO at Criteo]

It enables advertisers to engage consumers wherever they are while measuring and optimizing outcomes across the funnel. Momentum across both social and OpenAI continues to build, with these channels nearly doubling their share of Commerce Growth campaigns compared with the first quarter. Every new channel expands the value we deliver to advertisers and creates new opportunities for Criteo to grow. Alongside product innovation, we have also been sharpening our commercial execution. The leadership changes we made have strengthened sales discipline, pipeline management, and client engagement across the organization. While these efforts take time to translate into revenue, we are encouraged by the early leading indicators we are seeing. Compared with a year ago, our qualified pipeline has grown by approximately 30%, reflecting a broader mix of clients and verticals.

[Michael Komasinski, CEO at Criteo]

In the U.S., we delivered 24% year-over-year growth in new business revenue during the second quarter, while our opportunity mix continued to diversify beyond our largest clients. We also continue to expand our agency business, with agencies now representing approximately 55% of our pipeline, up from about 35% a year ago. While the challenges affecting several large enterprise clients remain a near-term headwind, these leading indicators reinforce our confidence that the actions we have taken to strengthen our commercial engine are positioning us to deliver more durable growth over time. Turning to Retail Media, our execution remains strong. Excluding the two previously announced retailer scope reductions, our underlying Retail Media business grew 20% during the quarter, and we remain confident in our strategy and our outlook for the year. Our momentum is driven by progress across demand, supply, and product innovation.

[Michael Komasinski, CEO at Criteo]

Starting with demand, we are expanding relationships with both brands and agencies. During the quarter, Retail Media spend growth outpaced the market while the number of brands on our platform continued to grow. Commerce Max now extends beyond Criteo-managed campaigns to include retailer-sold campaigns, giving brands a single platform to activate, optimize, and measure campaigns across retail environments. Adoption is off to a strong start. Several leading grocery retailers are already participating, making it easier for advertisers to consolidate budgets and scale their Retail Media investments. We are also seeing strong adoption of conquesting, which helps brands reach shoppers considering competing products and is already driving incremental budgets across multiple retailers. On the supply side, we added new retailer partners across every region, including Loblaw Advance in Canada, Monoprix and Druni in EMEA, and Olive Young and Golf Digest Online in Asia-Pacific, while continuing to grow with our existing partners.

[Michael Komasinski, CEO at Criteo]

One example is DoorDash. Momentum with DoorDash is building, with growing advertiser participation, media spend, and a strong second-half pipeline across multiple categories, including beauty, personal care, and food and beverage. Innovation is also driving stronger monetization across our network. Auction-Based Display remains our fastest-growing advertising format and is now live with more than 85 retailers globally, up from 60 retailers last quarter. Retailers are increasingly adopting auction-based buying because it improves monetization and attracts more advertiser demand. We are also excited about Page Intelligence, our AI-driven orchestration layer that optimizes merchandising, monetization, and shopper experience together rather than independently. This helps retailers maximize shopper monetization while maintaining full control over the shopping experience. During the quarter, we secured our first retailer launch with one of our largest retail partners, an important milestone as we bring this next-generation capability to market.

[Michael Komasinski, CEO at Criteo]

As I mentioned earlier, AI-powered shopping assistants represent another compelling long-term opportunity, and we believe Criteo is well-positioned to help retailers monetize these emerging shopping experiences. These initiatives reinforce our confidence in the long-term potential of our Retail Media business and position us well as we move beyond the previously announced retailer scope reductions. As we execute through this period of transformation, disciplined capital allocation remains a core priority for Criteo and a key driver of long-term shareholder value. Despite our revised outlook for the year, we continue to generate attractive profitability and strong cash flow while maintaining a robust balance sheet. Last week, we successfully completed our redomiciliation to Luxembourg and direct listing of ordinary shares, an important milestone in simplifying our corporate structure. Looking ahead, we intend to pursue a subsequent redomiciliation to the U.S. as early as January of next year, subject to the necessary approvals.

[Michael Komasinski, CEO at Criteo]

This would complete the simplification of our corporate structure, position Criteo for U.S. index inclusion, and broaden access to U.S. investors. In closing, our top-line performance this quarter was disappointing, and we have responded with a more conservative outlook. We are confident in our plan to improve commercial execution while maintaining disciplined profitability and investing in our strategic priorities that we believe will shape Criteo's next phase of growth. The progress we are making across agentic AI, Criteo GO, Retail Media, and our commercial organization reinforces our confidence that we are building a broader, more resilient company with multiple drivers of sustainable long-term growth. With that, I'll turn the call over to Sarah, who will provide more details on our second quarter financial performance and our outlook for the remainder of the year.

[Sarah Glickman, CFO at Criteo]

Thank you, Michael, and good morning, everyone. Our second quarter results reflect the continued headwind from several large Performance Media clients that Michael discussed earlier, partially offset by disciplined execution across the rest of the business. Our second quarter media spend grew 9% to $1.1 billion. Revenue was $428 million, and Contribution ex-TAC was $255 million, including a $1 million year-over-year foreign exchange headwind. Overall, client retention remains high at close to 90%. At constant currency, Q2 Contribution ex-TAC was down -12%, including a $21 million impact related to previously communicated scope changes with two Retail Media clients. The approximately $7 million shortfall relative to the midpoint of our Contribution ex-TAC guidance was primarily driven by the Performance Media dynamics we discussed earlier. We experienced lower budgets than anticipated from several large enterprise clients, while our broader Performance Media client base remained resilient.

[Sarah Glickman, CFO at Criteo]

Performance Media revenue was $380 million, and Contribution ex-TAC was $208 million, down 10% at constant currency. This reflects soft performance in Commerce Growth, partially offset by improved year-over-year trends in AdTech services. Within Commerce Growth, the decline in media spend was driven primarily by client-specific spending decisions among several large enterprise clients. Media spend declined across all regions, with EMEA proving more resilient than the U.S. and Asia-Pac, although travel moderated after several years of exceptional performance. Retail remained softer overall, particularly in discretionary categories such as fashion, which was down 21%. In Retail Media, revenue was $48 million, and Contribution ex-TAC was $47 million, reflecting the previously communicated $21 million headwind in the quarter. Excluding this impact, trends remained strong, with Contribution ex-TAC growing 20% across the underlying client base.

[Sarah Glickman, CFO at Criteo]

We continue to add new innovative capabilities and benefited from the strong adoption of our Auction-Based Display offering, our fastest-growing Retail Media format. Our growth was supported by both strong expansion across our existing client base and new retailer additions. Same retailer Contribution ex-TAC retention was 84%, or 113% excluding our largest retailer, demonstrating the strength of our multi-year, often exclusive retailer partnerships. Media spending Q2 grew 31% year-over-year, sustaining the strong momentum we saw last quarter as over 4,500 global brands continue to prioritize Retail Media as a key channel for their investments to reach relevant audiences and grow sales. We delivered Adjusted EBITDA of $73 million in Q2 2026, reflecting lower top-line performance and planned growth investments, partially offset by lower-than-expected employee costs and bad debt expense due to strong cash collections. Non-GAAP operating expenses decreased 10% year-over-year as productivity improvements more than offset planned growth investments.

[Sarah Glickman, CFO at Criteo]

Continued deployment of AI and increased adoption of self-service capabilities improved efficiency, streamlined execution, and enabled better resource allocation. Moving down the P&L, depreciation and amortization expense declined to $32 million, while share-based compensation expense declined to $17 million. Our income from operations was $15 million, and our net income was $12 million in Q2 2026. Our weighted average diluted share count was 50.5 million, which resulted in diluted earnings per share of $0.22 compared to $0.39 last year. Our adjusted diluted EPS was $0.80 in Q2 2026 compared to $0.92 last year. Operating cash flow was $20 million, and as expected, free cash flow was -$38 million in Q2, reflecting seasonality and payments of 2025 income taxes. Our trailing 12-month free cash flow was $180 million. We anticipate positive free cash flow generation in the second half of the year.

[Sarah Glickman, CFO at Criteo]

Criteo is a resilient cash generative business with the financial strength to invest for growth and return capital to shareholders. We have a strong balance sheet with no long-term debt and significant liquidity. 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 committed to driving shareholder value and deployed $30 million to repurchase 1.7 million shares this quarter. There was $160 million remaining under the current authorized share repurchase program as at the end of June. In July, we canceled a total of 4.5 million treasury shares in conjunction with our redomiciliation to Luxembourg. Turning to our financial outlook, which reflects our expectations as of today, August 5th, 2026.

[Sarah Glickman, CFO at Criteo]

Our revised outlook incorporates year-to-date performance and reflects a more conservative approach by extrapolating current Performance Media spending trends through the balance of the year with no recovery assumed from the large enterprise clients that affected our second quarter results. We have maintained prudent macroeconomic assumptions. Our Retail Media outlook is unchanged. We now expect contribution ex-TAC to decline by -10% to -12% at constant currency in 2026. Our 2026 outlook does not assume meaningful contributions from OpenAI or our broader agentic AI initiatives. We anticipate these capabilities to become a meaningful growth driver beginning in 2027. We estimate foreign exchange will provide a year-over-year modest benefit to contribution ex-TAC for the full year. Turning to our outlook by segment, our Retail Media guidance remains unchanged.

[Sarah Glickman, CFO at Criteo]

We expect media spend growth ahead of the market, with contribution ex-TAC declining in the mid to high teens year-over-year at constant currency due to the $75 million client scope reduction impact. Excluding those two clients, the underlying Retail Media contribution ex-TAC growth for 2026 is expected to be in the high teens to 20% range we previously provided. In Performance Media, we now expect contribution ex-TAC to decline in the high single digits at constant currency in 2026. This assumes that the lower spending levels from certain large clients continues through the second half of the year, more than offsetting the ramp-up of Go. We expect lower travel growth in Europe as well as continued softness in discretionary retail, driven by inflation and weaker consumer sentiment. These dynamics remain largely concentrated in our international markets, EMEA and Asia-Pac, which together represent approximately two-thirds of our Commerce Growth media spend.

[Sarah Glickman, CFO at Criteo]

We now anticipate an Adjusted EBITDA margin of approximately 30% for 2026, given our lower top-line expectations. This is partially offset by continued disciplined cost management and productivity gains, while investing in agentic AI and other growth initiatives. We have a resilient business model that allows us to continue to fund our highest priority growth investments while maintaining rigorous cost discipline. We do not view 30% as a normalized profitability level for the business, and we continue to believe our model has meaningful operational leverage as top-line growth improves over time. We believe these investments position Criteo to return to sustainable top-line growth while continuing to generate strong cash flow. We expect a normalized tax rate of 27%-32% under current rules, driven by our evolving revenue mix and certain one-time items related to our redomiciliation.

[Sarah Glickman, CFO at Criteo]

As a reminder, we anticipate higher CapEx in 2026, primarily related to the renewal of certain data centers, with total CapEx expected to be approximately $190 million. We expect operating cash flow conversion from Adjusted EBITDA to improve to approximately 85% in 2026, up from 76% in 2025, driven by continuous improvements in working capital. We also expect free cash flow conversion of about 35% of Adjusted EBITDA before any non-recurring items. For Q3 2026, we expect Contribution ex-TAC of $237 million-$241 million, down 14%-15% at constant currency. Our outlook reflects the current spending levels of certain large Performance Media clients, which have remained consistent with the trends we saw in June and assumes no improvement throughout the quarter. We have also maintained prudent macroeconomic assumptions.

[Sarah Glickman, CFO at Criteo]

In Retail Media, this reflects the previously communicated client scope reductions, as well as tougher year-over-year comparisons for the underlying business in the second half. We estimate foreign exchange to be a larger headwind in Q3, reflecting more unfavorable rates compared to three months ago. We expect a $6 million-$8 million negative year-over-year impact on Contribution ex-TAC in Q3, about $4 million worse than under the rates assumed in our prior guidance. We expect Adjusted EBITDA between $54 million and $58 million, reflecting lower top line, continued investments in high ROI, agentic AI, and other growth initiatives, partially offset by disciplined cash cost management and productivity gains. In closing, our updated outlook reflects a prudent view of the business as we see it today. At the same time, I remain confident in Criteo's financial strength and its ability to execute against its strategic priorities.

[Sarah Glickman, CFO at Criteo]

Before we open the call for questions, I would like to say what a privilege it has been to serve as Criteo's CFO. I am incredibly proud of what we have accomplished together over the past six years, and I'm grateful to have worked alongside such a talented team. I would also like to thank our investors and analysts for their partnership and support over the years. I look forward to continuing to support Connor and the team during the transition. With that, I will open up the call for questions.

[Operator]

To ask a question, please press star, then the number one. If you're using a speakerphone, please pick up your handset before pressing the case. To withdraw your question, please press star then the number two. At this time, we will pause to assemble a roster. The first question comes from Ygal Arounian from Wedbush. Please go ahead.

[Ygal Arounian, Analyst at Wedbush]

Good morning, everyone. Sarah, it's been great to work with you. Good luck on the next phase. On the lower budgets than anticipated from the large enterprise clients, a couple of things. First, if you can maybe give a little bit more color exactly what's happening here from these clients, why they're pulling back and what changed from last quarter that they got worse. More broadly, we've been facing this type of environment where we've got to talk about the core underlying business is strong, and there's been one or two clients or whatever it is that are sort of getting in the way of that. How do we get to the point where we're kind of delivering and the strength of the core business is overriding client-specific issues?

[Ygal Arounian, Analyst at Wedbush]

It's been a little bit a while, but we've been dealing with this and just what's the visibility and kind of fixing all this? I have a follow-up.

[Michael Komasinski, CEO at Criteo]

I'm happy to take it. Thanks, Ygal. Let me take the point on the XL clients first, and then we can talk about the broader business. On the handful of enterprise clients, as we said, the trends that we saw earlier in the year continued to accelerate a little bit. Unfortunately, there isn't one common thread across that set of clients. For example, there would be a client that's been impacted in the travel vertical by the conflict in the Middle East. It could be a client that's been impacted by tariff changes and de minimis import rules. In some cases, a client where they have changed investment tactics and we were unsuccessful in retaining that budget as they shifted to other tactics in the funnel.

[Michael Komasinski, CEO at Criteo]

That one in particular points to the upgrades that we've made in our commercial organization, because we need to be able to capture that share shift when that happens. That's an execution issue that we're getting on top of. We have products available now, given the evolution of our product portfolio to move up and down the funnel. We need to be at the table with those clients as they make those decisions and make sure that we continue to keep that investment in the Criteo platform, and that's something that we're focused on over the course of the year. A couple of those root causes are a little bit harder to deal with, a couple of those are execution.

[Michael Komasinski, CEO at Criteo]

I think the other point I'd add, which starts to get, kind of to the second part of your question, we need to have our new business engine and our new products performing at a level that overcomes those ups and downs that we will see periodically with enterprise clients. These fluctuations in budgets are not unheard of. We need our new business machine and our new product initiatives to be scaling at a rate that can overcome the down cycles in that client segment. Unfortunately, we're just in this period right now where we're ramping up several really exciting products that just not scaled enough yet to make up the difference. There's some encouraging signs on the new business front. In Q2, new business performance in the U.S. was up 24% year-over-year.

[Michael Komasinski, CEO at Criteo]

Clearly product initiatives like the partnership with OpenAI or Criteo GO are exciting, and we expect those to be meaningful contributors next year, which gives us a more diversified growth stack as we go into 2027. Hopefully I've sort of given you the perspective on the XL clients and then how we think about the durability of growth as we go into next year. Happy to talk more about it.

[Ygal Arounian, Analyst at Wedbush]

Yeah, thanks. That's helpful. Just second on, maybe on a more positive note. Sorry, getting some feedback. On a more positive note, just on the Commerce Growth and the OpenAI partnership, understood with Sarah's comments, it's going to be more of an impact next year. Can you bridge us from where we are today to that bigger impact? One of the things that seems to be, as we go through earnings, is the traffic coming to a lot of, in travel, for example, continues to be minimal, and e-commerce players, Commerce Growth has been a strong top-of-funnel product that you talked about. Just how is the ecosystem and the landscape shaping up here as we're not seeing that kind of actual transactional element being layered in, but it's becoming a stronger top-of-funnel product discovery product. Thanks.

[Michael Komasinski, CEO at Criteo]

Yeah. I think what you've expressed there is what a lot of our clients are working through as they test the platform. They see highly qualified traffic coming from paid referral off the platform. The conversion rates we've talked about, 1.5x-2x higher. The statistic about 80% of that traffic being new to brand. That creates really a new discovery tactic, and we find that a lot of clients are then trying to figure out how does that fit into their overall mix, and where would they take budget from to fund larger budgets as they go into next year. I think really you think of clients in the testing phase right now trying to figure out how this powerful discovery vector fits into the rest of their mix.

[Michael Komasinski, CEO at Criteo]

Of course, there is also the parts that I think people forget about. We are still only live in seven countries. We have two more that will launch here in the near term, and then most of Western Europe is still yet to come, at some point in the near future. There is a lot of ramp up geographically yet to do, and then some of the really powerful product features that drive performance spending, like Custom Audiences, like CAPI and improved measurements, those things really only came online in the last couple of weeks. We really do have to give this platform a chance to scale. They are moving at an incredible pace, and we are proud to be one of their leading partners. That is why we are confident that it is going to be a meaningful contributor next year.

[Michael Komasinski, CEO at Criteo]

What we see right now is clients working through kind of operational issues to get set up, take advantage of the new features as they roll, and then figure out how that fits in the rest of their mix. Again, even in saying that, talking about clients in the seven countries that are live currently, let alone the ones that are yet to come. Lots of work to do, but certainly an exciting platform.

[Ygal Arounian, Analyst at Wedbush]

Great. Thank you very much.

[Operator]

Your next question comes from Ron Josey with Citigroup. Please go ahead.

[Jamesmichael Sherman-Lewis, Analyst at Citigroup]

Good morning. This is Jamesmichael Sherman-Lewis on for Ron. On the Performance Media headwinds, I wonder if you could add more color to the monthly cadence of spending patterns through the quarter, especially given the outlook of extrapolating June trends. Any update on those patterns into July? With that question, if you could provide a little bit more color on your more conservative outlook philosophy, and any conviction that the revised outlook has more upside here.

[Sarah Glickman, CFO at Criteo]

Yeah. Specific to the clients, it really does relate to, and I think we covered it, specific dynamics, especially in Asia-Pac, it was really the e-tailers that we saw having lower spend. In Europe, travel as a vertical was a significant growth vector for us last year. That has been impacted by, I would say, macroeconomic as well as other drivers in the quarter. We are seeing that continued, I would say, drag over the next couple of quarters. We are assuming that the current levels that we're seeing will not evolve to significant growth this year. In Americas, we've been very clear on the commercial execution focus that we have, and that is front and center the focus that we are on ensuring that we can turn this around.

[Sarah Glickman, CFO at Criteo]

In terms of the seed growth clients who are excelled, it's about 19% of our revenue relates to our largest clients. That includes the Retail Media, our largest client as well. It is quite a significant base for us with, I would say, some areas where we have new products that are in those clients, but with a lower growth rate than we had anticipated for the year.

[Jamesmichael Sherman-Lewis, Analyst at Citigroup]

Appreciate it. A quick follow-up, if I may. The annual performance data that we're seeing from the AI conversational ad format and the timeline here for movement goes from pilots to scaled commercial deployments.

[Michael Komasinski, CEO at Criteo]

Sorry, it broke up a little bit. I think the question was about AI sponsored in retail AI shopping assistants.

[Jamesmichael Sherman-Lewis, Analyst at Citigroup]

The conversational ad format and moving into scaled commercial deployment. Thank you.

[Michael Komasinski, CEO at Criteo]

Kind of similar to some of the commentary on the agentic programs. We don't assume much of a build in the guidance for this year. We do think that those will be meaningful contributors next year. I think you could lump the conversational ad format together with the sponsored products in retailer shopping assistants. We went live with Albertsons on their shopping assistant. We've got other retailers in the pipeline behind that. We've gone live with one travel client in Europe on the conversational ad format, and more behind that one. Nice proof points in the market on two really interesting ad units. We'd like to see more traction on those over the course of the year as that pipeline converts, and then again, believe that can be a meaningful contributor for next year, both of those types of formats.

[Jamesmichael Sherman-Lewis, Analyst at Citigroup]

Great. Thank you very much.

[Operator]

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

[Justin Patterson, Analyst at KeyBanc]

Great. Thank you very much. Could you talk about how the competitive markets shifted in the past couple of quarters? Are more people competing for Retail Media budgets? I'd love more about just who you're seeing with the... Sorry, my AirPods keep disconnecting. Who you're seeing within bake-offs and the rest, and whether you've observed any meaningful changes. Thank you.

[Michael Komasinski, CEO at Criteo]

Yeah. Hey, Justin. Thanks for the question. In Retail Media, not seeing a material change in the competitive dynamics. We continue to gain share. Our Retail Media spend grew 31% in the quarter, which outpaced the market. We had that growing at 26% in Q2, according to the Skai figures that have been published. There are a set of smaller competitors, but our win rate remains high, and we continue to secure major multi-year retailer renewals, as well as a couple of the new ones that we highlight in the script. We continue to roll out new products to help them monetize and grow their business, whether that's conquesting, Auction-Based Display, Page Intelligence, which opens up new stakeholders inside the retail C-suite as we get merchandising, and the retail network folks on the same page to optimize shopping experience.

[Michael Komasinski, CEO at Criteo]

There's a handful of smaller competitors out there that might be doing more bespoke or custom type work on a smaller scale. We definitely continue to enjoy a leadership position in that segment and confident in the outlook for that.

[Operator]

Your next question comes from Tim Nollen with SSR. Please go ahead.

[Tim Nollen, Analyst at SSR]

Hi. Thanks for the question. I've got two or three, actually. I'll try to consolidate best I can. Michael, you said that the ad budgets for commerce spending with OpenAI seem to be incremental. I'm just curious, where are they really coming from then? If they're not shifting from, for example, search into a chatbot spending budget, whatever that looks like. I'm just curious where the money is coming from. I think relatedly, maybe tying in the enterprise client slowdown. I just wonder, you're doing a lot of really interesting things with chatbot spending, and I just wonder, with some of the money that's slipping away elsewhere, are you maybe too far ahead of the game? Are clients ready to put money into these efforts? Is something maybe slipping because all the great stuff that you're doing is not quite market-ready yet?

[Tim Nollen, Analyst at SSR]

I just wanted to also ask, you had a take private offer during the quarter. I don't know if there's anything you could possibly inform us about in terms of your views on that at this point. Thanks.

[Michael Komasinski, CEO at Criteo]

Got it. Yeah, Tim, happy to take those. What I'll say is that today, that is largely test budgets. Most clients reserve a certain amount of budget in their overall media plan for testing new formats and products, and that is the majority of what we see going into OpenAI work today. That said, I think you raise an interesting question about, as those budgets scale, where does it come from? I believe that it won't come from any one particular platform or channel, right? As a new discovery surface, it probably will draw some spend from traditional search, think like brand keywords or product listing ads, things of that nature. It also could take things on the edge from general online video or other places where brands try to be discoverable.

[Michael Komasinski, CEO at Criteo]

I do think that there is a case for incrementality, right? There have been some studies published recently by a couple of the leading analyst firms showing how ad spend has continued to outpace GDP broadly, just due to the advances in advertising effectiveness. Budgets going into OpenAI certainly could benefit from that continued divergence. I do think it's a little bit TBD, but no question, it's a powerful discovery platform, and the budgets are going to have to come from other areas with some potential incrementality as it continues to drive outcomes and, again, that divergence from GDP versus spending. The second question on enterprise clients is an interesting one. I don't know that we're ahead of the market exactly, but I think what we're focused on when it comes to enterprise clients is commercial execution.

[Michael Komasinski, CEO at Criteo]

We need to be more of a trusted advisor, have a closer seat at the table, and we have more products to sell than we had in the past. If you go back a couple of years, the product set on the Performance Media segment was a little more limited, mostly lower-funnel kind of remarketing tactics. Now it's more of a full-funnel, multi-channel sell, and that means that we've got to be more advisory, and be able to work with clients as they want to shift tactics, as they think about how to think about incrementality versus different channels. That is the challenge that we are rising to with the investments that we've made in that commercial organization. There are a number of training and certification programs.

[Michael Komasinski, CEO at Criteo]

There's a lot of go-to-market work that's happening, Ed's just done a great job reinforcing the talent across the team. We believe that those actions are going to pay off over time. We've got plenty to sell right now that is in the market, let alone the things that are maybe a little further ahead of the market. I appreciate that question. On the last one, as you know, we don't comment on market speculation, but the board continues to be focused on looking at every opportunity to maximize shareholder value, and that's our position.

[Tim Nollen, Analyst at SSR]

Great. Thanks for all those. Thanks.

[Operator]

The next question comes from Alec Brondolo with Wells Fargo. Please go ahead.

[Alec Brondolo, Analyst at Wells Fargo]

Yeah. Hey, thanks so much for the question. I appreciate it. Maybe two from me. On the Performance Media side, I think a lot of conversation, perhaps, about what the underlying issue is. I would love to get your thoughts about how your advertisers are thinking about supply. Clearly, I think there's been a degradation in terms of traffic to open web publishers. Perhaps that's causing some of the customers to want to look elsewhere in terms of where they deploy media dollars. How much of the solution here, how much of the potential solution is perhaps shifting kind of the aperture of what media you buy against and that acting as maybe a vector to improve advertiser sentiment on your products? That's the first question. I think the second question on Criteo, the Criteo GO self-service campaigns, encouraging data point on the advertiser acquisition.

[Alec Brondolo, Analyst at Wells Fargo]

I think you said it was up 3x last month versus the initial month. What are you seeing from a spend per advertiser from the advertisers you've acquired thus far? Help us understand the size of the customers you're acquiring. Thanks.

[Michael Komasinski, CEO at Criteo]

Yeah, sure. Happy to take those. Thanks, Alec. Yeah, look, on the open web question, in the open web, you certainly see some pressure on lower intent traffic and long-tail publishers. Engagement from high-intent users remains strong, and we have access to broad, diversified, high-quality supply, and most importantly, we see no shortage of opportunities to engage with users to drive performance in those tactics. More broadly, what drives performance is the quality of user intent and the outcomes that we deliver, and those fundamentals remain stable. Now in spite of that, we are on a diversification path, 85% of our total media spend is already outside of desktop display. We see clients moving to this cross-channel setup, and they spend up to 3x more on average than single-channel clients. It really starts to reduce our reliance on any single environment

[Michael Komasinski, CEO at Criteo]

I don't know, Todd, if you wanted to add anything to the web commentary.

[Todd Parsons, Chief Product Officer at Criteo]

Not really. Clients are very focused on getting better consumer reach, new to brands, new to products, and we're incredibly good at finding high-intent traffic on the open web and getting very good at doing that in combination with emerging channels like OpenAI and also social, as we've talked about before. The net of which is our clients want to get to new traffic that's more likely and highly qualified to buy a product, and we're doing that across channels. I think on the Go question, I can just switch to that very quickly. It's still early days for that product. You heard Michael talk about the very positive trends in user acquisition after our first three months in business. What we're seeing is adoption across the small to medium-sized business spectrum, and that's very encouraging to us.

[Todd Parsons, Chief Product Officer at Criteo]

We don't disclose the spend per advertiser, but you can imagine how that maps between a medium client and/or a small client on a daily and a monthly basis. Those trends are pulling through to the users of the Go platform so far. It's early days. We keep a very close eye on this.

[Operator]

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

[Richard Kramer, Analyst at Arete Research]

Michael, or maybe for Todd, can you discuss whether Criteo's opened its user graph to third-party advertisers via SSPs, maybe even enabling buys by rival DSPs? How might your user graph and retail engagement be impacted by the sorts of new privacy and consent laws we see entering the market, like the one that just got enacted in New Jersey? One quickly for Sarah, since it didn't really get addressed in the call. You mentioned positive cash flow in the second half, but obviously you've got rising CapEx and some further costs. Are you expecting to sustain the share buybacks through the end of the $160 million remaining authorization? Any further comments on the sort of capital structure that you would see when you're heading out the door? Thanks.

[Todd Parsons, Chief Product Officer at Criteo]

Hey, Richard. Good to hear from you. I can hit the graph question. The answer is yes. Exposing the graph to third-party demand has always been part of our strategy. Whether that brand comes directly through a curated deal or whether that comes through an SSP is sort of just a variation of that strategy. We do expect that while we maintain a strong position in data and ownership over the graph, that opening it up to SSP traffic is just going to increase demand paths into the business. We're excited about that. On the privacy discussion, obviously, because as you well know, you were born from GDPR, we look at every emerging state regulation, and we hope for more of an exertive approach federally here in the U.S. to make sure that everything we're doing with privacy and data security is compliant.

[Todd Parsons, Chief Product Officer at Criteo]

New Jersey is just another item on that list, we have a group that watches that very closely to make sure that we're not outside the lines of compliance.

[Sarah Glickman, CFO at Criteo]

Thanks, Richard, for the question. First of all, we did cancel 4.5 million shares, which was in addition to the 1.9 million shares that we canceled in April. The board is very supportive of our share buyback program, and that was renewed as part of the redomicile to Luxembourg. We, as you know, always evaluate all opportunities to maximize shareholder value. In terms of the CapEx for this year and the cash flow, this is a higher year of CapEx with two new data centers, and that will normalize back to normal levels going forward in 2027. We're very happy with our cash position, our operational cash flows, the highest it's ever been, 85% of Adjusted EBITDA, and we continue to drive strong cash.

[Sarah Glickman, CFO at Criteo]

We have strong liquidity, and we will always be looking for ways to maximize shareholder value.

[Richard Kramer, Analyst at Arete Research]

Okay. Thanks, Sarah.

[Mélanie Dambre, SVP of Investor Relations and Corporate Communications at Criteo]

That concludes our call for today. Thank you everyone for joining us. If you have any follow-up questions, the Investor Relations team is available to assist. Have a nice day.

[Operator]

Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Mélanie Dambre, SVP of Investor Relations and Corporate Communications
• Michael Komasinski, CEO
• Sarah Glickman, CFO
• Todd Parsons, Chief Product Officer

Analysts

• Ygal Arounian, Analyst at Wedbush
• Jamesmichael Sherman-Lewis, Analyst at Citigroup
• Justin Patterson, Analyst at KeyBanc
• Tim Nollen, Analyst at SSR
• Alec Brondolo, Analyst at Wells Fargo
• Richard Kramer, Analyst at Arete Research