Criteo NASDAQ: CRTO reported second-quarter results that fell short of its own expectations, citing reduced spending from several large Performance Media clients and softer demand in certain verticals. The company lowered its full-year outlook, while maintaining its Retail Media forecast and emphasizing continued investment in artificial intelligence, self-service tools and commercial execution.
Chief Executive Officer Michael Komasinski said the company’s challenges were concentrated among a handful of large enterprise customers, whose spending reductions became more pronounced during the quarter. Those decisions more than offset resilience across most of Criteo’s client base, he said.
“The second quarter was a challenging one for Criteo,” Komasinski said. “We did not meet the expectations we set for ourselves.”
The company’s revised outlook assumes no improvement in spending from the affected large enterprise clients for the rest of 2026. Komasinski said the causes varied by customer, including travel-sector effects from conflict in the Middle East, tariff and de minimis import-rule changes, and client decisions to shift investment toward other parts of the marketing funnel.
Second-Quarter Results and Updated Outlook
Criteo reported second-quarter media spend growth of 9% to $1.1 billion. Revenue totaled $428 million, while Contribution ex-TAC, a non-GAAP measure referring to revenue excluding traffic acquisition costs, was $255 million. The figure included a $1 million year-over-year foreign-exchange headwind.
At constant currency, Contribution ex-TAC declined 12%, including a $21 million impact from previously disclosed scope changes with two Retail Media clients. Chief Financial Officer Sarah Glickman said the company’s approximately $7 million shortfall relative to the midpoint of its prior Contribution ex-TAC guidance was primarily attributable to lower-than-expected budgets from several large Performance Media clients.
- Performance Media revenue was $380 million, with Contribution ex-TAC of $208 million, down 10% at constant currency.
- Retail Media revenue was $48 million, with Contribution ex-TAC of $47 million.
- Adjusted EBITDA was $73 million.
- Net income was $12 million, and diluted earnings per share was $0.22, compared with $0.39 a year earlier.
- Adjusted diluted EPS was $0.80, compared with $0.92 in the prior-year quarter.
Criteo now expects full-year 2026 Contribution ex-TAC to decline 10% to 12% at constant currency. The company expects Performance Media Contribution ex-TAC to decline in the high single digits, while its Retail Media outlook remains unchanged.
For the third quarter, Criteo forecast Contribution ex-TAC of $237 million to $241 million, representing a 14% to 15% decline at constant currency. It expects Adjusted EBITDA of $54 million to $58 million. The company said foreign exchange is expected to reduce third-quarter Contribution ex-TAC by $6 million to $8 million year over year.
Criteo expects an Adjusted EBITDA margin of approximately 30% for 2026, reflecting lower top-line expectations, partially offset by cost controls and productivity gains. Glickman said the company does not view that margin as a normalized profitability level and believes its model has operating leverage if revenue growth improves.
Performance Media Pressures and Commercial Response
Within Performance Media, Criteo said Commerce Growth experienced soft results, although AdTech services showed improved year-over-year trends. Media spend declined in all regions, with Europe, the Middle East and Africa more resilient than the U.S. and Asia-Pacific.
The company said travel growth in Europe moderated after several strong years, while discretionary retail remained soft. Fashion spending declined 21%, according to Glickman. Criteo also cited lower spending among e-tailers in Asia-Pacific and inflation and weaker consumer sentiment affecting discretionary retail.
Client retention remained near 90%. The company said its largest clients account for about 19% of revenue, including its largest Retail Media customer.
Komasinski said Criteo is focusing on improving commercial execution to retain budgets as customers change tactics. The company has expanded its product set beyond lower-funnel remarketing toward full-funnel and multi-channel offerings, which he said requires a more consultative sales approach.
Criteo reported that qualified pipeline grew approximately 30% year over year, while U.S. new-business revenue increased 24% in the second quarter. Agencies represented about 55% of pipeline, up from roughly 35% a year earlier.
Retail Media Underlying Growth Remains Strong
Retail Media was affected by the previously announced client scope reductions, which are expected to have a $75 million impact on full-year Contribution ex-TAC. Excluding the two affected clients, underlying Retail Media Contribution ex-TAC grew 20% in the second quarter.
Retail Media media spending rose 31% year over year, with more than 4,500 global brands using the platform. Same-retailer Contribution ex-TAC retention was 84%, or 113% excluding Criteo’s largest retailer.
The company added retailer partners including Loblaw Advance in Canada, Monoprix and Druni in EMEA, and Olive Young and Golf Digest Online in Asia-Pacific. It also cited growing activity with DoorDash across categories including beauty, personal care, food and beverage.
Criteo said Auction-Based Display, its fastest-growing Retail Media format, is now active with more than 85 retailers globally, compared with 60 in the prior quarter. The company also secured its first Page Intelligence launch with one of its largest retail partners. The AI-driven offering is designed to optimize merchandising, monetization and shopper experience together.
AI Partnership and Self-Service Expansion
Criteo highlighted momentum in its partnership with OpenAI, where it became the company’s first advertising technology partner only months earlier. The number of brands running campaigns through OpenAI exceeded 2,000, more than double the 1,000 announced at the end of April, according to Komasinski.
The OpenAI demand integration is available in seven countries, with Mexico and Brazil planned next following launches in Japan and South Korea. Criteo has also integrated OpenAI into its Criteo GO self-service platform alongside display, social and video channels.
Komasinski said ChatGPT traffic converts at approximately 1.5 to two times the rate of traditional referral traffic, while roughly 80% of paid traffic is new to the brand. He characterized current OpenAI budgets primarily as client test spending, with advertisers still determining how the new discovery channel fits into broader media plans.
Criteo’s 2026 outlook does not assume meaningful contributions from OpenAI or broader agentic AI initiatives. The company expects those offerings to become meaningful growth contributors beginning in 2027.
More than half of Criteo’s small clients globally have adopted Criteo GO, the company said. June account creation was approximately three times higher than in the initial months after launch. Nearly 80% of U.S. GO revenue is already cross-channel, according to Komasinski.
Leadership and Capital Allocation
Criteo announced that Glickman will step down as CFO on Aug. 10 after six years in the role. She will remain an adviser through the end of September. Connor McGogney, currently chief strategy officer, will become CFO effective Aug. 10.
The company generated $20 million in operating cash flow and negative free cash flow of $38 million during the quarter, which it attributed to seasonality and payments of 2025 income taxes. Trailing 12-month free cash flow was $180 million, and Criteo expects positive free cash flow in the second half.
Criteo repurchased 1.7 million shares for $30 million during the quarter, with $160 million remaining under its current authorization at the end of June. In July, the company canceled 4.5 million treasury shares in connection with its redomiciliation to Luxembourg.
The company said it completed its Luxembourg redomiciliation and direct listing of ordinary shares last week. It intends to pursue a subsequent redomiciliation to the U.S. as early as January, subject to required approvals, which it said could simplify its corporate structure, support U.S. index inclusion and broaden access to U.S. investors.
About Criteo (NASDAQ:CRTO)
Criteo 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.
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