Criteo NASDAQ: CRTO reported third-quarter results that were in line with its expectations on the top line and ahead of plan on adjusted EBITDA, while management pointed to stabilizing spending among large performance media clients and growing traction in connected TV, social and AI advertising channels.
Revenue for the third quarter was $416 million, while Contribution ex-TAC, a non-GAAP measure that excludes traffic acquisition costs, totaled $240 million, down 15% at constant currency. The result included a $4 million foreign-exchange headwind and a $20 million impact from previously disclosed scope reductions involving two retail media clients.
Adjusted EBITDA was $65 million, producing an adjusted EBITDA margin of 27%. Chief Financial Officer Connor McGogney said the result exceeded the company’s outlook, primarily because of lower hiring and a partial reversal of previously accrued employee bonus expense. Non-GAAP operating expenses fell 3% year over year to $153 million.
Performance Media Spending Stabilizes
Performance media revenue was $365 million, with Contribution ex-TAC of $189 million, down 13% at constant currency. Criteo said lower budgets from several large enterprise clients continued to pressure the segment, though spending by those customers stabilized during the third quarter compared with the second quarter.
Chief Executive Officer Michael Komasinski said the company’s broader client base was more resilient and that Criteo is working to improve sales execution, client ramp-ups and expansion within existing accounts. The company’s open opportunities rose 72% year over year, while spending from new business increased 13%. Criteo expects recently signed clients to begin ramping in the fourth quarter and reach full run rate in the first half of 2027.
McGogney said the U.S. remained Criteo’s most challenged market, while EMEA and Asia-Pacific trends were comparatively stronger. Travel decelerated following several years of growth, while retail improved but remained soft, particularly in discretionary categories. Fashion spending declined 14% during the quarter, he said.
Management said the company is not currently seeing a direct impact from Safari changes in iOS 27. Komasinski attributed that position to Criteo’s investments in privacy-safe technology and its broader channel diversification.
CTV and AI Advertising Expansion
Criteo said newer channels are becoming a larger part of its Commerce Growth business. Connected TV, AI platforms and social represented 13% of Commerce Growth campaigns in the third quarter, up from 6% a year earlier. Social media spend and campaign volume each grew about 20% year over year.
The company announced a global expansion of its connected TV offering after launching the product in the U.S. Criteo plans to launch in Brazil and Mexico by the end of the year, followed by major markets in Europe, Canada and Australia in 2027. Komasinski said the company is on track to double its third-quarter CTV run rate in the fourth quarter.
Management said CTV campaigns are being used across apparel, travel, consumer electronics and automotive. Criteo cited a global travel-platform campaign that generated a 61-times return on ad spend and a 9% lower cost per acquisition than a display campaign directed at the same audience.
The company also expanded its OpenAI integration from seven countries in the prior quarter to 89 countries. Komasinski said advertisers are still largely testing ChatGPT Ads, though average spending per client has increased modestly. He expects the channel’s contribution to build in 2027.
Criteo said 3,600 clients have used the ChatGPT Ads platform at different points, reflecting an “on and off” testing cycle as advertisers assess campaign results. The company is focused on converting those tests into always-on campaigns and larger budgets. Criteo cited a Turkish Airlines campaign using Prompt Smart Ads that generated a 183% increase in site landings from ChatGPT Ads, while users exposed to the ads spent 15% more time per visit.
Retail Media Growth Excluding Scope Changes
Retail media revenue was $52 million and Contribution ex-TAC was $51 million, down 23% at constant currency. Excluding the $20 million effect of client scope reductions, underlying retail media Contribution ex-TAC grew 10%, supported by advertiser demand and adoption of new formats. Media spend in retail media increased 22%, and the number of brands on the platform reached 4,700.
Criteo said auction-based display was its fastest-growing retail media format. The product is live with more than 95 retailers, double the count at the beginning of the year, and now accounts for more than half of on-site display. The company expects display spend to grow by close to 50% this year.
Management also highlighted retailer AI assistants as a potential new advertising surface. Following an initial launch with Albertsons, Criteo is working to bring sponsored recommendations to other retailer assistants, including THG Ingenuity in the U.K. The company is also testing Page Intelligence, which combines merchandising, advertising and shopper engagement tools, with one of its largest retail partners.
Four of Criteo’s largest retail partners recently renewed multiyear agreements, according to Komasinski. Existing partners Douglas, Flaconi and Metro are preparing to expand into additional markets, while new partners include Notino in EMEA, El Puerto de Liverpool in Mexico, ONIGO in Japan, Adore Beauty in Australia and PayU in India.
Cash Position and Outlook
Net income was $6 million, or $0.11 per diluted share, while adjusted diluted earnings per share was $0.43. Operating cash flow was $57 million and free cash flow was $21 million. Criteo ended September with $275 million in cash and no long-term debt. During the quarter, it repurchased $4 million in shares, bringing year-to-date repurchases to $65 million.
The company maintained its full-year outlook for Contribution ex-TAC to decline 10% to 12% at constant currency. It continues to expect a high-single-digit decline in performance media Contribution ex-TAC and a high-teens to 20% decline in retail media Contribution ex-TAC, including about $75 million of impact from client scope reductions. Excluding those reductions, Criteo expects underlying retail media Contribution ex-TAC growth in the low teens.
For the fourth quarter, Criteo expects Contribution ex-TAC of $292 million to $298 million, down 9% to 11% at constant currency, and adjusted EBITDA of $105 million to $111 million. The company continues to expect an adjusted EBITDA margin of about 30% for 2026.
Criteo also said it remains on track to complete its planned U.S. redomiciliation on Jan. 1, 2027, subject to shareholder approval and customary conditions.
About Criteo (NASDAQ:CRTO)
Criteo SA NASDAQ: CRTO is a global commerce media and advertising technology company headquartered in Paris, France. The company helps brands, retailers and other businesses use commerce data and artificial intelligence to reach consumers, build customer relationships and measure advertising performance across digital channels.
Criteo's offerings include retail media solutions, which enable retailers and marketplace operators to provide sponsored product listings and other advertising placements, as well as performance media tools for campaigns across websites, mobile applications and the open internet.
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