The Trade Desk vs. Criteo: Which Ad Tech Stock is the Better Buy Now?

Industry Overview - The digital advertising market is expected to grow at a compound annual growth rate (CAGR) of 15.4% from 2025 to 2030, driven by mobile penetration, social media proliferation, and programmatic advertising expansion [2] - Video advertising is projected to remain the dominant format as brands increasingly leverage visual storytelling [2] The Trade Desk (TTD) - TTD reported revenues of $616 million in Q1 2025, a 25% year-over-year increase, exceeding management's guidance of at least $575 million [4] - Adjusted EBITDA for TTD was $208 million, reflecting a 34% margin compared to $162 million and a 33% margin in the previous year [4] - Customer retention rate was over 95% for the reported quarter [4] - TTD's net cash from operating activities was $291.4 million, with free cash flow at $230 million [5] - Adjusted earnings per share increased by 27% year-over-year to 33 cents [5] - The Kokai platform is utilized by two-thirds of clients, achieving lower cost per conversion by 24% and lower cost per acquisition by 20% [5] - TTD's revenue is heavily reliant on North America, with 88% of revenues coming from this region, limiting international market expansion [7] - Total operating costs surged by 21.4% year-over-year to $561.6 million, which may impact profitability if revenue growth does not keep pace [8] Criteo (CRTO) - Criteo's AI-driven Performance Media business and capabilities in Retail Media are strong growth drivers [9] - The Commerce Media Platform includes both demand-side and supply-side solutions, allowing Criteo to capture value across the ad tech value chain [9] - Criteo's media spend was $4.3 billion over the last 12 months, with $919 million in Q1 2025 [10] - Retail Media on-platform revenues grew by 17% year-over-year, supported by partnerships with 70% of the top 30 U.S. retailers [10] - Criteo onboarded 300 new brands in Q1, bringing the total to over 3,800 for Retail Media [11] - The company launched a new AI-powered automation toolset, Commerce GO!, designed to streamline campaign launches [12] - Criteo differentiates itself by offering direct retailer access and a transparent platform built around first-party data [13] Share Performance and Valuation - Year-to-date, CRTO has declined by 33.6%, while TTD has seen a decline of 37.1% amid macroeconomic uncertainties [14] - Valuation metrics indicate TTD is overvalued with a Value Score of F, while CRTO has a Value Score of A [16] - TTD's forward 12-month price/earnings ratio is 38.32X, significantly higher than CRTO's 5.97X [17] Analyst Estimates - Analysts have revised CRTO's earnings estimates downward for the current quarter, indicating a trend of negative revisions [18] - TTD has experienced relatively lower downward revisions in earnings estimates compared to CRTO [20] Investment Recommendation - Criteo is positioned as the stronger investment option due to its better valuation, focus on partnerships, and expanding retail media presence [22]