Summary of Criteo's Conference Call Company Overview - **Company**: Criteo - **CEO**: Michael Komasinski - **Duration of CEO Tenure**: Just over six months Strategic Goals and Outlook - Criteo aims to expand its position in the retail media ecosystem, which is identified as the fastest-growing sector in digital advertising [4][5] - The company is focused on enhancing its performance engine and leveraging significant data assets to drive AI opportunities [5][6] - Criteo's strategy includes exploring adjacent markets to capitalize on synergistic opportunities [6] Performance Media Segment - The resolution of cookie deprecation has provided stability in the addressability landscape, allowing Criteo to focus on product development rather than protecting existing products [8][11] - The company is enhancing its full funnel, cross-channel, and self-service capabilities to attract a larger advertiser base [11][12] - A potential 1% market share gain could translate to a double-digit million opportunity for Criteo's Commerce Grid Supply-Side Platform [12] Agency Relationships - Criteo has been building strong relationships with agencies, which control a significant portion of media investment decisions [15][16] - The company is underpenetrated in the agency segment, presenting substantial growth opportunities [24] - Criteo's products are designed to be complementary to agency offerings, enhancing efficiency in retail media buying [15][17] Commerce Go Product - Commerce Go is a self-service tool aimed at SMB advertisers, currently in early rollout with 15% to 20% of long-tail clients migrated [27][29] - The product simplifies campaign management, allowing users to set up campaigns with minimal clicks [27][28] Connected TV (CTV) Opportunity - Criteo recognizes CTV as a rapidly growing segment and is developing audience products in partnership with platforms like Roku [31][32] - The company aims to integrate CTV as a biddable supply channel to influence consumer behavior [32][33] Meta Partnership - Criteo's partnership with Meta is growing at a rate of 30%, focusing on cross-channel performance [37] Agentic Commerce and GenAI - Criteo is preparing for the future of commerce through agentic commerce, which involves integrating with large language models and enhancing data capabilities [41][42] - The company is exploring monetization strategies for agentic commerce while ensuring its data infrastructure is robust [43][50] - AI is being integrated into Criteo's products to enhance efficiency and user experience, with significant improvements in audience building and campaign management [54][56] Retail Media Products - Criteo is scaling its retail media offerings, with new formats like on-site video and auction-based display driving incremental revenue [61][62] - The company is focused on holistic page optimization to balance e-commerce and advertising objectives [62][63] - Criteo is piloting programmatic solutions to address supply-demand imbalances in retail media [63][64] Conclusion - Criteo is strategically positioned to leverage its data assets and enhance its product offerings in the rapidly evolving digital advertising landscape, particularly in retail media and connected TV. The focus on agency relationships and self-service tools like Commerce Go indicates a commitment to expanding its market share and driving growth in activated media spend.

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $483 million, with contribution ex TAC increasing to $292 million, reflecting a year-over-year tailwind from foreign currencies of $6 million [28] - At constant currency, Q2 contribution ex TAC grew by 7% year-over-year, representing growth of 21% on a two-year stack basis [28] - Adjusted EBITDA for Q2 2025 was $89 million, reflecting strong operational leverage from top-line growth and cost discipline [33] - Net income for Q2 2025 was $23 million, resulting in diluted earnings per share of $0.39 and adjusted diluted EPS of $0.92 [34] Business Line Data and Key Metrics Changes - In Performance Media, revenue was $422 million, with contribution ex TAC up 6% at constant currency or 17% on a two-year stack basis [29] - Retail Media revenue was $61 million, with contribution ex TAC growing 11% at constant currency, representing a 35% increase on a two-year stack [31] - Campaign volume for Commerce Go grew 200% quarter-over-quarter, driven by increasing adoption from SMB advertisers and lower churn [18] Market Data and Key Metrics Changes - Travel vertical grew by 28% in Q2 2025, with notable strength in APAC driven by full funnel activation [20] - Retail spending, particularly in fashion, was down 6%, indicating challenges in certain sectors [30] - Media spend in Q2 grew 20% year-over-year, demonstrating share gains across a diversified client base [32] Company Strategy and Development Direction - The company is focused on delivering full funnel, cross-channel, self-service advertising, leveraging unique commerce data and AI [6] - A renewed focus on performance media and accelerated AI innovation is expected to drive the next phase of growth [15] - The company is expanding its partnerships with agencies, including a significant partnership with Dentsu, to enhance its commerce media platform [10] Management's Comments on Operating Environment and Future Outlook - Management noted a slow start to the quarter but observed better macro trends in May, with a relatively stable environment since then [28] - The company anticipates positive free cash flow generation in the second half of the year, with a free cash flow conversion rate above 45% of adjusted EBITDA [35] - For 2025, the company expects contribution ex TAC to grow 3% to 4% year-over-year at constant currency, with growth in each segment [37] Other Important Information - The company has a strong financial position with $746 million in total liquidity and no long-term debt [36] - The company is committed to disciplined capital allocation, including investments in high ROI organic investments and share buyback programs [36] Q&A Session Summary Question: What is the monetization strategy for the AgenTic AI product? - The monetization strategies for AgenTic AI are still being determined, with options ranging from affiliate programs to sponsored citations [43][46] Question: Are clients actively spending on AgenTic AI? - It is early days in discussions, with retailers focusing on controlling data flows and ensuring relevance in the shopper journey [53][55] Question: Can you elaborate on the agency relationships and their impact on financials? - The agency relationships are structured around shared economics, data integration, and co-development strategies, with strong traction in agency spending [58][63] Question: What is the outlook for CTV and its value to advertisers? - CTV is seen as a promising channel for performance-based advertising, with the ability to tie advertising to sales lift [81][84] Question: How is the Miracle partnership expected to impact market penetration? - The Miracle partnership is aimed at unlocking demand from third-party sellers in the mid to long tail, enhancing Criteo's value proposition [74][75] Question: What is the current retailer count and outlook for retention? - The company now partners with over 230 retailers, with a strong base in the US and Europe, feeling confident about retaining its retailer base [77]

Core Insights - Criteo has announced a partnership with WPP Media to enhance commerce intelligence for Connected TV (CTV) advertising, leveraging Criteo's real-time commerce signals and WPP Media's Open Intelligence to improve advertiser reach and effectiveness [1][4][7] Group 1: Partnership Overview - The collaboration aims to provide advertisers with curated audiences based on high-fidelity commerce signals, which can be activated across any Demand-side Platform (DSP) [2] - Criteo's Commerce Grid Supply-side Platform (SSP) enables advertisers to implement commerce-first CTV strategies, linking ad exposure to measurable outcomes such as foot traffic and sales [3][5] Group 2: Market Impact - Criteo's real-time commerce signals are derived from 17,000 e-commerce sites and 200 global retail partners, representing over $1 trillion in annual e-commerce sales, which helps create high-intent shopper audiences [5] - The partnership is designed to allow brands to access these high-intent segments across their preferred DSP partners, streamlining the activation process [5][6] Group 3: Strategic Goals - The collaboration seeks to merge traditional brand marketing goals with emerging metrics of performance-driven commerce media, facilitating full-funnel strategies in CTV [4][7] - The initiative emphasizes not just improved targeting but also the ability for brands to reach broad audiences with precision and measurability akin to digital advertising [7]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $451 million, with contribution ex TAC increasing to $264 million, reflecting a year-over-year headwind from foreign currencies of $6 million [30] - Adjusted EBITDA for Q1 2025 was $92 million, up 30% year-over-year, driven by operational leverage from top-line growth and cost discipline [34] - Net income for Q1 2025 was $40 million, an increase from $9 million in the previous year, resulting in diluted earnings per share of $0.66 compared to $0.12 last year [35][36] Business Line Data and Key Metrics Changes - Retail media revenue was $59 million, with contribution ex TAC growing 18% at constant currency, driven by strength in on-site and off-site campaigns [31] - Performance media revenue was $392 million, with contribution ex TAC increasing by 4% at constant currency, led by the Commerce Growth Solution [32] - The company activated $335 million in media spend in retail media, up 21% year-over-year, with significant growth in U.S. agency spend [18][19] Market Data and Key Metrics Changes - Double-digit growth in media spend was observed in Asia Pacific, while low single-digit growth occurred in Europe and the Middle East, with lower budgets in the U.S. [33] - Travel was the fastest-growing vertical, up 44%, while retail and fashion saw declines, with fashion down 6% [34] Company Strategy and Development Direction - The company aims to reaccelerate growth and improve durability, fortifying its leadership position in retail media and reenergizing its performance media business [11][12] - Criteo is shifting from a managed service model to a more scalable self-service platform, investing in new formats like outcome-based native display and CTV [17][28] - The company plans to maintain adjusted EBITDA margins in the 33% to 34% range while generating industry-leading cash flows [28][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the performance media segment, especially following Google's decision regarding third-party cookies [8][38] - The company anticipates contribution ex TAC to grow low single digits year-over-year at constant currency for 2025, with underlying growth expected to be around 20% excluding two specific clients [39][40] - Management acknowledged near-term challenges but emphasized the resilience of the business and the potential for continued growth and profitability [44] Other Important Information - The company has a strong financial position with $810 million in total liquidity and no long-term debt, allowing for disciplined capital allocation [36] - A share buyback program was initiated, with $56 million deployed for share repurchases in Q1 2025 [37] Q&A Session Summary Question: Impact of retail media client changes - Management noted that the largest retail media client will continue to use their technology but will curtail managed services, resulting in a significant impact on growth rates for retail media [49][51] Question: Macro trends in April - Management observed a soft macro environment in April, with mixed performance across categories, but emphasized resilience in their performance business [55] Question: Spending patterns across income demographics - Management indicated that spending patterns are being monitored, with some discretionary categories seeing less spend across income bands [61] Question: Revenue impact from large client downtick - Management clarified that the impact from the largest retail media client will be significant but is expected to lap within a year, with a focus on maintaining growth across the broader client base [63] Question: CTV and video strategy - Management expressed interest in CTV as a growing segment and is in the early stages of assessing how it fits into their overall strategy [95][96]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $451 million, with contribution ex TAC increasing to $264 million, reflecting a year-over-year headwind from foreign currencies of $6 million [28] - Adjusted EBITDA was $92 million, up 30% year-over-year, driven by operational leverage from top-line growth and cost discipline [31] - Net income for Q1 2025 was $40 million, a significant increase compared to $9 million last year, with diluted earnings per share of $0.66 compared to $0.12 last year [32][33] Business Line Data and Key Metrics Changes - Retail media revenue was $59 million, with contribution ex TAC growing 18% at constant currency, driven by strength in on-site and off-site campaigns [29] - Performance media revenue was $392 million, with contribution ex TAC increasing by 4% at constant currency, led by the Commerce Growth Solution [30] - Retail media activated $335 million in media spend, up 21% year-over-year, with significant growth in U.S. agency spend [17][18] Market Data and Key Metrics Changes - Double-digit growth in media spend was observed in Asia Pacific, while low single-digit growth occurred in Europe and the Middle East, with lower budgets in the U.S. [31] - Travel was the fastest-growing vertical, up 44%, while retail and fashion saw declines of 6% [31] Company Strategy and Development Direction - The company aims to reaccelerate growth and improve durability, fortifying its leadership position in retail media and reenergizing its performance media business [9][10] - A shift from a managed service model to a more scalable self-service platform is underway, with investments in new formats like outcome-based native display and CTV [15][26] - The company plans to maintain a disciplined approach to growth through a build, partner, and buy framework, focusing on maximizing shareholder value [14][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the performance media segment, especially following Google's decision regarding third-party cookies [6][35] - The company anticipates a challenging macro environment impacting retail media growth, projecting low to mid-single-digit growth at constant currency for 2025 [36] - Despite near-term challenges, management remains optimistic about the underlying strength of the commerce media platform and expects continued growth and profitability [41][42] Other Important Information - The company has a strong financial position with $810 million in total liquidity and no long-term debt, allowing for disciplined capital allocation [33] - A share buyback program was initiated, with $56 million deployed for share repurchases in Q1 2025 [34] Q&A Session Summary Question: Impact of largest retail partner's changes - Management noted that the largest retail media client will continue to use their technology but will curtail managed services, impacting growth rates for retail media [46][48] Question: Macro trends in April - Management observed a soft macro environment in April, with mixed performance across categories, but emphasized resilience in their performance business [52][53] Question: Spending patterns across income demographics - Management indicated that discretionary categories are seeing less spend across income bands, with a focus on monitoring trends as retailers announce results [57][59] Question: Retail media client revenue impact - The impact from the largest retail media client is significant but is expected to lap within a year, with ongoing growth from other clients [61][62] Question: Self-service tools sophistication - Management acknowledged that Criteo is on a journey to enhance self-service capabilities, with excitement around the rollout of Commerce Go [98]