CRTO — Criteo S.A.

Criteo Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Media Spend: Grew 9% year-over-year to $1.1 billion.
• Revenue: $428 million, with contribution ex-TAC at $255 million, reflecting a $1 million foreign exchange headwind.
• Performance Media Revenue: $380 million, contribution ex-TAC down 10% at constant currency.
• Retail Media Revenue: $48 million, with contribution ex-TAC at $47 million, impacted by $21 million from previously communicated scope changes.
• Adjusted EBITDA: $73 million, with an adjusted EBITDA margin of approximately 30%.
• Net Income: $12 million; diluted EPS of $0.22 compared to $0.39 last year; adjusted diluted EPS of $0.80 compared to $0.92 last year.
• Free Cash Flow: Negative $38 million for Q2, with a trailing 12-month free cash flow of $180 million.
• Share Buybacks: $30 million spent to repurchase shares, with $160 million remaining under the current program.

2. Strategic Updates and Business Highlights

• Leadership Change: CFO Sarah Glickman will step down, with Connor McGogney appointed as the new CFO.
• OpenAI Partnership: Criteo's collaboration with OpenAI continues to grow, with over 2,000 brands now using the platform, significantly increasing advertiser engagement.
• Product Innovations: Introduction of new capabilities in retail media and performance media, including AI-driven features and self-service tools like Criteo GO, which is gaining traction among small to medium-sized businesses.
• Retail Media Growth: Excluding the impact of client scope reductions, underlying retail media contribution ex-TAC grew 20%.

3. Forward Guidance and Outlook

• Revised Outlook: Contribution ex-TAC expected to decline by 10% to 12% at constant currency for 2026, with no recovery assumed from large enterprise clients.
• Performance Media: Anticipated contribution ex-TAC decline in the high single digits at constant currency for 2026.
• Q3 2026 Guidance: Expected contribution ex-TAC of $237 million to $241 million, down 14% to 15% at constant currency.
• Long-Term Growth: Confidence in the long-term strategy remains, with expectations for AI initiatives to contribute meaningfully starting in 2027.

4. Bad News, Challenges, or Points of Concern

• Client-Specific Headwinds: Several large enterprise clients reduced spending due to various factors, including macroeconomic conditions and strategic shifts, impacting overall performance.
• Performance Media Decline: Revenue from performance media faced significant challenges, particularly in the travel and discretionary retail sectors.
• Market Conditions: Ongoing softness in consumer sentiment and inflation affecting discretionary spending, particularly in EMEA and Asia Pacific regions.
• Execution Risks: Need for improved commercial execution to capture shifting budgets from enterprise clients and to leverage new product offerings effectively.

5. Notable Q&A Insights

• Client Spending Dynamics: Management noted that the decline in budgets from large clients is not uniform and is influenced by specific vertical challenges, including travel and retail.
• OpenAI Budget Allocation: Current spending on OpenAI is primarily from testing budgets, with potential for future growth as clients evaluate its effectiveness.
• Competitive Landscape: Criteo continues to gain share in retail media despite increased competition, maintaining a strong position with significant growth in media spend.
• Future Capital Structure: The board remains committed to maximizing shareholder value through share buybacks and evaluating growth investments despite rising CapEx.

Overall, Criteo's Q2 2026 results reflect a challenging environment with specific client headwinds impacting performance, but the company maintains a focus on strategic growth initiatives and long-term potential.