Criteo S.A. Q1 FY2025 Earnings Call

Good morning. And welcome to Criteo’s First Quarter 2025 Earnings Call. All participants will be in the listen-only mode. After the prepared remarks, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Melanie Dambre, Vice President, Investor Relations. Please go ahead.

Good morning, everyone. And welcome to Criteo’s first quarter 2025 earnings call. Joining us on the call today, Chief Executive Officer, Michael Komasinski; and Chief Financial Officer, Sarah Glickman are going to share some prepared remarks. Todd Parsons, our Chief Product Officer will join us for the Q&A session. As usual, you will find our investor presentation on our Investor Relations website now, as well as our prepared remarks and transcript after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements, which reflect Criteo’s judgment, assumptions and any decision we adopt today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo’s business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release, as well as our most recent Score 10-K and 10-Q files with the SEC. We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this course are against the same period in the prior year. With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. I appreciate you all joining us today. I'm honored to be here for my first earnings call as CEO of Criteo, and I see a huge opportunity to guide the company forward with determination and vision. In the last two months, I've had the opportunity to connect with many of our teams across various regions, and with clients and partners. I want to begin by sharing some thoughts on my reasons for taking this role, my observations during my initial months, and our vision for the future. Before I dive into that, I'd like to mention two significant recent developments. The first pertains to Google's decision to retain third-party cookies, which is beneficial both now and in the future. Not only does this offer a slight advantage for this year, but we also find ourselves in a stronger position with clearer insights. We're optimistic about the long-term prospects of our Performance Media segment. Our investments in addressability have resulted in substantial advancements in AI innovation, which will yield benefits across all environments. With a privacy-centric approach that ensures addressability, we're diligently working to implement customized, comprehensive, cross-channel campaigns that deliver measurable results for our clients across all scenarios and in the future. The second development directly affects us in the short term and involves our largest Retail Media client, a long-standing partner. This client informed us unexpectedly this week that while they will continue to utilize our top-tier Retail Media technology platform under a multiyear committed contract, they will end our managed services and reduce the remaining brand demand sales services starting in November of this year. This abrupt change will significantly impact the growth rates of our Retail Media business for the 12 months beginning in Q4 2025. However, this near-term change does not diminish our substantial opportunities to continue outpacing market growth across the rest of our retailer base in the long run. More generally, it’s crucial to recognize that Criteo, as a leading independent AdTech player, has created something exceptional: a robust, AI-driven Performance Media business paired with leading Retail Media capabilities, which is one of the fastest-growing sectors in digital advertising. Criteo is positioned at the intersection of commerce and media, which is a powerful combination. We have extensive commerce data, advanced AI capabilities, a large and diverse global client base, exceptional talent, and a solid position within the digital advertising ecosystem. Criteo is increasingly recognized as an essential agency partner in the evolving advertising landscape, and I have witnessed firsthand that our relationships with top global agencies are becoming more strategic with each quarter. In my initial months, it is apparent to me that Criteo has yet to fully realize its potential. My main priorities will be to reignite growth and improve sustainability, strengthen our leadership in Retail Media, rejuvenate our Performance Media business, and enhance the capabilities of our platform, all with a keen focus on maximizing shareholder value. The opportunities that lie ahead involve sharpening our focus, scaling our strengths, and prioritizing a few core strategic initiatives to achieve lasting, robust, and profitable growth. First, we're seeing early momentum with our platform strategy. We’ve improved our market positioning, and major enterprise clients like Office Depot and ODP Business Solutions are now utilizing our comprehensive Commerce Media Platform. They are leveraging our demand-side capabilities with Commerce Growth and Commerce Max, along with our supply-side solutions via Commerce Grid and Commerce Yield. This showcases the value of our integrated strategy. We're also expanding our global agency partnerships to engage more of the overall platform. These strategic partnerships will remain a crucial growth driver for us moving forward. As a multi-product platform company, we have numerous synergies across our offerings, providing real potential to amplify these connections and enhance our operational efficiency. Second, we are dedicated to increasing demand for our platform, which is essential for refueling growth. After establishing a strong presence in Retail Media supply, we’re enhancing our partnerships with agencies and APIs and anticipate incorporating more demand sources ahead, including through partnerships with Microsoft and others. In Performance Media, we’re thrilled about the introduction of our new AI-powered automation and optimization toolkit, Commerce GO!, designed to launch high-performing campaigns with just five clicks and onboard more advertisers swiftly. Third, we are focusing on improving brand performance, assisting brands in building actionable awareness that connects to measurable results. Our reach across various buyer types, along with our unique capability to produce performance throughout the buyer journey, provides us with flexibility. No other entity delivers performance at all levels like we do, backed by a solid foundation and ongoing innovation. This is a strength we aim to build upon with new product offerings. For the second consecutive quarter, we’ve successfully captured budgets from traditional upper-funnel DSPs, which reinforces our growing significance across the entire funnel. Central to these efforts is our AI innovation. We possess exceptional capabilities, including high-quality training data, and we plan to continue accelerating our innovative efforts. In Performance Media, our AI enhances automation and drives performance breakthroughs. Moreover, as AI agents evolve into a new interface for consumers, we recognize a clear opportunity for Criteo to assume a vital role in helping brands connect with consumers where it matters, in real time, with measurable results. In Retail Media, AI is pivotal for achieving full-funnel relevance and holistic optimization strategies. Looking ahead, you can expect us to continue leading in Commerce Media while maintaining our disciplined approach to growth through our build, partner, and buy framework. We will ensure accountability and align our ambitions with effective execution. Our transition from transformation to scale will be accompanied by consistent innovation and disciplined practices. This means expanding across various channels, including Retail Media, the open web, and social media, to cover the entire buyer journey. We are investing in new formats such as outcome-based native display, onsite video, and CTV, all of which will broaden our serviceable available market. Importantly, we are progressing from a primarily managed service model to a more scalable self-service platform. We are excited about this new chapter, backed by a world-class team ready to execute. Personally, I emphasize transparency, operational discipline, and a focus on measurable outcomes. I actively engage with the business dynamics to make informed decisions that turn high aspirations into tangible results. Now, regarding our performance in the first quarter, I’m pleased to report solid results reflecting our ongoing execution and momentum. In Retail Media, we activated $335 million in media spend, marking a 21% year-over-year growth from over 3,800 brands globally. This growth in media spending was largely driven by our long-term partnerships with leading agencies, which experienced approximately a 50% year-over-year increase in U.S. agency spending this quarter. Simultaneously, our expanding relationships with independent agencies are driving the growth of our small- and mid-sized brand portfolio. With retailers transitioning from Microsoft Advertising to our platform, we now partner with 70% of the top 30 retailers in the U.S., up from 65% previously, and our pipeline is robust. We’re also expanding globally, achieving new wins across all regions, including Dick’s Sporting Goods in the U.S., Endeavour in Australia, d shopping in Japan, Cooperative U in France, and Elkjop, our first retailer in the Nordics. Our collaboration with E. Leclerc in France is also growing. Furthermore, we're leveraging our success with sponsored ads to introduce newer formats, including onsite video, which has recently launched for general availability, along with our outcome-based native onsite display offering set to debut later this year. Shoppable video enhances onsite advertising by increasing inventory, driving engagement, and enriching the overall shopping experience. For retailers, it creates new revenue opportunities while improving how consumers discover and interact with products. For brands, it boosts awareness at the point of sale and encourages purchases, all supported by measurable outcomes. We are excited to observe early adoption of onsite video from several key retail partners, including Albertsons Companies and Costco, and we look forward to expanding this initiative in the coming quarters. Overall, we are confident that our comprehensive, full-funnel onsite advertising solutions, merging video, display, and sponsored product ad formats into one integrated platform, can significantly bolster our market share. Our offsite Retail Media presents additional opportunities for retailers and brands to extend their reach across the open web. Recently, we initiated offsite advertising with Office Depot, ODP Business Solutions, and Costco Canada using our Commerce Max DSP. A recent campaign with HP and Costco exemplified the effectiveness of our full-funnel Retail Media strategy, revealing an 855% increase in conversion rates for shoppers exposed to both onsite and offsite ads, resulting in over a 10x enhancement in revenue per user and a 58% rise in click-through rates. This clearly demonstrates the impact of our integrated approach on driving measurable business results. Additionally, multiple retailers are currently engaging in offsite monetization through our Commerce Grid SSP, allowing brands to access retailer audiences via third-party DSPs. This underscores our platform synergies and further enhances the scale and flexibility of our Retail Media offerings. Moving on to Performance Media, we are encouraged by the sequential growth in media spending, excluding AdTech services. Our growth was led by Commerce Audiences, utilizing our extensive commerce dataset and top-tier AI to help advertisers acquire and retain customers effectively. We've successfully leveraged cross-selling and now increasingly benefit from third-party demand through our Commerce Grid SSP. We are now focusing on broadening our initiatives to unlock even greater scale and opportunity. We believe our capability to drive client performance is at an all-time high and will continue to grow. We are dedicated to creating a seamless buyer journey on a single, independent platform for advertisers to enhance brand performance and reach consumers wherever they are located. To support this goal, we've broadened our social offerings, enabling advertisers to activate Facebook and Instagram inventory at the SKU level for their Commerce Audience campaigns globally. While this is still in its early stages, it has resulted in a 40% sequential increase in social campaigns this quarter. Our value proposition is resonating well, and we are excited to announce a new preferred partnership with Tinuiti, one of the largest independent full-funnel agencies in the U.S., which will leverage our Performance Media solutions. More generally, our objective is to provide an end-to-end self-service workflow with Commerce GO!, facilitating advertisers in planning, buying, and optimizing across various ad formats and channels while onboarding clients more quickly and reducing our cost to serve. Our advanced AI automates decisions regarding audiences, channels, ad formats, and creatives to maximize results. Though we are still in the early phases of the rollout, we are observing steady uptake from small clients and lower churn rates. We have increased Commerce GO! campaign volume by 45% quarter-over-quarter, primarily driven by small clients. We are concentrating our go-to-market efforts to build on this progress over the coming quarters. To sum up, we believe Criteo is well-positioned with numerous growth avenues. Our diversified global business and strong financial base provide us with a robust standing, and our emphasis on performance enables us to remain resilient. By maintaining focus and operational discipline, we know the long-term potential of our platform is significant, and we are fully committed to delivering sustained value for our shareholders. In Performance Media, we’ve gained greater clarity and increased confidence in our long-term outlook. In Retail Media, the fundamentals and momentum of our business remain robust despite the short-term challenges. On the whole, we have strong momentum in our holistic platform strategy and anticipate growth in our business. We will implement cost and productivity measures as required to maintain adjusted EBITDA margins in the range of 33% to 34% for 2025, and continue to generate industry-leading cash flows. Criteo is at the core of Commerce Media, uniquely equipped with cutting-edge AI technology and unmatched commerce data at scale. We are dedicated to driving shareholder value and plan to continue our share buyback, highlighting our confidence in our strategy, financial robustness, and belief in the intrinsic value of our shares. We acknowledge there is more to be done, and the management team and Board are exploring all methods to enhance value for our shareholders. With that, I will now turn the floor over to Sarah to provide further insights into our financial results and outlook.

Thank you, Michael, and good morning, everyone. Our first quarter performance reflects strong execution and financial discipline. Revenue was $451 million and contribution ex-TAC increased to $264 million. This includes a year-over-year headwind from foreign currencies of $6 million. At constant currency, Q1 contribution ex-TAC grew by 7% year-over-year, representing growth of 24% on a two-year stack basis. We are lapping a tougher comparison with significant AI-driven performance enhancements in 2024, as well as the prior year quarter including leap day and Easter. Client retention remains high at close to 90%. Starting with Retail Media, revenue was $59 million and contribution ex-TAC grew 18% at constant currency to $59 million. Our growth was driven by continued strength in Retail Media onsite and continued traction for offsite campaigns. We benefited from the contribution of newly signed retailers, and growth from existing clients remains strong with same-retailer contribution ex-TAC retention at 120%. On the supply side, we continue to win new retailers globally, including former Microsoft Advertising retailers. As expected, and as previously communicated, we also benefitted from higher tiered fees in January for exceeding fiscal year volume thresholds. On the demand side, we saw significant expansion with CPG and smaller brands, and we onboarded 300 new brands this quarter. There is continued momentum with our agency partners, and we expect our 3,800 global brands to continue to prioritize Retail Media as a key channel for their advertising investments given the proximity with the point-of-sale. During the first quarter, we experienced strength in grocery while we saw lower growth in beauty. In Performance Media, revenue was $392 million and contribution ex-TAC was $206 million, up 4% at constant currency. This was driven by our Commerce Growth solution which leverages our large-scale commerce data and AI-powered audience modeling technology to find in-market shoppers. We also benefited from the growth of our Commerce Grid SSP, while AdTech services continued to be negatively impacted by lower spend by a large client in our media trading marketplace. We benefit from a global, diversified client base. By region, we delivered double-digit growth in media spend in APAC and low-single-digit growth in Europe and the Middle East while we saw lower budgets in the U.S. By vertical, travel remains our fastest growing vertical, up 44%, followed by classified and marketplaces performing well. Broadly, there was lower spending in retail and fashion was down 6%. We delivered adjusted EBITDA of $92 million in Q1 2025, up 30% year-over-year, mainly driven by operational leverage from topline growth and cost discipline, including slower pace of hiring and lower bad debt expense. Non-GAAP operating expenses decreased 3% year-over-year, reflecting our rigor on resource allocation. We invest in our growth areas while optimizing our operating model to enable scale and operational efficiencies. We continue to streamline our processes to work better and faster and enable increased productivity with AI-driven tools. Moving down the P&L, Depreciation and amortization increased by 3% in Q1 2025 to $26 million. Share-based compensation expense was $16 million, reflecting a normalized run-rate compared to $27 million in 2024. Our income from operations was $48 million and our net income was $40 million in Q1 2025, an increase compared to $9 million last year. Our weighted average diluted share count was 57.2 million, which resulted in diluted earnings per share of $0.66, compared to $0.12 last year. Our adjusted diluted EPS was $1.10 in Q1 2025, up 38% year-over-year. Operating cash flow was $62 million and free cash flow was $45 million in Q1, reflecting improved working capital and lapping last year’s calendar impact. We benefit from a strong financial position and pristine balance sheet with solid cash generation and no long-term debt. We had $810 million in total liquidity as of the end of March, which gives us significant financial flexibility to execute on our strategy and enable disciplined and balanced capital allocation. Our priorities are to invest in high ROI organic investments and value-enhancing acquisitions and to return capital to shareholders via our share buyback program. We are confident in our business strategy and we are committed to driving shareholder value. We deployed $56 million for share repurchases this quarter, which included the repurchase of 1.5 million shares, and we will continue to actively buy shares as part of our buyback program. Turning to our financial outlook, which reflects our expectations as of today, May 2, 2025. We have taken a prudent approach given the uncertain macro-environment and the reduced scope of services related to our largest Retail Media client. It is important to emphasize that our strategic priorities remain unchanged with a strong focus on topline growth, delivering for our clients and ensuring strong operational rigor on costs and cash. We also have greater clarity around Google’s plans for third-party cookies, giving us even more confidence in the long-term outlook of our Performance Media segment. For 2025, we now expect contribution ex-TAC to grow low-single digits year-over-year at constant currency, with growth in each of our segments. We now estimate forex changes to drive a positive year-over-year impact of about $10 million to $12 million on contribution ex-TAC for the full year. In Retail Media, we have a scaled $250 million plus revenue base. Our 2025 Retail Media growth is now projected to be in the low-to-mid single digits range at constant currency. The downward revision contemplates a more challenging macro-environment driving delays of certain retailers’ tech roadmaps. This revision also reflects the scope changes for our largest retailer client and for a food delivery client in the U.S. We expect the reduced scope for these two specific clients to result in a $25 million negative impact in 2025, largely related to Q4 2025, and approximately $75 million for the first ten months of 2026 until it annualizes. We have included our most prudent view in our updated outlook and do not anticipate any further significant changes. Excluding these two clients, our underlying growth for 2025 is expected to be in the ballpark of 20%. In Performance Media, we expect contribution ex-TAC to be up low-single-digits in 2025. This reflects continued traction with advertisers to drive performance throughout the buyer journey and laps tough comps from the significant AI-driven performance enhancements in 2024. We and our clients are excited about our platform innovation and look forward to the continued ramp up of Commerce GO! We also expect potentially lower ad budgets in a challenging macro environment, especially in discretionary categories, as all ad budgets are likely to face greater scrutiny. Overall, we continue to anticipate an adjusted EBITDA margin of approximately 34% to 34% for 2025. Q1 adjusted EBITDA had some phasing benefits as some expenses shifted from Q1 into Q2. We intend to maintain margins and generate strong cash flow while continuing to invest in the growth of our Commerce Media Platform. We anticipate that the investments we are making this year will position us for continued topline growth and strong cash flow generation for the coming years. We expect a normalized tax rate of 22% to 27% under current rules. Our overall CapEx is expected to be approximately $100 million. We now expect a free cash flow conversion rate of above 45% of adjusted EBITDA before any non-recurring items. For Q2 2025, we expect contribution ex-TAC of $272 million to $278 million, down 2% to flat at constant currency. Our range takes into account the volatility in the macro environment, its impact on consumers and our clients, and soft April trends. As previously communicated, this includes a sequential decrease in our Retail Media growth in Q2 mainly due to lapping a tough comparison and tiered fees in January. We estimate forex changes to drive a positive year-over-year impact of about $10 million to $12 million on contribution ex-TAC in Q2. We expect adjusted EBITDA between $60 million and $66 million. As previously communicated, this includes a one-off planned company-wide internal event. It also reflects continued high-ROI growth investments in our platform, our annual employee merit increase, effective in April, and foreign exchange rate headwinds on our European cost base. We anticipate a slower pace of hiring and less discretionary spend for the remainder of the year. As a reminder, in Q2 2024, we benefited from a reduction in bad debt expense due to lower DSO for Retail Media and a one-time milestone payment related to one of our large partnerships. To conclude, our strong Q1 results demonstrate the underlying strength of our Commerce Media platform. While we are facing near-term challenges including uncertainty in the macro-economic environment, we expect to continue to deliver growth, healthy profitability, and solid cash generation. We have a resilient business with robust performance capabilities and a broad and diversified client base. We have strong conviction in our strategy and business model, and we have the access to commerce data that fuels our AI models to enable performance and relevance at scale across the buyer journey.

Good morning, everyone, and welcome, Michael. First, regarding Retail Media, over the last few quarters, you have pointed out the competitive landscape. Criteo has been strengthening in this competitive scenario significantly. The overall effects we’re discussing will account for about one-third of your Retail Media contribution excluding TAC in 2025, which is quite substantial. I would like to delve deeper into why you think your largest retail partner is pulling back again, especially since this occurred a year and a half ago, given the support you provide. Additionally, I’d like some insights into why similar trends are happening with Uber Eats and your confidence in maintaining a strong competitive position as this situation evolves. Is there an increased risk of in-housing? I would appreciate guidance on that. Lastly, could we elaborate on the comments regarding April and the software macro, providing more detail on your observations? Thank you.

Thanks, Ygal. I can start the first question, then I’ll ask Sarah for some extra commentary. In terms of the in-housing question, we see some retailers willing to own the sales and demand front-end of their Retail Media network, but continuing to use our technology. But not every retailer can take that on. And Criteo demand generation is differentiated, and so is our technology, which we don’t see any risk of in-housing from. So no, we don’t see this as a continuing trend. This client being one of the larger ones in the market was probably overdue to start adopting this operating model. And in fact, they had contemplated it for some time. So let Sarah talk a little bit about that.

Yeah. Thanks for the question. Just in terms of this situation, first of all, this is a very longstanding partner for us and obviously is our largest Retail Media client. What we have seen over the years is that they have changed their arrangement with us a few years back, as you know. In this situation, what has happened is that they have removed services which relate to two specific items. One relates to client services that we support bringing in new clients and demand generation services, as well as other services, including billing and print collections. That will now be curtailed starting November. That being said, we have an incredible long-term relationship with them. They will continue to use our tech for running Retail Media. So there will be no other change there. But it is a significant impact, especially given that we have done a strong job for them, as well as our other clients across this year and into 2025. We do expect strong growth across the rest of the base and for the long-term. And we expect to continue to get leverage from our tech across this customer and all our customers for the long-term. Specifically, to the U.S. food delivery client, this was a choice by them simply for the U.S. market. We are continuing to manage all the business for them globally. And that, as you know, was announced externally. Overall, we do not expect this to be impacting us for other clients. This is, I would say, a unique situation, and we managed through it and we continue to service all our clients, and we continue to drive our tech roadmap, as well as the value that we deliver for them.

Okay. Thanks. And then maybe just on the macro trends in April and what you’re seeing there?

Oh! Yeah. Yeah. I mean, we did see a soft macro in April. I mean, we came off a fantastic Q4, strong traction into Q1. I would say in Q1, and as I said, we saw a mixed order. Beauty being more down, fashion down, U.S. retail department stores also down. But offset with very strong growth, travel up 44%, classifieds up. And similar trends in April, but we did see, I would say, a flat Easter year-on-year and it was softer across the board. I think, just given some of the news in the macro environment, we saw a softening. Yeah, that being said, we always see that we have an incredibly resilient Performance business. And none of our categories are down more than 10%. They are all either up or they’re down to the kind of mid-single-digit range.

Thank you, and welcome, Michael. I just wanted to get a sense, appreciate the color, Sarah, on the verticals that you saw weaker in April. But in terms of spending patterns across income demographics, I know you see a lot of data. And I’m just curious if you’re starting to see any weakness at the upper-income levels relative to the low-to-mid. That would be interesting. And then in terms of the OpEx leverage, Sarah, that you saw across all line items in the first quarter, I’m just curious how that should trend into Q2 and through the year. I think you’d have a better picture perhaps of the topline this year. But I would be interested in just getting a sense of how you plan to manage that. And then just initially how we should be thinking about the 12-month revenue impact that begins in fourth quarter from your large client downtick. Thanks.

Okay. Yeah. Yeah. I’m happy to take those. Thanks, Mark, for the question. I mean, first of all, on the macro, we do look at this, I would say, in many ways. And actually, there is information on our website regarding kind of marketing trends. I don’t know if we show that in demographics. What I would say is that we have seen, we said fashion down, right, broadly. Beauty, which is including in the fragrance kind of categories in, I would say, the nicer stores down. U.S. department stores, they’re not doing as well. And we’re clearly very focused on the retailers as they announce in the coming months. But in terms of brand spend, it really is, some brands are more resilient than others. So more discretionary categories, I would say, across income bands, we’re seeing less spend just in general. But we clearly keep a close eye on what the banks publish there as well. In terms of the operating leverage, we saw terrific operational leverage in Q1. We’re really keeping a close eye. This is, I would say, well-trained muscle for us at this point. So Q1, very strong EBITDA leverage coming from the topline. Q2, as we actually have included within our investor materials a walk of Q1 to Q2. So you can see the dynamics there. Some of it relates to comps and some of it relates to specific one-time expenses. There’s also an FX headwind in there for our European cost base that we expect to continue to see this year. But it’s a very, I hope, clear walk for you that we included in the materials. But overall, for the year, we’re focused on ensuring that we deliver on the topline, as well as on the bottom line and we’re going to continue to focus on all cost levers largely related to the, I would say, pace of new buyers. In terms of the Retail Media client, we have a $250 million base for our Retail Media client. It’s a scale base. It’s across over 200 clients. We added over 1,100 brands year-on-year. Yeah, that continues to grow. This impact relates to two specific client situations. It will, of course, lap within a year. It is a significant headwind to us, largely because, I would say, we’ve done a good job to ensure that we deliver services to our clients, including demand generation services for the long tail of brands, and that is the piece that will be curtailed. But overall, for all our client-based Commerce Max is going well. High spend from agencies that want to go cross-retailer across our ad network. And so, our focus is to continue to ensure that we deliver value to all those base. And of course, we’ll see the uptake in our new clients, as well as our new capabilities coming in. And we anticipate that will be more in the end of this year, but likely more to start ramping up in the beginning of next year, just given the uncertain macro.

Great. Thank you very much. Good morning, everyone. Hello, Michael. A couple of just quick ones, unsurprisingly, on Retail Media. Just starting with your largest Retail Media client, any way to give us a sense for what percent of the demand you were generating versus what they were doing in-house before this change? And then second, just on the Uber relationship, can you just walk through what that process was like? I can see who the, competitor is that was starting to work with them in the U.S., but was there like an RFP process that, where they were testing you against other solutions and the other solution won out? I’m just trying to get a sense for just the dynamics at Uber? Thank you.

I will first address the question regarding the largest retailer. Generally, we don’t comment on specific clients and we do not disclose the details of our interactions with them. However, what we can share is that 80% of brand spending for major brands is influenced by most of our large retailers. We are effectively increasing the number of brands globally, particularly in the mid- to long-tail segment that we service for this client as well as others. This dynamic is expected to shift towards the end of this year. Regarding client concentration, we provide that information in our 10-K, so you can refer to that for specifics.

Yeah. Yeah. Thanks, Sarah. And hi, Mark. I can address the Uber Eats question. But while we’re disappointed with the change, I think it’s worth reminding that we continue our global partnership with Uber Advertising and remain focused on even in that collaboration and drive and share success. Like Sarah said, we don’t, I think, comment in detail about how clients make their decisions. But I guess what I can tell you is there was not a head-to-head competition of some kind that we lost out on. We were driving significant demand for that client and they made a decision that they think that there’ll be some maybe stronger synergy with another provider. That’s about the best I could surmise at this current state.

Thanks. Thanks very much, Michael. You mentioned, and Sarah as well, you mentioned the onboarding of the Microsoft clients, capturing budget from upper-funnel DSPs, and you talked about the growth rates in agencies, both larger- and mid-size agencies, but we’re not really seeing this come through in numbers this year. And Sarah, it seems like you’re mentioning more 2026 figures. Can you talk through what you could do to speed up the ramp of these both new cohorts of clients and also these new channels? It does seem like you’re calling out a lot of areas where you’re winning share or you’ve got a big pipeline, but again, it’s hard to see that flowing through in numbers this year?

Yeah, Richard. It’s Michael. Hey. How are you? Thanks for the question. I will start that and then probably kick this to Todd for a little extra commentary. But I mean, in general, there’s a solid strategy here and a strong roadmap, and it’s kind of back to my overall remarks that, our focus here in the near term is to focus on product delivery, scaling products in the market and making sure that we execute commercially. In the near term for Performance Media, we need to ramp Commerce Go! and make sure that that’s positioned to have an impact on the business in 2026, continue to leverage our AI investments. And I think longer term, make sure that we can continue to move up funnel to be more of a full funnel cross-channel product on the performance side. In Retail, near-term, I think it’s about driving solutions towards holistic page optimization and making sure that we scale offerings like onsite video, right? That’s contemplated in the plan, but we need to deliver against that. And then long-term, it’s really about solving the equation for efficient buying in Retail Media. But I’ll let Todd comment on maybe a couple of those product enhancements that we could focus on.

Thanks, Michael. Good to hear from you, Richard. I want to emphasize that Retail Media is still evolving into a system that integrates onsite search, display, and offsite channels within a comprehensive cross-channel approach that Michael discussed. This is why we mention the long-term prospects of our partnership with Microsoft and other demand platforms; we need to ensure that all these components function effectively within the full funnel cross-channel model. Currently, that level of integration is lacking in Retail Media, and we are at the forefront of developing and implementing this for the entire ecosystem. This long-term focus explains why we haven’t seen immediate results. However, we are very confident that we are leading the way, and we have a strong position in the ecosystem to make this happen. We are very optimistic about the potential as we advance into an era where Retail Media operates across the full funnel and various channels.

We have adopted a more cautious approach to our forecast, influenced by macroeconomic factors. While we are acquiring new clients and experiencing a strong win rate, we expect that some of these wins may take longer to materialize due to client readiness. This means that the transition will be slower and the pace will be more gradual.

Thank you, Sarah, for discussing expense management while still focusing on growth. Can you share how much flexibility there is in managing expenses this year? Also, Michael, there has been significant interest in Retail Media, particularly on the video side as connected TV gains traction. What are your thoughts on how to approach this channel and how it may fit into the long-term roadmap? Thank you.

Yeah. And just to address on the cost side, I mean, we clearly had a roadmap and an investment including, I would say, selling and operational resources that was focused on maybe a different macro environment at the beginning of this year. So most of this would relate to not hiring for, I would say, more discretionary roles. Second, I would say that our focus is on a self-service platform and the Commerce Go! would be one great area. It’s a new segment for us, focused back to small clients. It’s self-service capability kind of end-to-end, and clearly that’s a more efficient operating model. So I would say those would be the two items that we’re focused on. We are not stopping any investment on high ROI investments. What we have seen is that we need less people to do that given AI innovation, just given some of the discussion we just had on the AI resources and engineers that are able to do more with less. So, all in all, it’s across the board, but ultimately it’s doing what we do well, which is ensuring that the operating model and the resources are focused on just ensuring that we go full speed ahead on where our clients are going and on the efficiency that we can drive and the productivity.

Thank you for the question. I'll address the one on CTV. It begins with our goal to support the entire buyer journey across various channels, and CTV is the second fastest growing area of digital advertising. In terms of its format, it aids in brand building while also being measurable and providing closed-loop attribution, which we believe can enhance performance. We are currently in the early stages of evaluating how CTV will fit into our strategy and how we can connect living room commerce with other channels. Although it’s still early, it could significantly help us scale by leveraging this rapidly growing segment of the media landscape. Todd, would you like to share some of our initial thoughts on this?

Yeah. I’d just reinforce something Michael said. We’re looking at CTV and video across the full funnel cross-channel landscape, and it’s not just something that we’re considering. We are in the process of testing the dimensions of how it is used for both performance in the direct response context, as well as all the way up to the top of the funnel in discovery advertising. So we have two dimensions of work that we’re doing there product-wise to prove that we can manage performance and deliver it for our clients across that full funnel setup.

Yeah. Hey. Thanks so much. Maybe one for Sarah and one for Michael. Sarah, could you maybe help us think about the percent of Retail Media contribution ex-TAC after backing out the $100 million from the largest customer that’s generated via ad sales or, I guess, demand generation services? I’m trying to think about, like, how much of the business pro forma is on the supply side, which seems a little bit safer, more defensible, versus on the demand side. And then maybe for Michael, I guess, could you help us think about, early impressions of Criteo’s self-service kind of tools? How would you rate the sophistication of self-service campaigns set up and management at Criteo right now relative to maybe like a Meta Advantage plus or a Google Performance Max? And how do you think about maybe closing the capability gap over time? Thank you.

To address 2026, we won't be providing long-term guidance for that year. What I can share is that we are starting from a solid base of over 200 growing customers who are expanding at a rate faster than the market. We anticipate this growth to intensify, particularly in 2026, especially in a more normalized economic environment. Regarding the service aspect, the slowdown primarily concerns services, which make up about 20% of our base, and this is the only major client we have in that area. Therefore, this results in a gradual increase for the services layer. We expect demand generation to come through Commerce Max, with agency growth at 50% year-on-year. We are maintaining a strong focus on mid- and long-tail brands, as well as larger brands. Our customers, particularly our agency partners and brands, are inclined to purchase across various retailers. We do not view this as a major impact on our supply fees, which are relatively fixed due to technology. However, we do see significant scaling on the demand side of our business through collaboration with our agency and brand partners.

Hi, Alec. How are you? Thanks for the question. I’ll take the one on the self-service capabilities. Look, I would say that Criteo is on a journey as it pertains to that, but we are very excited about the rollout of Commerce GO! I think we have the benefit there of seeing what has worked in terms of what’s come before us and frankly what hasn’t. I can tell you from my agency background, really what agency partners are looking for in a solution like that is the ability to manage parameters. They actually enjoy AI automation, but certainly want to have hands on the key critical levers. They want to understand placement. They want to have a good understanding of the measurement component. And so Commerce GO! is designed with all of those in mind, right? We refer to it as our gray box solution because it offers those types of parameters and transparencies that other solutions in the market don’t. And so we think that we potentially will be differentiated with that as we roll it out, and we’re excited about the potential that that has for the business.

I don’t have further questions at this time. I will now turn the call over to Melanie for closing remarks.

Thank you, Michael, Sarah, and Todd. That concludes our call for today. Thanks, everyone, for joining. If you have any follow-up questions, the Investor Relations team is available to assist. Have a great day.

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