Criteo S.A. (CRTO) September 8, 2026 Conference Transcript

Great. Thank you, everybody. Let's get started. My name is Ron Josie. I cover lead coverage, the internet sector here at Citi. And I'm very happy to have with us today, Michael Komensiski. I butchered your last name. Oh, pretty close. No, was that good? Okay, Komensiski. Yeah. So I was going to say new CEO, but not new CEO. We're 18 months in. 18 months in? You know, Criteo, I think we all know what Criteo does, but bottom line is, has one of the largest identity graphs out there, I believe. and leverages this data set and shopper graphs to basically help to drive greater sales for retailers and advertisers, full stop. With that, I'll let you do a better job of explaining this directly. But Michael, I just want to say thank you for joining us. And why don't we kick off specifically, just talk to us, you're 18 months in, in the CEO role. A lot's changing in the industry, a lot's changing at Criteo. And so maybe quickly tell us about Criteo, the business, most people know already, but then sort of where are you focused here as we move forward in this new world of agentic advertising?

Sure, sure. So I'd start like at the highest level. So Criteo is a commerce intelligence platform, right? And we pick those two words very purposefully. We believe that commerce really is the organizing construct for advertising and marketing in a world where everything is shoppable and biddable. And then the intelligence part comes in, how do you allocate media investment optimally across what is an increasingly fragmented ecosystem of places where people spend time, where they shop, where they make decisions? So really the future is about how do you drive commerce outcomes in a more complicated ecosystem in a very sort of AI-driven, highly automated way. So that's kind of the set of the North Stars or the things that we believe in, I think, at the highest level. How the company actually accomplishes that, I'll try not to get too complicated with it, But we have several different data sets that we use to drive that decision-making of where to place optimal client investment. So you mentioned one of them, the identity graph. It is the third largest identity graph in the world. We have the third largest product catalog in the world. We are incredibly good at ingesting 25 billion raw SKUs, some updated as frequently as hourly. and then processing that and normalizing that data set into a SKU catalog of about 5 billion SKUs globally.

Michael, the third largest product catalog in the world. Yes.

And you mentioned 25 billion? 25 billion is the raw SKU count that we ingest on a regular basis. Yeah. And so what you need to do is you need to be able to normalize that down to something that's usable so that this vacuum cleaner that's got just a slightly different aspect is the same thing as that vacuum cleaner, and you'd normalize those two things together, basically. When you combine identity with product catalog with then the shopper graph, which is the events timetable of what do people browse, what do they consider, what do they do on site, and how do the learnings from that help you determine where to place the next best or the next investment or the impression to buy? That's basically the three data sets that combine to enable that. So without getting sort of too deep into the science. And those data sets are reinforced with the client relationships that we have. So through the ability to ingest product information, availability, and landing activity on site, that becomes a self-reinforcing loop that makes our performance better and better over time. um so if i keep going with a little bit of the lead into the question the focus areas for the company um at the highest level are really threefold one to innovate and lead the industry in agentic commerce and the kind of two interesting use cases there would be retailers developing new agentic shopping services and how do we power those for them as well as true pure play agentic channels like paid advertising on open AI, where we're their leading ad tech partner globally. Second priority would be continuing to innovate and maintain our industry leadership in the fast growing retail media channel. And we can come back to that in some detail. And the third would be to re-energize our performance media segment by making it more cross-channel, which enables us to conquest new budgets in the funnel. So we sometimes refer to that as the full funnel cross-channel strategy. I think if we execute on agentic retail media leadership and re-energizing performance media, then this is a really exciting business over the next couple of years.

I want to sort of follow up on that last one on re-energizing performance media, I think you said making it cross-channel, full funnel, understood the vision, where are we coming from? So are we not doing that prior?

No, but for good reason, right? So if you need to back up a couple of years, like back into maybe kind of 2023, 2024, before I arrived, the company would have been very focused on addressability and essentially Google's privacy sandbox effort so that would have consumed a lot of attention in that time table time frame right and rightfully so so um it was not as much product innovation going on at that time and so i was fortunate to arrive at critio at the time that i did because about two months after i joined google backtracked on the privacy sandbox proposal we essentially have now an addressability landscape that is more or less unchanged from where it was two or three years ago and i think also the regulatory environment and other factors suggest that that is a very stable foundation to build on and so i wanted to embark on a more growth oriented agenda for that segment by pursuing the full funnel cross-channel strategy so start to innovate channel connections again which enables us to conquest mid or even upper funnel budgets which is how you grow a performance platform yep super helpful um i have more questions on this yeah big three but before i do i wanted to talk a little bit about the leadership team yeah i think connor who's in the audience just announced cfo we're in the market for a new uh chief product officer if i'm not mistaken um so talk to us about where we are from a leadership team and then and then we'll go from there yeah definitely so um i mean i think first of all it's worth reminding people like we've got an incredibly strong bench in the company um across all the different disciplines um and then we've got a very rigorous um and methodical approach to cultivating our succession plans um and then you know ensuring in smooth transitions um you know when when it's time to do that and so um connor coming into the cfo role is a good example of that he's been with the company for eight years um had been on the succession plan for some time and really has the perfect background for what we need as a company right now connor's got a a strategy background ran our partnerships group understands the ecosystem I think as better than almost anyone I know in the industry and you know with eight years in the company he's got a lot of familiarity with how we work and how we operate but also has some deep opinions on things that we can change and so a fresh perspective I think is always a good thing and this was a very methodical well thought out transition and with a candidate that hits the ground running 60 miles an hour out of the gate sure yeah and then on the chief product officer side, Todd did a great job in his six years at Criteo in terms of navigating the privacy sandbox situation that I talked about and then really being the architect of the full funnel cross-channel self-service strategy that we are going to continue on. Todd had had a long time ambition to be the CEO of a company and has a fantastic opportunity to do that. So leaves us with a great bench of talent that he's brought in and has a very natural progression to his personal career journey. We wish him well on that. And so we currently have our senior product team reporting into Dermot Gill, our chief technology officer. And we're in the hunt for a new chief product officer with a great bench of talent at the next level down. So don't need to change the strategy in any big way and have a great bench and a good interim setup so i'm very comfortable with where we are perfect and and that dovetails into the three key focus areas don't need to change the strategy you have the tools for agentic retail media correct i mean we're always reacting and pivoting and sure you know improving how we scale those strategies but agentic retail performance nothing changes with that strategy and i think the major elements within each of those Perfect.

I want to get into the data set and agentic commerce here, particularly around your partnership. But before we do, just to level set to us, you know, post 2Q, you know, there was a little bit of a budget reset, I feel, around some of your largest clients and performance media. Just talk to us about the visibility into the business. I think we saw qualified pipelines were actually up quite nicely. I think we saw U.S. new business revenue up quite nicely. But then we also have some of your largest clients pulling back. Is that behind us? How do we think about these two?

So coming into the year, we started to notice some softness in budgets with a handful of large clients. And then that trend continued across Q2. And that's what got us to the downgrade that we announced in August at earnings. And we wanted to give ourselves a prudent outlook, given that we'd had to do that twice. And since then, we saw trends stabilize in the July timeframe. And then also the commercial teams, I think, really on top of each of those situations. In some cases, that is just competing more effectively for budget shift. A budget moves from one tactic to another. And as Critia, we have enough products to satisfy both needs. We need to make sure that that's a left pocket, right pocket shift for us. some things were maybe macro that were out of our control but that's going to happen and that's why it's important to have a new business machine that can bring in new revenue that offsets the inevitable fluctuations that clients will have and and those are some of the stats that we shared at the august call right so new business performance in the u.s have been up 24 year on year which is a really good signal and i would say attributable to um um some of the talent that that ed has brought into the business since he joined in january um and then uh we noticed that qualified pipeline was up significantly i think in the mid-30s um and and overall pipeline is now coming over over 50 from agencies so a lot of the things that we've talked about um uh coming coming to bear and i And I think, like, to the point, that situation is now stabilized. Each account is a little bit of a different situation. And it's just game on to now get some of that share of budget back into the business and make sure that we follow through on new business efforts.

And what changed in July that you said trends have stabilized? Yeah, I think it could be attributable probably to some of the commercial efforts in some cases. um or maybe some macro factors abating um probably a mix of the root causes that i went through there okay yeah that's great so so one of the questions that we often get i want to get into the data set and everything else because clearly that that's the asset of the company but the questions we're getting is you know the critio and open ai's tech uh partnership and and i think you mentioned you know of like if we can focus on of the three things agentic commerce was one of the first ones So tell us a little bit more, you know, I think about your partnership with OpenAI. Specifically, I think you now have, what, 2,000 plus clients on. There was a release not too long ago of like continued strength. So let me just make it a high level. How did this partnership come about? Why did they choose you?

And talk to us about the evolution of how that's going. so um i think the reason that they chose us is multifold here but basically comes down to we look at advertising in very similar ways um like as critio you know we don't start with sort of reach and frequency as our starting point we start with what product do you want to advertise and what is the context and the relevancy that triggers that and sort of how do I drive to a commerce outcome, right? And that is the way that the OpenAI ad platform is architected. And so it gets into a lot of the value add and the way that our partnership fits together. I like to say we optimize the inputs. So what SKUs am I going to advertise? Is the data associated with those SKUs up to date? Is the metadata correct? Is it deep enough and rich enough to drive the relevancy signals? And then when it comes to prompts, how do we engineer prompt hints that are insightful and comprehensive to maximize all relevancy display coming out of their engine? And then on the back end, how do I give insights into cross-channel measurement about how their paid referral traffic is performing relative to other paid referral traffic. So I call it optimizing the inputs and explaining the outputs. And that's a lot of the value that we provide. Now, we do have a product-to-product or tech-to-tech relationship as well, but that is largely about us giving them market feedback on feature function that needs to be developed, helping them with their roadmap. Ultimately, it's them building their platform, but it is quite a technical relationship week to week. And, you know, they announced a couple of weeks ago that they had gotten on to a billion dollar a year run rate, which is exciting. Opened up now in 51 markets globally, the European expansion and then the Middle East expansion. So that will start to drive client count, I believe, through the rest of the year in a pretty strong way. And really what we want, what they want, is to move really from a lot of test budgets to always-on budgets and to make them bigger. But with the efficacy we see in both mid-funnel and lower funnel, I'm pretty confident that those budgets will scale and that they will become part of always-on plans. You know, just to pay that off a little bit, you know, in the mid funnel, there's an amazing statistics that we keep sharing because it keeps showing up in the data. And that is that 80% of paid referral traffic is new to brand, which is an amazing incrementality metric when you think about mid funnel objectives. And then in the lower funnel, it converts one and a half to two times better than traditional search. So those are great conversion rates. And so, you know, lots of reasons to believe that those with that kind of performance, that kind of insight, that that'll move from test budgets to always on and that it will pull investment from some other competing products in the mid or lower funnel. funnel.

So that, you know, where do you think budgets come from?

Yeah.

Because, you know, new to brand is interesting.

Greater conversion rates is even more interesting. I think new to brand, the new to brand will put pressure on CTV budgets. It'll put pressure on some social budgets. I mean, those are the places that you derive new customers primarily. And then in the lower funnel, I think it'll put pressure on certain tactics within search. Certainly product listing ads or PLAs, maybe even depending on the CPCs you're seeing, could be even branded search. But not all of traditional search, but certainly some tactics within. Economically, you'll just get better performance on open AI. And look, if they're driving incremental outcomes, there certainly could be some incrementality as well, just in terms of overall ad spend as a percent of GDP.

Open to 51 markets now. Last metric we heard was 2,000 advertisers. Who are these advertisers and how quickly are they able to go from test to actual line item?

Yeah. So Criteo has quite a a varied and global client base. I think that is one of the other reasons that they chose to partner with us, right? We have 17,000 clients globally. And it is particularly strong in the mid-market. And so that is a lot of the 2,000 that we're working with on their behalf. And I think a client typically needs about two months of testing, go through a couple of weeks, per campaign to do evaluation and tweak it, run it again. So it probably takes about two months to start to get to some comfort level of how it's performing relative to other tactics. I would say two milestones we're looking forward to will be holiday season this year. So kind of come October, November, how many clients are choosing to invest in OpenAI as a mechanism to drive their holiday objectives. I think that will be an interesting signal for all of us, everyone in the ecosystem, let alone Criteo and OpenAI. And then early next year, lots of brands and advertisers tend to set budgets at the beginning of the year by platform, by tactic for their always-on. So I think that's another signal kind of in Q1 that we would get a read on.

Not that those have to stay fixed over the full year but that is a pretty typical client approach to set those early in the year i want to get into the impact so not to spend the whole time on open ai but um two other quick questions because i think agentic commerce can potentially change how we shop if you have an agent helping you find what you're looking for that you may or may not know exist so question number one is um uh we talked about two milestones holiday the holiday this year do we have enough product with the advertisers on chat gpt to be meaningful uh for users you know i know we talked

about your product catalog so i'm bringing it back to critio's product catalog that that's point one and point two the impact of critio itself so when when can we get on a call and you and connor can say it's uh now uh incremental or adding more so to growth or you know yeah yeah so the there's enough product for sure um you know what what we continue to work with them to tune the relevancy engine to improve budget completion and fill rate um and so that's just a work in progress and as they develop now some of the additional performance capabilities like optimized cpc the cappy measurement uh program that they uh introduced about a month or so ago even little things like exclusion lists i think that all starts to drive volume and help command larger budgets for us and we've continued to be conservative about guiding on performance just because it's decent client count, but relatively small budgets per. We believe that it will be a meaningful contributor to 2027. And we're continuing to talk about how we're going to give guidance on that. We want to give guidance on that. It's an exciting part of our business. We need to be mindful about starting to guide to some kind of a statistic then that we can update regularly with confidence. But meaningful is the word that we keep using for now. And again, everyone's interests are aligned. We really want to guide on something for this next year. So we're going to figure that out.

So maybe moving on to retail media. Specifically, I think some of your core offerings like Commerce Max, sponsored products, was it Page Intelligence, Conquesting. How do you see retail media evolving here?

Yeah. Yeah, it's really great, actually, because when I joined, shortly after I joined, had the sort of misfortune of the pretty big news event with our largest retail client taking some, I call them legacy scopes of work in-house because they very much continue to use our technology. but since then the business has really embarked on being more diversified that's both strategic on our part but it's also what the market is sending us as a signal so retailer ad stack is becoming more diverse in that there's opportunities for an ad server for sponsored products there's an opportunity for an ad server to serve display and online video um there's an opportunity for a mediation layer there's an opportunity to optimize paid and organic and what shows up on a product listing page conquesting right so there's a lot of different monetization tactics now that as these retail uh media networks get bigger and more sophisticated they really have an appetite for um and so we're just building to market demand um but the the nice benefit of that is it it diversifies the business so that we're not sort of so binary on you know if you're not the sponsored ads ad server you're just in or out and and you know obviously that's a that's not always a great situation so being more diversified i think allows you to evolve with clients bring them more product and if they ever did in-house something, like you still have a role to play in the stack. And that's just talking to supply side, right? On the demand side with Commerce Max, we continue to introduce new insights features, new capabilities for how cross retail campaigns are run and measured. And that's the core value proposition there, because you want to make running retail media as frictionless as possible, because that's really been the inhibitor on the advertiser side for scaling spend outside of the top two players. So that's our mission with CommerceMax. And we see really good results happening here over the summer with that.

That's great. And maybe the last one on just, you know, we talked about agentic and retail. Let's talk about performance media.

We talked a little bit about it earlier, but, you know, how do you, I think we talked about the privacy sandbox may have taken a little bit of wind out of the sails what what products can we look forward to so that we can see that growth come back or in performance media in performance yeah yeah so um the the sort of highest priority channels for us are ctv and app um you know it said it simply said simply we just need to be where digital activity is happening right where's the audience going and budgets will follow. Now, each of those channels has different dynamics about how people behave and interact in those channels that then allow you to conquest additional budgets outside of traditional lower funnel remarketing tactics. So that's why we always call it full funnel cross channel.

You need to establish channel capabilities in order to conquest budgets in the funnel so they they're just different sides of the same coin and as we get into maybe the technology behind this you know i think we we said agencies are about a third of criteo's total media spend if i'm not mistaken yes um and now most are accessing criteo's back end via mcp which it's coming the fast growing way that they access i i wish i could say that's most of it but it's the fastest growing and it's certainly the area of interest And so the question is, you know, ultimately, if we get in this world where agents are buying from agents and we're sort of doing things automated, we have this MCP compatibility that's happening as we speak here. How does that accelerate the business or, you know, do you see greater flow of dollars come through Criteos?

Yeah, definitely. I mean, I'd slightly reframe the premise, and I would just say that, in particular, the agency segment is moving towards headless buying, kind of the simplest way to say it. Because I don't know that it's fully agentic. It's agentic-enabled, but this kind of headless is really the phrase, I think, to think about it. And this agency is wanting to own a workflow that allows them to standardize the way that they plan, run, and activate media, which gives them greater operating efficiency across their headcount. The ability to build more automation into each step in that process gives them automation and operating leverage. And then that has an impact on who they want to partner with. So Criteo, as a partner with a lot of sort of data assets and algorithms that are geared towards turning those assets into outcomes, we become like a great partner in a setup like that, where I just want to go direct into your audience builder to help me build bigger, higher fidelity audiences. I want to come into your supply paths to buy supply at the cheapest and most optimal way. Or I want to get to a commercial agreement where if you can deliver me a ROAS of 10, I can pass that on to my client in a way that's good for them and still allows the agency some economics in that setup. So there's a variety of, I think, ways that it plays out, but agencies want to own sort of a wide end-to-end stack, but they want to partner sort of at the things below that help scale each module in that setup.

Got it. One last question on the tech side, then we'll get into maybe some other, the profitability and redomacillation, but the go and self-service platform. so talk to us about what it could mean to the business and I believe it's more of a 27 event yeah but you know we we have this self-service platform it's called go talk to us about what this could be as we just got finished talking about agencies and mcp we just talked about the potential with you know yeah well they're they're like flavors of the same thing right so with agencies we use a fancier word like headless you know buying but but go self-service is geared towards the smb market which is just a different flavor of the same trend which is

automated buying of outcomes so the ecosystem's gotten very complicated and really as an advertiser you just really want an outcome and you want it to be easy and you want to work with a platform that you can trust will allocate your dollars optimally across the channels or impressions that are relevant to driving your products. And that's really the philosophy that GoSelfService is built on. Now, that is both an acquisition vehicle for us for new clients in that segment on a self-serve basis, not dissimilar from some other self-serve platforms that are in the market. But we also use it internally. So you could think of it as more efficient managed service that makes us a more efficient organization and how we use our own tools. And that continues to help us get operating leverage and maintain healthy margins in the business. that's perfect let's um let's let's shift well there's about four minutes left i don't know there's any questions in the audience you can uh think about questions and then uh we can oh there is one that's uh there's a mic behind you if you want to open ai's uh international rollout have you seen effect on your international customer account you mean on in terms of non-ai or sorry non-open ai clients no on opening oh oh oh um we're not sharing updates on that just yet but uh we should in conjunction with them hopefully give an update to that 2000 advertiser figure sometime in the fall i hope yeah when uh when is the ctv product going to ship is that end of year you know it's interesting it's already it's already shipping on some level right now i think the right question would be like when does it scale and become a more meaningful part of the revenue stack i think that will happen in 27 so we are already driving a managed service ctv offering today and commercial activity on that has accelerated over the course of the summer we need to get to a place with that later in the year early next where that's like something that we would guide on or give some indication of how it factors into the stack next year but we're absolutely going to get there with that channel and it's not dependent on some big tech build that we have to do that potentially would help scale and accelerate something but building the book of business on managed service is actually something we're doing already thank you and where are we with uh like streamer partnerships out of the big 10 are we seven out of 10 eight out of 10 i'd have to get back to it's not bad it's it's we'll come back to you on that it yeah i know we have several of them i'll have to come back to you on the specific number maybe as we uh wrap up here i would love an update on the redomiciliation if i said that correctly you did um you know what i think we've completed the luxembourg step what's next and again remind us the benefits here yeah sure so um we did complete the shift to be a luxembourg-based company at the beginning of august and so as a luxembourg-based company now that does two things for us one it removes some of the capital controls that we had on share buyback when we were domiciled in france and it makes us eligible for actually a couple of passive indices now, most notably the MSI. We are on track to complete the transition to a U.S.-based domicile on January 1st of 27. There will be a shareholder vote to confirm that in December, but all signals are that that will complete as planned, and then we would be a U.S. domiciled company effective at the beginning of next year. Does that impact anything from maybe an M&A perspective? No, not necessarily. I mean, you continue to progress into fewer and fewer capital controls as you move through that. There still are some limitations in Luxembourg, though nothing to the extent that we had in France. And then in the U.S., you would know that regime uh well um and then the i think the in the u.s conversion it accelerates the the rest of the passive indices that we want to be included in perfect yeah any other questions from the audience with that maybe we'll wrap it up we have a lot to a lot to think about with yeah key focus areas but Michael thank you very much for your time thanks for coming everyone