Criteo S.A. Earnings Call: Strong 2025, Cautious 2026

Criteo S.A. ((CRTO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Criteo S.A. struck a notably constructive tone on its latest earnings call, pairing record 2025 financials with visible traction in Retail Media, Performance Media and new AI‑driven products. Management acknowledged meaningful near‑term headwinds but framed 2026 as a deliberate transition year, positioning the business for more durable growth once one‑off client issues and elevated investment spending normalize.

Record 2025 Financial Performance Underpins Confidence

Criteo reported 2025 revenue of $1.9 billion with contribution ex‑TAC of $1.2 billion, up 3.5% at constant currency and an adjusted EBITDA margin of 35%. Adjusted net income reached $253 million, or $4.62 per diluted share, while free cash flow climbed 16% to $211 million, representing 52% of adjusted EBITDA and backed by $891 million of liquidity and no long‑term debt.

Performance Media Delivers Steady Growth

Performance Media remained the company’s workhorse, generating $1.7 billion of revenue and $915 million of contribution ex‑TAC, up 4% at constant currency in 2025. In Q4, revenue reached $465 million with contribution ex‑TAC up 2% in constant currency, supported by strong verticals such as Travel, which surged 37%, Classifieds up 12% and a 5% gain in Commerce Growth Solutions.

Retail Media Shows Robust Core Momentum

Retail Media posted 2025 revenue of $264 million and contribution ex‑TAC of $260 million, up 2% at constant currency despite contract changes at two large clients. Excluding those scope reductions, Retail Media contribution ex‑TAC grew a robust 16% for the year and 20% in Q4, aided by a 65% jump in auction‑based display, which now represents about 21% of on‑site media spend across 49 live retailers and recent wins such as Lidl, JB Hi‑Fi and Ulta Beauty.

AI and Agentic Commerce Show Promising Early Results

Criteo highlighted strong proof points from its agentic recommendation engine, which delivered roughly a 60% uplift versus baseline LLM recommendations in offline tests and has moved into extended testing with a key partner. Its ‘Go’ AI automation product is also gaining traction, with campaigns that include social channels delivering over 20% higher ROAS, 37% of Go campaigns now incorporating social and about half of small‑client campaigns in the U.S. already running through Go ahead of a full self‑service launch expected by the end of Q1.

Cash Generation Fuels Shareholder Returns

The company continued to convert earnings into cash, generating Q4 free cash flow of $134 million and $161 million of cash from operations. Over 2025, Criteo deployed $152 million to repurchase 5.4 million shares and canceled 2.2 million shares in Q4, while the board boosted the remaining share buyback authorization to as much as $200 million, signaling confidence in long‑term value.

Holiday Season and Product Performance Stand Out

Criteo’s platform captured strong holiday demand, with Q4 media spend rising 25% year over year across roughly 4,100 global brands and Black Friday on‑site display spend more than doubling. Shoppable video spend increased 30% sequentially, and off‑site activations during Cyber Week for a major computer brand reached 7 million Costco shoppers while generating a striking four‑digit return on ad spend.

Retail Client Scope Reductions Cloud Near Term

Management reiterated that previously disclosed scope reductions at two major retail clients weighed on Q4 results by about $25 million and will create a $75 million headwind in 2026. The impact is particularly acute in Q1, where the company expects an approximate $27 million drag on contribution ex‑TAC, making these contract changes a central driver of its muted short‑term outlook.

Soft Guidance for 2026 and Weak Q1 Start

For 2026, Criteo forecasts contribution ex‑TAC to be flat to up 2% at constant currency, including the $75 million retail headwind, implying high single‑digit underlying growth when that is excluded. Q1 2026 is expected to be the trough, with contribution ex‑TAC guided to $245 million–$250 million, down about 9%–11% at constant currency, and adjusted EBITDA projected between $50 million and $55 million.

Category and Regional Pockets of Weakness

The quarter exposed pockets of softness in key retail categories, as department store media spend fell 13% and fashion declined 12%, offsetting strength elsewhere. Regionally, the U.S. and Asia‑Pacific trends lagged, while EMEA showed an acceleration, underlining that Criteo’s growth profile remains uneven across geographies and sectors.

Mix Shift and Take Rate Compression

A strategic shift toward display, CTV and off‑site formats, which typically carry lower take rates, plus renegotiated terms with a large retailer, compressed Retail Media take rates year on year. Separately, ad tech services revenue declined about 3% in 2025, trimming roughly 100 basis points from Q4 Performance Media contribution growth and illustrating the drag from lower‑margin service lines.

Elevated Investment Load Pressures Margins

Criteo plans to step up spending in 2026 on agentic AI initiatives, higher CapEx of about $190 million driven by data center renewals and additional return‑to‑office costs, while also absorbing foreign exchange headwinds. As a result, management expects the adjusted EBITDA margin to ease to around 32%–34% from 35% in 2025, deliberately trading some near‑term profitability for long‑term product and infrastructure upgrades.

Agentic Monetization Opportunity Still Ahead

Despite strong technical results from agentic commerce and AI features, management emphasized that monetization models remain in early stages and unproven. Reflecting that caution, the 2026 outlook assumes no incremental revenue from agentic initiatives, suggesting meaningful optionality if these capabilities convert into commercial products over the next several years.

Guidance Signals Transition Year in 2026

For 2026, Criteo expects contribution ex‑TAC to be flat to up 2% at constant currency, or high single‑digit growth when excluding the $75 million retail headwind, with Retail Media contribution ex‑TAC down mid‑ to high‑teens including the client changes but accelerating to high‑teens or around 20% growth for the remaining base. Performance Media contribution ex‑TAC should grow mid‑single‑digits, while management targets a 32%–34% adjusted EBITDA margin, CapEx of about $190 million, free cash flow at roughly 40% of adjusted EBITDA and a normalized tax rate between 27% and 32%, with Q1 marked as the weakest quarter.

Criteo’s latest earnings call painted a picture of a company balancing strong 2025 execution and promising AI‑driven innovation against a deliberately cautious 2026 shaped by client‑specific headwinds and elevated investment. While headline growth will slow in the near term, the underlying Retail and Performance Media engines, coupled with early agentic commerce proof points and solid cash returns, suggest the stock’s story remains one of long‑term digital advertising leverage rather than structural slowdown.