Criteo S.A. ((CRTO)) has held its Q1 earnings call. Read on for the main highlights of the call.
Criteo’s recent earnings call painted a picture of both triumphs and trials. While the company celebrated significant achievements in Retail and Performance Media, AI-driven innovation, and a robust financial position, these positives were counterbalanced by challenges such as changes with major clients, macroeconomic uncertainties, and slower growth in certain verticals.
Retail Media Growth
Criteo reported a substantial increase in Retail Media, with $335 million activated in media spend, marking a 21% year-over-year growth. This success was largely attributed to multiyear partnerships with leading agencies and new wins across various regions, showcasing the company’s strategic expansion efforts.
Performance Media Momentum
The company experienced a sequential increase in media spend growth, excluding AdTech services. This momentum was driven by Commerce Audiences and benefited from third-party demand via the Commerce Grid SSP, highlighting Criteo’s ability to capitalize on emerging market opportunities.
Strong Financial Position
Criteo’s financial health remains robust, with an adjusted EBITDA of $92 million, up 30% year-over-year. The company boasts a strong liquidity position with $810 million in total liquidity and no long-term debt, underscoring its financial stability and capacity for future investments.
AI and Innovation
Significant advancements in AI have led to enhanced automation and performance breakthroughs for Criteo. The company plans to continue accelerating its pace of innovation, aiming to maintain its competitive edge in the industry.
Global Expansion and New Clients
Criteo has expanded its partnerships with major enterprise clients like Office Depot and ODP Business Solutions, leveraging its comprehensive Commerce Media Platform to drive growth and client engagement on a global scale.
Impact of Retail Media Client Changes
The company faces challenges as its largest Retail Media client has decided to discontinue managed services and curtail brand demand sales services. This change is expected to impact growth rates for a 12-month period starting in Q4 2025.
Macro-Economic Challenges
Criteo is navigating a soft macroeconomic environment, particularly in April, with lower spending observed in the retail and fashion sectors. These conditions have impacted the company’s overall business performance.
U.S. Food Delivery Client Reduction
A major U.S. food delivery client has reduced the scope of services, impacting Retail Media growth. This reduction is projected to have a $25 million negative impact in 2025, posing a challenge to Criteo’s growth trajectory.
Slower Growth in Certain Verticals
The company has observed slower growth in the beauty and fashion verticals, with spending patterns affected by the uncertain macroeconomic environment, highlighting the challenges in maintaining consistent growth across all sectors.
Forward-Looking Guidance
Looking ahead, Criteo provided guidance for low-single-digit year-over-year growth in contribution ex-TAC at constant currency for the full year. Despite facing macroeconomic headwinds and a significant impact from a large Retail Media client reducing its managed services, the company anticipates maintaining adjusted EBITDA margins between 33% and 34% for 2025. Retail Media is expected to grow in the low-to-mid single digits, driven by a scale base of over 200 clients, while Performance Media is anticipated to achieve low-single-digit growth.
In conclusion, Criteo’s earnings call reflected a balanced narrative of growth and challenges. While the company celebrates its achievements in Retail and Performance Media and its strong financial standing, it remains vigilant of the macroeconomic uncertainties and client changes that could impact its future growth trajectory.