Criteo's Q3 2025: Contradictions Emerge on Agentic AI, Retail Media Strategy, AI Investments, and Macroeconomic Impact

Date of Call: October 29, 2025

Financials Results

• Revenue: $470 million in Q3 2025; contribution ex-TAC $288 million (up 6% YoY, +15% on a 2-year stack)
• EPS: $0.70 diluted EPS; adjusted diluted EPS $1.31, up 36% YoY

Guidance:

• Reaffirm full-year contribution ex-TAC growth of 3%–4% YoY at constant currency; FX tailwind $12M–$15M.
• Raise adjusted EBITDA margin guidance to the high end of range; now project ~34% adjusted EBITDA margin for 2025.
• Q4 contribution ex-TAC expected $325M–$331M (down 3%–5% constant currency); Q4 adjusted EBITDA $113M–$119M; Q4 FX +$5M–$8M.
• Expect free cash flow conversion >45% of adjusted EBITDA (excl. nonrecurring); capex ≈ $110M; normalized tax rate 22%–27%.
• Not providing formal 2026 guidance; anticipate overall low growth with Q1 as a low point due to one-time retail fee timing and a ~$75M impact.

Business Commentary:

* Revenue and Earnings Growth: - Criteo reported revenue of $470 million for Q3 2025, with contribution ex-TAC increasing by 6% year-over-year at constant currency. - Growth was driven by strong performance in Performance Media and Retail Media, despite challenges in classifieds and fashion verticals.

• Performance Media and Retail Media Growth:
• Retail Media revenue was $67 million with contribution ex-TAC growing by 11% at constant currency, outpacing market growth.

• This was supported by new brand acquisitions and increased media spend, while Performance Media revenue was $403 million with contribution ex-TAC up 5% at constant currency.

• AI and Product Innovation:

• Criteo's AI and product innovations, including Commerce GO, are driving growth and performance enhancement, with Commerce GO campaign increase by 6%.

• The company's AI-powered tools are leveraging large-scale commerce data to improve performance and user experience across channels.

• Executive Leadership and Strategic Initiatives:

• The appointment of Ed Dickson as Chief Customer Officer and the decision to redomicile to Luxembourg and list on NASDAQ reflect strategic efforts to enhance execution and shareholder value.
• These initiatives aim to optimize corporate structure, allocate capital effectively, and expand the shareholder base.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described 'real momentum' and confidence in multi‑year growth (CEO: 'we're executing with conviction'); CFO highlighted strong results: 'adjusted EBITDA of $105 million, up 28% YoY' and 'adjusted diluted EPS $1.31, up 36% YoY'; guidance was reaffirmed and margin guidance raised, signaling operational leverage and optimism.

Q&A:

• Question from Justin Patterson (KeyBanc Capital Markets): How have clients responded to your agentic products and what investments are required to scale CTV as a multiyear growth opportunity?
  Response: Agentic products are live (audience and campaign agents) and piloting with AI partners; CTV scaling requires supply‑side integrations, demand‑side tactics and unified measurement to deliver cross‑channel performance.

• Question from Ygal Arounian (Citigroup): Philosophically, how will partnerships with AI platforms monetize if transactions move into agentic AI — how would that model work for Criteo?
  Response: Criteo expects AI platforms to monetize via native advertising/affiliate‑style economics; its proprietary product data feeds can improve AI responses and be monetized regardless of exact platform model.

• Question from Ygal Arounian (Citigroup): Can you expand on the Google partnership and how brand search budgets will roll into contribution next year?
  Response: Google API is live in Americas (Q4) and opens access to a large addressable search pool (~$172B); it should drive multiyear Retail Media growth (more material in 2026) with take rates directionally neutral.

• Question from Mark Kelley (Stifel): As transactions move into agents, could Retail Media eyeballs decline and become a headwind versus capturing more search budgets?
  Response: Management views agentic as an additional channel, not a full cannibalizer; retailers can adapt (e.g., raise CPMs) and Criteo will participate either by powering in‑agent solutions or enhancing retailers' on‑site experiences.

• Question from Mark Kelley (Stifel): On Activated Media's Q3 acceleration, how much was from new wins (e.g., DoorDash) versus existing retailers?
  Response: Q3 growth was mainly from the existing scaled customer base; recent new wins like DoorDash were announced late in the quarter and are only beginning to ramp.

• Question from Tim Nolan (SSR): How did you beat substantially on adjusted EBITDA in Q3 and are there financial implications or costs from the planned redomiciliation?
  Response: The EBITDA beat was driven by top‑line strength, operational leverage, reduced bad debt and marketing timing shifts; redomiciliation is not expected to have material costs and any related expenses will be disclosed separately.

• Question from Douglas Anmuth (JPMorgan): Are material investments needed for the AI products into 2026, and can you clarify the slower ramp for certain Retail Media clients and the $75M headwind?
  Response: No large incremental AI spending is expected beyond normal scaling and marketing for Commerce GO; slower retail client ramp is temporary and the previously disclosed ~$75M impact remains expected with Q1 as the low point.

• Question from Matthew Cost (Morgan Stanley): How should we think about Commerce GO's contribution to growth in 2026 and beyond — is it incremental or offsetting other product shifts?
  Response: Commerce GO drives higher spend per client, lower churn and new customer acquisition (self‑service rollout), and is expected to be a meaningful contributor to 2026 top‑line growth.

• Question from Matthew Cost (Morgan Stanley): For the AI assistant proof‑of‑concept, if successful what are the next steps?
  Response: If the PoC demonstrates improved product recommendations, Criteo will scale the integration with the partner; current focus is on evidence generation and then stepwise scaling.

• Question from Mark Zgutowicz (Benchmark): With Retail Media net dollar retention at 107%, what was the incremental contribution from off‑site versus display and how should we think about US trends and take rates?
  Response: Growth is primarily driven by sponsored on‑site ads and a ramping auction‑based display format; off‑site is growing (~10% of revenue) but remains secondary to on‑site sponsored offerings.

• Question from Richard Kramer (Arete): What's the status of Custom Audiences and social inventory outside Meta, and how do self‑serve economics compare with direct sales and their effect on take rates?
  Response: Social expansion includes testing partners like TikTok but Meta still provides significant headroom; self‑serve improves margins via automation and lower cost‑to‑serve, while BidSwitch and similar channels contribute positive but lower‑margin revenue.

Contradiction Point 1

Agentic AI Opportunities and Impact on Retail Media

It involves differing perspectives on how Agentic AI could affect Retail Media, impacting potential shifts in advertising budgets and business strategy.

What impact might agentic AI have on Retail Media and how do you balance gains from new budgets against potential losses in Retail Media ads? - Mark Kelley (Stifel, Nicolaus & Company, Incorporated)

2025Q3: Agentic AI is not replacing commerce ecosystems. Retailers will adapt to maintain traffic and value in channels. We see potential for retailers to increase their CPMs on their own based on the enhanced ad relevance. - Michael Komasinski(CEO & Director)

How should we approach monetization or payment mechanisms for the Agentic AI product? Could this product negatively impact Retail Media as budgets shift to it? - Mark Patrick Kelley (Stifel)

2025Q2: Agentic AI is a new channel and not necessarily replacing commerce ecosystems. Retailers will adapt to maintain traffic and value in channels, but we see potential for retailers to increase their CPMs on their own based on the enhanced ad relevance. - Michael Komasinski(CEO & Director)

Contradiction Point 2

Investments Required for AI Products

It involves differing statements about the need for new investments in AI products, which impacts expectations for resource allocation and spending.

What are the required investments for AI products in 2026, and will slower adoption of new Retail Media clients affect guidance? - Douglas Anmuth (JPMorgan Chase & Co, Research Division)

2025Q3: We are close to breaking even on our AI products. None of the AI products that we have are significant. The new stuff we are building, we are building with our existing teams. - Michael Komasinski(CEO & Director)

How should we assess the monetization strategy for the Agentic AI product? Could the product negatively impact Retail Media as budgets shift to it? - Mark Patrick Kelley (Stifel)

2025Q2: This year, we are investing in our R&D to build an AI stack and in our product offerings for AI, including the agentic AI, the AI-based solution and the AI support for these new product offerings. - Michael Komasinski(CEO & Director)

Contradiction Point 3

Retail Media Strategy and Client Relationships

It highlights differing approaches to Retail Media strategy and the handling of client relationships, which could impact Criteo's growth and market positioning.

How is Criteo integrating its capabilities into AI platforms and what impact will this have on Retail Media budgets? - Ygal Arounian (Citigroup Inc.)

2025Q3: AI platforms could skew toward native advertising solutions, with Criteo's data enhancing product recommendations. - Michael Komasinski(CEO & Director)

Why is the largest retailer pulling back on retail media despite Criteo's support? Is there additional in-housing risk? What macro trends did you observe in April? - Ygal Arounian (Citigroup)

2025Q1: Some retailers like the larger ones are willing to own the sales and demand front-end of their Retail Media network but continue to use our technology. - Michael Komasinski(CEO)

Contradiction Point 4

Macroeconomic Impact and Client Growth

It illuminates differing perspectives on the impact of macroeconomic factors and client growth, which could influence Criteo's financial performance and strategic direction.

What AI product investments are needed for 2026, and will slower Retail Media client growth affect guidance? - Douglas Anmuth (JPMorgan Chase & Co, Research Division)

2025Q3: The macro environment is more challenging in Q3 given the slowdown in consumer spending and the economic slowdown. - Sarah Glickman(CFO & Principal Accounting Officer)

What are spending patterns by income demographic? What is the OpEx leverage strategy for Q2 and the remainder of the year? What is the 12-month revenue impact of the large client's decline? - Mark Zgutowicz (Benchmark)

2025Q1: The client has removed services, like client services and demand generation. They will still use our tech for Retail Media. There is a significant impact due to this change, but we expect strong growth across the rest of the base. - Sarah Glickman(CFO)

Contradiction Point 5

Investment in Agentic AI and CTV

It underscores differing statements about investment priorities, particularly in Agentic AI and CTV, which are key growth areas for Criteo.

What are the 2026 AI product investments, and will slower Retail Media client growth affect guidance? - Douglas Anmuth (JPMorgan Chase & Co, Research Division)

2025Q3: There are no significant new investments required; existing teams are developing agentic products. - Michael Komasinski(CEO & Director)

How can you accelerate the growth of new clients and channels? Has retargeting recovered in Privacy Sandbox, and what were the costs associated with the Privacy Sandbox transition? - Richard Kramer (Arete Research)

2025Q1: Our focus is on scaling products and executing commercially. We're enhancing AI for both Performance and Retail Media. - Michael Komasinski(CEO)