Criteo S.A. Q4 FY2025 earnings call

• Agentic Commerce: Developing an agentic commerce recommendation service for partners like LLM platforms, with offline testing showing 60% uplift in relevant product prioritization. Testing conversational shopping experiences and embedding agentic capabilities in solutions for marketers. Proof of concept with an LLM partner advanced into extended testing. - Scaling Performance Engine: Expanding self-service with Go, aiming to launch full self-service at end of Q1. Cross-channel execution as a differentiator, with social scaling and new video formats for Instagram and Facebook. Extending performance up the funnel with new discovery solutions and CTV as a growing opportunity. - Retail Media: Strong leadership position with 70% of top 30 U.S. retailers and half of top 30 EMEA retailers. Expecting revenue return to growth in Q4. Developing AI-driven optimization layer for retailers. Enhancing Commerce Max for brands and agencies, completing Google SA360 integration, and expanding Mirakl partnership. Auction-based display leading growth with 65% increase in media spend, and shoppable video gaining traction.

Performance Media: 2025 revenue was $1.7 billion and contribution ex-TAC was $915 million, up 4% at constant currency. Fourth quarter revenue was $465 million and contribution ex-TAC was $255 million, up 2% at constant currency. The Commerce Growth Solution within Performance Media was up 3%, with travel being the fastest-growing vertical at 37%, while retail was softer with department stores down 13% and fashion down 12%. Retail Media: 2025 revenue was $264 million and contribution ex-TAC was $260 million, up 2% year over year at constant currency. Excluding two clients with scope changes, contribution ex-TAC grew 16%. Fourth quarter revenue was $76 million and contribution ex-TAC was $75 million, with trends consistent excluding the $25 million headwind, and contribution ex-TAC grew 20% across the underlying client base.

• 2026 contribution ex-TAC expected to be flat to up to 2% at constant currency, with low overall growth due to retail media client scope reductions. Excluding the $75 million headwind, underlying contribution ex-TAC expected to grow high single digit. - Q1 2026 contribution ex-TAC expected $245 million to $250 million, down 9% to 11% at constant currency. - 2026 adjusted EBITDA margin expected approximately 32% to 34%. - Anticipate higher CapEx in 2026 (~$190 million) related to data center renewals. - Free cash flow conversion rate expected about 40% of adjusted EBITDA before nonrecurring items.

• Market fragmentation increasing complexity for advertisers but also opportunity, but any adverse impact on advertiser spending could affect results. - Client scope changes at retail media clients have impacted recent results and could continue to do so, affecting revenue and margin. - Foreign exchange fluctuations could impact financial results, both positively and negatively depending on currency movements.

Q: Thomas Cauthorn White asked about agentic offerings and department store weakness.

A: Michael Komasinski discussed agentic commerce partnerships and product reco service, with Todd Parsons adding on the adaptable nature of the reco service. Sarah Glickman commented on not commenting on specific clients but noted department store and fashion weakness.

Q: Mark Patrick Kelley inquired about Retail Media growth phasing and Commerce Go.

A: Michael Komasinski talked about Retail Media growth drivers and Go's focus on SMB and self-service, with Sarah Glickman discussing the front-loaded impact of client scope changes and Todd Parsons on Go's cross-channel optimization.

Q: Justin Tyler Patterson asked about retailers' adoption of AI tools and global personalization.

A: Michael Komasinski spoke about retailers' investment in agentic front ends and Todd Parsons on AI's impact on creative and self-service with auto-generated creation.

Q: Alec Brondolo questioned Retail Media EBITDA margin impact and Off-site contribution.

A: Sarah Glickman discussed EBITDA margin impact and Michael Komasinski talked about Off-site's early innings and growth paths.

Q: Tim Nollen asked about monetization from AI initiatives and agentic upside.

A: Michael Komasinski and Todd Parsons discussed monetization models for retail and LLMs, with Sarah Glickman noting no assumption of agentic upside yet.

Q: Richard Alan Kramer asked about lower take rates and 2026 budget visibility.

A: Sarah Glickman addressed take rate mix issues and budgeting visibility, noting strong forecast capabilities and recurring revenue base.