Criteo SA Sponsored ADR Aktie

Good morning, and welcome to the Criteo's First Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Melanie Dambre, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.

Good morning, everyone, and welcome to Criteo's First Quarter 2026 Earnings Call. Joining us on the call today, Chief Executive Officer, Michael Komasinski; and Chief Financial Officer, Sarah Glickman, are going to share some prepared remarks. Joining us for the Q&A session is Todd Parsons in his role as Chief Product Officer.

As usual, you will find our investor presentation on our IR website now as well as our prepared remarks and transcript after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements, which reflect Criteo's judgment, assumptions and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo's business.

Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10-K and 10-Q filed with the SEC.

We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this quarter are against the same period in the prior year. With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. One year into my role, we've made significant progress in sharpening our strategy, strengthening execution and focusing the company on what we expect will drive sustainable value creation. Our focus is clear, building Criteo into the leading commerce intelligence and AI decisioning platform for an increasingly complex and fragmented ecosystem.

Our conviction is that the next phase of commerce will be defined by how decisions are made, not just where ads appear. As AI changes how people discover products and makes the ecosystem more fragmented, the real value will come from turning intent into measurable outcomes at scale. That is exactly where we are focused and where we are building our advantage.

While this is not yet reflected in our results, we are making meaningful progress as we continue to transform our business. As we navigate this transition year, we executed with discipline in the first quarter, including media spend growth for the third consecutive quarter and meaningful progress across all our strategic priorities.

What matters most is the pace of execution, and we are moving quickly. In the first quarter, we have advanced our Agentic AI road map, including our exciting partnership with OpenAI and increasing adoption of MCP with agencies. We also launched Criteo GO as our AI-powered self-service offering and introduced new capabilities like Page Intelligence to help retailers improve product discovery while maximizing monetization.

Together, these milestones demonstrate strong progress against our strategy and reinforce the foundations for mid- and long-term growth. More broadly, AI is shaping how consumers discover, evaluate and buy, which raises the bar for relevance, trust and high-quality data. As commerce becomes more complex, the need for a decisioning and orchestration layer across multiple touch points becomes critical, and that is exactly where we believe we have a clear competitive advantage.

This is powered by our unique commerce data foundation with visibility into over $1 trillion in e-commerce transactions annually and reach across billions of daily active users, products and interactions, allowing us to operate at scale. We believe this combination of data, AI and scale positions us to play a central role in the ecosystem and to capture increasing value over time.

At the same time, AI platforms are emerging as a powerful new discovery channel, unlocking incremental budgets and expanding our addressable market. And for retailers, this is opening new monetization opportunities as they integrate conversational AI into their digital storefronts and create new surfaces for sponsored discovery. These dynamics are increasing demand, expanding our opportunity set and reinforcing the central role we play across the commerce ecosystem.

We entered 2026 with the ambition to lead in Agentic AI, and we are already delivering on this ambition with discipline and focus. We became OpenAI's first ad tech partner, integrating our demand into ChatGPT's advertising offering with a focus on experiences that are relevant, additive and built on user trust. This positions us at the forefront of a new high-intent discovery channel for our advertiser clients.

Momentum is building. We now have over 1,000 brands live with incremental budgets from both existing and new clients, strong agency traction and early expansion across international markets. We are also extending access through Criteo GO, integrating ChatGPT into our self-service cross-channel platform to enable advertisers to easily test and scale AI native media.

This traction reflects the value advertisers are seeing. Traffic from AI platforms like ChatGPT converts at approximately 1.5x the rate of other referral channels, driving incremental high-quality demand to retailer and brand destinations. More broadly, as AI-driven commerce emerges, our agentic recommendation service is enabling us to demonstrate our capabilities. It has been instrumental in advancing several partnership opportunities, including driving new engagement with a broader set of partners and is now evolving into a foundational layer of our platform embedded across multiple use cases.

An example is conversational ads, an innovative format we are actively developing. These enable interactive shopping experiences where users can describe what they're looking for and receive tailored product or service recommendations directly within the ad unit. In addition to being engaging, they generate richer intent signals that continuously enhance our models. We're seeing strong early interest, particularly in our travel vertical.

We are also advancing sponsored recommendations within retailer AI assistant built on the same capability. This allows sponsored and organic products to appear seamlessly within conversational experiences, opening new retail media inventory across these emerging surfaces, and we look forward to sharing more.

Importantly, Agentic AI is making our platform more scalable and easier to use. We are moving toward an API-first future with agentic workflows embedded directly into our solutions, reducing friction and accelerating execution for our clients. Thanks to our MCP server, dentsu has activated campaigns with Criteo from their agent using only a plain text brief. And this is a concrete example of how Agentic AI raises the bar for efficiency and interoperability, and we expect others to follow. At the same time, we are scaling agents across the platform, helping clients move faster across onboarding, audience creation, analytics and activation.

Turning to Performance Media, our focus is clear: reaccelerating growth by scaling self-service, expanding cross-channel activation and extending further up the funnel. As consumer journeys become more dynamic, advertisers are increasingly looking for unified outcome-driven solutions across the full path to purchase. This plays to our strengths and reinforces our confidence that Performance Media will be a durable and growing contributor to our business over time. Against this backdrop, near-term trends reflect softer demand in specific verticals, particularly travel in Europe and reduced budgets from certain large U.S. clients, primarily driven by client-specific decisions. Sarah will provide more detail shortly.

We are proactively responding by focusing on delivering strong outcomes to secure client budgets while executing against our growth priorities. While the near-term environment is challenging, it does not distract us from delivering on the strategy we believe will drive sustained growth and value. We are taking decisive actions to improve execution. Since joining as Chief Customer Officer in January, Ed Dinichert has elevated our commercial team and operating discipline, including bringing in new leadership for Performance Media in the Americas with deep experience in enterprise sales and scaling revenue.

We are also deepening and accelerating our engagement with agencies to capture greater share of spend while reinforcing commercial discipline through clearer performance metrics, stronger accountability and more rigorous pipeline management. We are already seeing early signs of progress with new enterprise client wins in the U.S. Our mid-market remains resilient, and our GO self-service offering is increasingly effective in addressing the needs of smaller clients.

Starting with self-service, GO launched as planned at the end of Q1. With more than 2/3 of campaigns from small clients now running through GO in the U.S., we are building on the successful transition of existing clients as we roll out self-service to new ones, supported by a comprehensive go-to-market plan, including targeted marketing campaigns with focused commercial support to drive awareness and adoption.

GO simplifies activation and optimizes performance across channels, bringing together display, video, native and social into a single campaign environment. AI dynamically allocates budgets to drive outcomes, while built-in generative tools ensure consistent, high-performing creative across formats. We are also embedding agentic onboarding capabilities into GO, further reducing friction and accelerating time to value for our clients.

Importantly, GO expands our addressable market, particularly among small- and medium-sized businesses. This is supported by strong industry tailwinds with AI-powered ad buying expected to grow from approximately $35 billion in 2025 to over $140 billion by 2030 according to Madison and Wall. We are already seeing strong interest and expect GO to be a multiyear growth driver.

Clients running fully cross-channel campaigns are spending up to 3x more, reinforcing the value of an integrated approach. For example, Wine Country Gift Baskets increased return on ad spend by 28% and average order value by 10%, driving higher spend. We are also extending performance further up the funnel as brand performance becomes increasingly important. Discovery is how we help brands reach new audiences across channels. And as we build toward a more complete full funnel offering, we are introducing Discovery audiences in GO this quarter.

Discovery typically represents at least 1/3 of media budgets, creating a meaningful opportunity to expand our addressable market. We are well positioned to capture that spend by connecting upper funnel engagement directly to lower funnel performance. Our cross-channel foundation is what makes this possible. It allows us to execute this full funnel strategy seamlessly, engaging consumers wherever they are and optimizing outcomes across channels rather than in silos. In practice, this means activating discovery across the environments where it is happening today, including social, CTV and emerging surfaces like AI platforms, all supported by AI-driven creative and optimization.

Social continues to be a strong driver for our business, providing broad incremental reach and scalable performance. We are expecting -- expanding into high-impact formats like short-form video on Instagram, Facebook and TikTok, where we are seeing encouraging traction. CTV is another important growth channel. Through our recently announced partnership with Roku, we are combining premium inventory with our commerce audiences to drive better performance and simplify activation, and we expect to bring CTV into GO by the end of the year. Taken together, this positions us to capture a greater share of upper funnel budgets while reinforcing our leadership in performance, and we expect these initiatives to build momentum as we move through the year.

Turning to Retail Media. We continue to build on our position as a global leader in the fastest-growing segment of digital advertising. Today, we partner with 235 leading retailers worldwide, and our focus is clear: unlock greater demand, scale high-performing formats and bring more intelligent conversational experiences to retail environments. Underlying performance remains strong with contribution ex-TAC up 24% in the first quarter, excluding the impact of the 2 previously communicated scope reductions.

On the demand side, we are expanding budgets and deepening engagement with brands and agencies. We drove additional share gains in the quarter, supported by our network of 15 third-party demand API partners and marketplace integrations that continue to unlock additional demand, particularly from long-tail advertisers. We are also seeing new capabilities like conquesting drive incremental spend across multiple retailers. By increasing competition on the digital shelf, it helps brands acquire new customers and defend market share.

On the supply side, we expanded our partnership with DoorDash in Canada and added Hyundai department store in Asia Pacific. We also secured many multiyear renewals, including ASOS in the U.K., reflecting the strength and durability of our retailer relationships. Innovation across formats continues to be a major growth driver and a source of share gains with existing and new retailers. Auction-based display remains our fastest-growing format, now live with more than 60 retailers, up from 49 last quarter. This is improving monetization efficiency and driving higher yields for retailers.

Shoppable video is also scaling quickly as retailers adopt more full funnel on-site strategies that combine discovery and conversion. AI is an important enabler of how we drive performance and monetization. With Page Intelligence, we are introducing an AI optimization layer that helps retailers balance organic and sponsored content while improving the shopper experience and also to unlock additional revenue opportunities while maintaining full control over product selection and ranking.

This positions retailers for a more AI-driven commerce future and reinforces our role as a long-term strategic partner. Collectively, these drivers are strengthening both demand and monetization across our network. We are executing with focus and remain on track for Retail Media revenue to return to growth in the fourth quarter as we move past previously communicated near-term headwinds from 2 [ client scope ] changes. We also continue to expect underlying Retail Media growth to accelerate in 2026 compared to 2025.

To close, we are executing with focus in a transition year. Our fundamentals remain strong with solid margins and cash generation while we invest in the capabilities that will drive our next phase of growth. We remain highly confident in the trajectory of our business, including our expectation of a return to growth in the fourth quarter and reacceleration into 2027.

We remain committed to shareholder value, including continued share buybacks, reflecting our confidence in the business and its potential. At the same time, we are advancing our portfolio and corporate structure optimization. Our redomiciliation to Luxembourg remains on track for completion in the third quarter, following strong shareholder support and will enhance our strategic and financial flexibility.

As a next step, we plan to pursue a subsequent redomiciliation to the United States, which could occur as early as the first quarter of 2027, subject to applicable approvals and other conditions to make Criteo easier to invest in and better positioned for the future. We are building a more scalable Criteo, well positioned to capture the opportunities ahead and deliver sustainable value to our shareholders.

With that, I'll hand it over to Sarah, who will provide more details on our financial results and our outlook.

Thank you, Michael, and good morning, everyone. Our first quarter performance reflects solid execution and financial discipline. Our first quarter media spend surpassed $1 billion for the first time. Revenue was $425 million and contribution ex-TAC was $250 million. This includes a year-over-year tailwind from foreign currencies of $9 million.

At constant currency, Q1 contribution ex-TAC was down 9% as expected, reflecting a $27 million headwind related to previously communicated scope changes with 2 Retail Media clients. Excluding this impact, contribution ex-TAC grew 1% in Q1 and client retention remains high at close to 90%.

Starting with Performance Media, revenue was $383 million and contribution ex-TAC was $210 million, down 2% at constant currency. This reflects mixed performance in Commerce growth, continued momentum in our Commerce Grid SSP and improving trends in Ad Tech Services. Within Commerce Grid, we have a diversified client base and a global footprint.

By region, we delivered low growth in media spend in EMEA, while budgets declined in the U.S. and to a lesser extent, in APAC. By vertical, travel remains our fastest-growing category, up 20% on top of 43% growth in Q1 last year, followed by solid performance in our marketplaces. We continue to see lower spending in retail, especially in discretionary categories such as fashion, which was down 18%. As the quarter progressed, spend from certain large enterprise clients softened in the U.S., while the broader client base remained stable and resilient.

In Retail Media, revenue was $41 million and contribution ex-TAC was also $41 million, reflecting the previously communicated $27 million headwind in the quarter. Excluding this impact, trends improved compared to last quarter and contribution ex-TAC grew 24% in Q1 across the underlying client base. This growth was driven by continued strength in Retail Media onsite.

We benefited from the traction of our auction-based display offering and new retailers. Growth from existing clients was strong with same retailer contribution ex-TAC retention at 88% or 110%, excluding our largest retailer, driven by multiyear contracts and exclusive partnerships with most of our retailer clients.

Media spend in Q1 grew 30% year-over-year, accelerating from 25% last quarter as our 4,150 global brands continue to prioritize retail media as a key channel for their investments to reach relevant audiences and sell more products. We delivered adjusted EBITDA of $65 million in Q1 2026, reflecting lower top line along with planned growth investments in our seasonally lowest quarter, partially offset by lower-than-expected RSU social charges and onetime tax refunds recognized in Q1 that were originally expected in Q2.

Non-GAAP operating expenses increased 10% year-over-year, primarily driven by planned growth investments, return to office costs and a foreign exchange headwind on our euro-based cost structure with productivity gains partially mitigating the increase. AI deployment continues to improve efficiency, streamlining execution and enabling better resource allocation.

Moving down the P&L, depreciation and amortization was $28 million and share-based compensation expense was $14 million. Our income from operations was $10 million, and our net income was $9 million in Q1 2026. Our weighted average diluted share count was 51 million, which resulted in diluted earnings per share of $0.15 compared to $0.66 last year.

Our adjusted diluted EPS was $0.73 in Q1 2026 compared to $1.10 last year. Operating cash flow was $48 million and free cash flow was $16 million in Q1, reflecting planned higher CapEx and improved working capital in a seasonally low quarter.

Criteo continues to be a resilient cash-generative business with the financial strength to invest for growth and return capital to shareholders. We have a strong balance sheet with no long-term debt. We had $889 million in total liquidity as of the end of March, which gives us significant financial flexibility to execute on our strategy and enable disciplined and balanced capital allocation.

Our priorities are to invest in high ROI organic investments and value-enhancing acquisitions and to return capital to shareholders via our share buyback program. We are confident in our business strategy, and we are committed to driving shareholder value. We deployed $31 million to repurchase 1.6 million shares this quarter, and there was $190 million remaining under the current authorized share repurchase program as of the end of March. In April, we canceled a total of 1.9 million shares, increasing our capacity for additional share repurchases.

Turning to our financial outlook, which reflects our expectations as of today, May 6, 2026. Our guidance incorporates softer performance media trends seen so far in Q2, while our Retail Media outlook remains unchanged. For 2026, we now expect contribution ex-TAC to decline by low single digits at constant currency. This reflects the previously communicated Retail Media client scope reductions as well as a more cautious view of the volatile macro environment and the reduced budgets from certain large enterprise performance media clients in the U.S.

At the midpoint, our full year outlook is down approximately 300 basis points, reflecting several factors impacting Performance Media. About half of that or roughly 150 basis points relates to indirect macro impact. Our direct exposure to the Middle East is limited at around 1% of our business, but we are seeing broader effects. This includes slower travel growth in Europe, which has been the region's fastest growth driver, softness in discretionary retail due to inflation and weaker consumer sentiment and slower adoption of newer products as advertisers concentrate spend on established solutions in a more cautious environment.

It's important to note that these dynamics are largely concentrated in our international markets, EMEA and Asia Pac, which represent close to 2/3 of our media spend for commerce growth. The remaining approximately 150 basis points is driven by U.S. client-specific dynamics. Taken together, these factors are pushing our return to growth into the fourth quarter. Excluding the $75 million Retail Media headwind, underlying contribution ex-TAC is expected to grow at a mid-single-digit rate.

Our guidance does not assume any material revenue contribution from Agentic AI initiatives given their early stage, although we are seeing strong early traction. We estimate ForEx changes to drive a positive year-over-year impact of about $6 million to $8 million on contribution ex-TAC for the full year. In Retail Media, we are confident in our outlook that remains unchanged.

We continue to expect media spend growth ahead of the market with contribution ex-TAC declining in the mid- to high teens year-over-year at constant currency due to the $75 million client scope reduction impact. Excluding the 2 clients, the underlying Retail Media contribution ex-TAC growth for 2026 is expected to accelerate towards the high end of the high teens to 20% range that we previously provided compared to 16% in 2025.

In Performance Media, we now expect contribution ex-TAC to be flat to up low single digits at constant currency in 2026. This reflects the expected ramp-up of GO over the course of the year, offset by macro headwinds and reduced spend from certain large U.S. clients. We have taken actions to reinforce execution, including new sales leadership.

Overall, we continue to anticipate an adjusted EBITDA margin of approximately 32% to 34% for 2026. Despite lower top line, we expect to maintain margins in line with our prior view through disciplined cost management and productivity gains, while we continue to invest in Agentic AI and key growth initiatives and absorbing foreign exchange headwinds on our euro-based costs.

We anticipate that the investments we are making this year will position us for sustainable top line growth and strong cash flow generation for the coming years. We expect a normalized tax rate of 27% to 32% under current rules, driven by our evolving revenue mix and certain onetime items related to our redomiciliation.

As previously communicated, we anticipate higher CapEx in 2026, primarily related to the renewal of certain data centers with total CapEx expected to be approximately $190 million. We expect operational cash flow conversion from adjusted EBITDA to improve to approximately 85% in 2026, up from 76% in 2025, driven by continued improvements in working capital. We also expect free cash flow conversion of about 35% of adjusted EBITDA.

For Q2 2026, we expect contribution ex-TAC $260 million to $264 million, down 11% to 9% at constant currency. Our range reflects a more volatile environment shaped by geopolitical tensions and reduced spend from certain large U.S. Performance Media clients, which has translated into softer April trends. We estimate foreign exchange to be a modest headwind in Q2, reflecting more unfavorable rates compared to 3 months ago.

We now expect up to a $2 million negative year-over-year impact on contribution ex-TAC in Q2, about $3 million worse than under the rates assumed in our prior guidance. We expect adjusted EBITDA between $67 million and $71 million, reflecting lower top line, continued high ROI investments in Agentic AI and growth areas, annualized employee costs and our annual promotion cycle and foreign exchange rate headwinds on our European cost base.

We are pleased that our proposed redomiciliation for Luxembourg and direct listing are progressing as planned, following strong shareholder support. This is expected to enhance our flexibility for share repurchases by removing current structural constraints. We remain on track to complete the redomiciliation in the third quarter of 2026.

Looking ahead, we plan to pursue a subsequent redomiciliation to the U.S. as early as the first quarter of 2027, subject to applicable approvals and other conditions with the objective of further broadening our access to U.S. capital markets.

In closing, we have strong conviction in our strategy. We are excited for Agentic AI, and we are laser-focused on disciplined execution and capital allocation while delivering strong margins and cash flow generation.

And with that, I will open up the call for questions.

[Operator Instructions] Your first question is from Mark Kelley with Stifel.

I appreciate all the color on the macro headwinds that you're seeing by vertical and by region. I guess I had 2 questions there. One is, is it fair to assume that the majority of the headwinds are outside of retargeting? Or is it kind of spread across the whole performance business?

And number two, you mentioned slower adoption of some of the newer products given some of the worries that people have out there from a macro perspective. I feel like we've been worried about collectively across the digital advertising industry. We've been worried about a lot of things for a handful of years here with ongoing conflicts and plenty of things to be mindful of. I guess what do you think your clients need to see in order for them to start adopting some of these newer tools that you've put into the market a bit more -- in a more meaningful way?

Yes. Sure, Mark. Happy to take that, and Todd probably add a little color to some of the product adoption parts of that question. The slowdown with the U.S. clients is across the Performance Media segment at large. So not just retargeting sort of across the whole portfolio. And that sort of leads to maybe the more important point, which is there wasn't any common denominator of those decisions. No sort of red thread running between them other than we need to build a stronger pipeline. We need to execute better with the way that we convert that pipeline on large U.S. clients. And that's something that we think we've already addressed.

We've got a great new leadership team in place. We brought on a new Chief Customer Officer and Ed Dinichert at the beginning of the year. And Ed, in turn, has revamped his entire commercial organization globally, in fact, but especially in the United States, where he brought on several key hires, many of whom started in the March or April time frame. So we feel like we've got the right team in place to jump start growth with that portfolio. And it's really more at an account level, just making sure that we're right there with our clients, driving strategic decisions, maintaining the right share of budget across our product set. And in terms of adoption of new clients or products, and Todd, if you wanted to comment on that part.

Yes, I can add to that, Mark. We're seeing a very healthy mix of new and existing advertisers adopting the capabilities that we're shipping. And as Michael said, we're shipping a lot of product at a very quick rate here. What you're seeing is early days in that adoption. And with large clients, it really goes to our commercial and selling motion and the work that Dinichert and the new organization are doing.

With self-service products like GO, it's just simply early. We're a month into it. our focus is what you'd expect from a launch, very tight feedback loops from our users, continuous improvements in customer experience and so forth, and we're seeing all positive signs there.

Your next question comes from Matthew Cost with Morgan Stanley.

Maybe one for Michael, one for Sarah. Michael, just on the ChatGPT partnership, you talked about incremental spend, which is very encouraging. How are you defining success for that product? And what are the milestones that investors should be watching as you continue to work through that launch? That's question one.

And then for Sarah, you've talked about how travel in Europe is softer, but EMEA was still a growth driver in 1Q. And obviously, that's been -- travel in Europe has been a very fast-growing category for you, as you pointed out. So what are your assumptions for the rest of the year for that category? And how conservative are you choosing to be given the uncertainty in the macro?

Sure. Thanks, Matthew. I can start with the OpenAI question and then the second part to Sarah. On OpenAI, definitely the leading KPI right now is client count. And that's why we published the update yesterday on the 1,000 clients that we now have live. And we expect that number to continue to scale nicely over the course of the year as they open up additional markets. And what's going to be really interesting is how our value proposition coexists along OpenAI as they develop their own self-service platform, right? And so we continue to see really strong engagement with clients where they need our expertise and our service to help them with adopting a new ad unit, a new surface, right? How does it work? How do they optimize? How should they think about that alongside their other investments and touch points?

We're developing our data management feeds to help them scale their product data into that environment because that's a real key part of driving ad performance in that unit. And then, of course, the cross-channel setup will always be a unique proposition that we'll be able to offer. And so we're really excited about getting that supply into our cross-channel setup and go over the course of the year. And that is something that we'll continue to provide updates on publicly in terms of making progress on that product rollout.

So a lot to be excited about. I think key client count is the main KPI for now as we get into '27, we probably would start to guide more around contribution and some additional disclosure. But Sarah, do you want to take the second half of Matthew's question?

Yes. So just on travel, that was our highest growing vertical this time last year at 43% and in Q1, it was at 20%. We did anticipate growth, including in the Middle East. We actually won some really good new clients there, and they just have been floated for obvious reasons. So we are taking a prudent approach on travel, assuming that we won't see the growth profile that we had anticipated.

And maybe if I can just take one minute on other verticals. We talked about fashion being down kind of year-on-year. Last year, that was down about 6%. This year, it's down like 18%. So we are seeing these trends from our clients. Even if I just go one more marketplaces, real estate classified was an amazing growth driver for us last year. And it's just much more muted. So that's what we've put into our guide, and we've just assumed a European and Asia Pac impact as well as a U.S., I would say, slower spend impact as well.

Your next question comes from Justin Patterson with KeyBanc.

Great. I appreciate the details on Agentic. I guess one thing that our team has been wondering is that how you think about some of the new device types and multimodal search, more visual search as an opportunity in there. Is that something Criteo can address today? Or is that just another area you would need to invest in down the road?

And then separately, the 1,000 clients is a nice milestone with Agentic. I'm curious how that's changed the pipeline of of client engagements and how you think that might build up over the course of the year?

Yes. So I can jump in to start with. So the answer is absolutely yes. We see that as an opportunity for us, and it's a very natural one, Justin. Our job overall is to bring performance discipline to the LLM surface. And as Michael laid out, that's not just client count, but from a product functionality standpoint, it's relevance, it's outcomes, it's measurement.

Those surfaces or additional creative types or ways that users are engaging them are absolutely baked into our strategy. But at the core, we're really focused on enabling those 3 things consistently across the surfaces so that we're not running towards an interaction or engagement that might not scale. But yes, it absolutely represents an opportunity, and we're well prepared to take advantage of it. And Justin, just on the kind of incrementality part of OpenAI, a couple of different thoughts there.

One, I mean, it's been the fastest-growing partnership that Criteo has ever had. I think it's probably sort of obvious from some of the statistics that we're sharing. We do find that, by and large, the budgets that go into it are incremental. And the pipeline is increasingly incremental as well. In the early stages, a lot of existing clients then wanting to use their Criteo pipes and service model to get into that platform. But it opened up a lot of traction for us on the new business front. And so increasingly, that's net new in our pipeline.

Now we need to go convert that over the course of the year and then cross-sell those clients into our cross-channel setup or to our other products. But we see a lot of potential in kind of a flywheel coming off this partnership. So helping our partners scale their product, but certainly bringing new folks into the Criteo platform more broadly. So more to come on that in the second half of the year.

Your next question comes from Alec Brondolo with Wells Fargo.

Maybe two for me. On the large client softness that you've experienced year-to-date, I guess, what is the level of confidence that it's a sales execution issue and not an issue that's more structural with the underlying performance of the advertising products? So that would be a helpful place to start.

And then maybe secondly, can you speak to the GO self-service rollout? Has it been a material new customer driver thus far? And could you help us understand what's implied in the guide for contribution from that product specifically in 2Q and the back half of the year?

Sure. Great questions, Alec. Yes, look, on the U.S. clients, we do not think that, that's structural. As I said, we've not lost any clients there. And as I mentioned, there really isn't like a common theme running through those other than we've got to be closer to those clients and jockey for position amongst other vendors that they work with. And as they make decisions, be able to move budget from, say, one Criteo product into another, right? If someone wants to pull budget from, say, lower funnel conversion into mid-funnel customer acquisition, we need to be right there at the table to suggest the right alternatives and move that from left pocket to right pocket.

We also need to continue to build more pipeline at that scale. And we've started to do that. But we have to convert it, and we need to get those net new clients scaled up so that when we have these fluctuations, in that segment. We've got new growth and revenue coming in to offset it. So we're a little out of sync for the quarter on that. We feel like we've brought in the right leadership to address it. And the underlying metrics on pipeline growth and certainly stability with those U.S. clients is there. So we think that this will resolve itself in another quarter or two.

In terms of GO, maybe I'll let Todd take that one.

Yes. Just to reinforce what I was saying earlier, we're a month into the launch there, and we can't say now exactly what's going to happen for the rest of the year. But I can say that the interest for the product is outstanding. And as I mentioned, we are really focused on making sure that smooth onboarding and customer retention, so we're ensured with product market fit is there. That's the stage that we're at in launching a new product, but it looks very good at the beginning. And of course, we're brokering on a year worth of experience in G campaign success in the company. So we feel very good about that, but it's just very early.

Your next question comes from Brian Pitz with BMO Capital Markets.

This is David Lustberg on for Brian. Two quick ones, if I may. The first one, just to touch on some of the macro impacts that obviously impacted the full year guidance. I was just curious if you could kind of pinpoint when you started to see those impacts kind of come on and hit the model?

And then secondarily, just on the client retention, I think it's kind of remained in the strong kind of like 90% range. But just kind of curious if you can kind of touch on the customers that do churn off the platform, where are you finding that they're either replacing you or they kind of just with a vendor would be helpful.

Yes. Just -- I mean, on the macro, we started to see it within Q1. So we were seeing, I would say, March and then April, we are seeing that impact. And it does -- it is quite broad reaching, obviously, Asia PAC and especially Europe. It's definitely a conversation with our clients. And then in the U.S., notwithstanding all the comments that Michael made, we are seeing some lower growth in, for example, large U.S. department stores and some other areas. So it's a trend that we have seen over the last few months and hence, why we felt that we needed to take Q2 guide down and there for the year.

Yes, I can take the second part on the churn question. The good news on that one is that there really isn't sort of a dominant or even a couple of different places that people typically go. I think the market for performance products and even branded products to be more measurable and performance like has definitely accelerated.

So when we churn something or when we lose a budget, it can go to a variety of places because even brand products are measurable these days. And thus our move into the full funnel, our plan to launch Discovery audiences next quarter, we need to be wherever those budgets are going to shift. And again, I think that's why we feel good about our strategy to be full funnel cross-channel so we can catch those dollars wherever they move. So no common denominator of where people typically churn to other than maybe, like I said, some validation of our strategy to be in the right places to catch things.

Your next question comes from Mark Zgutowicz with Benchmark.

Sarah, just a couple of clarifications, if I could. Your PR mentioned certain large performance media U.S. clients in terms of some of the weakness that you're seeing. Is that multiple clients or 1 or 2? And if you think about the '26 guide, how wide is the scope of, I guess, those weakening budgets that you're seeing? And how does that translate into the level of conservatism that's now set in the '26 guide?

And then perhaps for Todd and/or Michael, is there a first-mover advantage with ChatGPT versus a steep learning curve that you may be carrying for others to follow? And then, Michael, you mentioned regarding initial client spend being incremental there. I suspect that, that's test budgets. But as you -- as this evolves over time, why is that budget not a replacement versus remaining incremental?

Yes. So to comment on the clients, it's a -- yes, a number of, I would say, extra large U.S. clients, and they're all kind of down. So that is having an impact and some of those were key growth drivers for us. So that is the impact, but it's a number -- a small number, but a number of U.S. clients. The rest of the base is resilient. So our medium, large, small kind of clients are all resilient, but there have been some client-specific reasons why the spend is down on those certain large U.S. clients.

Yes. On the ChatGPT question, absolutely. Yes, it's a competitive advantage for us in two ways. One, in terms of just time to be in market. And as Michael mentioned, we're crossing 1,000 clients on that, many of which are new to the company. That gives us a really neat advantage to grow the Criteo portfolio.

Technically speaking, though, it gives us an advantage to already be at the table, having our tech and the value we add to ChatGPT's integration, developing faster than others so that when OpenAI launches new features, CPC being a good example or a new measurement feature, as you saw announced yesterday, we're ready for that. And in fact, we're ahead of the pack on that.

So we're really excited about the timing of things, and we're doing what we're really good at, which is bringing performance to a new surface and making it cross channel and full funnel. So we're right in our sweet spot there and competitively, it feels quite good.

Yes. In terms of incrementality, it's definitely incremental for Criteo even as we move past test budgets because in its current format, that's a discovery budget. And so that, again, is an example of us wanting to move up funnel. This partnership accelerates that. So CPM and even the CPC model that they currently have in place, and that's why they call it a test program right now. We'll see if that's the model that they persist with. But let's take as an example, if they did move to like a full optimization model off of this CAPI that they introduced this week, that would then compete for search budgets, which again, for Criteo would be truly incremental.

So we're incremental off this platform either way. If it stays a discovery surface with kind of the model that you see now or if they really go performance-oriented, that's a channel that we've been blocked out of. So I think for us, it's incremental either way.

Your next question comes from Tim Nolan with [ SSR ].

It's actually a bit of a follow-on to the last one regarding OpenAI, again, surprise, surprise. Could you please just clarify what the business model is for you? If it's a demand integration, which I understand it is, then is it a similar business model as any other partner that you'd be placing ads on or maybe not placing ads but providing the data for the ad placements?

And relatedly, if OpenAI, if ChatGPT is successful with however you've explained the model may work out, how might that change the retail media business? Meaning if consumers are doing -- spending more and more of their time on ChatGPT and not doing searches and clicking links to the publisher sites and going on to the retailer sites, how does that change the retail media business model for you?

So to answer your question, it's both data and placements, and it's a normal course of doing business for us. So there's really nothing to say that is out of the ordinary there, Tim, except that when it comes to cross-channel, the point -- the second point that you make, we are very set up to catch users as they traverse channels. So whether it's OpenAI or whether it's retail media or whether it's the open web, we're there with our performance setups to make sure that we find those users and we're able to convert them into outcomes for advertisers.

Also, I think it's important to say that traffic continues to grow on retailer sites for us. So we're not seeing deterioration in places that would signal weakness to us, and that feels quite good. So cross-channel helps us find users where they're engaging, and we're seeing traffic go to the places where we have the greatest strength as a company. Those are 2 good patterns.

Yes. And I'll just build on that second point, Tim. I think you really see the vision that we have for how this all plays out is that retailers continue to own the transaction. And I think that, that's supported by some of the different product moves that you've seen in the market over the last few months. even with ChatGPT itself with the pullback on instant checkout.

We see discovery offerings like OpenAI's product being complementary to retail media, right, providing more high-intent traffic. And so people may land in a customer journey in a different state of mind or in a different part of the sort of site infrastructure. We published some thought leadership about product detail pages being the new homepage or the new landing page. But retailers still then have the opportunity to do a lot with that high-intent traffic.

There's different ad units that you can play around with on the PDP or certainly the introduction of shopping assistance conversational ads. I think the transition from keyword search to semantic interaction is a powerful trend. So as long as high-intent traffic is landing in retail environments, retailers are going to figure out ways to optimize that, both for organic and paid objectives. So we're a big believer in that future. So -- and we think that the OpenAI products are complementary to that, not cannibalistic.

Your last question comes from the line of Richard Kramer with Arete Research.

Just a couple of quick ones that haven't really been addressed yet. First one, activated media spend grew 8% constant currency and topped $1 billion, but contribution ex-TAC declined against that. Maybe Michael or Sarah, can you give us some details on what impacted take rates across retail and Performance Media?

And then equally, excluding the headwind, you had 24% growth in retail media, and you mentioned the sort of 20% growth in retailers to 60 adopting auction-based formats. What's the pipeline look like for expanding retail media networks? And where should that 60 number get to relative to your 235 retailers that you mentioned?

Yes. I mean just to take the take rate question, it's actually quite stable on the Performance Media side. There is some mix there, but that was pretty stable quarter-on-quarter, year-on-year. The biggest impact is the retail media client impact that took the take rate down for Retail Media quite significantly, which I think we've communicated. The underlying take rate of all other clients is at the high end of the previous communicated range of the 10% to 15%. So we feel -- we do see that the only big impact being that retail media dynamic.

Yes. Happy to take the second part of that on the display product and retail. Look, it's already a key growth driver and definitely a source of share gains. It represents 64% of on-site display spend. And as we mentioned, the 60% versus the 49% last quarter in terms of retailers. We think that, that will continue to grow significantly across that client base. And what you see is a lot more monetization and growth happening in that existing base.

So there definitely is still a pipeline for net new retailers standing up new networks. But certainly, the growth of the business is tilted towards new products like conquesting, like display and now some of the new things like Page Intelligence, where retailers continue to gain traffic and we'll get more out of that and make those networks work harder.

Thank you, Michael, Sarah and Todd. That concludes our call for today. Thanks again to everyone for joining. If you have any follow-up questions, we're available to assist. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

All right. Okay. Thank you all for being here. My name is Matt Cost, Morgan Stanley U.S. Internet team. I'm very pleased to be joined by Michael Komasinski, the CEO of Criteo. Thank you for being here so much.

Thanks, Matt. Appreciate it.

I have to quickly run through the disclosures. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

All right. And with that out of the way, maybe for those in the audience that are newer to the Criteo story, maybe give us a quick overview of the company, where you fit into the ad landscape and the opportunities ahead and maybe what's changing?

Sure. Yes. So Criteo is more than an ad tech company. We increasingly position the company around commerce intelligence and decisioning. And really, it's the sort of AI-driven commerce platform that's built to sort of power the next generation of shopping, right, which as we all know, is changing rapidly by the week, it seems like sometimes these days. And in terms of where we fit into the ecosystem, we sit, like, right in the center of the commerce ecosystem. We sit in between brands, retailers, agencies who are all trying to drive commerce outcomes across an increasingly fragmented ecosystem.

And our cross-channel orchestration and decisioning capabilities help them do that, right? And so a couple of, I think, facts to ground the scale of Criteo for folks that are new to the business. We see over $1 trillion of commerce transactions per year or roughly $3 billion per day. We've got about 17,000 clients globally. We have a normalized SKU catalog of over 5 billion SKUs. And in terms of the daily active users that we can reach, it's actually 750 million per day and actually extends up to 3 billion plus when you include the social channel that we now have access to.

So it's a really scaled business that in some ways, that's bigger than the size of the company from a revenue and profit standpoint. In terms of where we're taking the business, I try to always simplify it down into really 3 things. One, we're pushing hard on agentic. We think this is the most powerful development in this ecosystem, and maybe ever. And we'll come on to some of the recent events that underpin our focus on that. We have a Performance Media segment. And we are focused on really reenergizing that business and scaling it through 3 pillars that I think will come on to in more detail, which is full funnel, cross-channel and self-service.

And then in Retail Media, which is the fastest-growing segment of the media landscape, we've developed an industry-leading position with 235 retailers globally. And we are trying to continue to double down and accelerate that leadership position by bringing more monetization opportunities for our retailers, bringing in more demand partners and just generally continuing to scale that segment of the market. So 3 really powerful pillars, and it gives us a lot of optimism about where we're headed.

I think you're about a year into the CEO role. So maybe in light of all of everything you just went over, what are some of the key learnings about Criteo that you've gleaned in that first year?

Yes. Well, I would equate kind of learnings and hypotheses because they're kind of the same thing in hindsight. So I had sort of 4 hypotheses coming into the role. One, a belief, and I think it was true, right, that you can't do really anything meaningful in AI if you don't have scaled data assets and deep tech talent that is oriented around algorithmic and optimization-type programs. And I knew agentic would be big, although I certainly could not have predicted where we've landed at this point a year later, right? So that all sort of goes in that AI and agentic hypothesis.

Two, there is a convergence of brand and performance advertising and the benefit of that convergence disproportionately accrues to the performance platforms and advertisers in the ecosystem. It's a lot easier to move up into biddable and addressable brand formats than it is to try to move down into performance. And Criteo is certainly well positioned there. I believe that the addressability landscape would quiet down. So we've all forgotten about the cookie deprecation issues and things like that. As someone who's worked in performance and data and identity for over a decade, I knew that, that was going to get resolved probably in a pretty sort of quiet and nondisruptive way, and that did turn out to be true.

And then last but not least, category leadership matters. And so that head start that Criteo has in retail media, I figured was something that could be built on and accelerated. And so all 4 of those things have basically happened in this past year, sometimes in ways I couldn't have predicted, but those were my hypotheses coming into the role, like, even when I took the job.

Maybe zooming out to the market backdrop for a second. So I think on the last call, you mentioned that trends remained stable through 4Q and the holiday season was solid. As you enter 2026, what are we seeing in the ad markets to date? Are there pockets or geographies that are coming out particularly strong or where there are headwinds? And what's top of mind in your advertiser conversations as they plan for the rest of the year?

Sure. Yes. So we -- as you said, we did have a pretty solid holiday. And in our guide for Q1 indicated a little bit of softness in U.S. department stores and some year-on-year comps for our Asia Pacific region. But the macro is relatively stable, current events notwithstanding, and those would not be material to us right now, anyway. But as I look ahead to the year, we're really trying to sort of get past some of the headwinds that we had announced last year with a couple of our retail clients and just really focus on driving the underlying business as we work past those comparatives.

And I think that we're on track for that. Performance Media continue to accelerate across the year. Retail Media, same thing. Product rollouts are very much on schedule. And we think we're continuing to gain momentum as the year progresses quarter-to-quarter.

I think you touched on this a little bit in your opening remarks, but just to put a finer point on what your top priorities are for 2026. So as you think about what's driving strength across the business, where are you leaning in?

Yes. Yes. So I'll just kind of go back to those -- maybe those 3 pillars in a little more detail on this. So in agentic, that really, I'd say, shows up in 3 main ways: One, the ChatGPT pilot that we announced on Monday. Two, the product recommendation service that we announced a couple of weeks ago, which shows the power of our data set and our ability to create high fidelity recommendations off the back of that. And then third, the agentic enablement of all of our products. So we are, like, quickly deprecating most of our user interfaces in favor of MCP-enabled APIs that make all of our products much more -- much easier to work with, more scalable, more accessible.

And we think that, that drives adoption and stickiness. So that's kind of the agentic bucket, and it's got a couple of really big initiatives inside of that. Inside of Performance Media, we talk about that trio of full funnel, cross-channel, self-service. Full funnel and cross-channel go together, right? They're kind of the same -- they're 2 sides of the same coin, right? Competing for mid-funnel and upper funnel budgets is really the idea of the full funnel and that convergence of brand and performance is the industry tailwind that enables that.

And then cross-channel really is the diversification of the supply base to support campaign optimization as we gain access to those budgets. You kind of can't do one without the other. But to be clear, you take budgets in the funnel and you enable them with a more diverse cross-channel supply base. And then self-service, that is, again, about making the product easier to use and easier to buy. And so we have a flagship product launching at the end of this quarter, so just in a couple of weeks called Commerce GO!.

And that is a performance product that is focused on the SMB market. And it's full self-registration, 5 clicks to campaign is sort of the tagline. And it enables small and midsized advertisers to access the power of Criteo's cross-channel performance engine literally with a handful of clicks, and they can be running campaigns cross-channel and have all the tagging infrastructure done automatically for them. Even the creative gets pulled in automatically. So it sort of tails off of that trend of, I call it the democratization of advertising. And this is our foray into that. So I think we definitely have a fair share of market share to take with that. So really excited about those.

I want to follow up on Commerce GO!, but first, let's go back to the ChatGPT partnership. I mean, that's really exciting news that just was a couple of days ago, it was this week. Tell us a little bit about what that is, what the opportunity is and what it means for Criteo.

Yes. So here's -- the simplest way to describe it, and then I'll go into a little bit of detail is ChatGPT scales discovery and Criteo optimizes downstream cross-channel conversion. Like, that's the simplest way to sort of, like, think about the relationship and who does what in the context of a customer journey. How it works practically, we've been invited into this pilot program as an API partner. We're now integrated into that API. So there's a tech integration where advertisers with Criteo now we can pass campaign information to ChatGPT, where they then can determine contextually relevant opportunities to surface that ad.

And that will allow our advertisers to be discoverable in contextually relevant situations. And discovery really is, like, kind of the new growth area in the industry. And what clients get for that besides more access to that important surface is the convenience of just working with Criteo. So we already have MSAs in place. We've got data pipes in place. We've got agreements in place. And now we just turn that on, and we let some of that demand flow into ChatGPT as those contextual opportunities arise and our clients can benefit now from additional discoverability in, like, the fastest-growing platform on the planet. So really excited about it. And the inbound interest has been unbelievable since Monday. Our sales and partner teams are just having a lot of really great conversations. It's been good.

That's really exciting and really exciting to be kind of the first ad tech partner there. So it will be interesting to watch how that develops. I guess going back to Commerce GO!, I mean, you gave a little bit of an overview of what it is. But I guess, what is the cost to serve difference for GO! campaigns versus traditional managed service? And how should we think about the revenue opportunity as you launch the full self-service, I think you said just a couple of weeks?

Yes. So here's what's interesting about Commerce GO!. So we've been transitioning existing clients to GO! since late last year. So what launches here in a couple of weeks is the net new customer acquisition program. But we learned a lot of really important things as we were transitioning existing clients. We found that they churned less. They spent more on activated media spend, so they increased their budgets.

They're getting 20% better performance. And so like those are incredible statistics, right? So it gives us a lot of confidence that the product like really works. And now it's all about how effective are we in reaching potential customers and in some ways, doing the work that we do on behalf of our clients to go out and reach new customers, get them into our sales pipeline and hopefully get them on to the platform where that ease of use and the results will speak for themselves and hopefully drive incredible results for them.

I guess on the Performance Media side, I think you grew 2% in that business line in constant currency in the fourth quarter. Commerce Go! was strong. I think retail was an area that was slightly more of a headwind. So going forward, how are you addressing kind of those different category trends? And can you help us understand the offsets from Commerce Go! and CTV versus retailer category headwind?

Yes. Yes, sure. So here's how I would sort of like back up and look at the business right now. Performance Media as a segment is kind of in reacceleration mode. So I think before I arrived, the company was dealing with some of those addressability concerns across the ecosystem. Those settled down early into my tenure, and then we were able to really press on product expansion and road map acceleration. So that's really where we are right now.

It will take a couple of quarters for that to show up in the results, but Commerce GO! will be a catalyst to that. We'll be rolling out a new discovery product, at least in alpha and beta in the first half of this year and then hopefully, general availability in the second half. And of course, the ability to invest client performance dollars in the agentic channel, we think will drive interest and performance for clients. So that's in reenergizing mode.

In Retail Media, we announced a couple of scope reductions on some large retailers last April. And we had to announce those pretty far in advance before they actually happened. And now we're in that period of working past those comparatives. And so that will happen across the balance of this year. It does start to tail off, especially into Q4. And really, we're just focused on driving the underlying business.

So continuing to scale the auction-based display product. We launched a conquesting product actually 2 months early. So that's in market now. And we continue to make significant investments in our Commerce Max platform to drive the demand side of that product set, new insights module, new cross-retail campaign support, things that make our tool easier for brands to buy the 235 retailers that we represent.

So that really is like focus on the underlying business, let the comps come off as we progress through the calendar and hopefully come out here at the end of the year and show like a really strong business in both segments with some other simplification of the business that I think we'll probably come on to later in this talk as well.

Yes, of course. So maybe shifting to AI and agentic commerce. So you've obviously been active in the early stages of agentic commerce. You've talked a lot about your commerce or your agentic commerce recommendation product that you're working on, some really great stats on that in the early stages.

How are you thinking about monetizing that product? Because I believe it's not part of the ChatGPT partnership. So how are you thinking about monetizing it as you expand services that it can touch? And what advantages does Criteo have when it comes to developing that recommendation service?

Yes. So I'll start with the monetization question first. So that path is not determined yet. It could go a number of ways. It could show up in a SaaS format. It could be some kind of a per query basis. But the beauty of that offering is that it can be monetized in both ad and non-ad formats, right? Because the sort of target market for that is going to vary in terms of how they're thinking about monetizing use cases that have product recommendation at the core of them.

So what we're focused on right now is proving effectiveness and driving partner engagement and frankly, industry awareness because we've had this strong thesis that we have the best commerce data set in the industry outside of Amazon, but you kind of need to prove it. And so the commerce recommendation service is the attempt to do that. It says, look, you can enter product queries into this, see the carousel that you get back, analyze that for accuracy, fidelity, relevancy and put that up against any other carousel that comes back from any other platform, and it's better hands down.

And in fact, if you were to co-mingle that service with, say, an LLM environment, you get a 60% uplift in the relevancy and accuracy of the products, which is powerful. And we think that as not just LLMs, but other platforms that are going to be competing for daily and monthly active users where product recommendation is a use case that drives differentiation, that makes us an attractive partner. And therefore, then there's a path to monetization from that.

So there's a couple of leaps of faith, but I think standing up the service and really being able to put it out there in full general available form shows the power of that conviction. And it will lead to some interesting places.

Yes. I mean it's not hard to imagine how it could be commercialized. And obviously, Criteo is in a unique position given the data that you have access to and the other products that I think are relevant to the process of developing it. I guess what are the milestones investors should be watching to get to the point of saying like, oh, this is really heading to something that's going to be commercializable at scale. What are the milestones that you're watching?

Yes. So we've been trying to provide some disclosure on some of the testing activity that's happening with large partners. So we'll continue to update on that. After that, it really comes from those testing efforts. But I think by being really public about it, it's also starting to create other inbound interest in it. And so I guess it's really about testing updates and then what other types of partner activity do we want to -- do we get and that we want to report on. So those would be the near-term milestones.

Got it. So maybe talking about competitive positioning for a second. So as you position Criteo as this AI-driven commerce intelligence and orchestration platform, how do you differentiate from competitors who are also investing heavily in AI and commerce data? And what are the unique advantages of Criteo?

Yes. So one of the things that we've not talked about is the cross-channel setup. So we're one of the only platforms out there that has the ability to hold performance constant across channels. There just aren't very many or frankly, any that I can think of that have that same capability. And that's the way that marketers want to market. Marketers don't want to be channel marketers. You lose audience fidelity, you don't have frequency capping.

You have all kinds of problems that occur when you get locked into sort of channel investments to run media. And so the cross-channel setup is how marketers think about it. I want to run discovery campaigns to find -- to attract people to my brand for the first time. I want to run customer acquisition campaigns for people that are given off some kind of a high-value behavior signal.

I want to run remarketing campaigns to capture demand. And I want to run those things cross channel seamlessly where I'm getting efficiency in how impressions are served, how audiences are served and how I measure. So we map better to how marketers want to market. And that is unique. Walled gardens by definition are walled gardens. And that ability is sort of deep in the Criteo DNA of being a performance marketer for the last 20 years.

We learned how to identify identity in low-signal environments. We learned how to do attribution across fragmented customer journeys. And all those are sort of IP that create that cross-channel setup. And that is unique and differentiated. And hopefully, with GO!, we can start to scale that to a new client segment and I think really demonstrate that as well as expansion into channels like CTV and of course, the agentic channel, which is how we think about it.

It's just another channel that sits along others. And depending on the campaign type and the advertiser, it's going to be entitled to a certain level of investment to drive to an overall outcome.

A lot of exciting things to offer customers. I wonder if you could talk just for a second about your customer life cycle. You've had changes in scope from some large retail media clients in the past. But overall, I think your client retention as of last quarter was over 90% still. So very, very strong. I guess what's driving that retention rate? And how is the process going of meeting these customers with these new offerings?

Sure. Yes, we do have a high client retention rate, which is great. And I think it comes from, one, driving performance and being a valuable part of their P&L, right? Clients count on Criteo to deliver predictable, valuable results. And so that drives part of that. And then maybe more on the retail side, it's similar, but we are an essential monetization partner. So our retail clients really count on us to not just give them tech that provides scaled ad serving for a retail network, but to drive the demand side of that as well, right?

Criteo's proposition in retail is really that of a full business partner. We stand up the tech for you, but equally, we will go out and surface demand that actually puts revenue into your P&L. So I sometimes will call it like a turnkey P&L, which is really differentiated from other competitors that might just offer tech only.

And I think it's then just like more cultural things like listening to your customers. We're tight with our 235 retailers, and we listen to what they want. We incorporate those things into our road map. We meet with them frequently. It's a very client-centric organization in that regard. So yes, I think those things kind of all add up to contributing to that retention rate.

Great. Maybe on the process of redomiciling. So you're in the process of moving from France to Luxembourg, I think, in the third quarter this year with the goal of getting to the United States from Luxembourg in the first quarter of 2027. So I guess walk us through the strategic vision underlying this move and the costs and benefits associated with it.

Yes, sure. So the principles or the drivers are relatively straightforward. And in the French domicile setup, we had -- we're forced into an ADS structure for the equity shares. We had no passive index inclusion, and we had certain capital controls that limit share buyback activity. And so the move is really to address those 3 things, right?

And so the move to Luxembourg gives us more flexibility on capital allocation. And then the subsequent move to the U.S. will give us more index inclusion. And we're very much on schedule for that. We just had an exceptional general meeting last Friday, where we received over 98% approval on all of the recommendations. And so we do expect to land in Luxembourg in early Q3.

And then there will be a subsequent vote and move to the U.S. that could conclude in Q1 of '27. And so it's all about removing complexity from the stock. And making it more complementary to the way all of you and the way the market buys shares in public companies today, which is at least partially through passive indices. And of course, flexibility in capital allocation should be table stakes.

Of course. Before we go to capital allocation, I do want to talk about your P&L for a second. So when you're thinking through margins, how are you thinking about the puts and takes between leverage versus investing in strategic opportunities like agentic AI, increased productivity? And how should we think about OpEx discipline longer term? Do you see more efficiency coming in '27 and beyond?

Yes. Yes. So there's definitely a lot of puts and takes in the business on this right now. And I think you could see it in the profit guidance that we gave for the year, right? In light of a $75 million headwind, we were able to guide to EBITDA targets that are not too far off, relatively high performance last year. So what that shows is that we're able to drive efficiency in the business while still investing in accelerating the road map and in new channels like agentic.

And I would look for that to continue. Commerce GO! creates a new lever that's kind of interesting in the self-service so it reduces our cost to serve. We might reinvest some of that efficiency on deeper service models for large advertisers. But equally, we could take some of that to the bottom line and efficiency or redirect it to maybe even more investment in agentic or into the retail road map.

We'll figure all that out as we go into '27. The good news for us is that we've got multiple levers to pull, right? We've got a self-service product that we think is going to go well, that spins off efficiencies by its very nature. We've got a broad-based AI efficiency program that runs across the company that just makes us more efficient.

And then we've got a nice tight road map for the 2 segments. So there's not any sort of wasted effort in terms of the investment that we put into those. So I would look for us to sort of be in and around that ballpark, but we'll get on to guidance for '27 kind of when we get there later this year.

So you're pursuing this redomiciling to the U.S., which creates opportunities, including buying back stock. But in the meantime, as we think through 2026 before those new opportunities potentially become available, how are you thinking about capital allocation this year, especially given the investments that you're making kind of on the operating side?

Yes. Yes. So it's always the same list and in the same order. We invest in the core business to drive organic growth. Then we're looking for high-value opportunistic acquisitions, and then we return capital to shareholders through buybacks. So that has been the philosophy since I got here. Sarah is good at repeating that often, and it's in the same rank order.

And I guess on the second one with M&A, we haven't done anything since I've been here, but it's just we've been selective, right? We actually do have an active M&A pipeline. We look at all kinds of things that are on market or in some cases, not in market. But it's got to be the right fit. Synergies have to be there. It's got to be the right profile for where we are as a business. And the landscape changes quickly. So you also have to have like the real conviction about how it fits for the mid-term, and we do. So that's sort of why we've done what we've done.

Great. Maybe we can close out with a big picture question. When you think about the conversations that you're having with investors on the topic of AI, what do you think feels like the most underappreciated opportunity for Criteo and then maybe an underappreciated challenge that you're working on executing through?

Yes. So yes, I think the underestimated opportunity is the kind of incrementality of agentic. I think people don't appreciate -- this tend to get into a lot of zero-sum game conversations and the incrementality element gets lost. I think you guys actually put a paper out late last year that talked about sort of the accelerated contribution of agentic to e-commerce overall, and we very much agree with that thesis.

So I think that is underappreciated even across this conference probably that the power of those engines unlocks commerce that otherwise would not have happened in legacy search because it was either too time-consuming, too inefficient or price discovery was too opaque. And a lot of that gets addressed with what I'll talk about then to my second point, which is the underappreciated challenge.

That unlock is not going to happen unless agentic platforms have high-quality data feeds feeding high fidelity relevant product recommendations with accurate product data price and availability and other elements like that, that make it high quality. So again, that core thesis of you can't do great recommendation without good data, I think, is still underappreciated, but time will tell and we will be proven out.

Great. We can leave it there. Michael, thank you so much.

Thank you, Matt. Thanks, everyone.

Good morning, and welcome to Criteo's Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions].

I would now like to turn the conference over to Melanie Dambre, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.

Good morning, everyone, and welcome to Criteo's Fourth Quarter and Fiscal Year 2025 Earnings Call. Joining us on the call today, Chief Executive Officer, Michael Komasinski; and Chief Financial Officer, Sarah Glickman, are going to share some prepared remarks. Joining us for the Q&A session is Todd Parsons in his role as Chief Product Officer. As usual, you will find our investor presentation on our IR website now as well as our prepared remarks and transcript after the call.

Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect Criteo's judgments, assumptions and analysis as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today.

For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10-K and 10-Q filed with the SEC. We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year.

With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. 2025 unfolded a bit differently than we had anticipated. Even so, we delivered solid execution and made good progress against our strategy, closing the year with momentum across our key initiatives. One year into my role, we are aligning the company around commerce intelligence and AI decisioning to simplify the business and scale our opportunity as an AI -- as a commerce AI platform for the future of shopping.

Consumer attention is more fragmented than ever across websites, apps, social feeds, connected TV and now AI-powered assistance. That fragmentation increases complexity for advertisers, but it creates an opportunity for us to help them navigate it. We reach shoppers wherever they are with personalized advertising and deliver the outcomes that matter most to brands. All of this is powered by our unique commerce data foundation, an AI-driven performance engine that increasingly acts as an orchestration platform and decisioning layer across the ecosystem, operating at global scale. Our data foundation gives us visibility into over $1 trillion in e-commerce transactions annually or roughly $3 billion per day. With reach across more than 3 billion daily active users across channels, including social and 5 billion product SKUs, we have a global view of how shoppers discover and buy products.

At scale and capability translate into $39 billion of commerce outcomes for more than 17,000 customers, reinforcing our critical role to help them grow their businesses. Our diversified reach continues to stand out as a core strength and a differentiator, driving consistent, measurable returns across channels. Simply put, fragmentation favors platforms that can orchestrate decisions and outcomes holistically.

That foundation positions us well for the next major shift shaping our industry, the rise of a genetic commerce. Against this backdrop, we entered 2026 with conviction and focus. Despite low expected growth in 2026, it is already well understood by the market, we are strongly confident in the potential of our business beyond the current transition. Our priorities are clear, and we have a world-class team to execute against them.

Across each priority, our strategy is consistent, apply proprietary commerce intelligence and AI decisioning to optimize performance at scale. First, we aim to be at the forefront of agent at Commerce as AI assistance opened new pathways for discovery and purchasing.

Second, we are focused on scaling our AI-powered performance engine across channels, across the full funnel and through self-service. Third, we are reinforcing our retail media leadership by leveraging AI to help retailers shape the future of commerce and deliver measurable outcomes for brands. Agent Commerce marks the next evolution of digital shopping, where intelligent assistance increasingly influence how consumers discover and choose products and services.

Winning in this environment requires turning intent into outcomes informed by real purchasing behavior. As large language model platform scale and advertising becomes an important monetization model, delivering relevant product recommendations with measurable outcomes fits squarely in our wheelhouse. We are prioritizing agent at Commerce now because our scaled commerce intelligence and AI decisioning give us a path to win, and we are moving decisively across 3 focused areas.

First, we are developing an agentic-commerce recommendation service designed for prospective partners, including LLM platforms and personal shopping agents. The objective is to enable these platforms to surface product recommendations that are not only accurate, but highly relevant to purchase intent. In broad off-line testing, our approach outperformed baseline large platform recommendations. Delivering materially higher relevance. We observed an average uplift of 60% in prioritizing the products most likely to be purchased. This reflects the value of Criteo's access to real-time purchase data and proprietary AI models optimized for buying behavior. This capability is intended to broaden our partnerships across the ecosystem. And we are already engaged with several potential partners. During the fourth quarter, our proof of concept with an LLM partner advanced into extended testing, and we are preparing additional testing with other partners.

Second, agenetic environments create additional monetization opportunities. We are testing new conversational shopping experiences, including conversational ads, and sponsored products within retailer agents. And we have progressed a proof of concept and are seeing strong client interest pointing to a path for monetization within these new experiences. Over time, we see meaningful opportunity for sponsored discovery as retailers extend their agentic shopping experiences through retailer-owned apps embedded in LLM platforms. Together, these efforts position agentic Commerce as a natural extension of our strategy, reinforcing Criteo's role at the center of discovery, relevance and measurable outcomes as shopping continues to evolve.

And third, we are embedding agent capabilities directly into our solutions for marketers. Our model context protocol infrastructure allows external agents to interact with Criteo in new ways, enabling more dynamic demand creation, activation and optimization. Agentic workflows are already live across multiple campaigns and expect it to drive broader adoption of our solutions among agency partners and brands. We now have multiple agents live across the platform, including audience and insights agents, helping clients reduce manual effort, and move more quickly from insight to action. We are extending these agented capabilities into campaign creation and reporting to make activation more efficient and scalable. Agentic Commerce is a strategic pillar for Criteo in 2026 and a long-term growth opportunity.

Turning to our second priority, scaling our performance engine. We believe Performance Media has a strong future, and we are reenergizing the business through focused execution across 3 areas: expanding self-service, increasing cross-channel activation, and extending performance further up the funnel to capture discovery budgets. Early traction across each of these levers reinforces our confidence and the addition of Ed Dinichert as Chief Customer Officer last month further strengthens execution.

At the center is go, our AI-powered automation and optimization tool set that enables advertisers to launch high-performing cross-channel campaigns in just 5 clicks. GO is scaling and progressing as planned, and we remain on track to launch our full self-service offering at the end of the first quarter. GO campaigns delivered stronger results with higher spend, lower churn and better return on ad spend. On average, GO campaigns that include social activation deliver more than 20% higher roll-offs than traditional campaigns. Today, 37% of GO campaigns include social, supporting our cross-channel strategy.

Adoption continues to accelerate. In the United States, 1 in 2 campaigns from small clients now runs through GO. Our self-service launch expands our addressable market among small- and medium-sized business advertisers and represents a significant multiyear growth driver for Performance Media. Cross-channel execution remains a key differentiator and an important growth lever for Criteo. We dynamically allocate and optimize spend across channels through a single performance-focused orchestration platform.

Social continues to scale with double-digit sequential growth in every quarter of 2025, supported by strong momentum with Meta and expanding engagement with additional partners. New video formats launching this quarter for Instagram and Facebook are expected to support continued growth. We are extending performance further up the funnel as brand performance becomes increasingly important. In the first half of 2026, we plan to test new discovery solutions designed to introduce brands to new customers with a broader rollout in the second half of the year.

While still early, CTV is a growing part of our mix and represents a multiyear opportunity given our underpenetration in one of the fastest-growing segments of digital advertising. By combining the reach of traditional television with the precision of digital targeting, CTV is emerging as an increasingly important performance channel. We are launching new campaigns that reflect growing enterprise adoption and continue to onboard premium CTV publishers globally. Together, these strategic initiatives are expanding our addressable market and broadening adoption, positioning Performance Media for stronger growth in the second half of the year.

Turning to Retail Media. Retail Media is the fastest-growing segment of digital advertising and a growth engine for Criteo. We have a clear leadership position and unmatched supply at scale, including 70% of the top 30 retailers in the U.S. and half of the top 30 retailers in EMEA. We are executing with focus and expect revenue to return to growth in the fourth quarter as we move past previously communicated near-term headwinds related to scope changes at 2 clients.

As a trusted partner to 235 retailers, we see agentic commerce reshaping how consumers discover products, not where commerce happens. Agentic capabilities are emerging as an incremental layer on top of existing retail experiences. Improving discovery, while engagement and conversion remain anchored on retailer-owned sites across an expanding set of formats and touch points. This dynamic is driving retailers to invest further in their own digital storefronts, unlocking new surfaces for sponsored discovery and monetization and supporting continued growth in e-commerce traffic.

Retail Media remains integral to retailer economics and margin profiles, reinforcing the durability of the category. We help retailers deliver a superior product discovery experience compared with generic LLM outputs. To support this, we are developing an AI-driven optimization layer that allows retailers to balance organic and sponsored content, expanding monetization opportunities while maintaining full control over product selection and ranking. This positions retailers for agenetic commerce and reinforces our role as a long-term strategic partner.

Agentic systems are designed to preserve this retailer decisioning, whether through retailer chatbots or integrations with third-party LLM platforms. This control is essential for long-term success and creates clear opportunities for Criteo to help retailers maximize value. We are seeing traction across our strategic initiatives, and we expect retail media growth in the underlying client base to accelerate in 2026 versus 2025.

On the demand side, we are enhancing Commerce Max for brands and agencies with new features like search conquesting, advanced analytics, deeper insights and AI-powered optimizations to further simplify holistic activation regardless of budget source. Demand partnerships are unlocking incremental budgets. We completed our Google SA 360 integration in the fourth quarter and saw strong early performance, including 600% ROAs with a leading global CPG brand.

We are working closely with Google to build adoption. Our Mirakl partnership continues to expand long-tail demand and support retailers as they scale their marketplaces. We expect our demand partnerships to contribute approximately 2 points of growth this year across the underlying client base.

On the supply side, we are strengthening our global leadership with new wins such as Lidl, Europe's leading retailer and JB Hi-Fi, a leading Australian consumer electronics retailer, alongside major multiyear retailer renewals. Auction-based display continues to lead our retail media growth. Media spend on this new solution increased 65% this quarter, building on last quarter's momentum. Adoption is accelerating with 49 retailers live today and 8 new additions this quarter, including Ulta Beauty.

During Black Friday week, on-site display spend powered by Criteo's technology more than doubled year-over-year. We are also rolling out auction-based display to our API demand partners expanding access to incremental advertiser demand. For retailers using auction-based display, format now accounts for 21% of on-site media spend, up from 13% last year. highlighting strong performance.

Shoppable video has also gained traction with video spend up 30% sequentially, an acceleration expected in 2026 as retailers move towards full funnel, on-site strategies. Off-site, which extends retail media beyond retail properties is becoming more strategic and increasingly always on.

One of the world's largest computer brands partnered with us on our largest Commerce Max off-site activation to date this quarter. Campaign reached 7 million unique Costco shoppers and delivered more than 2,000% roll-offs during Cyber Week. All of this translated into disciplined execution in the fourth quarter, with solid contribution ex-TAC, and adjusted EBITDA supported by a strong holiday season.

Our capital allocation reflects our confidence in the underlying value of the business and the path ahead. The Board increased our remaining share buyback authorization to up to $200 million, and we continue to focus on portfolio and corporate structure optimization with the redomiciliation process on track. Looking ahead, we see meaningful opportunities as we move through 2026. By serving as the AI-driven commerce intelligence and orchestration platform across an increasingly complex ecosystem.

Criteo is well positioned to benefit from one of the most important shifts in commerce and advertising. We are confident this will deepen our role with clients and partners and support durable growth and long-term shareholder value.

With that, I'll hand it over to Sarah for more detail on our financial results and outlook.

Thank you, Michael, and good morning, everyone. -- we delivered record results in 2025 with strong margins and robust cash flow generation. Starting with our financial highlights for 2025. Revenue was $1.9 billion, and contribution ex-TAC grew 3.5% at constant currency to $1.2 billion, reflecting a year-over-year tailwind from foreign currencies of $14 million. In Performance Media, revenue was $1.7 billion, and contribution ex-TAC was $915 million, up 4% in constant currency with our commerce growth solution up 5% and AdTech services down 3%.

In Retail Media, revenue was $264 million and contribution ex-TAC was $260 million, up 2% year-over-year at constant currency. Excluding the 2 clients with previously communicated scope changes, retail media contribution ex-TAC grew 16%. We delivered a strong adjusted EBITDA margin of 35%, driven by operational leverage enabled by top line growth operational productivity, while we strategically continue to invest in a genetic AI to fuel our future growth. We delivered free cash flow of $211 million, up 16% year-over-year. This represents 52% of adjusted EBITDA. Our adjusted net income was $253 million, and adjusted diluted EPS increased to $4.62 in 2025.

Turning to our fourth quarter performance. Revenue was $541 million, and contribution ex-TAC was $330 million, including a year-over-year tailwind from foreign currencies of $8 million. At constant currency, Q4 contribution ex-TAC was down 4%, as expected, reflecting a $25 million headwind or about 700 basis points related to previously communicated scope changes with 2 retail media clients. Client retention remains high at 90%, underscoring the resilience of our model. Macro trends remained stable throughout the fourth quarter with a tonnage holiday season.

In Performance Media, revenue was $465 million, and contribution ex-TAC was $255 million, up 2% at constant currency. This was driven by our commerce growth solution up 3% and which uses large-scale commerce data and AI-powered audience modeling to drive cross-channel full-funnel activation. We had a strong cyber peak travel remained our fastest-growing vertical with growth accelerating to 37%, followed by classifieds, which grew 12%.

Retail was softer overall, including a 13% decline in department stores and a 12% decline in fashion. Overall, we continue to benefit from a diversified client base and a global footprint. By region, media spend growth accelerated in EMEA, while trends were softer in the U.S. and Asia Pacific.

Similar to last quarter, ad tech services reduced Performance Media contribution ex-TAC growth by approximately 100 basis points due to lower spend in our media trading marketplace. In Retail Media, revenue was $76 million, and contribution ex-TAC was $75 million, reflecting the previously communicated $25 million headwind. Excluding this impact, trends were consistent with last quarter and contribution ex-TAC grew 20% in Q4 across the underlying client base. This growth was driven by continued strength in retail media on-site. We benefited from the traction of our auction-based display offering and newly signed retailers. Growth from existing clients was strong, with same retailer contribution ex-TAC retention at 99% or 110%, excluding our largest retailer, driven by multiyear contracts and exclusive partnerships with most of our retailer clients.

We had another strong holiday season and saw advertising spend growing in all categories and across all regions during the traditional Cyber Peak piece. Media spend in Q4 grew 25% year-over-year as our 4,100 global brands are prioritizing retail media as a key channel for their investment to reach relevant audiences and sell more products. We delivered an adjusted EBITDA of $120 million in Q4 2025. Non-GAAP operating expenses increased 12% year-over-year, driven by planned growth investments and a foreign exchange headwind on our euro-based costs, partially offset by our continued focus on productivity.

Moving down the P&L. Depreciation and amortization was $31 million in Q4 2025 and share-based compensation expense was $7 million, down 67% year-over-year. Our income from operations was $73 million in Q4 2025 and our net income was $46 million. Our weighted average diluted share count was 53.1 million. This resulted in diluted earnings per share of $0.90 and adjusted diluted earnings per share of $1.30 in Q4 2025.

In the fourth quarter, we canceled a total of 2.2 million shares. We benefit from a strong financial position with solid cash generation and no long-term debt. We had $891 million in total liquidity as of the end of December, which gives us significant financial flexibility to execute our growth and capital allocation strategy. In the fourth quarter, we generated $134 million in free cash flow and $161 million in cash from operating activities driven by disciplined execution and record low day sales outstanding.

Criteo continues to be a resilient cash-generative business with a financial strength to invest for growth and return capital to shareholders. In 2025, we deployed $152 million of capital or 72% of our free cash flow for the year to repurchase [ 1.4 ] million shares. As of December 31, 2025, there were $67 million remaining under the current authorized share repurchase program as the Board increased our remaining share buyback authorization to up to $200 million. Our capital allocation strategy demonstrates our confidence in our business strategy, financial strength and our ongoing commitment to enhance shareholder value.

Turning to our financial outlook, which reflects our expectations of today, February 11, 2026. For 2026, we expect contribution ex tax to be flat to up to 2% at constant currency. As you know, we anticipate low overall growth this year due to retail media client scope reductions. Excluding this $75 million headwind in underlying contribution ex-TAC is expected to grow high single digits. We expect a low point in the first quarter given the onetime tiered fee revenue recognized in January 2025 and we expect sequential improvement through the year with a return to growth in the second half.

Our guidance does not assume any revenue contribution from agentic commerce initiatives given their early stage. We estimate ForEx changes to drive a positive year-over-year impact of about $8 million to $12 million contribution ex-TAC for the full year.

In Retail Media, we expect to drive media spend growth ahead of the market and contribution ex-TAC is expected to decline year-over-year in the mid- to high teens at constant currency due to the $75 million impact from client scope reductions. Excluding the 2 clients, the underlying retail media contribution ex tax growth for 2026 is expected to accelerate into the high teens to 20% range compared to 16% in 2025.

In Performance Media, we expect contribution ex-TAC to grow mid-single digit at constant currency in 2026. This reflects the expected ramp-up of GO over the course of this year while we are experiencing lower spend in certain categories, including fashion and department stores in the U.S. Overall, we anticipate an adjusted EBITDA margin of approximately 32% to 34% for 2026. This reflects continued disciplined investments in agentic commerce and AI innovation and key growth initiatives. Costs associated with our return to office and a foreign exchange headwind on our euro-based costs, partially offset by productivity actions. We prioritize high-return investments that lead to sustainable growth enabling margin expansion. We anticipate the investors we are making this year will position us for continued top line growth and strong cash flow generation for the coming years. We expect a normalized tax rate of 27% to 32% under current rules driven by our evolving revenue mix and certain onetime items related to our redone affiliations.

As mentioned last quarter, we anticipate higher CapEx in 2026, primarily related to the renewal of certain data centers with total CapEx expected to be approximately $190 million as we continue to invest in and to optimize our AI infrastructure. We expect a free cash flow conversion rate of about 40% of adjusted EBITDA before any nonrecurring items. For modeling purposes, we assume a flat number of shares outstanding in 2026.

For Q1 2026, we expect contribution ex tax of $245 million to $250 million, down 9% to 11% at constant currency. As a reminder, Q1 is expected to mark the low point of the year reflecting an approximately $27 million near-term headwind or about a 10 percentage point drag on growth related to the 2 retail media clients. Our Q1 guidance also reflects lower spend for department stores in the U.S., soft trends in Asia Pac and continued softness in our tech services. We estimate ForEx changes to drive positive year-over-year impact of about $8 million to $10 million on contribution ex-TAC in Q1. We expect adjusted EBITDA between $50 million and $55 million in a seasonally low quarter reflecting lower top line, the timing of certain corporate initiatives and a foreign exchange headwind on our euro-based cost of $12 million.

We are pleased that our proposed redomiciliation to Luxembourg and direct NASDAQ listing are progressing as planned with no material tax impact. We continue to expect completion of this region affiliation to Luxembourg in the third quarter of 2026, subject to shareholder approval later this month and other conditions. Looking ahead, we plan to pursue a further redomiciliation to the United States as early as the first quarter of 2027 to broaden our access to U.S. capital markets.

In closing, we have strong conviction in our strategy, we are excited for agentic and we remain focused on disciplined execution and capital allocation while delivering strong margins and cash flow generation.

And with that, I'll open up the call for questions.

[Operator Instructions]. Our first question comes from Thomas White with Davidson. Great.

Maybe 2, if I could. I guess, first off, Michael, on the gene offerings that you touched on at the top of the prepared remarks. Could you maybe just talk a little bit more about kind of the -- your end targets or sort of prospects, I guess, for the AI recommendation service and you talked about helping surface sort of more personalized product recommendations. Like if it's the LLM, I guess I'm just trying to understand like sort of how realistic it is that you're going to I guess, be able to convince them to, I guess, help influence the way that their search results look in such a meaningful kind of an important way.

And then just on the -- maybe a follow-up on the department store weakness you said. I'm just curious if there's any if that's related to the Saks global bankruptcy or maybe there's something broader going on there? And maybe you could just quantify your exposure, Sarah to Saks and all the various brands it has.

Yes. Happy to address those, Thomas. Good questions. Look, I'll start on the agentic topic and then hand to Todd, and then Sarah will address the department store question. But we -- as we said in the remarks, right, we've broadened out our partnership discussions on the product eco-service now to be with multiple partners. And it's driven by the hypothesis that the fidelity and relevancy of product recommendations that comes out of those platforms is essential for them to compete for daily active users. And so it's a really important use case for them.

The thesis goes further to say that there's no way for those platforms to surface high-quality recommendations without access to product recommendation engines that are grounded in commerce data. right, Symantec, sort of scraping and compute alone won't get to the fidelity of answers that are required to really win in the commerce recommendation category. So it is early days in terms of how that revenue model might manifest. But it's important for us to expose the deep capabilities that we have and really embed ourselves deeply in that ecosystem as it evolves. And I'll let Todd talk a little bit about sort of the reco engine itself and kind of where we see that going with the partners.

Yes. I would just add to that, that because the Reco service and our system is application-agnostic, Tom. It extends our data distribution advantage for merchants across the full ecosystem just LLM agents. So everything that Michael said about improving the experience and the results of a query in an LLM agent is true. But the service itself is adaptable to all the rest of our cross-channel full funnel mix. So whether social platform, TV or other advertising-related services, we are able to deliver outcomes in recommendation with an ad payload or not, wherever consumers decide. So the flexibility of the service itself supports multiple monetization models as the agent ecosystems develop, not just the LOMs, which gives us a great deal of leverage.

Hello, Tom. Just to comment on -- or maybe not comment on specific clients. I would say that in our prepared remarks, we talked about department stores being down 13% and also fashion, which is a vertical for us being down 15% -- sorry, 12%. So we do continue to see, I would say, headwinds that started in Q4 that will continue into 2026.

Your next question comes from Mark Kelley with Stifel.

A couple of quick ones, or maybe not quick. The first one, just on retail media specifically. I appreciate all the color about the moving pieces for Q1 and as we move throughout the year. I guess maybe can we put maybe a finer point on how we expect underlying growth to kind of -- is it linear throughout the year? Or is it more of a step-up in Q3 and then Q4 as you add these 2 new partners and we start to lap the 2 partners that change the way they work with Criteo. I guess that's the first one.

And then the second one, can you just remind us the incremental opportunity, how much GO, as you move to a self-serve offering, and that kind of removes the minimum spend requirements from some of the cohorts that maybe were not able to use Criteo in the past. Can you just walk through those dynamics for us one more time?

Sure. Mark, I'll just start the retail media question and then hand off to Sarah. But there are several growth drivers for that business over the course of the year, and Sarah can sort of talk about phasing. But we continue to scale the products that we introduced last year, in particular, the auction-based display product, we continue to win new retailers, as Sue mentioned in the script. And actually Q4 tends to be sort of a buyer quarter for winning new retailers, given their focus on holiday operations. And then as we get into this year, the investments in Palmers Max the additional rollout of features like conquesting like we continue to have a really robust pipeline of products to roll out that are going to drive growth against that scale client base. So a lot of confidence in how that business will perform ex the headwind that we've talked about. So do you want to talk a little bit about the phasing and assumptions?

Yes. I believe we put in the slide the breakdown the quarter-by-quarter impact of the 2 largest clients. But it's certainly front loaded. And yes, we do anticipate growth in pacing throughout the year. So the Q1 and Q2 more impacted to about $27 million in Q1 and then it will start to ramp down. But we do continue to have an impact even into Q4 of next year. Also, I would say that Q1 is our smallest quarter. We obviously have more seasonality going into the second half. So there is a bigger impact if you will on the percentile just given that dynamic.

Great. And look, I can just start the GO answer real quick and then hand to Todd for some extra color on that. I think when we think about GO, right, we do get very focused on the SMB opportunity. and the self-service rollout. And I think that's really the sort of new and exciting part. But the more fundamental part that I would share is GO starts to really be an expression of our cross-channel full funnel strategy with the sort of very highly automated optimization and decisioning engine that sits in it. It really starts to transition us from a managed service offering some self-serve. And as we really stand up supply channels at scale, the efficacy and power of that cross-channel optimization really starts to come through. And I think that we'll see across '26 and that actually will be applicable to our entire client base, not just limited to SMB and although that tends to be the focus with the self-service launch. But I believe that, that optimization engine really gets expressed through GO in a more powerful way.

I would only add 1 point to that, which is that as we're seeing clients opt in and use the GO product, we are seeing some of those larger clients take advantage of the fact that they can advertise cross-channel full funnel, as Michael said, and maintain constant performance for whatever DPI is that they're advertising against. That's what really sets GO and our cross-channel full funnel strategy at par. It's making it impossible to think about all of the complexities of the single channel because the product is helping make those decisions and dynamically reallocating budgets for our advertiser and big and small advertisers are tending to like that, both of them.

Your next question comes from Justin Patterson with KeyBanc.

Could you expand a little bit more on how you're seeing retailers and brands adopt their own kind of internal genetic tools right now. I thought it was a good characterization you had of just kind of dimensioning between the broader chat bots that are in the market and then some more retail-specific solutions. So I would love to hear a little bit more about just what stage those clients are in their journey. And then just stepping back, it does seem like agentic has gotten very good at -- excuse me, just broader AI has gotten very good at personalizing ads for international markets, making them hyper localized. So I would love to hear just kind of what experience Criteo has had around that, whether it's just local language adoption, more kind of targeted scenery with the ad, so on and so forth and how that's influencing conversion rates.

Yes. Great questions, Justin. I'll take the kind of AI retail question and then Todd will take the global personalization question. I think what's interesting about retailers in this sort of AI and agent conversation is the starting point, right? They're already very bought in on serving relevant sponsored ads as a core part of the experience and as part of their business model. So they don't really have any like tension about whether that's something they're going to do or not. It's fundamental to retailing and the capabilities that have built up to show sponsored ads in, like, say, on site, those capabilities are directly applicable to the new surfaces.

And so if you're a retailer, you're not going to sit back and surrender the discovery layer to other platforms or customer journeys that you want to own. And so they are all aggressively investing in shopping agents or more agent or AI-enabled front ends, that allow discoverability, a more curated experience and Criteo is right there, power in the way that relevant sponsor opportunities show up in those surfaces. So in terms of innings, it is early innings, but we have several pilots underway with very large-scale retail clients around different versions of that, whether it's conversational ads, sponsorship inside of chatbots that are on-site or sponsored products that are going to show up in apps that are hosted on the LLM platforms. So there's a few different flavors of that. but they're all rushing to make sure that they maintain share of customer journey and our relevance engine and data fees power that. So we're excited about this and I think you'll see retailers continue to make really good strides with us across the year.

Yes. I would just add on the creative piece. So it's not just a regional thing that we're seeing show up it's really affecting our entire business across the board. Just wanted to see on Michael's mention of GO where we're using AI for not just localization and personalization. But auto-generated creation, whether it is tax to image or whether it's image to video. What we're seeing in practice is that our customers that are self-serving in to GO are using those products incredibly fast. And that the results of using those products take image to video, for instance, are really driving higher rates of performance across the board. So this is showing up across our whole business. But in the self-service tech specifically, it's very exciting.

Your next question comes from Mark Zgutowicz with the Benchmark Company.

This is Alex on for Mark. First, I was hoping you could qualify or quantify the implied decremental adjusted EBITDA margin impact for Retail Media predicated within guidance for the year. and perhaps with the incremental investment profile for agentic looks like this year relative to last? And then second, offset becoming more of an always on budget, if you will. -- what level of contribution is implied within guidance this year relative to '25, ex the large client transition and understanding you're not factoring incrementality from agentic.

Yes. Mark, just on -- we actually put in some slides into the debt related to the wall. We don't sell out the retail media related to EBITDA, but we do talk about obviously, I said more -- growth rate. So we have assumed that including the growth net of retail media is about 170 basis points and upside to the year, and then you'll see from the walk that we've also incorporated within our EBITDA guidance a growth investment of about 260 basis points kind of going the other way. So our assumption is that we are highly focused on the productivity actions within the entire company to ensure that we I would say, mitigate and transform from where we are to move forward. And there has been a deliberate shift and focus into agentic AI investments. and more productivity actions in terms of them being left now retailer -- sorry, Criteo sold within our retail media pipeline.

Got it. And then just curious if you could elaborate on the implied mix of off-site within guidance this year, just directionally how to think about incremental drivers in '26, considering you're not implying or factoring any incrementality from agentic.

Didn't load the plan with any genic upside from things like the product recommendation engine. But in terms of like retail off-site, I don't think we'd break that out specifically, but let me comment on just kind of off-site more broadly. The retail media offsite market is still in the early innings. Only about 15% of that market is offsite. But it's starting to get traction as platforms mature and look for additional revenue sources beyond sponsored product and on-site opportunities. So we've got retailers participating in our off-site program. And we mentioned the great case study with the global computer brand in Costco in the prepared remarks. It's a great example.

And our value prop is differentiated because agencies and brands basically get to approach retail marketing with a fully integrated capability. where they can integrate off-site and on-site and have better measurement across how those 2 are working together and we leverage unique third-party audiences for off-site got full funnel closed loop budget. And we also have several retailers running off-site monetization through our which gives us another way to approach that market, depending on how retailers want to scale that. So in the OSP, we enable brands to access retailer audiences via third-party DSPs if that's the path we go. So early innings, but I think we'll get more focus on this from the industry in '26 and '27. And we've got 2 paths to execute on that between Cmax and the SSP.

Your next question comes from Tim Nolan with SSR.

I'd like to dig a little bit more into a couple of topics that have already come up on the call. And it's really about how do you make money from your clients doing these AI initiatives. So a previous question was about kind of focusing on the retailer client side. and these new products that you're launching. Can you explain what is the pricing model? How are you charging for that? Is it a transactional-based business as you've typically done? Or is there like a service element that you're making money off of? And then on the kind of the big AI company side, I guess they're not necessarily customers of yours, but you need to be integrated with them to make sure that all these agenetic processes work. Can you just help us understand, is it more the retailer traditional customer side that you will make money from? Or is there a revenue opportunity from the native AI companies as well?

Yes. I'm happy to take that and just making a couple of notes here. So the -- yes. The monetization opportunities obviously vary. So in retail, surfacing sponsored product in those interfaces is largely the same fee structure that we have today for serving those on site. It's a take rate model, not dissimilar from how that works today for on-site products. As we think about the LLM, like I said earlier, really the play right now is to get out to an industry leadership position with our offering, get deeply embedded into that ecosystem. And then as they develop their monetization models, we'll figure out how we participate in that. It could be a continuum from paying for that API access, almost like fee for content, all the way to some kind of participation in their economic model as their monetization strategies evolve and mature. So it is early days there, but there's a continuum of paths forward. And there certainly needs to be a monetization on that at some point in time.

Todd, do you have anything you wanted to add?

Yes. I would just add one thing, Tim. What we know from operating our business for years is that brands want to be discovered, they want new audiences to discover their products or discover them for the first time. independent of whether it's a paid or an organic discovery. And what you hear Michael is saying is that we have 2 paths to get to those outcomes of a brand being discovered and their product being bought One is to take advantage of the traditional paid approach that we have done well for years. and that will show up in the LOMs that are developing advertising solutions.

And the other one is organic, and you're seeing that from the recommendation service today. we can get a brand discovered organically, and that's where the pricing model is a little bit less clear. That has not been part of our core business. It is still representative of an outcome for that brand being discovered. And we know we'll monetize it, but it is an organic discovery rather than a paid discovery. So that's why we're a little loose on what we're doing there. The experimentation now is focusing on making sure the discovery works better. And we know the monetization will come right after that.

And can I just follow up to be clear. You mentioned, I think, Sarah, you said there's no assumption of any upside from gene tools. I guess you're referring to the new things that you've rolled out recently, some of the announcements that you've made, it feels like you may be holding back on the quantification of that, given how enthusiastic you are about some of these tools and processes. Am I reading that correctly?

I would say, yes. But to Todd's point, we haven't monetized it yet. So it's -- we can't assume something that we haven't got, I guess, signed contracts for -- at this point. So we're very excited about it. and we believe we're in a really, really strong position to be, I would say, the ad tech company of choice to partner with in agentic commerce yes, I would hope that you will see more announcements and more upside going forward.

Your next question comes from Richard Kramer with Arete Research.

Michael, maybe you could shed a little light on the lower take rates that we saw across Retail Media and Performance Media. Historically, Q4 would see stronger take rates in both segments. And what was driving the that weakness. Is it competitive pressure? Is there some other factor here in terms of wanting to lock down business? I mean, what explains that? And maybe one for Sarah, given the weak first quarter '26 guidance and your comments about retail media growth during the year, how much of the '26 budget do you have currently committed? Or do you have visibility on? And how much still needs to be determined over the course of the year?

Yes. I mean, I'll take the take rate questions, and I just want to clarify your second question, so I think I missed some of that. But in terms of take rate, we do continue to have strong take rates within Performance Media as we move further up the funnel, those take rates change. So there is some mix related to we're serving more social, more CTV. So we kind of are moving into new areas with, I would say, just a different mix of tanker, we feel very good about the margins that we're getting in Performance Media. On retail media, we do see the, I would say, the expected compression of the take rate year-on-year, that does largely relate to the change that we did in the [ room bell ] the large retailer contract. And so that is part of that impact. And we do also see a mix issue there as we continue to add more display advertising, that would be at a lower take rate than the on-site sponsors adds.

And just to add one comment on. We see a massive moat for us that we do on the on-site space. So further to the question kind of earlier in terms of as we continue to transition and move into these new spaces they will likely have a lower take rate. However, there's clearly more scale there. Could you just repeat the second question, I didn't hear the whole question.

Yes. I mean, given that obviously, you're having a what's going to be a pretty slow start to the year and your comments about growth over the course of the year. How much of the '26 budget that you're looking for is currently committed? Or do you have line of sight visibility on? And I guess we're all concerned about how that progresses over the course of the year.

Yes. I mean, I would say we have very strong forecasting capabilities. But as you know, most of our revenue is reoccurring revenue and tends to shift season to season and product by product. So we don't have full visibility to the year's forecast, and that's very usual for us. However, we do have, especially with Ed coming in as well as the commercial leader we have a very strong focus on our planning cycle with our large retailers and with our large customers, kind of at start of the year, a lot of that starting now, either for January or February as they move into their new year. So the feasibility is strong. I would say the AI tools that we have to understand the forecasting along with our clients, it's also stronger, but same as usual in terms of a high rate recurring revenue base. Thanks.

Thank you, Michael, Sarah and Todd. That concludes our call for today. Thanks again to everyone for joining. If you have any follow-up questions, the Investor Relations team is available to assist. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to Criteo's Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

And I would now like to turn the conference over to Ms. Melanie Dambre, Vice President, Investor Relations. Thank you. Please go ahead.

Good morning, everyone, and welcome to Criteo's Third Quarter 2025 Earnings Call. Joining us on the call today, Chief Executive Officer, Michael Komasinski; and Chief Financial Officer, Sarah Glickman, are going to share some prepared remarks. Joining us for the Q&A session is Todd person in his role as Chief Product Officer. As usual, you will find our investor presentation on our Investor Relations website now as well as our prepared remarks and transcript after the call.

Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect crude's judgments, assumptions and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10-K and 10-Q filed with the SEC. We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today.

Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year.

With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. Thanks for joining us today. Well, what excites me most about this quarter isn't just the strength of our results, but how our business is growing into a platform that reaches far beyond any single channel or format. Consumer attention is more fragmented than ever Carl's websites, apps, social feeds, connected TV and now AI-driven assistance. That fragmentation creates complexity for advertisers, but it creates opportunity for us. Criteo is built to meet shoppers wherever they are and deliver the outcomes brands care most about. -- progress we're making in Performance Media, in Retail Media and in Agentic AI shows our strategy is working, and our opportunity is only expanding.

Since stepping into this role, I focused on getting close to our teams, our clients and our partners. And what I see gives me confidence that we are on the right path. We're building on our strengths and sharpening our focus, and we're seeing early results from our push for greater decentralization and agility. Our purpose is clear. We power shopper journeys that unlock commerce outcomes. We help brands, agencies and retailers connect with consumers wherever they are across every channel and every device. We've evolved from being an open web company to a diversified multichannel platform with about 85% of our media spend now happening outside of desktop display. Retail Media represents roughly half of our spend with strong growth across mobile, social and video, including CTV.

This cross-channel diversification continues to set us apart from single-channel ad tech players and walled gardens. Criteo's diversified reach across these channels is a core strength that's often underappreciated. Our platform enables consistent, measurable returns across channels, delivering stronger performance in siloed alternatives as advertisers focus on outcomes rather than media buying, they're looking for the ability to accurately measure performance across a variety of consumer touch points. Our data, our AI and our global reach create a foundation that gives us a distinct competitive edge to deliver measurable outcomes for our clients. With this strong cross-channel foundation in place, we're now focused on the next major shift shaping our industry, the rise of Agentic AI.

This is a natural extension of our strategy. Intelligent assistants are starting to guide people through their shopping journeys, helping them discover compare and choose products in new ways. We see this as another channel where brands will want to engage because every major shift in digital has created more fragmentation, not less. We're moving fast to prepare for this future. Our MCP server is live and has powered our first client campaigns, proving the flexibility of our platform and new workflows.

In Performance Media, we've developed new agents that let brands generate audiences or surface insights instantly. removing friction from data workflows. In Retail Media, we're piloting sponsored recommendations within retailer agents. These are clear signs of how our platform adapts to new behaviors and new channels. Looking ahead, the opportunity is to bring together the proven performance of recommendation systems with the usability of large language models. Our performance engine keeps getting stronger with every AI innovation we deliver including our latest deep learning bidding model and it's powered by 1 of the most complete sets of commerce data in the market.

We combine normalized product information from thousands of e-commerce players with a global map of how people search, browse, consider and buy across categories. This curated view of products and shoppers reveals the connections that predict intent and enable precise product recommendations. It gives us a data set that is uniquely structured, granular and scalable, making our recommendations more accurate, more actionable and ultimately more valuable for clients and partners. And it's an advantage that is very hard to replicate. We're thrilled to be partnering on a proof of concept with a major AI-powered assistant to explore how our technology can seamlessly integrate into their ecosystem. A strong signal of how relevant we believe Criteo will be in the next phase of digital commerce. This includes exploring how integrating our product recommendation API into product-level search to drive incremental performance and relevance for users.

Turning to Performance Media. This part of our business is in the midst of an exciting transformation we're moving from a managed service model to a self-service AI-first platform that can serve customers more broadly and capture a greater share of their budgets. This shift matters because self-service not only lowers cost to serve, but also opens the door to a much larger market by allowing our technology to integrate within partner ecosystems and reach a broader universe of SMB advertisers. At the center is our Go solution where momentum is building quickly for our small and midsized clients. For example, 1 in 4 campaigns from small clients now run through Go up from just 10% last quarter and we expect that to double again by year-end. Go simplifies performance marketing through automation and built-in optimization, driving higher spend, lower churn and stronger return on ad spend.

Go has also accelerated in adoption and social, which now accounts for approximately 35% of our Go campaign revenue. As we continue to expand across channel access and full funnel capabilities, we see significant opportunity ahead. Progress we're making reinforces our confidence that Performance Media will become an even stronger growth engine for Criteo going forward. Our engine is purpose-built to optimize performance holistically across channels and throughout the full buyer journey. Social is a great example with more than 3 billion daily active users. Its share of Performance Media business has nearly tripled since last year. Cross-channel full funnel campaigns for large enterprise clients drove 5x more new users and positive incremental return on ad spend, proving that our engine delivers true performance lift across CTV, social and video.

We're also extending into Connected TV, which is emerging as a new performance channel. Marketers can activate CTV campaigns through our commerce growth demand solution or our Commerce grid supply side platform, and the results are compelling. A food brand tripled household exposure and a luxury fashion brand lifted transactions per user by 50%, revenue per user by 25% and new buyers by 7%, with Criteo still underpenetrated in the second fastest-growing part of the digital advertising ecosystem. CTV represents a significant multiyear growth opportunity.

Another area where we see significant opportunity is with our marketplace offering, which allows marketplaces to offer their merchants Criteo's targeting and retargeting tools. Marketplaces now account for more than half of global e-commerce sales and our solution helps them unlock incremental ad revenue while strengthening merchant retention. This is a scalable new channel of distribution that accelerates adoption of our platform across a broader commerce ecosystem.

Turning to Retail Media. It continues to be a powerful growth engine despite the near-term headwinds that we expect to work through in the coming quarters. This quarter, we drove over $450 million in media spend, up 26% year-over-year with more than 4,100 brands worldwide. We're making it easier for brands and agencies to plan, buy and optimize retail media spend through partnerships with Google, Microsoft and Miracle while also deepening agency relationships and bringing more brands onto the platform. Our new partnership with DoorDash underscores the strength of our demand generation engine.

Our new API integration with Google is live. It is especially important because it captures brand search budgets that have historically sat outside of retail media, opening new spend opportunities. As Google's first on-site retail media partner, we're seeing strong interest from both existing and new retailers looking to take advantage of this integration. Search is 1 of the largest pools of digital ads band. And as we roll out this offering through Google Search Ads 360 in the Americas in Q4, it gives us access to an estimated $172 billion in addressable spend a portion of which we expect will move into retail media over time. While still early, we see this as a multiyear growth driver starting in 2026.

We're also encouraged by the early traction of our Miracle partnership, which is opening up demand from mid- to long-tail advertisers and helping us expand with retailers, including Lowe's and Ulta Beauty as they grow their marketplaces.

With Microsoft, we're excited to begin testing this quarter. We're rolling out scalable real-time bidding solutions that enable programmatic buying while ensuring retailers retain full control over their data and site experience. On the supply side, we're executing with strong momentum led by the rapid success of our auction-based display format which has quickly become the fastest-growing ad format in retail media. On-site display spend grew 42% this quarter and retailer adoption more than doubled with 41 retailers now live and more coming in Q4. And that represents 12% of our Retail Media business, up from 9% last quarter with meaningful upside as it can reach 30% to 40% of our clients' media mix.

Our global retailer network continues to expand, now at 235 retailers, including Sephora, fragrance shop in the U.K. and Zepto in India and new market entries with Mero and inter discount in Switzerland and mass market in South Africa. Shoppable video is gaining traction, too, and contributing to the success of full funnel on-site strategies to drive over 5x higher conversion and 5x more new buyers than sponsored products alone. We're expanding off-site with Superdrug as our latest client to adopt the solution, and we see opportunities to extend retail media off-site into CTV and social. All of this reinforces our confidence in the long-term growth trajectory of Retail Media.

Overall, we delivered solid results this quarter. Media spend grew 4%, representing a 400 basis point improvement from last quarter. Contribution ex TAC increased 6% year-on-year, and adjusted EBITDA margin came in above guidance. We have the right team and strategy in place to reaccelerate growth over the next few quarters and the foundations we're building will drive multiyear benefits. As part of that effort, I'm thrilled to announce that Ed Dinahar as our new Chief Customer Officer, a key addition to our leadership team, who will further strengthen execution and ensure client success remains central to everything we do. This morning, we also announced our intention to redomicile Criteo to Luxembourg and replace our current ADS structure with a direct listing of our ordinary shares on NASDAQ. We view this as an important strategic step toward unlocking significant and sustainable shareholder value, which reflects our commitment to ensuring Criteo has the optimal corporate structure.

It is expected to offer significant advantages over our existing structure, including eliminating most of the legal complexities currently applicable to Criteo, enhancing flexibility in capital allocation and broadening our shareholder base and Sarah will provide additional details on this shortly.

To close, Criteo has real momentum. We're executing with conviction, building on a durable strategy and positioning ourselves to capture the most important shifts in commerce and advertising. We're confident that this will translate into sustained growth and long-term value for our shareholders.

With that, I'll hand it over to Sarah for more detail on our financial results and outlook.

Thank you, Michael, and good morning, everyone. We delivered strong Q3 results with significant operational leverage driven by top line growth and disciplined cost management. Revenue was $470 million, and contribution ex TAC increased to $288 million. This includes a year-over-year tailwind from foreign currencies of $6 million. At constant currency, Q3 contribution ex TAC grew by 6% year-over-year, representing 15% on a 2-year stack. Client retention remains high at close to 90% underscore storing the resilience of our model. Macro trends remained stable throughout the quarter and during the back-to-school season, we saw higher advertising spend year-over-year across several key categories including office supplies, furniture and personal care.

In Performance Media, revenue was $403 million, and contribution ex TAC was $222 million up 5% at constant currency and 10% on a 2-year stack. This was driven by our commerce growth solution, up 6% which leverages our large-scale commerce data and AI-powered audience modeling technologies connect advertisers with in-market shoppers. We also benefited from incremental AI-driven performance enhancements on top of the strong AI improvements we implemented last year. Ad Tech Services reduced Performance Media contribution ex TAC growth by approximately 100 basis points due to lower spend in our media trading marketplace.

Overall, we benefit from a diversified client base and a global footprint. By region, we saw immediate spend growth in Asia Pac and EMEA and softer but improving trends in the U.S. Travel remains our fastest-growing vertical, up 24%, with classified about 14% and marketplace is also performing well. Retail net spending was softer, including an 11% decline in fashion. In retail, Media revenue was $67 million, and contribution ex TAC grew 11% at constant currency to $66 million, up 34% on a 2-year stack. Growth was driven by continued strength in retail media on-site. We benefited from the traction of our auction-based display offering and the addition of newly signed retailers. We continue to win new retailers across all regions.

Media spend in Q3 grew 26% year-over-year, outpacing the market and reflecting share gains we saw continued expansion with CPG and smaller brands, and we onboarded 100 new brands this quarter. Momentum with agencies also remained strong, and our 4,100 global brands are prioritizing retail media as a key performance channel. We delivered adjusted EBITDA of $105 million in Q3 2025, up 28% year-over-year resulting in adjusted EBITDA margin of 36%, up 500 basis points year-over-year. This reflects strong operational leverage from top line growth, AI-driven productivity gain and cost discipline as well as lower-than-expected total charges for us. We also benefited from approximately $8 million due to the timing of marketing expenses shifting into Q4 and lower bad debt expense.

Non-GAAP operating expenses were flat year-over-year at $158 million in Q3, reflecting our disciplined resource allocation while enabling continued investment in product innovation. We continue to build on our strong operational fitness to enable greater scale and efficiency, including driving productivity gains through commerce, Go and AI-powered tools.

Moving down the P&L, depreciation and amortization was $30 million in Q3 2025. Equity-related compensation expense was $15 million compared to $35 million in Q3 last year. Our income from operations of $52 million, up sharply compared to $10 million in the same quarter last year, and our net income improved to $40 million reflecting both revenue growth and operational leverage and lower equity-related compensation expense. Our weighted average diluted share count was $53.8 million compared to $58.4 million a year ago, which resulted in diluted earnings per share of $0.70. Our adjusted diluted EPS was $1.31 in Q3 2025, up 36% year-over-year. Free cash flow was $67 million in Q3, up 74% year-over-year. We are delivering consistent upward momentum in adjusted EPS and free cash flow per share demonstrating long-term value creation.

We expect to deliver free cash flow conversion above 45% of adjusted EBITDA this year, excluding nonrecurring items. Criteo is a well-managed, resilient cash-generative business with a financial strength to invest for growth and return capital to shareholders. We closed the quarter with $811 million in total liquidity and no long-term debt, giving us the flexibility to execute our strategy and pursue disciplined balanced capital allocation. We are confident in our business strategy and the priorities remain clear: invest in organic growth as new value-enhancing acquisitions and return capital to shareholders. We deployed $11 million towards share repurchases this quarter, buying back about 0.5 million shares, reflecting our current constraints related to French law limits for share buybacks.

Year-to-date, we have allocated $115 million to share repurchases and anticipate resuming our buyback program in Q4. We had $104 million remaining in our Board share buyback authorization as of the end of September.

Turning to our financial outlook, which reflects our expectations as of today, October 29, 2025. We are reaffirming our full year contribution ex TAC guidance and raising our adjusted EBITDA margin guidance at the high end of our range. For 2025, we continue to expect contribution ex TAC to grow 3% to 4% year-over-year at constant currency. We estimate 4 changes to have a positive full year impact of $12 million to $15 million. in Performance Media, we expect contribution ex TAC to grow mid-single digits at constant currency in 2025. This reflects our solid performance in the first 9 months of the year, continued traction with advertisers to drive performance throughout their buyer journey and the ramp-up of Commerce Go partially offset by lower ad tech services.

In Retail Media, we expect to drive media spend growth ahead of the market and contribution expect growth is now expected to be at the low end of low to mid-single-digit growth range at constant currency. As previously communicated in Q4, we anticipate lower revenue due to scope changes with 2 specific clients, and we lap onetime Tier C for our largest retailer in December 2024. Excluding these 2 clients, underlying retail media contribution ex TAC growth for 2025 is expected to be in the mid- to high teens range reflecting a slower ramp-up from certain new clients in Q4. We now project an adjusted EBITDA margin of approximately 34% for 2025 this reflects our confidence in operational leverage from top line growth, AI-driven productivity, continued cost discipline and the ongoing transformation of our operating model as we continue to invest in areas of growth, including Agentic AI innovation.

These investments will support continued top line growth and strong cash flow generation for the coming years. We expect a normalized tax rate of 22% to 27% on the current rules and capital expenditure of approximately $110 million for the year. As a reminder, Criteo operates its own data centers and infrastructure, which supports our stability, flexibility, performance and cost efficiency. In 2026, we anticipate higher CapEx related to the renewal of certain large data centers.

For Q4 2025, we expect contribution ex TAC between $325 million at $331 million, down 3% to 5% at constant currency. We estimate full rate changes to have a positive impact of $5 million to $8 million per year year-over-year impact from contribution ex TAC in Q4. We expect adjusted EBITDA between $113 million and $119 million. This reflects continued high ROI growth investments in our platform and foreign exchange rate headwinds on our European cost base. It also reflects our return to office transition and higher Q4 marketing spend tied to follow launches.

Importantly, we anticipate that our Q4 trends do not represent a run rate for 2020. While we are not giving formal guidance to 2026, we currently anticipate overall low growth given the temporary retail media impact with a low point expected in Q1 given the onetime revenue from TFCs in January 2025.

Before I close, I'd like to touch briefly on our intention to write redomicile to Luxembourg and list our ordinary shares directly on NASDAQ. This change is designed to enhance our capital management flexibility, eliminating restrictions that pretty on currently faces in relation to share repurchases and position us for potential inclusion in major U.S. stock indices. We believe it would expand our access to passive capital triggering associated benchmarking from actively managed funds and broadening our shareholder base. We expect this process to be completed in the third quarter of 2026 subject to the prior consultation of Criteo's Work Council and shareholder approval.

Looking ahead, we intend to pursue a subsequent redomiciliation to the United States potentially as early as the first quarter of 2027 to further broaden our access to U.S. capital markets.

In closing, our results reflect a resilient company with strong execution and consistent cash generation. Innovation in AI are deeply embedded in our DNA and drive how we deliver performance, scale and value for our clients. We are confident in our strategy, our team and our ability to drive growth, profitability and long-term value for our shareholders.

And with that, I'll turn it over to the operator to begin the Q&A session.

[Operator Instructions] And your first question comes from the line of Justin Patterson from KeyBanc.

Great. Michael, I was hoping you could elaborate on just how your clients have responded to your genic products. I know it's early, but would love to hear more about how you're thinking about that. And then just a quick follow-up. You also called out CTV as a multiyear growth opportunity. What are some of the investments you need to make so that can become more material over the next few years?

Thanks for the question. Yes, we'll take both of those. On Agentic, really, I'd say our opportunities are threefold I try to categorize them a bit. We have delivered internal agentic products around our current workflows. For example, the audience agents that advance how audiences are built and activated we're moving towards real-time intelligence audience creation, it's less work, it's faster. And really, the goal is to enable brands and agencies to generate the right audience instantly without delays. And that's in market today.

Similarly, campaign agents, right, where we build tools for agencies where they can access our growth engine directly. We can create and manage and optimize full funnel cross-channel campaigns, much simpler prompt based interface really drives the modernization of that product.

Second category would be how we integrate sponsored ads into retailers' own Agentic chat like experiences. So I think of how we power retail media networks today, all retailers are going to need to beef up their Agentic capabilities to create easier shopping experience as we can power that with a lot of the feeds and technology that we used to serve as today.

And then lastly, the 1 that we highlighted in the script is the potential partnerships with AI platforms that bring our product recommendation capability into their responses and make them better and more informed because of the breadth of data that we have in our engine combined nicely with the Symantec capability that really is the way that the responses are generated in AI platforms. We've put a blog post out on this and some social post a few weeks back, and that's the thesis that we're really working on now with 1 of the large platforms to test that theory and see the results. And then on CTV, I think I'll hand that 1 over to Todd, and he can elaborate on some of the investments required to scale that channel.

Great. Justin, just a couple of points on CTV -- we have been investing on the supply side, specifically in the United States, but also beginning to fan out globally with direct relationships with CTV providers that are scaled that gives us a basis for bringing cross channel pull funnel tactics into play where CTV can help with product discovery at the upper funnel customer acquisition in the middle funnel and obviously, performance, which we're seeing show up and go, for instance, with social we would expect the same thing with CTV.

So we're doing 2 things: supply-side integrations and on the demand side, working with our tactics to make sure that CTV shows up in each of those 3 categories. So that our advertisers get to net new incremental audiences that are on CTV can be acquired. And then on the performance level can be reactivated in a variety of different lower funnel tactics. Measurement underpins all of this. And of course, for us, making sure that advertisers see performance at a constant level across their entire marketing mix is a very key point in bringing these 2 worlds together. Those are the 3 key investments, I would say.

And your next question comes from the line of Ygal Arounian from Citi.

First, just a follow-up on the third opportunity like Michael or Todd or whoever just on the partnership with the AI platforms. And I guess a ton of debate from investors on how Agentic Commerce changes e-commerce, product discovery and kind of where the transaction is owned and it sounds like you're kind of integrating to be part of that. Just philosophically, how do you see that playing out? And is there anything you could share -- I know I'm not going to share the economics specifically, but how that model would work for you guys, if more and more of the transaction is moving into that Agentic AI platform.

Yes, sure. Gale, great question. Certainly, the debate in the weekly press week to week. But -- we see the monetization strategies for those platforms, probably skewing towards a native advertising solution. There definitely has been some headlines here recently with the commerce capability for single product checkout, which you think is interesting. But I think ultimately, those platforms probably move towards the native advertising solution, Think of it as the modernization of paid search. And really, our solution works either way, sort of not dependent on that. What we're trying to do is bring an API data feed that allows product-oriented responses to simply be better. And so as AI platforms are competing for market share based on user experience and quality of response data feeds like ours that are proprietary, deep, complete, really start to differentiate the types of outputs that those platforms are able to generate.

So we see them being interested in it sort of no matter what their monetization strategy is and I'll hand it over to Todd, maybe just to kind of talk about some of the hypothetical economic models that might support that.

I would say this. We see the affiliate model as being sort of an underpinning to the trading that will occur regardless of the native ad format and how it might present itself heal I think what's not happening in the dialogue today is enough attention is being given to how a merchant is going to participate and show up in that clearing. So when you don't know what the format is or how it's going to be treated, it's easy to neglect how a merchant might play. So we're spending a lot of time with data feeds, as Michael pointed out, working with our retailers, with our marketplace partners to help them get ready to show up in answers in a way that native formats might be agnostic to.

So there's a very big investment on our end to make sure that retailers are ready to play regardless of format. And we think that some affiliate type setup will be the clearing capability for economics, but we're not sure of that either. What we're really focused on now is making sure that retailers are going to show up in answers the right way. And that's the work that we're doing on the platform side or exploring with different platform partners. So we have a real advantage in that regard.

Great. That's in shift in how e-commerce is going to play out. And then on the Google partnership, that seems like a pretty big deal to me getting integrated into Google Search, talked about brand dollars kind of being part of that opening up incremental budgets just expand on that relationship a little bit more about -- I want to add to just like how that rolls in terms of contribution and all that.

Sure. Yes, I have to expand on that. But the Google partnership is exciting. We announced that back in August. And it really is another example of Criteo unlocking more demand for the retail at media category. And obviously, it allows retailers to capture brand search budgets that have traditionally been outside of retail media, and it's going to give advertisers true cross-channel visibility into search performance. And so the incrementality comes from net new brands and new search budgets from existing mutual brands. And back to the size that we talked about, obviously, it's a huge addressable spend at $172 billion. A portion of that will move in. And importantly, the API connection with Google is up and running now. So we will start to see campaign volume flow into the business across Q4 and then we'll open that up to the other regions in the first half of next year.

So it's a strong multiyear growth lever really probably starting more in 2026. If you just sort of go off a few other things. From a take rate perspective, it's directionally neutral, the same demand side fee, whether a brand goes through SA 360 or through Cmax -- in terms of measurement, retailers can choose whether they want to share click data with Google to enable that cross-channel measurement and so Google has an incentive to proving for mentality and importantly, we only share click data tied to Google campaigns, not all quick data or broader user behavior on retail sites. So I think a real great win-win here for retailers for Google to get access to the fastest-growing part of the ecosystem and for Criteo to continue to benefit from unlocking demand for our retailers, which is for our mission.

And your next question comes from the line of Mark Kelley from Stifel.

Great. I'll stick with the Agentic theme. I wanted to get your thoughts on -- I think there's a debate across the investor base, not for just Criteo but just the retail media category overall, where as people start to transact more inside agents, maybe that would be a headwind to retail media as we know it today, people not going to that e-commerce site. So fewer eyeballs to see retail media ads. But conversely, I think as people more transact more inside these agents, it seems like you'll be able to tap more and more into the search budget? I know we just talked about the Google partnership. But I guess how do we balance those 2 dynamics in terms of what you gained that you didn't have access to before versus what might be a for retail media, if that makes sense?

It does. It does, Mark. And I would like to, again, like a hotly debated topic, I think, week to week. I mean at Criteo, we see agenetic as an additional channel. We just don't subscribe to the notion that agent platforms will essentially swallow or cannibalize the entirety of the commerce ecosystem. So this pattern that you see today of people doing discovery, getting shopping assistance agentically and then jumping into commerce sites to complete transactions. We see that pattern continuing. Now Agentic may become a bigger channel in that mix at some point, but we just don't see it consuming it in entirety.

I mean, that would be a bear case for like all of retail in all marketplaces. So it's just not the future that we believe in. If you did see some of that channel shift, which I don't think has to be 0 sum, by the way, retail could compensate by raising CPMs because you could argue that those placements are going to be even more valuable than they would be today. I think what also gets lost is that retailers won't stand still, they'll continue to add additional formats, improve their shopping and site experience, and they're competing for really the right to conduct business on their own channel versus an Agentic channel. So I mean those are some of our thoughts. I guess we'll see how it plays out. But I think Criteo has got to play in that either way, right? We'll either play directly into that channel in some of the ways that we talked about earlier on the call or through some of our current means, powering retailers as they serve of world-class experiences that give them the right to continue to command traffic and serve customers.

That all makes sense. And then maybe a second question, just on Retail Media. Nice to see activated media accelerate in Q3. Possible to parse out, I guess, some of the new wins that you've announced, whether it's DoorDash or other ones, how that's layered in already? Or is that mostly kind of like a same-store sales number with your existing retailer footprint?

Yes. I mean I'll let Sarah comment a little bit about it because we were super excited about the 26% activated media spend growth and so you have the 2 factors that we've talked about in the past, scope reductions and then lapping the tier fees. And then really the new things. We had a couple of new wins that just did not scale as quickly as we had hoped for in this quarter. And so that created a little bit of softness, but we think that we'll make that up as those programs get up and running for next year.

Yes, most of Q3 is activity related to our existing base. And within that, we have some more mature, I would say, customers right scale based but ultimately, some -- there's a little bit of softness in some of the beauty area. But the new wins that we have are starting to ramp up now. So we've only announced, as you know, to DoorDash a couple of -- really a couple of weeks ago, so that's starting to ramp up now.

And your next question comes from the line of Tim Nolan from SSR.

Two numbers questions, I guess. If you can help us understand a bit better as to how you beat so substantially on the earnings line in Q3. It looks like your CXT number was roughly in line with guidance, but you'd be pretty substantially on the adjusted EBITDA line. And then as you move your domicile to Luxembourg and into the U.S., are there any financial implications we should be aware of, the cost to do this, the tax implications, reporting, anything like that?

Yes. I mean just in terms of the beat for EBITDA, and some of that relates to the top line on CXT -- we also benefited and continue to benefit from the operational leverage of just continuing to make smart investments. And there are a couple of, I would say, more onetime items. So our bad debt reserve reduced our receivables are in really good shape, which also translates to great cash flow in Q3. And we have some shift of marketing spend from Q3 into Q4. So I would say, a pretty solid list of kind of why would be most of it related to, I would say, strong operational leverage.

Sorry, I thought you said Q3. So yes, in terms of the redo, we don't see any material pulp related to that. And we will isolate those within our filing, so you can see what those costs are.

And your next question comes from the line of Doug Anmuth from JPMorgan.

Appreciate you highlighting the 3 major areas of the Agentic opportunity. Are there any particular investments that we should be thinking about as you're heading into '26 required to build out those AI products.

And then, Sarah, just on the few guidance, I know you just with the 2 retail media clients, -- is there anything to call out on the slower ramp in certain new clients that you mentioned? And then as we think '26, any change to the headwind that you had called out earlier in the year kind of over the first 10 months of the year.

Thanks, Doug Yes, I can take the AI investment one, and then Sarah can follow up on the second half. I wouldn't say that there's any investments that are sort of out of the norm to continue to scale the 3 different categories that we've talked about or at least that we can see right now. Yes. I mean you can see a little bit of it in the quarter. There's some extra marketing costs that's going into launching Commerce Go, but that's probably just like kind of more of an increase on a run rate as we scale that self-service tool in the market. But things like the campaign agent and the audience agent have been developed very much inside the teams as they are today. And then we'll see how the pilot test goes with the Agentic platform I suppose that's a bit of a wildcard. We'll have to see how the test goes and then what would be required to scale that, if that's a partnership that's going to take off. But obviously, it would be self-funded with some kind of a revenue model attached to it.

Yes. I mean -- and I think just on the Retail Media, we have a strong base of clients, 235,000, $4,100 per an -- we're continuing to see a really strong baseline of our revenue. And there's just a slow ramp up of some of those new clients in the latter part of 25%, which is not unusual. We see that in past years.

And same -- Sarah, just to clarify the same kind of cadence that you talked about '26 in terms of win. Just want to be sure that we're on the same page there.

Yes. Yes. We still anticipate the $75 million. And I pointed out in the prepared comments that Q1 will be the low watermark. So then we had the tiered fees for December 25 and January 26 for our largest retailer. So our expectation is that it will be the same impact of about $75 million that we already discussed.

And your next question comes from the line of Matthew Cost from Morgan Stanley.

Commerce Go is coming up a lot. It seems like the launch is pretty exciting, talking about kind of doubling the number of campaigns from 10% by the end of the year for small customers. I guess how should we think about the contribution to growth for this product, especially as we look into 2016 and beyond? Is this something that is sort of offsetting change in behavior for customers in other parts of the product portfolio? Or is it like really incremental in the way that we think it could kind of shift the growth trajectory for Performance Media. And then I have 1 follow-up.

Yes. Thanks, Matthew. It's a great question. It's a product we're really excited about. You can think about it in a couple of ways. One, there is a conversion of existing clients to the Go tool or to the Go campaign workflow. And in that case, what we're seeing is higher spend lower churn, better results. And so those flow through in a couple of different ways for us that are great for the business. Then there is an incremental client gain angle as well as we roll out full self-registration self-service early next year, we're looking to drive client count with that and bring on real net new customers.

The other thing that's exciting about Go in that context is how it really makes our cross-channel proposition come to life. I think we mentioned in the remarks, right, we've got 35% of the campaign revenue flowing through social channel. It really is like an expression of that cross-channel full-funnel self-service proposition with a lower cost to serve model. And again, the results we're seeing from clients so far are they spend more, they churn less and they get better performance. So it's really a win-win all around. Do you have anything to add?

Nothing to add to that at all. We're thrilled about it. We're excited. And it is already showing up in several ways as being significant with a lot of headroom.

And I guess, Doug, just -- or Matt, just to put a constrain on the we do see this being a contributor to 26% growth. We'll do guidance on 26, obviously, at year-end results in February. But we do see this being a meaningful contributor to our top line next year.

Great. And then just on the proof of concept with the major AI systems you talked about in the prepared remarks. Presumably, proof of concept is sort of an internal test that's not consumer-facing, if it's deemed to be successful by both yourselves and your partner, what are the next steps that come after that?

The next steps will be entirely determined on the quality of the test. Like you said, it's a fairly limited test at this point to determine how the data that we have, the feeds that we have that Michael talked about earlier are contributing to better answers and product recommendations. So it's relatively contained -- what we will see once we have that baseline is how we take that to scale to improve the way questions are answered across the larger base of that particular partner. And we don't know that yet. So we're very much in the evidence producing phase of the trialing. And we'll have more on it, obviously. We're going to go step by step like we do with everything, produce a good result and build.

And your next question comes from the line of Mark Sucotec from Benchmark.

Sarah, your net dollar retention was 107% for Retail Media in the quarter. And I'm just curious what was the incremental from offsite versus display and then just hoping you could provide a little more clarity on your comment about the retail media trends being softer, but improving in the U.S. and sort of what that means in terms of how we should be thinking about variables over the next 12 months in terms of growth spend versus take rate, anything outside of the large client transition that we should be thinking about there?

Yes, absolutely. I mean in terms of most of the revenue came from sponsored and we have seen that, I would say, consistently that sponsored and then our auction-based display ramp up or where we see most of the uptick. And that's obviously on a scale base.The fast growth within that, but there's also some more stable growth. Off-site, we now have 42 retailers, and I would say it's just over 10% of our revenue. In terms of what we're seeing for next year -- or sorry, rather of our media spend in terms of what we're seeing next year, we are seeing that the continued trend with auction display kind of continue to ramp up really spoke to being, I would say, the kind of lifeblood, if you will, of retail media, that's where we're seeing most of the expectation of our growth.

And with adding more and more capabilities to that offering that we will see most of the growth upside will continue to ramp up. But I would say that is absolutely secondary to the traction of our sponsored advertising and on-site offerings. And what we're seeing for next year is that -- we continue to see our media spend growth across our client base, and we continue to add new clients to that. So we're continuing to see that we're in the right place with our retailers, and there's some new opportunities, as we discussed with some of the AgenticIAI that we're partnering with our retailers on as well. So many, many factors for growth and obviously the near-term impact in very much been offset by good traction across the tamed.

And your next question comes from the line of Richard Kramer from Arete.

A couple of things, maybe I haven't touched on so much yet. One is, Michael, can you speak a little bit to custom audience share and the extent to which you're getting greater social media inventory from outside of meta properties? It would seem pretty important for the potential resumption of growth or continued resumption of growth in Performance Media.

And then maybe, Sarah, you mentioned all these new initiatives, specifically self-serve, and Michael made a few comments about the API relationship with Google, but mindful of the bid switch margin experiences. Can you talk about the relative economics of self-serve versus direct sales and the trade-offs that investors might expect to see in activated media growth but also take rates?

Thanks, Richard. Yes, I'm going to have Todd take the custom audience as 1 is the architect of that in full.

Yes, I can -- Richard, I would say this, the way we think about social right now is ensuring constant performance across Meta and open auction and going into CTV as we talked about earlier in the Q&A. So in terms of other social, we look at global scale partnerships. I think we've talked about the fact that we're testing in TikTok as 1 of those. And there are a couple of other explorations that we've done. But really, we have plenty of headroom with met it currently to optimize our setups for constant performance between social and the open auction. So that's why you're seeing the numbers show up the way that they are. So as much as we're excited about expanding the social footprint, we're doing it pretty thoughtfully with a global scale partnership set in mind and then making sure that we don't get lost in single channel setups that other competitors are emphasizing. We're all about holistic performance across social and open and retail media as it comes online, and we're very focused there.

Yes. And in terms of the margin, we certainly do see with self-serve, and I think it was answered well in terms of the traction we're seeing on scaling the media spend. So that's obviously beneficial. It just gives us top line leverage and it's optimized automated flows. Are we using the same, I would say, the same capability internally as well. So even if it is more a managed campaign, especially for our enterprise clients, we are starting and continuing to use more capability to optimize all of those campaigns set up. So that's all good for margin. In terms of -- you referenced bid switch, I mean, that is margin generating. So just to be clear on that. And while it's not as high margin as other partners growth, it does continue to contribute to our margin overall.

But yes, we're seeing really strong traction of self-service. We continue to see optimization and what we need is to unlock on media spend, and we have many avenues that we're highly focused on to make sure we can scale that.

Thank you, Mike, Sarah, Todd. That has our call for today. Thanks again to everyone for joining. If you have any follow-up, the Investor Relations team avatar to assist. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

All right. We'll get started. People rolling in post lunch, but we'll get started as people come in. So Ygal Arounian from the Citi Internet team. Really pleased to have Criteo CEO, Michael Komasinski, with us today. And as we kind of kick off the afternoon, thanks so much for being here.

Thanks, Ygal. Good to be here.

So Mike, you've been CEO at Criteo for a little over 6 months, right? Stepping back, just as we kind of get it kicked off here, like what excited you about the opportunity takeover at CEO, Criteo? Looking ahead, what are some of the strategic goals and outlook for Criteo that you've got? And just give us kind of your overall strategic overview.

Yes, sure. Yes. So I think in terms of like looking at the opportunity, definitely a big believer that -- I love this ecosystem, in general, right? But I do believe that platforms will continue to take share within the ecosystem for a long time, right? That's probably not a new insight, but for someone that had been in the agency, part of the ecosystem, sort of got to that crossroads and decided that while I love the overall ecosystem, the platform, no question is going to be a faster growth rate and taking share for some time to come, still debated point, but happy to take that side of that debate.

And in terms of evaluating which platform to go to, I wanted something that had performance engine at its core value proposition and a platform that had significant data assets from which to drive AI opportunities because you can't do AI unless you have great data assets. And I think when I started evaluating the Criteo opportunity, the fact that it's the industry leader in the fastest-growing secular space in the landscape in Retail Media was like the icing on the cake, so to speak.

So it had performance, had data to drive AI, whatever manifestation that ends up being and then the industry leader in the fastest-growing space. So this is a dream opportunity for me. In terms of the vision of where to take it, the commerce media platform vision that we've had that Megan started, I actually think it's quite sound. And I've said that since I took over at the beginning, our strategy really needs expansion and extension.

We got to continue to look for adjacent white spaces to make sure that we don't miss opportunities that are really synergistic or complementary for our core capabilities. And then we got to continue to drive. So what's the next generation or the next items on the road map in Retail Media in performance and continue to look out over 2 or 3 years. And if there's anything that's sort of new and additive to that strategy and vision, it really would be the agentic opportunity. And that's just kind of come on to all of us very rapidly this year. And I'm sure we've got some questions to get into that later.

Yes. We've got plenty of questions on all those things, and we'll dig into each of those topics, actually. Let's start with kind of your points about the kind of building around Retail Media and Commerce Media. You've moved more into being a full funnel cross-channel solution, particularly around agencies. And so we saw that in the Performance Media segment in 2Q, which outperformed that kind of drove the beat in the guidance raise. So let's start here with Performance Media and kind of what's driving the strength? How do you think about the segment's longer-term profile?

Yes. So one of the tailwinds that's happened this year was the sort of resolution of cookie deprecation and in this what I'd call stability of the addressability landscape. And in fact, that I think even went a step further just this week, with the DOJ decision around Google and Chrome.

Good timing to have this conversation.

It is, right? And so what that means, while I would say, and I think Criteo has been on record for many years saying this, like we were ready for whatever new addressability landscape came at us. If it was privacy sandbox or something like that, we were ready to operate in that paradigm. But -- it's nice to not have to go through a transition. And so that's good. And that allows us to put a lot of mental energy and resource investment into developing new product as opposed to trying to protect the foundation of the existing product, right? So a lot of that mental energy and some resource investment that was going towards addressability can now go into product development to move up funnel, which is the full funnel part of the strategy and to open up new supply sources, which is the cross-channel part of the strategy, and to continue to evolve the interface to make it more self-service.

I usually talk about full-funnel, cross-channel self-service. And there's a lot of energy going into all three facets of that, which makes that sort of core performance offering sort of taller, wider and more easy to use, which opens up a larger advertiser base and makes it more scalable for them, but also in partnership situations as well.

Okay. So with the addressability understood the Google's decision to not move away from cookie deprecation was positive for you guys in the way you're talking about reallocating those efforts into other places. Does the ruling yesterday impact you the same way? And then any comments to make on the ad tech trial that's upcoming and how all of that might impact you guys?

Sure. Like I said, the ruling this week really just, I think, reinforces stability. So no change there. On the ad tech trial, I've always said that a sort of fairer, more competitive landscape in the ad tech ecosystem is good for most of us in the sector, and it would be good for Criteo. That's not necessarily predisposing which way those decisions will go, but a fair landscape is good for us. If the ad serving and exchange parts of the business are sold off or divested, it probably does create some kind of an opportunity on the supply side.

And just to put some numbers to it, we had a 1% share gain would be a double-digit million opportunity for Commerce Grid, our Commerce SSP. So I don't know if that will happen, but there would be some market opportunity if those more extreme remedies were to come to pass.

Okay. Well, we'll keep a close eye on that, of course. Let's elaborate on the agency opportunity. You guys have before -- even before you joined, you guys have kind of already been moving in that direction, building strong relationships with agencies that are becoming a bigger part of the overall spend. You obviously come from an agency background, and you're pushing a little bit more on this effort. You recently announced a couple of broader agency relationships. Can you talk about those how you're fitting into the agency world and kind of the newer role that you're playing there? And what that opportunity is for you guys?

Yes, sure. I mean, as you alluded to, it's been a multiyear effort that preceded my arrival. And I think it probably started with just the simple realization that Criteo was underpenetrated with that segment. Agencies either control or influence a large amount of media investment decision-making. Not unilaterally, clients are quite involved in what ad tech tools are used on their behalf and often have strong preferences. So you always have to have relationships with both brands, advertisers and agencies. But we're not competitive with agencies.

There's a very complementary nature to our product set. And I think maybe the emergence of retail media was what helped maybe sort of tip that forward. Because our Commerce Max solution really gets good feedback from agencies in terms of the efficiency of the platform, the ability to run cross-retailer campaigns. And as you know, buying retail media efficiently and at scale is one of the sort of challenges that's been needed to be overcome in that space. So we really now approach agencies holistically with at least 3 of our main 4 products, Growth, Max and Yield -- and Grid, sorry, the SSP.

And we looked for a holistic commercial agreement. We support them on training and adoption and make sure that we've got the right customer support in place so that the people that are hands on keyboard have a great experience when they're using our tools and that drives adoption and expansion.

Okay. How many of your agency relationships have 3 of those 4? I think it's early? Or are there still...

Almost all of them. Yes, that is sort of our -- our sort of standard approach now is to go into those with all 3 of those products in play.

Okay. Got it. Yes. But still a lot of opportunity to build and expand relationships with agencies?

Yes. I mean we're still underpenetrated in the segment. And so there's just a lot of upside for Criteo to gain share. In some cases, that's client preference, where they maybe worked with us in the past on like our Commerce Growth platform, and they want to see their agency using that as part of their -- the media mix and the tool set up or it's again driving adoption and sort of fandom inside the agency and taking share from other ad tech player.

That was going to be my next question. So when you are building these relationships, is it -- are they new and incremental? Or I mean it sounds like you're answering it, some of it's -- at least some of it's coming at the expense of competitors as well?

Yes, it can. And I mean it's funny. We don't have exactly a lot of like perfect head-to-head competitors. So I think a lot of times, you might be taking share from other players, but you're not necessarily competing against them like one-on-one. I mean there are sort of the more traditional programmatic DSPs. We don't compete head-to-head with them. But as we move up funnel, with, say, mid-funnel offerings like Commerce Audiences, that competes for dollars that potentially would flow through a programmatic DSP. When we create curated audiences in Grid, the Commerce SSP, that's competing for curated audiences with other SSPs.

So -- yes. And like I said, we've got real advantages in the way that those products are built because they've got the commerce intelligence, the product catalog and so they are differentiated when we line those up.

Okay. Helpful. So one product that you haven't mentioned yet is Commerce GO! And part of -- I believe at least part of this agency push is around building more self-service tools, and that's what Commerce GO! is. So can you talk about GO!, the opportunity there? Maybe what it is and what you think it does for you guys?

Yes. Yes, Commerce GO! is a really exciting product that is in early stage rollout right now. We have about 15% to 20% of our long-tail clients migrated over and we will go into net new self-registration in early '26 for that product. But what Commerce GO! is, is really our performance engine with a really simple interface that basically takes a lot of the setup and the management of campaigns and automates it. So the selling tagline is 5 clicks to campaign. So you can set what audience you want to pursue, and we have an audience builder that will help do that for you. You upload some of the creative you want to use, set which marketing KPI you want to optimize to and the budget that you want to spend and you basically hit GO!, right?

[ That's ] the name and it will essentially drive those outcomes with that creative to that budget, and give you great reporting on how you're tracking against that objective. So it really appeals to people that want to drive outcomes, understand how they're pacing against it and have confidence that those campaigns are running in high-quality parts of the open Internet. And Commerce GO! does a great job with that.

Okay. And this is met for agencies, can open up to SMB advertisers like -- as well?

Yes. It's a great question. The initial focus is SMB advertisers, but we do see opportunity with agencies. And I actually think some large clients as well. So I believe the segment -- the client segmentation part will become a little less relevant as it scales. But we're very focused on the SMB segment, at least, initially to prove the efficacy of the platform and to get scale behind it.

Okay. And then this strategy on the agency side and the kind of full funnel, how does this help you get back to total activated gross media spend growth?

Yes. I mean that's key, right? That is one of the #1 objectives inside the company is driving robust activated media spend increase. Yes, we just have to compete for dollars, right? So I mean getting greater share of wallet inside of agencies drives that. As we become more full funnel cross-channel, we become a more -- a bigger platform that has more scale to drive various types of campaigns, own a bigger part of the media plan. And that's -- that all sort of works as a flywheel as you try to gain share inside of those companies.

Okay. And then I think this one will help, too, is CTV. And so that's an area that has also been a little bit more incremental since you've joined, you've focused there a little bit more. Can you talk to us about your -- the CTV opportunity. I think it's a small part of your business right now, but how do you envision kind of taking it from where it is today to where you want it to go? And what does that look like? What does that product look like?

Yes. So the -- as you said, the focus on it is pretty basic, right? The fastest-growing parts of the media ecosystem are retail media, CTV and influencer, right? So it just makes sense that if we're chasing activated media spend that we need to be present in the fastest-growing parts of the market. And then happens to be that CTV from a technology standpoint is the sort of closest into how we operate today.

And if I click into that, there's really two approaches for Criteo and CTV. One is to develop audience products where we might partner with somebody like Roku that we announced a couple of weeks ago to take their audience information, infuse that with our Commerce Graph information and to create really differentiated audiences that client like WPP media then might activate on behalf of their clients. And so that was the beauty of that announcement we made a few weeks ago. And so that's a great example of sort of infusing CTV audiences to create differentiation.

The other opportunity is to include it as a biddable supply channel on the performance side. So when we are looking for ways to influence consumer behavior, even think about like a retargeting use case. There are certain types of CTV inventory that are going to be relevant to that bid stream. And so we're taking a look at how we develop relationships in the right type of supply that works well with our algorithm. And then broadening the opportunities that we have to bid and influence behavior for our performance clients.

I think that might be the first time I heard retargeting and CTV put together. Maybe I missed it, but so -- okay. So that's an interesting opportunity. Is there a time line you think about when that becomes like a more meaningful part of the business or when you kind of have that set up to go to market?

Yes. I mean, obviously, the first part is already in market, right? So the more audience-based part of that is starting to roll now. And we'll have to come back and I think set some expectations on the performance side of that. We've got a couple of different proof of concepts that are running right now. And so I don't want to get ahead of that just yet, but -- we need to make that work.

Yes. I mean the performance side feels like a big opportunity. I feel like in CTV that's been a big area of promise where we really haven't reached that potential. Everyone talks about it, but big opportunity.

Yes. It's like these things are a lot of times, right? It's a little bit of a chicken and egg where the supply base continues to grow and evolve. So you have more sort of free ad-supported channels, which means you have a longer tail. You've got sort of more breadth of opportunity. You've got more range of CPMs as well as more opportunity to target sort of niche audiences. And then that creates opportunity for demand to come into that. And that flywheel, I think, is starting to really spin on CTV, which -- you see that in some of the other peer set companies really focusing on.

Got it. Okay. You mentioned influencers. And now you have a partnership with Meta that's become more important, maybe I'm not framing that the right way, but just talking about it. Can you talk about Meta partnership? And is this the influencer idea separate from that or aligned with that? Expand on that one.

Yes, it'd be separate from it. But I'm happy to come back to the partnership with Meta relates back to the cross-channel part of the strategy. We need to be able to drive performance where people spend time. And so the Open Web is still a really important part of that, but the other channels like CTV, like retail, like social, are a huge part of where people spend time. And so we have a great partnership with Meta. The campaign volume in that partnership has been growing at like a 30% clip. And so it's scaling really nicely. I think there are some other things that we could do with Meta. They're very partnership-friendly. So got a lot of expectations for what that could look like in the years to come.

Okay. And then you want to hit on the influencer thing also.

The influencer thing, I think, probably leads back to more affiliate or sort of opportunities of that nature. I don't have any sort of like announcements to make on that here. But it is an interesting space. And back to my point about the 3 fastest-growing spaces, you just have to follow the money and kind of look at what are the opportunities around that, that would be complementary to what we do. And so I think some of that -- some of the way that affiliate might interact with retail media and potentially with agentic make that interesting.

Okay. We're going to -- we're getting to the agentic. I had another follow-up. And now you mentioned agentic in my mind, just on blank except for thinking about GenAI. So let's shift to that. Okay. Before we get to that, other social partnerships, are you doing with any partnerships with anyone else? Is that part of the road map?

It's part of the road map. No new announcements to make yet, but definitely active discussions and hope to have other announcements in the future.

Okay. Got it. All right. GenAI, let's spend some time GenAI and agentic. I want to start with agentic commerce, in particular. You guys put out a block post a month or so ago, integrating with MCP and kind of how you're positioned there to help in this future world of where commerce might become more agentic, maybe live inside LLMs a little bit -- your commerce data kind of proprietary and really valuable in that. So maybe just kind of set the stage on what that is, what you're doing there and what the opportunity is for you guys?

Yes, sure. So -- as you set it up, right, you have to always come back to the monetization plan for agentic commerce is still in development, right? So you don't even know exactly what you're building towards. So you need to, as a product team, take a step back and think about what are the scenarios of how that might manifest. Is that going to be sponsored citations? Is that going to be affiliate? Is that going to be some kind of a rev share on product reco and work backwards from that. So what would we have to do to be ready for those opportunities when and if they come to pass.

And that's how we get into some of the MCP build-out that we've done, which is the architecture basically of how agents talk to each other. So we've got that server up and running. We've got a team around that, dedicated to it. And then even working back below that to make sure that our data house is in good order, in terms of what would flow into that, what would power it, that all the permissions are appropriate and that we're thinking about attribution and measurement sort of post activity, whatever that ends up being.

So really kind of getting ready and having dedicated teams in place. And starting to even think about what some of our own products could be, like how would that work? So if someone's hitting our API, is that a cost per call or some kind of a way that we monetize our IP flowing through that. And then how do we drive performance back to our clients as those recommendations are acted upon by us as consumers.

So really, I think a lot of getting ready, putting teams in place, putting the architecture in place, making sure the data layer is sound. And then just driving conversations with those companies to try to see if our ideas line up with their monetization ambitions, which are kept pretty close to the vest as you'd expect still.

Okay. So on that point, you're having conversations with the LLMs, with retailers, both -- all this collaboratively?

Both, right? It take different forms, yes, and you have to. They're going to own that consumer interaction. And so really falls in their core for how they're going to act on that and when. For retailers, I think it's a very different set of discussions. It's really all about what part of the shopping experience do they want to continue to own, and what are they doing from a capability standpoint to act on that? It starts with what data are they making available, like what's being scraped or crawled? And what's the front end of their e-commerce experience, like what's the agentic support for that?

And then how is sort of traffic coming into their site, where is it coming from? How is it showing up? But I mean, Criteo's got a great position in that because so much of the data that you would use in any kind of a retail agentic front end, would be the data that flows through our ad serving pipes today to serve ads, right?

It's SKU product information, copy, imagery, price, availability, all the sort of scaled up to data that we manage in an ad-serving environment. So I think retailers are still kind of figuring out what their strategy is going to be. But we're starting to prototype different approaches for how we'd support them in a couple of different scenarios.

Yes. Okay. This is all, like you said early, super fast...

It's early.

But it sounds very kind of forward thinking and position in Criteo leveraging your data assets for when this starts to become more of a reality.

Yes. Look, we -- big believer that this is -- it's a big opportunity, right? If you sort of maybe just take a step back and look at it historically, there have been these 4, 5 major waves of innovation and ad spend around this like search advertising, programmatic, paid social, retail. And Criteo has participated in two of those in a big way, right? The sort of programmatic performance wave and certainly the retail wave. And agentic is either the fifth or sixth in that cycle, and we need to be on the front end of that. So again, yes, trying to be ready and be forward thinking about how we play.

Okay. Great. What about some of the GenAI stuff for AI, GenAI that's actually happening now...

In the product?

Yes, that's -- in the products that's making contribution today. Can you talk about how you're leveraging that within your products and what you're seeing? And then I'll follow-up.

Yes, sure. Yes, that's the other -- there's really, I think, for any product company, there's maybe an ad tech especially, there's kind of 3 pillars to your AI strategy, right? There's just enterprise enablement, which is just efficiency inside the company and how you work better, more efficiently. There's the agentic commerce opportunity that we just talked about. And then we're getting to the third one, which is AI in your products. And so we are definitely driving that full speed. It shows up in products like Commerce GO! where I talked about how we've taken probably 100 different sort of settings and assumptions or things you would need to do to run a campaign and gotten that down to a pretty automated process with 5 clicks.

Audience building is another great example of that. Go back several years ago to build an audience to run campaigns against. You might need a data scientist, you'd take a couple of weeks to bring in some third-party data, you do some analysis and you develop an audience that you could activate against. And now we have prompt based interfaces inside of our tools where you just talk to the interface and generally describe the audience that you want to target and it will help you construct that real time.

And so that's the kind of enhancement that drives efficiency for the users of our products, which drives adoption, maybe if we're talking about agencies and makes them big fans of using our products. So there's a few other examples like that, that go audience building, definitely, there's some AI automation and measurement reporting. We want to make the platform as efficient and as effective as it can be.

Okay. And you mentioned this as one of the pillars. But -- so internally, in terms of efficiencies, how are you leveraging that? What are you seeing for you guys internally on the cost side?

Yes. So it's like all facets. It happens in the development teams where they are generating code with AI tools, right? So our productivity per developer is starting to really pick up speed. We see it in the sales team where we're building extensions off of our sales force implementation with their tool agent force, where we get more automation and how we find connections inside of target accounts or the way that we manage opportunities, even happens inside of the HR and finance functions, just the ability to sort of get data, analyze things quickly, it makes everybody more efficient. So we have a pretty broad-based agenda that basically covers almost every department in the company, and they've all got expectations to drive productivity into what we do.

Okay. Great. Very interesting there. Let's shift to Retail Media. Maybe if you can give us, I don't know, call it, kind of a state of the union update where Retail Media product sits today. Obviously, seen a lot of growth there. We're rolling out a few new products, real-time bidding for display, on-site video, continuing to focus off-site. What are the big drivers from here for Retail Media products? And how much is left -- you talked about it as one of the biggest -- the fastest-growing verticals within digital advertising? Like how much is left here for you guys?

Yes. So you touched on some of it. There definitely is a lot of scaling still to be done with the supply base that we have, right? So the 200-plus retailers that we represent are rolling out the new formats that we've introduced like on-site video and auction-based display. And we're getting great uptake on that. I think I talked in the earnings call about the uptake on auction-based display, and it's actually exceeded the kind of expectations that I'd set on that call. And so that drives incremental revenue for those retailers. It helps to scale our business. And it just, again, reinforces our category leadership position as the monetization platform of choice across the industry.

The types of things that we're rolling out new for next year tend to fall in a couple of different categories broadly. You want to continue to drive enhancements in relevancy. So product search and just raw efficiency of what that drives, but also how we help retailers optimize e-commerce objectives and advertising objectives on page. We call that holistic page optimization. Because you really want to optimize those 2 objectives, as an e-commerce retailer, you're trying to sell product and the gross merchandise value of those products represents the vast majority of the value of what shows up on a page. But you want to optimize advertising. Ideally, you'll actually want those things to be complementary to one another.

You want to make money on your advertising and actually have it help drive product sales. And all that has to be done in a fairly complex set of calculations that need to happen in those milliseconds while that page is loading. And so HPO, as we call it, is a set of sort of algorithms and features that allow retailers to accomplish that. And so that's a big part of our road map over the next year.

And then the other piece would be how to bring demand into the supply more efficiently. You touched on it earlier. It has been a little bit of a fragmented supply base and really some kind of a programmatic solution probably is the unlock there. So that's something that we are piloting and working on because there's still a supply-demand imbalance in that segment of the market.

So similar to HPO, we need to help retailers protect what types of bids they're going to yield against, especially in sponsored ads, so that it maintains that complementary nature to the shopping experience. And so you kind of have to figure out all the different sort of content protections and the complementary nature of products and bake that into the bid stream calculations to make that work properly. But we're working on that. And I definitely think that we will be first to market on a real scaled solution. And I think that drives to your question, the next big growth lag in that -- in Retail Media overall.

Great. Fascinating. We'll get an eye out on that. I feel like we're stopping mid conversation here, but we are out of time. Thank you so much for joining us.

Thanks, Ygal. Thanks, everybody.

Thank you.

Good morning, and welcome to Criteo's Second Quarter 2025 Earnings Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Melanie Dambre, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Criteo's Second Quarter 2025 Earnings Call. Joining us on the call today is Chief Executive Officer, Michael Komasinski; and Chief Financial Officer, Sarah Glickman, are going to share some prepared remarks. Todd Parsons, our Chief Product Officer and President, Performance Media, will join us for the Q&A session.

As usual, you will find our investor presentation on our Investor Relations website now as well as our prepared remarks and transcript after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect Criteo's judgments, assumptions and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release as well as our most recent Forms 10-K and 10-Q filed with the SEC.

We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all growth comparisons made during this call are against the same period in the prior year.

With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. Thanks for joining us today. After reversing myself of the business over the past few months, I'm encouraged by what I see. Incredibly resilient company with unique assets and enormous potential. That time has reinforced my conviction in our strategy and in the talent and innovation that will drive our next chapter.

Now I'd like to share how we're thinking about the future and positioning our business to address the opportunities ahead. Our vision is ambitious and focused on delivering full-funnel, cross-channel, self-service advertising that performs. It's anchored by a solid foundation and grounded in a clear path to execution. We're building a unified outcome-based advertising platform designed for the next decade of commerce, one that connects demand and supply, optimized for performance at every stage of the buyer journey. All of this is underpinned by a deep competitive moat coming from the combination of our unique commerce dataset, cutting-edge AI and global reach.

Starting with the demand side of our business. We're advancing intuitive, self-service solutions to attract a broad range of budgets from performance and trade marketing to national media and serve all types of buyers, including agencies, brands and SMB to advertisers.

Our strategy is built on 3 key levers to reaccelerate growth: cross channel, full funnel and self-service. First, we're meeting consumers where they are, whether that's on-site, offsite, increasingly on connected TV or soon through AI assistance and agents. Second, we're extending our full-funnel capabilities, building on the success of Commerce Audiences, which is our set of precision targeting tactics that leverage commerce data and advanced AI for customer acquisition and retention. We expect our full-funnel approach to unlock a larger share of advertiser spend as we deliver measurable outcomes from discovery to purchase. Third, we're moving towards self-service to drive scale and efficiencies. These initiatives are already expanding our serviceable market and they're key for long-term sustainable growth.

Moving to the supply side of our business. We offer retailers and traditional publishers best-in-class tools to deliver superior advertising performance and maximize yield across Retail Media and the Open Web. We have the industry's most expansive retail media footprint, giving us exclusive access to premium, global on-site inventory. Our strategy is focused on bringing programmatic flexibility into retail environments, advancing holistic page optimization and scaling curated supply with retailer data deals easily accessible through any DSP.

Together, our demand and supply capabilities create synergies that deliver better outcomes, simplify workflows and reduce the tech tacks. This convergence is already taking shape. The more we scale advertiser demand, the more value we create for media owners, the more exclusive or commerce and rich supply we bring to market, the more differentiated our performance becomes for advertisers. That flywheel is working, and we see tremendous opportunities to accelerate it.

We see momentum in our platform strategy, reflected in deeper, more strategic partnerships with leading agencies. Last month, we announced an expanded global partnership with Dentsu, marking the first time a holding company is leveraging our complete commerce media platform stack. Today, we're thrilled to announce the recent renewal and expansion of our multiyear global partnership with another major holding company now also using all of our platform's powerful commerce solutions. These milestones signal growing confidence in our unified offering.

Lastly, we're executing with discipline as we lay the foundation for sustainable, long-term growth with accelerated innovation. We're embracing the Agentic AI opportunity, which we see as an exciting new frontier for commerce where our scale and differentiated commerce data positions us to deliver real value. Wherever shopping happens, advertising inevitably follows. As AI assistance and agents change how consumers discover and decide, the ability to surface the right product at the right time becomes even more critical. And that's exactly where we come in.

Driving scalable performance in AI-powered environment starts with data, data that's high quality, structured and constantly refreshed. In commerce, that requires far more than static product listings. It means access to real-time, actionable data such as inventory levels, pricing, availability and sourcing standardized across thousands of retailers. We believe this is where Criteo has a unique and durable advantage. We bring product data and shopper journey signals at a scale and precision that differentiates us, powered by a reinforcement loop that continually improves performance. To enable this, we're developing model context protocol, or MCP, support for delivering product and shopper information to AI agents in a way that is real time, structured and controlled.

Trump's based recommendations are a natural extension of our strategy, and we're actively engaging with LLM vendors to explore how to best shape the next wave of consumer interaction.

We're also advancing how audiences are built and activated as we're moving toward real-time, intelligent audience creation that eliminates the friction of traditional workflows. Our goal is to enable brands and agencies to generate the right audience instantly without delays from manual queries or data handoffs. At the same time, we're expanding where and how media can be activated as we're embedding marketing capabilities into new environments, including agent interfaces. Ultimately, we're building tools for marketplaces and merchant networks to run full-funnel, cross-channel campaigns with simplicity and scale.

Our envision in the impact, we're realigning the organization to sharpen our focus and align execution with opportunity. Our business has strong fundamentals, and we're ambitious in our long-term outlook. We're renewing our focus on performance media with an expanded market approach and accelerated AI innovation to drive our next phase of growth. We're also focused on unlocking the next generation of demand to realize Retail Media's full potential. Our new structure consolidates product, R&D and commercial strategy under 2 seasoned leaders who will take on expanded executive roles. Todd Parsons, as Chief Product Officer and President, Performance Media; and Sherry Smith, as President, Retail Media. This streamlined organization will help us operate with greater agility, clearer accountability and set the stage for long-term sustainable growth.

While we believe it will take a few quarters to reaccelerate growth, we have a world-class team to execute against our strategy, and we're confident the foundations we're putting in place to bring multiyear benefits.

Now turning to our second quarter performance. We delivered solid results, reflecting our team's strong execution, starting with Performance Media. We're encouraged by the sequential improvement in our growth compared to Q1. We're building for durable growth and laying the groundwork for several multiyear growth opportunities that we believe will accelerate as we scale. Commerce Go continues to gain momentum as we simplify how advertisers plan, buy and optimize across formats and channels. Powered by AI, at Commerce Go automates decisions around audiences, channels and creative, driving better results and lowering our cost to serve. Campaign volume grew 200% quarter-over-quarter, largely driven by increasing adoption from SMB advertisers and lower churn. We see Commerce Go as a multiyear revenue growth driver, and we're focused on scaling this momentum by implementing an end-to-end self-service streamlined workflow in the coming quarters.

As part of our cross-channel strategy, we expanded our social capabilities last quarter, enabling advertisers to activate Facebook and Instagram inventory at the SKU level for global commerce audience campaigns. We have good traction with spend on social campaigns, growing nearly 30% sequentially this quarter. As we expand our full-funnel capabilities, we're leaning into brand performance and early results in CTV show strong potential as a powerful performance marketing channel. A great example is our recent partnership with Jewelry Television. We delivered CTV campaigns that drove 93% new users, a 20% increase in average order value and more than doubled qualified site visits, clearly demonstrating CCV's ability to deliver measurable outcomes at scale.

In addition, we recently announced a new partnership with WPP Media to reach high-intent shoppers at scale across premium connected TV inventory, starting with Roku, Samsung and Scripps. We're making it easier for advertisers to run audience-led CTV campaigns using curated DLIDs with Commerce Grid, our supply side platform. By combining rich commerce and identity data, we're helping them reach the right audiences and drive measurable results from initial exposure to purchase.

Overall, our business remains resilient, supported by diversification across markets, verticals and products. We experienced notable strength in APAC again this quarter, largely led by full-funnel activation and the success of our marketplace offering, which allows marketplaces to offer their merchants, Criteo's targeting and retargeting tools. We continue to gain market share in travel, up 28% in the second quarter, driven by continued momentum in EMEA and in the Americas. A great example of the measurable impact of our platform is Itaka, Poland's leading travel brand, by activating full-funnel reach. With cross-channel precision across web, app and meta, Itaka achieved a 5x return on ad spend and nearly 5x higher click-through rate.

A key differentiator for us is our Commerce Grid's supply side platform. It uniquely enables access to commerce audiences with full DSP interoperability and provides the only programmatic path to Retail Media at scale. It's a growing contributor to our business as agencies and brands ramp up investments to activate commerce audience deals and several leading retailers now use it to power off-site monetization. Today, over 30% of commerce growth inventory buys run through our SSP with meaningful upside as adoption continues to grow in the years ahead. All these synergies across our platform are driving more scale, more flexibility and more value for our partners.

Moving on to Retail Media, which is a long-term growth engine and differentiator for Criteo. As this category evolves, retailers are looking for strategic partners who bring global scale, flexible technology and deep connections to brand and agency demand. Criteo delivers on all fronts, which enables us to keep adding new retailers and new brands while outpacing market spend growth quarter after quarter.

We continue to win RFPs, including returning clients, and we're pleased with the traction of our new product launches. After launching shoppable video ads in April, we launched our auction-based display technology in June. Retailer adoption is ramping up rapidly with 16 retailers already live across all regions in just a month, and this number is expected to double in the coming weeks. Auction-based display is a great example of how we're making Retail Media supply easier to buy at scale. It's purpose-built to bring programmatic flexibility to retail environments, giving retailers more robust media capabilities like biddable trading optionality, flexible pricing, efficient workflows and advanced controls for ad relevancy. It complements reservation-based deals to give retailers more flexibility and access to national media budgets.

Today, on-site display makes up less than 10% of our Retail Media business and represents approximately 30% to 40% of our clients' media mix, which shows significant growth potential.

We drove close to $400 million in media spend this quarter, up 20% year-over-year with over 4,000 brands globally. We continue to see substantial growth from our multiyear partnerships with leading agencies, well above market growth rates, and we're incorporating new demand sources. Our new partnership with Miracle is expected to unlock demand from mid- to long-tail advertisers. Together with Miracle, we enable third-party sellers to easily launch campaigns, boosting product variety without adding operational complexity to retailers. We're deepening agency and API partnerships and expect to incorporate more demand sources moving forward, including through Microsoft, which is progressing well and other partnerships.

We're expanding globally with new wins across all regions, including Thermo Fisher, BJ's Wholesale Club, and Grocers Weis Markets, Winn-Dixie and Harvey supermarkets via our digital commerce partner, Mercato in the U.S.

In closing, we're confident in the strength of our business and the momentum we're driving. We're operating at the intersection of powerful market trends with the assets, capabilities and strategy to lead and create lasting value for our shareholders.

With that, I'll hand it over to Sarah, who will provide more details on our financial results and our outlook.

Thank you, Michael, and good morning, everyone. We delivered strong Q2 results with significant operating leverage enabled by top line growth and disciplined cost management. Revenue was $483 million, and contribution ex TAC increased to $292 million. This includes the year-over-year tailwind from foreign currencies of $6 million. At constant currency, Q2 contribution ex TAC grew by 7% year-over-year, representing growth of 21% on a 2-year stack basis.

As previously communicated, we experienced a slow start to the quarter. We observed better macro trends in May, and the environment has remained relatively stable since. Client retention remains high at close to 90%.

In Performance Media, revenue was $422 million and contribution ex TAC was $232 million, up 6% at constant currency or 17% on a 2-year stack basis.

We leverage our large-scale commerce data and AI-powered audience modeling technology to find in-market shoppers. We saw continued strong growth for commerce audiences and retail getting grew at a mid-single-digit rate. We benefited from further AI-driven performance enhancements despite lapping a tough comparison with the significant AI improvements implemented last year. The growth of our commerce grid SSP is primarily driven by the traction of commerce audiences packaged with publisher inventory to deliver highly targeted campaigns.

Lastly, Tech Services continued to be negatively impacted by lower spend by a large client in our media trading marketplace. Overall, we benefit from a global diversified client base. By region, we delivered high single-digit growth in media spend in Asia Pac and low single-digit growth in EMEA while we saw lower budgets in the U.S. By vertical travel remains our fastest-growing vertical, up 28%, followed by classifieds and marketplaces performing well. Broadly, there was lower spending in retail, including fashion, which was down 6%.

In Retail Media, revenue was $61 million, and contribution ex TAC grew 11% at constant currency to $60 million, in line with our expectations, that's a 35% increase on a 2-year stack. As a reminder, quarter-over-quarter trends reflect lapping a tough comparison on TACs in January. Our growth was driven by continued strength in Retail Media on-site and traction for off-site campaigns. We benefit from the contribution of newly signed retailers and growth from existing clients remain strong, with same retailer contribution ex TAC retention at 112%.

We saw continued expansion with CPG and smaller brands and we onboarded 200 new brands this quarter. Our media spend in Q2 grew 20% year-over-year. Our bulk market is demonstrating share gains. Momentum with our agency partners remain strong, and our 4,000 global brands are prioritizing Retail Media as a key channel, given its close connection to the point of sale. We continue to win new retailers globally, including former Microsoft advertising retailers.

We delivered adjusted EBITDA of $89 million in Q2 2025, reflecting strong operational leverage from top line growth and cost discipline, planned growth investments, including investments in our people and marketing events and lower-than-expected social charges for RSUs.

Non-GAAP operating expenses increased to $175 million in Q2, including product investments, marketing events like Cannes Lions and our long planned in-person company-wide event, partially offset by our rigor on resource allocation. We are building on our strong operational fitness to enable greater scale and efficiency. This means disciplined investments in growth areas, further optimization of our operating model, including the expansion of our lower-cost hub in India and unlocking productivity gains through Commerce Go and AI-driven tools.

Moving down the P&L. Depreciation and amortization increased to $36 million in Q2 2025, which includes approximately $9 million, largely related to accelerated amortization of privity sandbox assets.

Equity-related compensation expense was $22 million. Our income from operations was $30 million and our net income was $23 million in Q2 2025. Our weighted average diluted share count was 55.1 million, which resulted in diluted earnings per share of $0.39. Our adjusted diluted EPS was $0.92 in Q2 2025.

As expected, free cash flow was negative by $36 million in Q2, reflecting seasonality and payment of 2024 income taxes. Our trailing 12-month free cash flow was $194 million. We anticipate positive free cash flow generation in the second half of the year and a free cash flow conversion rate of above 45% of adjusted EBITDA, before any nonrecurring items this year.

We benefit from a strong financial position and pristine balance sheet with solid cash generation and no long-term debt. We had 100 -- sorry, $746 million in total liquidity as at the end of June, which gives us significant financial flexibility to execute on our strategy and enable disciplined and balanced our capital allocation. Our priorities are to invest in high ROI organic investments and value-enhancing acquisitions and to return capital to shareholders via our share buyback program. We are confident in our business strategy, and we are committed to driving shareholder value. We deployed $48 million for share repurchases for this quarter, which included the repurchase of 1.7 million shares. Year-to-date, we have allocated $104 million to share repurchases and we have $115 million remaining in our Board share buyback authorization as at the end of June.

Turning to our financial outlook, which reflects our expectations as of today, July 30, 2025. We have raised our guidance for the year while keeping a prudent approach, given the remaining uncertainties in the macro environment and potentially lower ad budgets in discretionary categories. For 2025, we now expect contribution ex TAC to grow 3% to 4% year-over-year at constant currency with growth in each of our segments.

We now estimate ForEx changes to drive a positive year-over-year impact of about $1 million to $3 million on contribution ex TAC for the full year.

In Performance Media, we now expect contribution ex TAC to be up mid-single digits in 2025, raised from our prior expectation of low single-digit growth. This reflects our solid ex performance in the first half of the year, continued traction with advertisers to drive performance throughout the buyer journey and the continued ramp-up of Commerce Go.

In Retail Media, our growth projection for 2025 remains unchanged and is projected to be in the low to mid-single digits range at constant currency. As previously communicated, this includes the unchanged negative impact related to specific client dynamics mostly affecting Q4 2025. Excluding these 2 clients, our underlying growth for 2025 is expected to be in the ballpark of 20%.

Overall, we continue to anticipate an adjusted EBITDA margin of approximately 33% to 34% for 2025. We expect strong margins and cash flow generation while continuing to invest in the growth of our commerce media platform, including investments in Agentic AI innovation. We believe these investments will position us for continued top line growth and strong cash flow generation for the coming years.

We expect a normalized tax rate of 22% to 27% under the current rules. Our overall CapEx is expected to be approximately $100 million to $110 million.

For Q3 2025, we expect contribution ex TAC of $277 million to $283 million, up 5% to 7% at constant currency. Our range takes into account uncertainty in the macro environment. We estimate ForEx changes to have a minimal year-over-year impact from contribution to ex TAC in Q3. We expect adjusted EBITDA between $81 million and $87 million. This reflects continued high ROI growth investments in our platform and foreign exchange rate headwind for our European cost base. We anticipate a slower pace of hiring and less discretionary spend for the remainder of the year.

In closing, our strong Q2 results demonstrate the strength of our platform and resilience of our business model. We expect to continue to deliver growth, healthy profitability and solid cash generation to drive shareholder value. We're confident in our strategy and uniquely positioned with the commerce data that powers our AI-driven performance and relevance at scale across the buyer journey.

And with that, I'll turn it over to the operator to begin the Q&A session.

[Operator Instructions] And our first question comes from Mark Kelley with Stifel.

I just had a couple on the Agentic AI product that you highlighted on the call and announced a handful of weeks ago. I guess the first one would be, what's the right way to think about monetization or I guess, the payment mechanism for a product like that? That's the first one.

And then I guess as consumers start to use agents more frequently in the coming years, I guess, in your mind, is that a negative for Retail Media as we know it today and some of those budgets maybe flow towards this Agentic AI product? Any thoughts there would be really helpful.

Great. Thanks for the question. I'll start with a couple of quick thoughts, and then I'll hand it over to Todd to take those. Look, the -- we definitely look at Agentic as a big opportunity for Criteo. And again, that perspective is grounded in the unique data assets that we have. The way that the money would flow into products like that, I mean, it's still being determined, right? The LLM vendors have yet to declare monetization strategies. Those could range from affiliate programs to sponsored citations or even commerce transactions, product recommendation inside their platform. So there's quite a range of options of what -- how that could evolve.

So our sort of commercial models for those would vary from calls to our API, could be on a CPM or CPC basis. So I think there's quite a few varieties that we're looking at. But we're confident that we really bring a pretty unique capability to those discussions.

I'll let Todd comment a little more on that in the retail question as well.

Yes. Let me start with the retail question, Mark. So right now, obviously, we observe traffic globally. And what we're seeing more of is AI assistance being used for discovery and less for conversion, which is good for the time being. What Michael said is true, we're setting up our back end, meaning our product recommendation capabilities, our audience capabilities and our full-funnel capabilities to be called by agents through MCP in order for us to be able to monetize in whatever the selected or winning hand ends up being.

As Michael said, and we know this from partnering with and speaking with all of the major players in the space, the prevailing pricing model has not been defined. So our job from a product perspective is to make sure that our MCP setup is flexible enough to accommodate that winning hand. And so far, we haven't seen it. But what we have seen is tremendous interest in our partners getting to product recommendation, getting to commerce audiences and getting the full-funnel, cross-channel campaign setup through MCP. And we think being very concrete about those use cases will help us get to a pricing model very quickly that can be tailored to each individual partner. But the setup is most important. And just to emphasize Michael's point about our data and what we've been doing to structure it for years being useful in this new environment as being job one.

And your next question comes from Ygal Arounian with Citi.

Just a follow-up on that Agentic AI and Agentic Commerce. Just so I understand, are your clients, retailers, brands, I think you mentioned the LLMs, are they actively spending on this or working with you guys on this? Like where are we at and the opportunity to monetize this, yes?

Thanks for the question. Again, I'll just tee this up and then let Todd expand, it is early days in these discussions. I think what you see with retailers, as an example, is them really thinking about what their Agentic front end looks like and wanting to make sure that they can control sort of the data flows and their IP and that they retain a position in the shopper journey that keeps them relevant. As said very directly, we definitely do not want to be disintermediated and turned into online fulfillment centers.

So I definitely see a lot of discussion there about protecting data, setting up Agentic front ends and wanting to control and add value to the shopping experience. When it comes to brands, I think they're all sort of looking at sort of the changes in search behavior, and wanting to make sure that they understand how to be discovered. And I'll let Todd sort of expand on the rest of that.

Yes. So whether it's a branded agent that sits on a retailer or a marketplace that we partner with or whether it's an LLM that is trying to do product recommendation, we're setting up to serve either or -- and go beyond. So everything Michael said is true. Brands need discoverability in this new workflow for consumers. We see a lot of organic traffic coming through agents, and it varies. It varies where they come from. But the setup for us is that we can serve all agents regardless of where they're domiciled. And that's exciting because whether a consumer chooses a retailer's agent, a brand's agent or an LLM, we're there with a product recommendation and a way to monetize that discovery. And later on, the conversion that we expect to result.

Okay. That's fascinating topic. I'm sure there'll be a lot more on that. And then I wanted to dig a little bit deeper into the broader agency relationships as well. You called out the one with Dentsu and your also seems like an opportunity, that's still pretty early. As you go to these agencies and holdcos and kind of move to the broader set of products that you're pitching, right, like you did with Dentsu, can you talk about that motion, like the sales motion, the go-to-market motion and the competitive differentiation of what you're offering now is the full end-to-end suite? And is there any way to help frame how this is flowing through the financials and what the impact is on that front?

Sure. Thanks for the question. Happy to start this and have Sarah give a little extra color on the flow-through. We -- in terms of the go-to-market, which I think is a great way to ask that, we start those conversations at the highest level and really take a look at what is the sort of partnership setup with the agency. And I always say, it's really 3 things, right? Do we have a commercial agreement that creates shared economics for both parties? Do we have a data integration strategy where our data can flow to theirs or be matched to create value? And do we have a co-development strategy where we are building tools that help our agency partners differentiate themselves around our services? So it's always for me the 3-legged stool of how we approach an agency relationship.

Specifically on products, we're seeing really good traction with the bundling of the commerce growth platform, our performance offering, Commerce Max, our Retail Media DSP -- and sorry, and our Commerce Grid, our SSP, right, where agencies oftentimes want to go direct to curated audience buys. And it's really bundling those 3 things together. And then we really get deep into the agency as well in terms of training, how we provide customer service. We even sometimes will co-locate people on site, because really what we're trying to do is drive adoption at the user level and make sure that our tools are the preferred choice for the people that are hands on keyboard using them. That's what gives us greater share of wallet inside of those agencies once we've created the partnership or commercial framework that frames it. Sarah?

Yes. I mean in terms of how the money flows through our financials effectively, it goes to the product that it relates to, so Retail Media would obviously be reported in Retail Media, Performance Media and for media, I guess in terms of the growth, I mean, this is the fastest-growing part of our business. The deals that we just announced are going -- are spending across the entire platform, as Michael said. For example, in Retail Media, we had about 38% of our business in 2025 coming from agencies versus 30% the year before. So really strong traction across the board in -- now we've got to get the dollars through, which we see very much so with the [indiscernible] front end as well. That's been well adopted.

Next question comes from Justin Patterson with KeyBanc.

Great. I wanted to hit on CTV a little bit. The partnership looked pretty interesting that was announced yesterday. I'm just curious how you think the time line of ramping up this channel and providing value to advertisers as well to take there?

Yes. Thanks, Justin. Definitely excited to talk about this. We had a couple of, I think, great pieces of content in this earnings cycle around case study with Jewelry Television, which really demonstrates the efficacy of performance in CTV. And then as you referenced in the question, the partnership with WPP Media. I would say, look, we're at the early stages still of assessing how CTV fits for us and really how we build connections, I would say, between the living room and other channels. But the partnership with WPP Media flows through our Commerce Grid SSP, and we're able to create those curated DLIDs that enable advertisers to connect essentially commerce for CTV strategies, and it's quite flexible. So it's with the DSP of their choice, which I think that the agencies like because it gives them flexibility to drive those solutions across clients that have embedded DSPs on the front end.

So I would say it's early days. We continue to make traction with partnerships like the one announced and some others that we're working on. And it continues to be a more meaningful mix of our supply base overall. And I think it will continue to ramp and accelerate as we go into 2016.

Your next question comes from Alec Brondolo with Wells Fargo.

Yes. We know that a significant percent of Amazon's retail media business, just with longer tail marketplace sellers. Could you maybe just walk us through how the Miracle deal helps you penetrate that market?

And then maybe a second question, if I could. After the 2 customer challenges in Retail Media last quarter, I think there's a lot of angst in the investor community that it might beget future issues. How confident are you that you're going to be able to retain the rest of the retailer base? And can you provide an update on the retailer count? I think it was 225 at the end of last year.

Sure. I'm happy to take those. Look, yes, the Miracle partnership is super exciting. It's -- as we've described in the release, it's -- Miracle is one of the real fastest-growing providers of marketplace support, which is also one of the big secular trends inside of Retail Media as retailers look to add third-party products and demand to their sites. So it's a really good match, fast-growing category with one of the fastest-growing providers in the space.

And really, we're there to unlock demand from third-party sellers in the mid- to long tail. For Miracle, it gives them a value proposition to allow them to drive demand generation with targeting and retargeting tools from Criteo in like a really easy setup. It really enhances their value proposition quite a bit. And so -- and obviously, it's great for Criteo because it drives demand and usage of our platform. So it's quite a mutually beneficial partnership.

And Miracle, I think, is well competitively positioned against Amazon because, again, we have the thesis that many retailers are not going to work with Amazon, whether it's in marketplace support Retail Media or anything else, including AWS support. And so it really -- I think it's a great fit with our client base, especially in that mid- to long tail of retailer sets.

The second question, I think, you had was on Retail Media, and Sarah can comment a little bit on how we're thinking about that.

Yes. Well, I think the question is on the number of retailer and unless I missed part of the question. So yes, I mean, we don't keep updating the numbers, but just to update the number. We now have -- we now partner with over 230 retailers. And we did roll off some less possible players over the last year that represented less than 2% of our CXT. So just to size that.

I would say what's important here is that for those retailers, we have a sizable base in the U.S. We have -- we partner with 70% of the top 30 retailers in the U.S. and 50% of the top 30 retailers in Europe. So we feel very good about being complementary to Amazon and continuing to drive our footprint across globally and across Europe as well as Asia Pac. And then we did add some of the new Microsoft partnerships this quarter as we disclosed as well.

Next question comes from Thomas White with D.A. Davidson.

Just a follow-up on CTV. It seems like you guys are talking about the potential for CTV to be more of a performance-based kind of accountable medium. Can you maybe just talk a little bit about what is it about your offering in that channel that positions you to maybe tracking to a space where there are already some decently entrenched competitors, specifically around that angle of sort of performance-based or making it more accountable?

Thanks, Thomas. I'll have Todd take this one.

Thomas, I think it's pretty simple. CTV has shown a huge amount of promise for awareness advertising and for discovery -- product discovery. But it's been very difficult for advertisers to tie their advertising to sales lift or to a better cost per order. And that's something that we do quite well. So when you think about our unique value proposition relative to CTV and what Michael said before, which is there's a brand performance sort of vail on that. That's what makes us special.

For us to be able to show incremental return on ad spend, for us to show sales lift organically is coming from those CTV sessions is a pretty special thing. And so that's the way we enter the market. And when you think about the buyer journey and we talk about discovery advertising at the top of the funnel being so important CTV gives us a huge swath of surfaces to reach consumers and then to tie that reach back to incremental sales lift, CPO, et cetera.

Your next question comes from Richard Kramer with Arete Research.

Michael, we've seen total activated media spend around $1 billion a quarter for the past 4 quarters with very limited growth. Can you parse out what the lower ad tech trading portion of that might explain that? And more importantly, can you speak to the drivers that might bring a step-up in total activated media. Do the 2 announced holdco deals with Dentsu and WPP include any firm spending commitments? Or would you open up retail media SSP inventory solutions to third-party DSPs.

Thanks, Richard. Yes, definitely as activated media -- growing activated media spend really is a top priority. So it's something that we're very focused on. we believe that the strategy for Performance Media, right, it's full-funnel, cross-channel, self-service. Is really the key to reverse that trend of that being flattish for the last couple of years. And we're really focused on that. Obviously, we have great top line media growth with Retail Media. And then there has been a little bit of a drag from our ad tech services units, which Sarah could expand on as needed.

The agreements with agencies typically are an endeavor or a commit. And they definitely do have sort of volume expectations. I think it varies a little bit agency to agency, but certainly, there are numbers that are talked about in terms of what we're mutually trying to drive towards. And look, I really think it comes back to the performance products. So driving Commerce Go, continuing to build into additional channels, developing the mid- and upper funnel offerings and that's what's going to start bringing in an increase in activated media spend to complement the strong growth that we've had in CXT over the last couple of years, but it's definitely a top priority for the management team.

And then a quick -- yes, please go ahead.

Sorry, just to unpack. I mean adtech services was down by, I would say, double-digit millions kind of quite significantly year-on-year, and that was due to -- preference from the largest ad tech player. Retail media spend is up 20%. It's significantly up in the U.S. We did have a marketplace in Europe that had, I would say, high spend but very low CXT, and that's -- so there's some change in the numbers there in Retail Media. But overall, fee growth is stable, but grower we want it to grow and with good CPMs on the other side. So we feel good about the focus on the acceleration of growth for Performance Media segment. Ad tech services has been impacted by lower traffic.

And maybe a quick follow-up for Sarah. There's obviously intense competition for AI and engineering talent. Can you talk about your strategy for attracting and retaining that talent? And do you expect it could impact future margins to ensure that you're able to staff up to address your AI opportunities?

I think Michael dived, but maybe at a side we operated. We attracted, first of all, fantastic for the new promotions that we just announced. So that gives focus, including on the product side. Second, we announced Will, who is going to be the head of our Product Activation team. And that's, I would say, a fantastic hire. So I'm really excited about that.

We have a really strong base in Paris of, I would say, the best engineering talent areas in AI in our Paris Hub, and we continue to have massive amounts of resumes coming in for people that want to work on in Criteo. We actually have 60 new engineers in the seats.

I will add teams love working at Criteo. So more broadly. We have really strong retention of our engineering talent, including in those very high so after areas, and we do interesting work, and we have fun as well.

Your next question comes from Doug Anmuth with JPMorgan.

This is Maggie Hoffman on for Doug. I just had 2 quick ones. So one on macro. Is there any more color you can provide on what you're seeing across budgets. I know you mentioned lower retail and some lower U.S. ad budgets as well. So just any additional color there would be great.

And then more so on the Microsoft partnership. I know you mentioned some progress there. So curious if there's anything else you can share across retailer wins or what's left to do with the demand integration.

Yes, I mean, just to share more color on the verticals. So we talked about 28% increase in travel on that, obviously, I'd say, quarter-after-quarter significant increases. I classified for us a really good vertical. That's actually up on activated media spend about just under 30% year-on-year. And where we see challenges in our bigger sectors, we certainly see CPG being down just broadly kind of depending on the category. Food and grocery slightly down to tech being down by 8%. And then nonfood actually more discretionary items down double digit, 20-plus percent in some categories.

Home & Garden is down about 12%. And then in terms of areas that we're seeing really good traction, yes, travel and classifieds would be the key ones. So the benefit of our business is we're diversified globally. And so there's obviously very different stories to that, depending on the region and depending on the cyber customers. Department stores in the U.S. and fashion are the 2 categories where slightly more challenged.

I can jump in on the Microsoft partnership. Obviously, Microsoft has been a great multiyear partner for us. And this is just really expanding the envelope of that. As far as Retail Media is concerned, we're continuing to progress well on both fronts. On the supply side, we're preparing the launch of several important retailers across regions in the coming months, and we talked about a couple of those wins.

On the demand side, we are tracking, as we talked about before, to get the first real time set up broadly in Retail Media, we hope by the end of the year. And so we're working together on that. It is a complicated technical challenge to meet retailers' requirements for brand safety for latency and the variety of controls that they operate with today. But again, we're making great progress with that demand solution, which should be a real unlock for our Retail Media network partners.

Your next question comes from Mark Zgutowicz with Benchmark Company.

Two quick questions. Just on Retail Media broadly, a lot of conjecture out there in terms of the pace of growth. And I'm just hoping maybe you could update us on key drivers over the next 12 months in terms of your core CPG and retail versus commerce media -- newer commerce media verticals, that is.

And then on the standardization front, perhaps an update when that visually could become perhaps a tailwind versus a headwind and for retail media growth? And then separately, just hoping you could maybe quantify initial demand that you're seeing for auction-based display and on-site video and whether either will have a noticeable contribution to second half revenue?

Yes, Mark, happy to get this started. Look, so the outlook for Retail Media growth over the next 12 months, right, well, we continue to be driven, I'd say, multifold. One, we continue to win new suppliers like the ones we announced here in call like BJ's, Thermo Fisher, et cetera, and we have other announcements pending for next quarter. It will come through the scaling of some of the new products that we've launched, like the on-site video product that we launched in April and the programmatic display product that we launched in June.

Specifically to your question on programmatic display, that's a great uptake, right? We have 16 retailers live, and we think that that's going to double in the coming weeks. So it's really taking off. And I think we mentioned in the prepared remarks, the gap between the current spend level on our product versus what it is as a total mix for retailers, which really shows the kind of the opportunity that we're chasing with scaling that product. And so that will continue to ramp up over the next 12 months, both of those. I'd say the biggest and longer-term one that will probably be more of a 2026 growth driver we'll be what Todd was talking about when he answered the Microsoft question, which is as we start to develop the technology to unlock real open RTB for retail supply.

I think it's really like the next leg of growth, not just for Criteo, but for the entire industry. And we're really looking forward to leading the charge on that. Criteo will absolutely be at the front of developing that capability for the industry. And again, it will scale because it will improve fill rates and really normalizes what is still a lot of demand that doesn't make its way into Retail Media networks even today at the stage of maturity that we've achieved.

And just in terms of activated media spend, we do see that there is some impact with certain retailers that are more mature in our base, there's less growth. All the factors that Michael spoke about are all key drivers for our growth in media spend. So we're seeing traction, I would say, across the board. Some slower start-ups of new retailers that have been signed. So that will be more a '26 driver versus '25. And then continued traction on, especially on large brand spend in Retail Media in North America.

Your next question comes from Brian Pitz with BMO Capital Markets.

Any additional color based on commentary from your advertisers? On how they're really thinking about tariffs in the second half and on holiday demand? So -- let's say, we settle at 15% across the board. Will that be a positive or negative? Where do they kind of think about getting more bullish?

And then separately, I believe same retailer contribution ex TAC for Retail Media was 112%. That was actually down a bit from 120% last quarter. If you consider the expected second half churn, how are you thinking about the durability of same retailer contribution ex TAC for the rest of the year?

Yes. So in terms of our outlook, I would say we've been prudent in our outlook. We do see the color related to Americas versus Europe. We do not have a significant -- as you know, China based, it's very, very small for us, and we tend to focus more on in-country larger brands. We do see some impact for the tariffs in the U.S. more for consumer sentiment versus the impact of tariffs or there is some impact clearly on certain categories and certain retailers, largely on the Performance Media side.

In terms of same retail CXT, yes, it's still strong. And we obviously have some tougher comps on that as well, and we expect that to continue to grow with our existing base and then adding the new retailers over time.

Thank you, Michael, Sarah and Todd. That concludes our call for today. Thanks again, everyone, for joining. If you have any follow-up questions, the Investor Relations team is available to assist. Have a great day.

The conference has now concluded. Thank you so much for attending today's presentation. You may now disconnect.