Criteo SA Sponsored ADR Stock

All right. Great. Thank you, everybody. Let's get started. My name is Ron Josey, I cover -- lead coverage the Internet sector here at Citi. And very happy to have with us today Michael Komasinski -- I butchered your last name.

Pretty clear.

Was that good? Okay. Komasinski.

Yes. So I wasn't going to say new CEO, but not new CEO. We're 18 months in.

Criteo, I think we all know what Criteo does, but bottom line is has one of the largest identity graphs out there, I believe, and leverages this data set and shopper graphs to basically help to drive greater sales for retailers and advertisers full stop.

With that, I'll let you do a better job of explaining this directly. But Michael, I just want to say thank you for joining us. And why don't we kick off specifically just talk to us you're 18 months in the CEO role. A lot is changing in the industry, a lot's changing at Criteo. And so maybe quickly tell us about Criteo the business. Most people know already, but then sort of where are you focused here as we move forward in this new world of agentic advertising?

Sure. So I'd start like at the highest level. So Criteo is a commerce intelligence platform, right? And we picked those two words like very purposefully. We believe that commerce really is the organizing construct for advertising and marketing in a world where everything is shoppable and biddable. And then the intelligence part comes in, like how do you allocate media investment optimally across what is an increasingly fragmented ecosystem of places where people spend time, where they shop, where they make decisions. So really, the future is about how do you drive commerce outcomes in a more complicated ecosystem in a very sort of AI-driven and highly automated way. So that's kind of the set of the north stars or the things that we believe in, I think, at the highest level.

How the company actually accomplishes that, I'll try not to get too complicated with it. But -- we have several different data sets that we use to drive that decision-making of where to place optimal client investment. So you mentioned one of them.

The identity graph, it is the third largest identity graph in the world. We have the third largest product catalog in the world. We are incredibly good at ingesting 25 billion raw SKUs, some updated as frequently as hourly and then processing that -- and normalizing that data set into a SKU catalog of about 5 billion SKUs globally.

Michael tell you about the third largest product catalog in the world? And you mentioned 25 billion?

25 billion is the raw SKU count that we ingest on a regular basis, yes. And so what you need to do is you need to be able to normalize that down to something that's usable so that this vacuum cleaner that's got just a slightly different aspect is the same thing as that vacuum cleaner and you normalize those two things together basically.

When you combine identity with product catalog with then the shopper graph, which is the events timetable of what do people browse, what do they consider, what do they do on site. And how do the learnings from that help you determine where to place the next best or the next investment or the impression to buy, that's basically the three data sets that combine to enable that. So without getting sort of too deep on the science.

And those data sets are reinforced with the client relationships that we have. So through the ability to ingest product information, availability and landing activity on site, that becomes a self-reinforcing loop that makes our performance better and better over time.

So if I keep going with a little bit of the lead into the question, the focus areas for the company at the highest level are really threefold. One, to innovate and lead the industry in agent commerce. And the kind of two interesting use cases there would be retailers developing new agentic shopping services and how do we power those for them, as well as true pure-play agentic channels like paid advertising on OpenAI, where we're their leading ad tech partner globally.

Second priority would be continuing to innovate and maintain our industry leadership in the fast-growing Retail Media channel, and we can come back to that in some detail.

And the third would be to reenergize our Performance Media segment by making it more cross channel, which enables us to conquest new budgets in the funnel. So we sometimes refer to that as the full funnel cross-channel strategy. I think if we execute on Agentic Retail Media leadership and reenergizing Performance Media, then this is a really exciting business over the next couple of years.

I want to sort of follow up on that last one on reenergizing Performance Media. I think you said making it cross-channel, full funnel. Understood the vision where are we coming from? So are we not doing that prior?

No. But for good reason, right? So if you need to back up a couple of years, like back into maybe kind of 2023, 2024 before I arrived. The company would have been very focused on addressability and essentially Google's privacy sandbox effort. So that would have consumed a lot of attention in that time frame, right? And rightfully so.

So it was not as much product innovation going on at that time. And so I was fortunate to arrive at Criteo at the time that I did because about 2 months after I joined, Google backtracked on the privacy sandbox proposal. We essentially have now an addressability landscape that is more or less unchanged from where it was 2 or 3 years ago. And I think also the regulatory environment and other factors suggest that, that is a very stable foundation to build on. And so I wanted to embark on a more growth-oriented agenda for that segment by pursuing the full funnel cross-channel strategy. So start to innovate channel connections, again, which enables us to conquest mid- or even upper funnel budgets, which is how you grow a performance platform.

Yes. Super helpful. I have more questions on this big three. But before I do, I wanted to talk a little bit about the leadership team. I think Connor, who is in the audience, just announced CFO, you're in the market for a new Chief Product Officer, if I'm not mistaken. So talk to us about where we are from a leadership team, and then we'll go from there.

Yes, definitely. So I mean, I think, first of all, it's worth reminding people like -- we've got an incredibly strong bench in the company across all the different disciplines. And then we've got a very rigorous and methodical approach to cultivating our succession plans and then ensuring smooth transitions when it's time to do that.

And so Connor coming into the CFO role is a good example of that. He's been with the company for 8 years, had been on the succession plan for some time, and really has the perfect background for what we need as a company right now. Connor's got a strategy background, ran our partnerships group, understands the ecosystem, I think, is better than almost anyone I know in the industry.

And with 8 years in the company has got a lot of familiarity with how we work and how we operate, but also has some deep opinions on things that we can change. And so a fresh perspective, I think, is always a good thing, and this was a very methodical, well-thought-out transition and with a candidate that hits the ground running 60 miles an hour out of the gate.

And then on the Chief Product Officer side, Todd did a great job in his 6 years at Criteo in terms of navigating the privacy sandbox situation that I talked about. And then really being the architect of the full-funnel, cross-channel self-service strategy that we are going to continue on.

Todd had a long-time ambition to be the CEO of a company and has a fantastic opportunity to do that. So leaves us with a great bench of talent that he's brought in and is a very natural progression to his personal career journey. We wish him well on that.

And so we currently have our senior product team reporting into Diarmuid Gill, our Chief Technology Officer. And we're in the hunt for a new Chief Product Officer with a great bench of talent at the next level down. So don't need to change the strategy in any big way and have a great bench and a good interim set up. So I'm very comfortable with where we are.

Perfect. And that dovetails into the three key focus areas don't need to change the strategy. You have the tools for Agentic Retail Media.

Correct. I mean we're always reacting and pivoting and improving how we scale those strategies. But Agentic, Retail, Performance, nothing changes with that strategy. And I think the major elements within each of those?

Perfect. I want to get into the data set and agentic commerce here, particularly around your partnership. But before we do, just to level set to us post 2Q, there was a little bit of a budget reset, I feel, around some of your largest clients in Performance Media. Talk to us about the visibility into the business.

I think we saw qualified pipelines are actually up quite nicely. I think we saw U.S. new business revenue up quite nicely. But then we also have some of your largest clients pulling back. Are we -- is that behind us? Or how do we think about these two?

Yes. So coming into the year, we started to notice some softness in budgets with a handful of large clients. And then that trend continued across Q2. And that's what got us to the downgrade that we announced in August at earnings. And we wanted to give ourselves a prudent outlook given that we'd had to do that twice.

And since then, we saw trends stabilize in the July time frame. And then also the commercial teams, I think, really on top of each of those situations. In some cases, that is just competing more effectively for budget shift, budget moves from one tactic to another, and as Criteo, we have enough products to satisfy both needs. We need to make sure that, that's a left pocket, right pocket shift for us.

Some things were maybe macro that were out of our control, but that's going to happen, and that's why it's important to have a new business machine that can bring in new revenue that offsets the inevitable fluctuations that clients will have, and those are some of the stats that we shared at the August call, right?

So new business performance in the U.S. have been up 24% year-on-year, which is a really good signal and I would say, attributable to -- some of the talent that Ed has brought into the business since he joined in January. And then we noticed that qualified pipeline was up significantly, I think, in the mid-30s and overall pipeline has now come in over 50% from agencies. So a lot of the things that we've talked about coming to bear.

And I think like to the point, that situation has now stabilized. Each account is a little bit of a different situation. And it's just game on to now get some of that share of budget back into the business. and make sure that we follow through on new business efforts.

And what changed in July that you said trends have stabilized?

Yes. I think it could be attributable probably to some of the commercial efforts in some cases, or maybe some macro factors abating, probably a mix of the root causes that I went through there.

Okay, yes, that's great. So one of the questions that we often get, I want to get into the data set and everything else because clearly, that's the asset of the company. But the questions we're getting is the Criteo and OpenAI's partnership. And I think you mentioned like if we can focus on all the three things, Agentic Commerce was one of the first ones.

So tell us a little bit more, I think, about your partnership with OpenAI. Specifically, I think you now have, what, 2,000-plus clients on. There were a slew -- there was a release not too long ago of continued strength. So let me just make it a high level how does this partnership come about? Why did they choose you and talk to us about the evolution of how that's going?

Sure. So I think the reason that they chose us is multifold here. But it basically comes down to we look at advertising in very similar ways.

Like us Criteo, we don't start with sort of reach and frequency as our starting point. We start with what product do you want to advertise? And what is the context and the relevancy that triggers that? And sort of how do I drive to a commerce outcome, right? And that is the way that the OpenAI ad platform is architected. And so it gets into a lot of the value add and the way that our partnership fits together.

We -- I'd like to say we optimize the inputs. So what SKUs am I going to advertise is the data associated with those SKUs up to date? Is the metadata correct? Is it deep enough and rich enough to drive the relevancy signals?

And then when it comes to prompts how do we engineer prompt that are insightful and comprehensive to maximize all relevancy display coming out of their engine. And then on the back end, how do I give insights into cross-channel measurement about how their paid referral traffic is performing relative to other paid referral traffic. So I call it optimizing the inputs and explaining the outputs. And that's a lot of the value that we provide.

Now we do have a product to product or tech to tech relationship as well, but that is largely about us given the market feedback on feature function that needs to be developed, helping them with their road map. Ultimately, it's them building their platform, but it is quite a technical relationship week to week.

And they announced a couple of weeks ago that they had gotten onto $1 billion a year run rate, which is exciting, opened up now in 51 markets globally, the European expansion and then the Middle East expansion. So that will start to drive client count, I believe, through the rest of the year in a pretty strong way.

And really, what we want -- what they want is to move really from a lot of test budgets to always on budgets and to make them bigger. But with the efficacy we see in both mid-funnel and lower funnel, I'm pretty confident that those budgets will scale and that they will become part of always on plans.

Just to pay that off a little bit. In the mid-funnel, there's an amazing statistics that we keep sharing because it keeps showing up in the data. And that is that 80% of paid referral traffic is new to brand, which is an amazing incrementality metric when you think about mid-funnel objectives.

And then in the lower funnel, it converts 1.5 to 2x better than traditional search. So those are great conversion rates. And so lots of reasons to believe that those -- with that kind of performance, that kind of insight that, that will move from test budgets to always on and that it will pull investment from some other competing products in the mid or lower funnel.

So that -- where do you think budgets come from? Yes, because new to brand is interesting, better conversion rates that you mentioned.

The new to brand will put pressure on CTV budgets. It will put pressure on some social budgets. I mean those are the places that you derive new customers, primarily. And then in the lower funnel, I think it will put pressure on certain tactics within search, certainly, product listing ads or PLAs maybe even depending on like the CPCs you're seeing could be even branded search, but not all of traditional search, but certainly some tactics within like economically, you'll just get better performance on OpenAI.

And look, if they're driving incremental outcomes, there certainly could be some incrementality as well just in terms of overall ad spend as a percent of GDP.

Open to 51 markets now? Last metric we heard was 2,000 advertisers. Who are these advertisers? And how quickly are they able to go from test to actual line item?

Yes. So look, Criteo has quite a varied and global client base. I think that is one of the other reasons that they chose to partner with us, right? We have 17,000 clients globally. And it is particularly strong in the mid-market. And so that is a lot of the 2,000 that we're working with on their behalf.

And think a client typically needs about 2 months of testing, go through a couple of weeks per campaign to do evaluation and tweak it, run it again, so it probably takes about 2 months to start to get to some comfort level of how it's performing relative to other tactics.

I would say two milestones we're looking forward to will be holiday season this year, so kind of come October, November, how many clients are choosing to invest in OpenAI as a mechanism to drive their holiday objectives. I think that will be an interesting signal for all of us, everyone in the ecosystem, let alone Criteo and OpenAI.

And then early next year, lots of brands and advertisers tend to set budgets at the beginning of the year by platform, by tactic for their always on. So I think that's another signal kind of Q1 that we would get a read on. Not that those have to stay fixed over the full year, but that is a pretty typical client approach to set those early in the year.

I want to get into the impact, so not to spend the whole time on OpenAI, but two other quick questions because I think Agentic Commerce can potentially change how we shop if you have an agent helping you find what you're looking for that you may or may not know exist.

So question number 1 is we talked about two milestones holiday this year, do we have enough product with the advertisers on ChatGPT to be meaningful for users? I know we talked about your product catalogs. So I'm bringing it back to Criteo's product catalog. That's point one.

And point two, the impact of Criteo itself. So when can we get on the call and you and Connor can say it's now incremental or adding more so to growth.

Yes. So there's enough product for sure. What we continue to work with them to tune the relevancy engine to improve budget completion and fill rate. And so that's just a work in progress. And as they develop now some of the additional performance capabilities like optimize CPC, the CAPI measurement program that they introduced about a month or so ago, even little things like exclusion lists. I think that all starts to drive volume and help command larger budgets.

For us, we've continued to be conservative about guiding on performance just because it's decent client count, but relatively small budgets per -- we believe that it will be a meaningful contributor to 2027, and we're continuing to talk about how we're going to give guidance on that.

We want to give guidance on that. It's an exciting part of our business. We need to be mindful about starting to guide to some kind of a statistic then that we can update regularly with confidence. But meaningful is the word that we keep using for now. And again, everyone's interest aligned. We really want to guide on something for this next year. So we're going to figure that out.

Perfect. So maybe moving on to Retail Media. Specifically, I think some of your core offerings like Commerce Max, sponsored products, was a page intelligence, conquesting. Just how do you see retail media evolving here?

Yes. Yes, it's really great actually because when I joined -- shortly after I joined, I had the sort of misfortune of a pretty big news event with our largest retail client taking some, I call them, legacy scopes of work in-house because they very much continue to use our technology.

But since then, the business has really embarked on being more diversified. That's both strategic on our part, but it's also what the market is sending us as a signal. So retailer ad stack is becoming more diverse in that there's opportunities for an ad server for sponsored products. There is an opportunity for an ad server to serve display and online video, there's an opportunity for a mediation layer. There's an opportunity to optimize, paid and organic and what shows up on a product listing page, conquesting, right?

So there's a lot of different monetization tactics now that as these Retail Media networks get bigger and more sophisticated, they really have an appetite for. And so we're just building to market demand. But the nice benefit of that is it diversifies the business so that we're not sort of so binary on if you're not the sponsored ad server, you're just in or out. And obviously, that's not always a great situation. So being more diversified, I think, allows you to evolve with clients, bring them more product. And if they ever did in-house something that you still have a role to play in the stack, and that's just talking to supply side, right?

On the demand side, with Commerce Max, we continue to introduce new insights features, new capabilities for how cross retail campaigns are run and measured, and that's the core value proposition there because you want to make running Retail Media as frictionless as possible because that's really been the inhibitor on the advertiser side for scaling spend outside of the top 2 players. So that's our mission with Commerce Max, and we see really good results happening here over the summer with that.

That's great. And maybe the last one on just -- we talked about Agentic and Retail. Let's talk about Performance Media. We talked a little bit about it earlier. But how do you -- I think we talked about the privacy sandbox is going to take a little bit of wind out of the sails. What products can we look forward to, so that we can see that growth come back or...

In Performance Media?

In Performance, yes.

Yes. So the sort of highest priority channels for us are CTV and app. Yes, I said it said simply, we just need to be where digital activity is happening, right? Where is the audience going and budgets will follow.

Now each of those channels has different dynamics about how people behave and interact in those channels that then allow you to conquest additional budgets outside of traditional lower funnel remarketing tactics. So that's why we always call it full funnel cross-channel, you need to establish channel capabilities in order to conquest budgets in the funnel. So they're just different sides of the same coin.

And as we get into maybe the technology behind this, I think we said agencies are about 1/3 of Criteo's total media spend if I'm not mistaken, and now most are accessing Criteo's back end via MCP, which...

It's coming. That's the fast-growing way that they access. I wish I could say that's most of it, but it's the fastest growing, and it's certainly the area of interest.

And so the question is, ultimately, if we get in this world where agents are buying from agents and we're sort of doing things automated, we have this MCP compatibility that's happening as we speak here. How does that accelerate the business? Or do you see greater flow of dollars come through Criteo.

Yes, definitely. I mean I'd slightly reframe the premise. And I would just say that -- in particular, the Agency segment is moving towards headless buying kind of the simplest way to say it because I don't know that it's fully agentic. It's agentic-enabled this kind of headless is really the phrase, I think, to think about it.

And it's agencies wanting to own a workflow that allows them to standardize the way that they plan, run and activate media, which gives them greater operating efficiency across their head count, the ability to build more automation into each step in that process gives them automation and operating leverage. And then that has an impact on who they want to partner with.

So Criteo as a partner with a lot of sort of data assets and algorithms that are geared towards turning those assets into outcomes, we become like a great partner in a setup like that, where I just want to go direct into your audience builder to help me build bigger, higher fidelity audiences. I want to come into your supply paths to buy supply at the cheapest and most optimal way. Or I want to get to a commercial agreement where if you can deliver me a ROAS of 10, I can pass that on to my client in a way that's good for them and still allows the agency some economics in that setup.

So there's a variety of, I think, ways that it plays out. But agencies want to own sort of a wide end-to-end stack, but they want to partner sort of at the things below that helps scale each module in that setup.

Got it. And one last question on the tech side, then we'll get into maybe some other -- the profitability and redomiciliation, but the GO and self-service platform. So talk to us about what it could mean to the business, and I believe it's more of a '27 event. But we have the self-service platform. It's called GO, talk to us about what this could be as we just got finished talking about agencies and MCP. We just talked about the potential with ChatGPT.

Well, they're like flavors of the same thing, right? So with agencies, we use a fancier word like headless buying. But GO self-service is geared towards the SMB market, which is just a different flavor of the same trend, which is automated buying of outcomes.

So the ecosystem has gotten very complicated. And really as an advertiser, you just really want an outcome and you want it to be easy. And you want to work with a platform that you can trust will allocate your dollars optimally across the channels or impressions that are relevant to drive in your products. And that's really the philosophy that go self-service is built on.

Now that is both an acquisition vehicle for us for new clients in that segment, on a self-serve basis, not dissimilar from some other self-serve platforms that are in the market. But we also use it internally. So you could think of it as more efficient managed service that makes us a more efficient organization and how we use our own tools. And that continues to help us get operating leverage and maintain healthy margins in the business.

That's perfect. Let's shift. Well, there's about 4 minutes left. I don't know if there's any questions in the audience. I can think about questions, and then we can -- there's a mic behind you. If you want to...

OpenAI's international rollout. Have you seen an effect on your international customer count?

You mean in terms of non-AI -- sorry, non-OpenAI clients?

No, on OpenAI.

We're not sharing updates on that just yet, but we should, in conjunction with them, hopefully give an update to that 2,000 advertiser figure sometime in the fall, I hope.

When is the CTV product going to ship? Is that end of year or...

It's interesting. It's already shipping on some level right now. I think the right question would be like when does it scale and become a more meaningful part of the revenue stack? I think that will happen in '27.

So we are already driving a managed service CTV offering today. And commercial activity on that has accelerated over the course of the summer.

We need to get to a place with that later in the year, early next, where that's like something that we would guide on or give some indication of how it factors into the stack next year, but we're absolutely going to get there with that channel.

And it's not dependent on some big tech build that we have to do. That potentially would help scale and accelerate something. But building the book of business on managed service is actually something we're doing already.

And where are we with the like streamer partnerships out of the big 10, are we 7 out of 10, 8 out of 10?

I'd have to get back to that. It's not bad. It's -- we'll come back to you on that. Yes. I know we have several of them. I'll have to come back to you on the specific number.

Maybe as we wrap up here, I would love an update on the redomiciliation. I said that correctly?

You did.

What I think we've completed the Luxembourg step. What's next? And again, remind us the benefits here.

Yes, sure. So we did complete the shift to be a Luxembourg-based company at the beginning of August. And so as a Luxembourg-based company now that does two things for us. One, it removes some of the capital controls that we had on share buyback when we were domiciled in France. And it makes us eligible for actually a couple of passive indices now, most notably the MSCI.

We are on track to complete the transition to a U.S.-based domicile on January 1 of '27. There will be a shareholder vote to confirm that in December, but all signals are that, that will complete as planned. And then we would be a U.S. domiciled company effective at the beginning of next year.

Does that impact anything from maybe an M&A perspective?

No, not necessarily. I mean you continue to progress into fewer and fewer capital controls as you move through that. There still are some limitations in Luxembourg, though nothing to the extent that we had in France. And then in the U.S., you would know that regime well.

And then I think in the U.S., conversion, it accelerates the rest of the passive indices that we want to be included in.

Perfect. Yes. Any other questions from the audience? With that, maybe we'll wrap it up. We have a lot to think about with the focus areas. But Michael, thank you very much time.

Thanks for coming, everyone.

Good morning, and welcome to Criteo's Second Quarter 2026 Earnings Call. [Operator Instructions] Please note that 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 Second 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 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 include -- 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 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. Before we begin, I'd like to share an important leadership update. After 6 years as Chief Financial Officer, Sarah Glickman will be stepping down from her role on August 10 and will remain with Criteo as an adviser through the end of September. On behalf of our Board and everyone at Criteo, I want to thank Sarah for her exceptional leadership and many contributions to Criteo. She has been instrumental in strengthening our financial foundation and driving greater operational discipline during a period of significant transformation for the company, and we are grateful that she will continue to support the business and ensure a seamless transition.

I am also pleased to announce that Connor McGogney has been appointed Chief Financial Officer effective August 10. Currently serving as Chief Strategy Officer, Connor brings a unique combination of finance, strategy and capital markets experience together with deep knowledge of our business and our financial operations. Having served in senior finance and strategy leadership roles across the company, he has been a key partner in shaping our long-term strategy, capital allocation priorities and transformation. His broad perspective across the business and strong relationships throughout the organization make him exceptionally well positioned to lead our finance organization as we execute against our strategy. Connor looks forward to meeting many of you in the weeks and months ahead.

With that, let me turn to our quarterly results. The second quarter was a challenging one for Criteo. We did not meet the expectations we set for ourselves, and we will be transparent about the factors behind our revised outlook and the actions we are taking. Primary drivers were the client-specific performance media dynamics that we discussed last quarter, which became more pronounced during the quarter. Several large enterprise clients further reduced spending, primarily driven by client-specific decisions and softer demand in specific verticals. While the vast majority of our client base remained resilient, these spending decisions more than offset the progress we made across the broader business.

As a result, while we are confident in the actions underway to improve the performance of the business, we have taken a more conservative approach to our outlook. Our guidance reflects what we see in the business today and assumes no improvement in spending from those large enterprise clients through the balance of the year. We believe this provides a prudent and achievable baseline for the remainder of 2026. Our focus is on consistently delivering against the commitments we make.

While we are not providing any outlook beyond this year, in Performance Media, we are focused on commercial execution while continuing to advance our full funnel cross-channel and self-service strategy. We believe these initiatives will improve the trajectory of our business over time, although our current outlook does not assume any meaningful benefit from them this year. In Retail Media, the previously communicated client scope reductions are largely behind us after Q3, providing a more supportive backdrop for the business as we move beyond those headwinds. Even as we face these top line headwinds in the second quarter, we delivered strong adjusted EBITDA through disciplined cost management and productivity gains without reducing investment in our strategic priorities.

Importantly, while our near-term assumptions have changed, our long-term strategy has not. In fact, the progress we are seeing across our strategic priorities reinforces our conviction that we are investing in the right opportunities. We remain committed to disciplined execution while continuing to evaluate every opportunity to maximize shareholder value. At the core of that strategy is commerce intelligence, combining large-scale commerce data with AI decisioning to predict shopper intent and optimize outcomes across increasingly fragmented shopper journeys. We believe AI is creating a new commerce paradigm, and Criteo is uniquely positioned to help brands and retailers navigate that transition.

The rapid evolution of AI is creating entirely new opportunities for Criteo and our partnership with OpenAI is a great example. Only a few months ago, we became OpenAI's first advertising technology partner. Today, that partnership continues to exceed our expectations, attracting new advertisers and expanding our addressable market. The number of brands running campaigns through OpenAI has now surpassed 2,000, more than double the 1,000 brands we announced at the end of April. We continue to attract incremental budgets from both existing advertisers and new clients, making OpenAI both our fastest-growing partnership and our fastest-growing channel. Advertisers benefit from dedicated support for campaign setup, prompt strategy and ongoing optimization.

We are quickly expanding internationally, and our demand integration is now available across 7 countries with additional country launches planned, including Mexico and Brazil. This follows our recent launches in Japan and South Korea. We've also integrated OpenAI directly into Criteo GO, enabling advertisers to activate ChatGPT alongside display, social and other channels through our self-service platform. The early performance validates the opportunity. Traffic from ChatGPT converts at approximately 1.5 to 2x the rate of traditional referral traffic, while roughly 80% of paid traffic is new to the brand. This demonstrates that AI is creating an entirely new discovery channel that complements existing media rather than replacing it, expanding advertisers' reach and unlocking incremental budgets.

We are also pioneering a new category of retail media. With Metro Canada, we became the first to bring AI-enriched retailer product catalogs into ChatGPT. We believe this opens an entirely new source of demand for brands and a new monetization opportunity for retailers. We are particularly excited about OpenAI's new custom audiences capability because it reinforces one of Criteo's core differentiators. We bring rich commerce audiences built on years of investment in commerce data and identity, enabling advertisers to activate AI campaigns with a level of relevance and scale that is difficult to replicate. We believe this combination represents a durable competitive advantage as AI advertising continues to scale.

Beyond our OpenAI partnership, we are embedding agentic capabilities across our platform. Our AI-powered conversational ad format transforms advertising across the open web into guided shopping experiences, helping brands engage consumers earlier in the discovery journey while generating richer intent signals that improve relevance over time. We are also unlocking a new retail media monetization opportunity through sponsored recommendations and retailer AI assistance. Albertsons became the first retailer to launch this capability with us, and we expect additional retailers to follow as conversational shopping is gaining traction.

Together, these innovations show how Agentic AI is reshaping commerce and helping brands engage consumers earlier in their shopping journey while enabling retailers to participate in the next generation of AI-powered shopping experiences. We are also seeing encouraging adoption of our MCP capabilities across agencies. Major agency holding companies have now integrated our MCP server into their workflows, enabling planners to build and activate campaigns using natural language. This is making campaign execution faster and more efficient while embedding Criteo more deeply into our clients' day-to-day workflows.

Turning to Performance Media. Our near-term challenges do not change the actions we are taking to restore growth. We remain focused on expanding self-service, increasing cross-channel activation and extending performance further up the funnel. We are also taking targeted actions to enhance our measurement capabilities, further strengthening our platform and the value we deliver to clients. Starting with our self-service offering, GO is making encouraging progress in strengthening our ability to serve the large and underpenetrated SMB market. Adoption among our existing clients is progressing faster than we anticipated. Today, more than half of our small clients globally have adopted GO, driving accelerated productivity gains while lowering our cost to serve.

While it remains early for new client acquisition, we are beginning to see encouraging leading indicators. Account creation in June was approximately 3x higher than during the initial months following launch, giving us confidence that awareness and adoption continue to build. Client feedback has also been positive. Advertisers consistently tell us they value the platform's ease of use, enterprise-grade targeting capabilities and AI-powered creative automation, which enable them to launch and optimize campaigns with minimal manual effort.

Just as importantly, advertisers are embracing the platform's cross-channel capabilities. Close to 80% of our revenue from GO in the U.S. is already cross-channel, demonstrating that advertisers increasingly value managing display, social, video and AI platforms through a single interface rather than separate point solutions.

GO is more than a self-service platform. It is becoming an increasingly important part of our full funnel strategy. During the quarter, we introduced Discovery Audiences, enabling advertisers to engage consumers earlier in the shopping journey while optimizing performance from discovery through conversion. We are already seeing encouraging client results. For example, Agape Diamonds used Criteo GO to expand beyond traditional retargeting, combining AI-powered customer acquisition with performance campaigns across the open web and social channels. This approach increased return on ad spend and conversion rate by 20%, while increasing average cart value by 13%.

This is what Commerce intelligence looks like in practice. It enables advertisers to engage consumers wherever they are while measuring and optimizing outcomes across the funnel. Momentum across both social and OpenAI continues to build with these channels nearly doubling their share of Commerce Growth campaigns compared with the first quarter. Every new channel expands the value we deliver to advertisers and creates new opportunities for Criteo to grow.

Alongside product innovation, we have also been sharpening our commercial execution. The leadership changes we made have strengthened sales discipline, pipeline management and client engagement across the organization. While these efforts take time to translate into revenue, we are encouraged by the early leading indicators we are seeing. Compared with a year ago, our qualified pipeline has grown by approximately 30%, reflecting a broader mix of clients and verticals. In the U.S., we delivered 24% year-over-year growth in new business revenue during the second quarter, while our opportunity mix continued to diversify beyond our largest clients.

We also continue to expand our agency business with agencies now representing approximately 55% of our pipeline, up from about 35% a year ago. While the challenges affecting several large enterprise clients remain a near-term headwind, these leading indicators reinforce our confidence that the actions we have taken to strengthen our commercial engine are positioning us to deliver more durable growth over time.

Turning to Retail Media. Our execution remains strong. Excluding the 2 previously announced retailer scope reductions, our underlying Retail Media business grew 20% during the quarter, and we remain confident in our strategy and our outlook for the year. Our momentum is driven by progress across demand, supply and product innovation. Starting with demand. We are expanding relationships with both brands and agencies. During the quarter, Retail Media spend growth outpaced the market, while the number of brands on our platform continued to grow. Commerce Max now extends beyond Criteo managed campaigns to include retailers sold campaigns, giving brands a single platform to activate, optimize and measure campaigns across retail environments.

Adoption is off to a strong start. Several leading grocery retailers are already participating, making it easier for advertisers to consolidate budgets and scale their retail media investments. We are also seeing strong adoption of conquesting, which helps brands reach shoppers considering competing products and is already driving incremental budgets across multiple retailers. On the supply side, we added new retailer partners across every region, including Loblaw Advance in Canada, Monoprix and Druni in EMEA and Olive Young and Golf Digest Online in Asia Pacific, while continuing to grow with our existing partners.

One example is DoorDash. Momentum with DoorDash is building with growing advertiser participation, media spend and a strong second half pipeline across multiple categories, including beauty, personal care and food and beverage. Innovation is also driving stronger monetization across our network. Auction-based display remains our fastest-growing advertising format and is now live with more than 85 retailers globally, up from 60 retailers last quarter. Retailers are increasingly adopting auction-based buying because it improves monetization and attracts more advertiser demand.

We are also excited about Page Intelligence, our AI-driven orchestration layer that optimizes merchandising, monetization and shopper experience together rather than independently. This helps retailers maximize shopper monetization while maintaining full control over the shopping experience. During the quarter, we secured our first retailer launch with one of our largest retail partners, an important milestone as we bring this next-generation capability to market.

As I mentioned earlier, AI-powered shopping assistance represent another compelling long-term opportunity, and we believe Criteo is well positioned to help retailers monetize the emerging shopping experiences. These initiatives reinforce our confidence in the long-term potential of our Retail Media business and position us well as we move beyond the previously announced retailer scope reductions.

As we execute through this period of transformation, disciplined capital allocation remains a core priority for Criteo and a key driver of long-term shareholder value. Despite our revised outlook for the year, we continue to generate attractive profitability and strong cash flow while maintaining a robust balance sheet. Last week, we successfully completed our redomiciliation to Luxembourg and direct listing of ordinary shares, an important milestone in simplifying our corporate structure. Looking ahead, we intend to pursue a subsequent redomiciliation to the United States as early as January of next year, subject to the necessary approvals. This would complete the simplification of our corporate structure, position Criteo for U.S. index inclusion and broaden access to U.S. investors.

In closing, our top line performance this quarter was disappointing, and we have responded with a more conservative outlook. We are confident in our plan to improve commercial execution while maintaining disciplined profitability and investing in our strategic priorities that we believe will shape Criteo's next phase of growth. The progress we are making across Agentic AI, Criteo GO, Retail Media and our commercial organization reinforces our confidence that we are building a broader, more resilient company with multiple drivers of sustainable long-term growth.

With that, I'll turn the call over to Sarah, who will provide more details on our second quarter financial performance and our outlook for the remainder of the year.

Thank you, Michael, and good morning, everyone. Our second quarter results reflect the continued headwind from several large performance media clients that Michael discussed earlier, partially offset by disciplined execution across the rest of the business.

Our second quarter media spend grew 9% to $1.1 billion. Revenue was $428 million and contribution ex-TAC was $255 million, including a $1 million year-over-year foreign exchange headwind. Overall, client retention remains high at close to 90%. At constant currency, Q2 contribution ex-TAC was down minus 12%, including a $21 million impact related to previously communicated scope changes with 2 retail media clients. The approximately $7 million shortfall relatively -- relative to the midpoint of our contribution ex-TAC guidance was primarily driven by the performance media dynamics we discussed earlier. We experienced lower budgets than anticipated from several large enterprise clients, while our broader Performance Media client base remains resilient.

Performance Media revenue was $380 million and contribution ex-TAC was $208 million, down 10% at constant currency. This reflects soft performance in Commerce Growth, partially offset by improved year-over-year trends in adtech services. Within Commerce Growth, the decline in media spend was driven primarily by client-specific spending decisions among several large enterprise clients. Media spend declined across all regions with EMEA proving more resilient than the U.S. and Asia Pac, although travel moderated after several years of exceptional performance. Retail remained softer overall, particularly in discretionary categories such as Fashion, which was down 21%.

In Retail Media, revenue was $48 million and contribution ex-TAC was $47 million, reflecting the previously communicated $21 million headwind in the quarter. Excluding this impact, trends remained strong with contribution ex-TAC growing 20% across the underlying client base.

We continue to add new innovative capabilities and benefited from the strong adoption of our auction-based display offering, our fastest-growing retail media format. Our growth was supported by both strong expansion across our existing client base and new retailer additions. Same retailer contribution ex-TAC retention was 84% or 113%, excluding our largest retailer, demonstrating the strength of our multiyear, often exclusive, retailer partnerships.

Media spend in Q2 grew 31% year-over-year, sustaining the strong momentum we saw last quarter as over 4,500 global brands continue to prioritize retail media as a key channel for their investments to reach relevant audiences and grow sales.

We delivered adjusted EBITDA of $73 million in Q2 2026, reflecting lower top line performance and planned growth investments, partially offset by lower-than-expected employee costs and bad debt expense due to strong cash collections. Non-GAAP operating expenses decreased 10% year-over-year as productivity improvements more than offset planned growth investments. Continued deployment of AI and increased adoption of self-service capabilities improved efficiency, streamlined execution and enabled better resource allocation.

Moving down the P&L, depreciation and amortization expense declined to $32 million, while share-based compensation expense declined to $17 million. Our income from operations was $15 million, and our net income was $12 million in Q2 2026. Our weighted average diluted share count was 50.5 million, which resulted in diluted earnings per share of $0.22 compared to $0.39 last year. Our adjusted diluted EPS was $0.80 in Q2 2026 compared to $0.92 last year.

Operating cash flow was $20 million. And as expected, free cash flow was minus $38 million in Q2, reflecting seasonality and payment of 2025 income taxes. Our trailing 12-month free cash flow was $180 million. We anticipate positive free cash flow generation in the second half of the year. Criteo is 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 and significant liquidity.

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 committed to driving shareholder value and deployed $30 million to repurchase 1.7 million shares this quarter. There was $160 million remaining under the current authorized share repurchase program as of the end of June. In July, we canceled a total of 4.5 million treasury shares in conjunction with our redomiciliation to Luxembourg.

Turning to our financial outlook, which reflects our expectations as of today, August 5, 2026. Our revised outlook incorporates year-to-date performance and reflects a more conservative approach by extrapolating current performance media spending trends through the balance of the year with no recovery assumed from the large enterprise clients that affected our second quarter results. We have maintained prudent macroeconomic assumptions. Our Retail Media outlook is unchanged.

We now expect contribution ex-TAC to decline by minus 10% to minus 12% at constant currency in 2026. Our 2026 outlook does not assume meaningful contributions from OpenAI or our broader agentic AI initiatives. We anticipate these capabilities to become a meaningful growth driver beginning in 2027. We estimate foreign exchange will provide a year-over-year modest benefit to contribution ex-TAC for the full year.

Turning to our outlook by segment. Our Retail Media guidance remains unchanged. We 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 those 2 clients, the underlying Retail Media contribution ex-TAC growth for 2026 is expected to be in the high teens to 20% range we previously provided.

In Performance Media, we now expect contribution ex-TAC to decline in the high single digits at constant currency in 2026. This assumes that the lower spending levels from certain large clients continues through the second half of the year, more than offsetting the ramp-up of GO. We expect lower travel growth in Europe as well as continued softness in discretionary retail driven by inflation and weaker consumer sentiment. These dynamics remain largely concentrated in our international markets, EMEA and Asia Pac, which together represent approximately 2/3 of our Commerce Growth media spend.

We now anticipate an adjusted EBITDA margin of approximately 30% for 2026, given our lower top line expectations. This is partially offset by continued disciplined cost management and productivity gains while investing in agentic AI and other growth initiatives. We have a resilient business model that allows us to continue to fund our highest priority growth investments while maintaining rigorous cost discipline. We do not view 30% as a normalized profitability level for the business, and we continue to believe our model has meaningful operational leverage as top line growth improves over time.

We believe these investments position Criteo to return to sustainable top line growth while continuing to generate strong cash flow. 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 a reminder, 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 operating cash flow conversion from adjusted EBITDA to improve to approximately 85% in 2026, up from 76% in 2025, driven by continuous improvement in working capital. We also expect free cash flow conversion of about 35% of adjusted EBITDA before any nonrecurring items.

For Q3 2026, we expect contribution ex-TAC of $237 million to $241 million, down 14% to 15% at constant currency. Our outlook reflects the current spending levels of certain large performance media clients, which have remained consistent with the trends we saw in June and assumes no improvement throughout the quarter. We have also maintained prudent macroeconomic assumptions. In Retail Media, this reflects the previously communicated client scope reductions as well as tougher year-over-year comparisons for the underlying business in the second half.

We estimate foreign exchange to be a larger headwind in Q3, reflecting more unfavorable rates compared to 3 months ago. We expect a $6 million to $8 million negative year-over-year impact on contribution ex-TAC in Q3, about $4 million worse than under the rates assumed in our prior guidance.

We expect adjusted EBITDA between $54 million and $58 million, reflecting lower top line, continued investments in high ROI agentic AI and other growth initiatives, partially offset by disciplined cash cost management and productivity gains.

In closing, our updated outlook reflects a prudent view of the business as we see it today. At the same time, I remain confident in Criteo's financial strength and its ability to execute against its strategic priorities.

Before we open the call for questions, I would like to say what a privilege it has been to serve as Criteo's CFO. I am incredibly proud of what we have accomplished together over the past 6 years, and I'm grateful to have worked alongside such a talented team. I would also like to thank our investors and analysts for their partnership and support over the years. I look forward to continuing to support Connor and the team during the transition.

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

[Operator Instructions] The first question comes from Ygal Arounian from Wedbush.

Sarah, it's been great to work with you. Good luck on the next phase. So on the lower budgets than anticipated from the large enterprise clients, I guess a couple of things. Just first, if you can give a little bit more color exactly what's happening here from these clients, why they're pulling back? And what changed from last quarter as they got worse?

And then I guess, more broadly, we've sort of been facing this type of environment where it's been -- you guys talk about the core underlying business is strong, and there's been 1 or 2 clients or whatever it is that are sort of getting in the way of that. As we get to the point where we're kind of delivering and the strength of the core business is overriding client-specific issues because it's been a little bit of a while that we've been dealing with this. And just what's the visibility in kind of fixing all this? And then I have a follow-up.

I'm happy to take it. Thanks, Ygal. So let me take the point on the XL clients first, and then we can talk about the broader business. So on the handful of enterprise clients, as we said, the trends that we saw earlier in the year continue to accelerate a little bit. And unfortunately, there isn't one common thread across that set of clients.

For example, there would be a client that's been impacted in the travel vertical by the conflict in the Middle East. It could be a client that's been impacted by tariff changes and de minimis import rules, or, in some cases, a client where they have changed investment tactics and we were unsuccessful in retaining that budget as they shifted to other tactics in the funnel. Now that one in particular, I think, points to the upgrades that we've made in our commercial organization because we need to be able to capture that share shift when that happens. And that's an execution issue that we're getting on top of.

We have products available now, given the evolution of our product portfolio, to move up and down the funnel. But we need to be at the table with those clients as they make those decisions to make sure that we continue to keep that investment in the Criteo platform, and that's something that we're focused on over the course of the year. So a couple of those root causes are a little bit harder to deal with and then a couple of those are execution.

I think the other point I'd add, which starts to get kind of to your -- the second part of your question, we need to have our new business engine and our new products performing at a level that overcomes those ups and downs that we will see periodically with enterprise clients. These fluctuation in budgets are not unheard of. And so we need our new business machine and our new product initiatives to be scaling at a rate that can overcome the down cycles in that client segment. And unfortunately, we're in this period right now where we're ramping up several really exciting products but just not scaled enough yet to make up the difference, right?

There's some encouraging signs on the new business front. In Q2, new business performance in the U.S. was up 24% year-on-year. And clearly, product initiatives like the partnership with OpenAI or Criteo GO are exciting, and we expect those to be meaningful contributors next year, which gives us a more diversified growth stack as we go into '27. So hopefully, it sort of given you the perspective on the XL clients and then how we think about the durability of growth as we go into next year, but happy to talk more about it.

Yes. That's helpful. So -- and then just second on -- maybe on a more positive note -- sorry, I was getting some feedback. On a more positive note, just on Agentic Commerce and the OpenAI partnership, understood Sarah's comments to be more of an impact next year. And can you bridge us from where we are today to that bigger impact?

And I guess one of the things that seems to be, as we go through earnings, is the traffic coming to a lot of -- in travel, for example, continues to be minimal and e-commerce players. Agentic Commerce has been a strong top-of-funnel product like you talked about. Just how are -- how is the ecosystem and the landscape shaping up here as we're not seeing that kind of actual transactional element being layered in, but it's becoming a stronger top-of-funnel product discovery product.

Yes. So I think what you've expressed there is what a lot of our clients are working through as they test the platform, right? So they see highly qualified traffic coming from paid referral of the platform, right? The conversion rates we've talked about 1.5 to 2x higher, the statistic about 80% of that traffic being new to brand, right? That creates really kind of a new discovery tactic. And we found that a lot of clients are then trying to figure out how does that fit into their overall mix. And where would they take budget from to fund larger budgets as they go into next year.

So I think really, you think of clients in the testing phase right now, trying to figure out how this powerful discovery vector fits into the rest of their mix. And of course, there's also the parts that I think people forget about, like we're still only live in 7 countries. We've got 2 more that will launch here in the near term. And then most of Western Europe is still yet to come at some point in the near future.

So there's a lot of ramp-up geographically yet to do. And then some of the really powerful product features that drive performance spending, like custom audiences, like CAPI and improved measurement, those things really only came online in the last couple of weeks. And so, we really do have to give this platform a chance to scale. They're moving at an incredible pace. And we're proud to be one of their leading partners. And that's why we're confident it's going to be a meaningful contributor next year.

But what we see right now is clients working through operational issues to get set up, take advantage of the new features that they roll and then figure out how that fits in the rest of their mix. And again, even in saying that, talking about clients in the 7 countries that are live currently, let alone the ones that are yet to come. So lots of work to do, but certainly an exciting platform.

Your next question comes from Ron Josey with Citigroup.

This is Jamesmichael Sherman-Lewis on for Ron. On the Performance Media headwinds, I wonder if you could add more color to the monthly cadence of spending patterns through the quarter, especially given the outlook is extrapolating June trends. Any update on those patterns into July?

And then with that question, if you could provide a little bit more color on your more conservative outlook philosophy and any conviction that the revised outlook has more upside here?

Yes. I mean, specific to the clients, it really does relate to -- I would -- and I think we covered it specific dynamics, especially in Asia Pac, it was really the e-commerce that we saw having lower spend. In Europe, we had significant -- travel as a vertical is a significant travel -- was a significant growth vector for us last year. That has been impacted by, I would say, macroeconomic as well as other drivers in the quarter. So we are seeing that continued, I would say, drag over the next couple of quarters. We are assuming that the current levels that we're seeing will not evolve to significant growth this year.

And in Americas, we've been very clear on the commercial execution focus that we have, and that is front and center of the focus that we are ensuring that we can turn this around. I mean in terms of the fee growth client direct sales, it's about 19% of our revenue relates to our largest clients. That includes the retail media, our largest client as well. So it is quite a base -- a significant base for us with, I would say, some areas where we have new products that are in those clients, but with a lower growth rate than we had anticipated for the year.

Appreciate it. And then a quick follow-up, if I may. Any early performance data that we're seeing from the AI conversational ad format and the time line here for enabling those from pilots to scaled commercial deployment?

Sorry, you broke up a little bit, but I think the question was about the AI-sponsored and retail AI shopping assistance.

Yes, the conversational ad format and moving into scaled commercial deployment.

Yes. So -- yes, so kind of similar to some of the commentary on the agentic programs. We don't assume much of a build in the guidance for this year, but we do think that those will be meaningful contributors next year. I think you could lump the conversational ad format together with the sponsored products in retailer shopping assistance. And we went live with Albertsons on their shopping assistant. We've got other retailers in the pipeline behind that. We've gone live with one travel client in Europe on the conversational ad format and more behind that one.

So nice proof points in the market on 2 really interesting ad units. We'd like to see more traction on those over the course of the year as that pipeline converts. And then again, believe that, that can be a meaningful contributor for next year, both of those types of formats.

The next question comes from Justin Patterson with KeyBanc.

Could you talk about how the competitive markets shifted in the past couple of quarters? There are more people competing for retail media budgets. So I'd love more about just how -- who you're seeing within -- sorry, my AirPods keep disconnecting. Who you're seeing within bake-offs and the ROAS and whether you've observed any meaningful changes?

Yes. So, hey, Justin, thanks for the question. In retail media, not seeing a material change in the competitive dynamics. We continue to gain share. Our retail media spend grew 31% in the quarter, which outpaced the market. We had that growing at 26% in Q2 according to the Skai figures that have been published. And there are a set of smaller competitors, but our win rate remains high, and we continue to secure major multiyear retailer renewals as well as a couple of the new ones that we highlighted in the script. And we continue to roll out new products to help them monetize and grow their business, whether that's conquesting, auction-based display, page intelligence, which opens up new stakeholders inside the retail C-suite as we get merchandising and the retail network folks on the same page to optimize shopping experience.

So there's a handful of smaller competitors out there that might be doing more bespoke or custom type work on a smaller scale, but we definitely continue to enjoy a leadership position in that segment and confident in the outlook for that.

Your next question comes from Tim Nollen with SSR.

I've got two or three actually. I'll try to consolidate best I can. Michael, you said that the ad budgets for commerce spending with OpenAI are -- seem to be incremental. And I'm just curious where are they really coming from then if they're not shifting from, for example, search into a chatbot spending budget, whatever that looks like. I'm just curious where the money is coming from.

I think relatedly, maybe tying in the enterprise client slowdown, I just wonder, you're doing a lot of really interesting things with chatbot spending. And I just wonder with some of the money that's slipping away elsewhere, are you maybe too far ahead of the game? Like are clients ready to put money into these efforts? Is something maybe slipping because all the great stuff that you're doing is not quite market ready yet?

And then I just wanted to also ask, you had a take-private offer during the quarter. I don't know if there's anything you could possibly inform us about in terms of your views on that at this point.

Got it. Yes, Tim, happy to take those. The budget for OpenAI really is an interesting one. So what I'll say is that today, that is largely test budgets. So most clients reserve a certain amount of budget in their overall media plan for testing new formats and products, and that is the majority of what we see going into OpenAI work today. That said, I think you raised an interesting question about as those budgets scale, where does it come from? And I believe that it won't come from any one particular platform or channel, right? As a new discovery surface, it probably will draw some spend from traditional search, think like brand keywords or product listing ads, things of that nature. But it also could take things on the edge from general online video or other places where brands try to be discoverable.

And then I do think that there is a case for incrementality, right? And there have been some studies published recently by a couple of the leading analyst firms showing how ad spend has continued to outpace GDP broadly just due to the advances in advertising effectiveness. And budgets going into OpenAI certainly could benefit from that continued divergence. So I do think it's a little bit TBD. But no question, it's a powerful discovery platform and the budgets are going to have to come from other areas with some potential incrementality as it continues to drive outcomes and again, a divergence from GDP versus spending.

The second question on enterprise clients is an interesting one. I don't know that we're ahead of the market exactly, but I think what we're focused on when it comes to enterprise clients is commercial execution. We need to be more of a trusted adviser, have a closer seat at the table. And we have more products to sell than we had in the past. So if you go back a couple of years, the product set on the Performance Media segment was a little more limited, mostly lower funnel kind of remarketing tactics. And now it's more of a full funnel multichannel sell. And that means that we've got to be more advisory and be able to work with clients as they want to shift tactics as they think about how to think about incrementality versus different channels.

And so that is the challenge that we are rising to with the investments that we've made in that commercial organization. There are a number of training and certification programs. There's a lot of go-to-market work that's happening. And then Ed has just done a great job like reinforcing the talent across the team. And so we believe that those actions are going to pay off over time. And we've got plenty to sell right now that is in the market, let alone the things that are maybe a little further ahead of the market, and I appreciate that question.

And then on the last one, as you know, we don't comment on market speculation. But the Board continues to be focused on looking at every opportunity to maximize shareholder value, and that's our position.

The next question comes from Alec Brondolo with Wells Fargo.

Maybe two for me. On the performance media side, I think a lot of conversation perhaps about what the underlying issue is. I would love to get your thoughts about how your advertisers are thinking about supply. Clearly, I think there's been a degradation in terms of traffic to open web publishers, perhaps that's causing some of the customers to want to look elsewhere in terms of where they deploy media dollars. How much of the solution here, how much of the potential solution is perhaps shifting kind of the aperture of what media you buy against and that acting as maybe a vector to improve advertiser sentiment on your products? That's the first question.

I think the second question on Criteo, the GO self-service campaigns, encouraging data point on the advertiser acquisition. I think you said it was up 3x last month versus the initial month. What are you seeing from a spend per advertiser from the advertisers you've acquired thus far? Help us understand the size of the customers you're acquiring.

Yes, sure. Happy to take those. Thanks, Alec. Yes, so on the open web question, in the open web, you certainly see some pressure on lower intent traffic and long-tail publishers. But engagement from high-intent users remains strong. And we have access to broad diversified high-quality supply. And most importantly, we see no shortage of opportunities to engage with users to drive performance in those tactics.

And more broadly, like what drives performance is the quality of user intent and the outcomes that we deliver. And those fundamentals remain stable.

Now in spite of that, right, we are on a diversification path. And 85% of our total media spend is already outside of desktop display. And we see clients moving to this cross-channel setup, and they spend up to 3x more on average than single channel clients. So it really starts to reduce our reliance on any single environment. And so I don't know, Todd, if you wanted to add anything to the -- Todd, is there any?

Not really. Clients are very focused on getting to -- getting better consumer reach, new to brand, new to product, and we're incredibly good at finding high-intent traffic on the open web and getting very good at doing that in combination with emerging channels like OpenAI and also social, as we've talked about before. The net of which is our clients want to get to new traffic that's more likely and highly qualified to buy a product, and we're doing that across channels.

I think on the GO question, I can just switch to that very quickly. It's still early days for that product. You heard Michael talk about the very positive trends in user acquisition after our first 3 months in business. What we're seeing is adoption across the small- to medium-sized business spectrum. And that's very encouraging to us. We don't disclose the spend per advertiser, but you can imagine how that maps between a medium client and/or a small client on a daily and a monthly basis. And those trends are pulling through to the users of the GO platform so far. But it's early days. We keep a very close eye on this.

Your last question comes from Richard Kramer with Arete Research.

For Michael or maybe for Todd, can you discuss whether Criteo has opened its user graph to third-party advertisers via SSPs, maybe even enabling buys by rival DSPs? And how might your user graph and retail engagement be impacted by the sorts of new privacy and consent laws we see entering the market like the one that just got enacted in New Jersey?

And then one quickly for Sarah since it didn't really get addressed in the call. You mentioned positive cash flow in the second half, but obviously, you've got rising CapEx and some further costs. Are you expecting to sustain the share buybacks through the end of the $160 million remaining authorization? And any further comments on the sort of capital structure that you would see when you're heading out the door?

Richard, good to hear from you. I can hit the graph question. The answer is yes. Exposing the graph to third-party demand has always been part of our strategy. Whether that brand comes directly through a curated deal or whether that comes through an SSP is sort of just a variation of that strategy. We do expect that while we maintain a strong position in data and ownership over the graph, that opening it up to SSP traffic is just going to increase demand path into the business. So we're excited about that.

On the privacy discussion, obviously, because as you well know, we're born from GDPR. We look at every emerging state regulation, and we hope for more of a concerted approach federally here in the United States to make sure that everything we're doing with privacy and data security is compliant. New Jersey is just another item on that list, but we have a group that watches that very, very closely to make sure that we're not outside the lines of compliance.

Thanks, Richard, for the question. So first of all, we did cancel 4.5 million shares, which was in addition to the 1.5 -- sorry, $1.9 million -- sorry, 1.9 million shares that we canceled in April. The Board is very supportive of our share buyback program. And that was renewed as part of the redomicile to Luxembourg. And we, as you know, always evaluate all opportunities to maximize shareholder value.

In terms of the CapEx for this year and the cash flow, this is a higher year of CapEx with 2 new data centers, and that will normalize back to normal levels going forward in 2027. But very happy with our cash position. Our operational cash flow is the highest it's ever been, 85% of adjusted EBITDA, and we continue to drive strong cash. We have strong liquidity. And we will always be looking for ways to maximize shareholder value.

That concludes our call for today. Thank you, everyone, for joining us. If you have any follow-up questions, the Investor Relations team is available to assist. Have a nice day.

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

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.

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