CRTO — Q2 2026 Financial Report Analysis

Overview

Criteo, the ad-tech company that places shopping ads across the open web and runs advertising businesses for large retailers, reported a weaker second quarter of 2026 than it had planned for. Revenue fell 11.3% to $428.0 million and net income roughly halved to $11.8 million ($0.22 per diluted share, down from $0.39). The known problem from earlier in the year, two large Retail Media clients that cut back what they buy from Criteo, is still there. The new problem is that the much larger Performance Media business went from growth in Q1 to a 10% decline in Q2. Management cut its full-year outlook for the second time, from a "low-single-digit" decline in its main gross-profit measure to a decline of 10% to 12%.

At a glance

• Contribution ex-TAC down 12.5% to $255.5 million. This is the figure Criteo manages the business by (explained below). It also came in below the company's own May forecast of $260–264 million.
• Performance Media contribution down 10.2%, after rising 2.0% in Q1. This segment is about 82% of the business, so the decline is no longer only about the two Retail Media clients.
• Full-year 2026 outlook cut to a 10%–12% decline (at constant currency), from a "low-single-digit" decline three months earlier. The adjusted profit margin target was also lowered, to about 30% from 32%–34%.

Results table

A note on Criteo's key measure. A large share of Criteo's revenue goes straight back out to the websites and apps where its ads appear. That payment is called traffic acquisition cost (TAC). Contribution ex-TAC is revenue minus TAC, which is roughly the money Criteo keeps for its own services. Adjusted EBITDA is earnings before interest, tax, depreciation and amortization, and it also leaves out stock-based pay and restructuring costs. Constant currency strips out exchange-rate swings.

For the first half, revenue was $852.7 million (-8.7%), contribution ex-TAC was $505.8 million (-9.1%) and net income was $20.3 million (-68%). Diluted EPS for the half was $0.37, against $1.05 a year earlier.

What drove the quarter

Retail Media: a client problem that is shrinking, not yet a growth story. In Retail Media, Criteo runs the ad businesses of retailers' own websites. Contribution here fell 21% (22% at constant currency). The company puts this down to "previously communicated scope changes with two specific Retail Media clients", which cost $21 million in the quarter, down from a $27 million headwind in Q1. Without those two clients, Retail Media contribution grew 20%, a slowdown from the 24% underlying growth reported for Q1. The segment also improved 16% from Q1 to Q2 ($40.6M to $47.2M). The underlying business is growing, then, but at a slower pace than last quarter.

Performance Media: the new weak spot. This is Criteo's original business, retargeting and shopping ads that follow consumers across the open web. Contribution fell 10.2% to $208.3 million. In Q1 the same figure grew 2.0% ($209.8M against $205.6M). The 10-Q blames "soft performance in Commerce Growth and our Supply Side Platform, partially offset by improving trends in AdTech services". The weakness was broad across regions:

The weaker yen and other Asian currencies explain about 5 points of the Asia-Pacific decline (-17% reported against -12% at constant currency). Client count was 16,752, down 2% from a year earlier.

One figure points the other way. Criteo says the media spend running through its platform, meaning the advertising budgets it places for clients, was $1.1 billion, up 9% at constant currency. That figure includes retailers' working media budgets, on which Criteo keeps only a fee, so it doesn't turn into contribution ex-TAC one for one. It suggests clients are still using the platform while Criteo earns less per dollar placed. This reading is ours; the filing does not say it.

Costs fell, which kept adjusted profit above plan. GAAP operating expenses fell 9% to $207.2 million. Sales and operations costs dropped 21%, which the 10-Q attributes to lower headcount costs, a company-wide event in Q2 2025 that did not repeat, lower bad-debt expense and lower stock-based pay. R&D fell 10%, mainly because Q2 2025 carried accelerated amortization of software tied to Google's planned third-party cookie phase-out. General and administrative costs rose 24% to $49.7 million, "mainly driven by higher restructuring and transformation costs". Restructuring, integration and transformation charges were $9.9 million, against $0.6 million a year earlier. Adjusted EBITDA of $73.3 million beat the company's own $67–71 million guide. Management credits "lower than expected bad debt expense and lower than expected employee costs", which looks more like a one-quarter cost benefit than a business improvement.

New business: ChatGPT ads. Criteo says it became OpenAI's first advertising technology partner in March 2026 and now has over 2,000 brands advertising on ChatGPT in seven countries, with Mexico and Brazil among the next launches. The filing gives no revenue figure for this, so its financial impact can't yet be measured.

Takeaway: Until this quarter, Criteo's decline could be blamed on two Retail Media clients that management called "temporary". In Q2, Performance Media, about four-fifths of the business, swung from 2% growth to a 10% decline, and the company missed its own revenue-side forecast. Guidance for Q3 calls for a steeper drop of 14%–15%, so the decline is getting worse before any recovery.

What the headline numbers hide

• Adjusted EPS is almost 4x GAAP EPS, and the definition just got looser. Adjusted diluted EPS was $0.80 against $0.22 under GAAP. The $29 million after-tax gap is made up of stock-based pay ($16.6M), restructuring, integration and transformation costs ($9.9M) and amortization of acquired intangibles ($6.7M), less a $4.4M tax effect. Beginning this quarter, Criteo also leaves out the employer payroll taxes owed on employee stock awards. It calls these "recurring" cash costs, and it did not restate prior periods ("not material"). A recurring cash expense being moved out of the adjusted figures makes adjusted results look slightly better than before.
• Restructuring is no longer a one-off. Restructuring and transformation costs were $20.1 million in the first half, against $2.4 million a year earlier. They include a cost-reduction plan started in Q4 2025 (about $8.0 million charged in H1 2026) and the costs of moving the company's legal home. A second domicile change is still to come (below), so more of these costs are likely.
• Cash flow: operations are fine, but spending has jumped. H1 operating cash flow was $68.5 million, over three times net income of $20.3 million, helped by collecting year-end receivables. Days sales outstanding, the average time customers take to pay, improved to 58 days from 65 a year ago. Capital spending, though, rose to $91.1 million in H1 from $52.3 million, mainly servers and data-center equipment. Management expects about $190 million of capex for 2026, almost double 2025's roughly $101 million. Free cash flow, the cash left after capital spending, was -$37.5 million in Q2 and -$21.5 million for the half, against +$9.0 million in H1 2025. Trailing-12-month free cash flow is still $180 million, but that figure will shrink while capex runs this high.
• Buybacks softened the EPS decline. Diluted share count fell 8.3%, from 55.1 million to 50.5 million, after $61.3 million of repurchases in H1 ($30.4M in Q2). Net income attributable to shareholders fell 47%, while diluted EPS fell 44%. On 30 July Criteo also cancelled 4.5 million treasury shares.
• A higher tax rate made it a little worse. The effective tax rate rose to 23.3% from 20.0%, so net income fell slightly more than pre-tax income.
• The balance sheet is not a worry. Criteo held $303 million in cash and marketable securities (down $86 million since December, mostly due to buybacks), had only about $10 million of financial debt, and had $464 million available on an undrawn credit line, which was extended by a year to September 2028.

Guidance: second cut of the year

The outgoing CFO described the new outlook as "a more conservative view of our business trends for the remainder of the year." The Q3 range is below Q3 2025's $288.1 million of contribution ex-TAC by more than Q2's decline. A full-year range of -10% to -12% after an 11% constant-currency decline in H1 and a guided 14%–15% decline in Q3 leaves room for a less severe Q4, but the company hasn't said it expects one.

Corporate changes to know about

• Moving from France to Luxembourg, then to the U.S. On 29 July 2026 Criteo completed its move from France to Luxembourg. On 5 August it signed a merger agreement under which the Luxembourg company would fold into a wholly owned Delaware subsidiary, Criteo Holdings, Inc., effective 1 January 2027. Shareholders would get one U.S. share for each existing share. The deal needs a shareholder vote and an effective S-4 registration, and the filing refers to listing the new common stock on the NYSE.
• New CFO. Connor McGogney, previously Chief Strategy Officer and with the company since 2018, became CFO on 10 August, succeeding Sarah Glickman after six years.

Outlook and our read

The 2025 explanation, that the decline was temporary and tied to two clients, now covers less of the picture. That headwind is fading ($27M in Q1, $21M in Q2), yet group contribution ex-TAC is guided to fall faster in Q3 because the core Performance Media business has turned down. Criteo is also choosing this moment to nearly double capital spending, to about $190 million, while running multi-quarter restructuring and two corporate moves. Adjusted EBITDA margins near 30% and a debt-free balance sheet give it room to do that. What it lacks so far is evidence that revenue has stopped falling.

What to watch in the Q3 report: whether contribution ex-TAC lands inside the $237–241 million range (this quarter it fell short); whether Performance Media's decline steadies or deepens; underlying Retail Media growth excluding the two clients (24% in Q1, 20% in Q2); whether ChatGPT advertising starts to show up in reported figures; and free cash flow as the larger capex budget comes through. The full 10-Q for Q2 has been filed and is the source of the segment and MD&A detail above.