Smart people.
All right. We're going to get started. I'm Doug Anmuth, JP Morgan's Internet Analyst. We're pleased to have with us Criteo CEO Michael Komasinski. Criteo operates at the intersection of e-commerce, digital marketing, and media monetization. It's leading the way for commerce media to help marketers and media owners activate first-party, privacy-safe data to drive better commerce outcomes. Its network consists of about 17,000 clients and 720 million DAUs across $4.3 billion of annual activated media spend. Michael joined Criteo as CEO earlier this year. He was previously CEO of the Americas and President of Global Data and Technology at Dentsu. He was also previously Global CEO of Merkle and held various other leadership positions across Merkle and Razorfish and Nielsen, among others. So welcome, Michael.
Thank you, Doug. Good to be here.
All right. Kicking off, you joined earlier this year. What attracted you to the CEO role? How will you leverage your years of agency experience at the company?
Yeah, sure. Look, I'd always followed the company because they were in our kind of digital performance ecosystem at Merkle and at Dentsu. A couple of things at a high level, right? I always thought the company was really tenacious in the way that it had overcome some of the ebbs and flows in the ad tech ecosystem. I really admired what Megan had done to transform it to be a multi-product company. There was certainly a culture and a tenacity that I thought was attractive. I think more at a product or capability level, I saw that the performance platform had a brighter future in front of it than maybe the industry was giving it credit for, in that addressability was going to become more multifaceted and that there were ways to overcome whatever Google was or was not going to do with cookies.
Moreover, if you're going to make any kind of a significant AI play in this world, you need several things, but two in particular. You need a deep team of engineering talent that is used to working with algorithms and optimization programs. You need access to a lot of data that you have permissible use for. Criteo has those things in very, very deep ways. Also, when you look at the media landscape, where's the money going, right? It's going into retail media, CTV, and influencer. Those are the fastest growing segments of the media landscape today. Criteo had already established a leadership position in retail media. That was attractive as well.
A few things, both culturally, capability-wise on performance, there's a real platform for AI extension there, and the industry leadership position in retail all made it super attractive for me.
OK, great. Where do you see the company's competitive advantages within the retail media space in particular?
Yeah. Yeah, so a couple of things. One, we're an independent ad tech player, which means that we can provide great value to our clients on both the supply and demand side of that segment. The other thing is that we have an unmatched supply footprint. That is because we were early to market with a real industry-leading monetization platform in Commerce Yield, as we call it now. That has enabled us to really amass a pretty significant and sizable supply advantage. We work both sides of that equation, right? We bring demand to our retailers, which furthers the value proposition, what we bring to them beyond the tech. We bring great retail supply to our brand partners, which helps them get close to the point of purchase and closer to consumer behavior where it matters.
OK. On the 1 Q call, you emphasized your focus on re-accelerating growth and improving its durability, scaling the company's retail media leadership, improving performance media execution, and then enhancing the platform. All of those as key priorities. Can you walk us through your one to two kind of top objectives across each of those pillars?
Yeah, sure. Again, I would say thematically, one of the things that I'm trying to do with the company is on the durability point, is really focus on execution. I inherited a very sound strategy, right? Our focus on commerce media and the product segments that we have that ladder up to that, I think, is fundamentally sound. What our investors want from us is durable, consistent results. You do that as a product company by identifying white space in the segments that you play in, developing product against that at a rapid pace, and then having a commercial organization that can go scale those products and take appropriate market share. We need to become really reliable and consistent and effective at how we do that. That's kind of a thematic level, almost operationally across all of it.
Within each segment, we have near-term and long-term opportunities. On the performance side, we have the ability to continue to become more of a multi-channel or full-funnel multi-channel platform, right? What I mean by that is extend our product set up the funnel from where it has traditionally been as more of a lower-funnel performance set of tactics and products, and then take it more cross-channel, which would take it into social or other performance channels like CTV, and extend it beyond what has traditionally been an open web product set, right? Longer term for that segment, I think we've got a lot of opportunity to be a player in the agentic shopping experience, however that starts to unfold. On the retail side, it's similar. In the near term, we've got a lot of exciting products like on-site video.
We're going to relaunch our display product later this year. We've got a native advertising product that'll roll. That'll keep us busy well into 2026, scaling those products in the market. Longer term, I think we're looking at some real technology advancements on how retail supply can be more efficiently bought to continue to unlock value for the overall market, but in particular for our retailers. We've got a great mix of near-term execution and long-term opportunity in both segments that I'm quite bullish about.
OK, great. Let's dig into performance media more. Google is officially maintaining its current privacy standards. That should drive some modest benefit this year and improve the performance media segment's long-term positioning. Can you just talk about what this really means for the company and also the broader industry?
Yeah. It is interesting because it is like a big announcement that was the announcement of something not happening. Clarity is good for business, right? Always. It does give us clarity. It gives the industry clarity, and it gives some clarity to Criteo. The way that that manifests tangibly is I think it gives a lot of our clients renewed confidence in investing in some of those lower-funnel tactics as an ongoing or more meaningful part of their marketing mix. I think it also allows us as a company to devote more headspace to extending and expanding our product set, as opposed to reserving mental energy and resources for a big transition in the industry. We were ready for that transition, to be clear. Now that we do not have to do that, we can focus on upper-funnel products. We can focus on cross-channel opportunities.
Generally can look out, I think, further on the horizon for where we want to take that product set. It has, I think, both near-term and long-term implications that we're really excited about.
OK. Commerce Audiences and growth targeting continues to grow rapidly, despite some of the challenging YoY comps. What improvements to the product roadmap should we expect to drive continued outsized growth?
Yeah. So I'm glad you mentioned it. Commerce Audiences have been a real success story in that segment. It's grown 45%, I think, was the QoQ number. You would look for us to continue to do additional products like that that move us up funnel in an audience construct. Think of the discovery layer of the funnel, where we are able to leverage our Shopper Graph and our product catalog to anticipate what people might want to discover when they are in maybe more of an exploratory set of behaviors, as opposed to Commerce Audiences, which starts to get to high-value behaviors and how you nurture those to actions, or the lower-funnel tactics like retargeting and retention, which are much more specific. It's really that extension that I was talking about.
It all draws on those data assets that we have and the ability to link those activities through the funnel to performance, which is really what closes the loop for our customers.
OK. Social media, also another fast-growing surface. You talked about 40% sequential growth in 1Q. That is on some expanded integrations that you've had with Facebook and Instagram at the SKU level within Commerce Audiences. What's making these integrations so effective? How will you cross-sell ad budgets into new channels, including social?
Yeah. What Meta does is it gives us extended reach, right? Clearly, their platform is a great place to identify high-value behaviors that are sort of the path to conversion. You would look for us to identify other social partnerships that we could light up. We're still early days with this Meta partnership. The early growth rate that you cited is impressive. We're still pretty early days with this one. I think there is a lot more that we can do with Meta. If there is another couple of partnerships in that same vein that we could unlock, that again starts to really broaden the product set and make it more cross-channel, as I mentioned before.
OK, great. Let's talk about AI innovation. You rolled out Commerce Go, so AI automation and optimization tool set. That came out late last year, helped drive campaign volume, 45% sequential growth in 1 Q, just as you tap into that long tail of SMBs. What differentiates Commerce Go from other advertiser AI tools?
Yeah. There are a couple of things. I'd start with sort of the slightly big picture on that, which is there's a lot of momentum in the advertising industry towards more AI-driven, automated marketing platforms that can deliver outcomes. We need to be part of that, right? We have a really powerful performance engine. What we've done in the product R&D for Go is figured out basically how to use AI to automate some of the decisions that maybe we used to do hands-on and more of a managed service type of setup. We're able to basically serve that up to end users who don't need to configure every single parameter or every single lever of the setup. The value proposition is campaigns in five clicks.
For, imagine, a mid or long-tail advertiser that doesn't have a massive team or isn't working with an agency to support them, it's self-registration. It'll be credit card optional for payments. Then five clicks to campaign. I know exactly what I'm going to get back in terms of ROAS versus what I'm putting in. It's a really strong proposition. It's differentiated from some of the other platforms like that because of the open web sort of inventory that it draws upon. We think that there's a place in the market for Go. We're excited about it.
OK. What are some of the other opportunities, just when you think about AI, some of the other ways that you can leverage AI technology just to improve monetization and advertisers' performance?
Yeah. I mean, there's really two things we're thinking about. One is continuing to tune our algorithms, right? So we did a lot of that in 2024 to just drive performance, to be able to look at different forms of addressable signal and to translate that into outcomes. And we made a lot of progress on that in 2024. I think further automation of the campaign setup and optimization is both good for ROAS for our customers, but also good in terms of our cost to serve. Then further out, I'm super bullish about how Criteo's data assets could be relevant in an agentic shopping world, right? That is all coming on us, I think, pretty quickly here. We do not have a prototype designed yet.
I like that we've got the sort of base assets that you would bring to that in terms of our Shopper Graph, our product catalog, the daily amount of transactions that we have visibility to. I think all of those will be highly relevant in either partnership discussions or product development that we do.
OK. Let's shift gears a little bit, talk more about retail media. You've highlighted a $50 billion SAM by 2027 and a strategy to scale new channels and products under a single unified platform. Commerce Max, the self-serve ad platform, has reached $500 million+ in spending. Are most of these new clients or existing who are deepening their budgets with Criteo?
Yeah, it's both. We continue to add advertisers or brands to the platform. We continue to develop new agency relationships. Then we're deepening the ones that we have. I think we cited agency growth in the call at up 50% QoQ . It continues to scale really well as agencies see commerce as one of the pillars of how they want to run media investment for clients. Look, I saw that firsthand when I was at Dentsu. Our retail strategy and our approach to commerce was definitely one of our strategic pillars in the media business. We're pushing on an open door there in terms of offering an industry-leading DSP to access that industry-leading supply base that we have. We continue to deliver enhancements to the product. It's progressing nicely.
OK. Just in terms of newer verticals, Criteo recently launched on-site video solutions for retail media. Can you just help us understand the early demand and adoption trends there, along with the path toward video monetization and then cross-selling of solutions?
Yeah. So it's pretty early days. We just went into general availability, I want to say, a few weeks ago. Some of the early results, in particular with Albertsons and Costco, you just see tremendous lift where on-site video is running alongside sponsored ads. Obviously, for brands, that allows them to sort of capture more attention at the point of sale, pair that with a sponsored ad, right, to drive to commerce. They get all that with closed-loop attribution. That's really powerful for them. For retailers, on-site video is a way to enhance the shopping experience and drive more GMV for them. They're not cluttering their product page with things that aren't complementary to the products that they're trying to sell. That's the customer experience balance that I think all of our retail clients are trying to achieve.
OK. Let's shift gears a little bit. Criteo is transitioning Microsoft advertising on-site retailers and some of their more than 500,000 advertisers to the Criteo stack. How is that demand-side integration progressing? How should we think about the incrementality from successful Microsoft integration?
Yeah. No, it's a great question. We're super excited about the Microsoft partnership. I'll touch on the supply aspect just for a second and come back to demand. We have been really successful in winning and converting a lot of those clients that are coming off the Microsoft platform. We announced DICK's Sporting Goods in the last earnings call. There are a couple more that we'll announce over the summer here. Generally speaking, very much on track with high win rates for that set of clients. On the demand side, we continue to work with Microsoft, really at our kind of deeper product and technology teams, to align on exactly the path of sort of investment that we want to make to most effectively access or to bring their demand into our supply. It will take another quarter or so before we make some announcements about that.
Conversation's going really well. Probably some kind of a near-term solve and then work on some things that would be longer-term beyond that. Hope to have some more tangible announcements on that here in the next quarter or two.
OK. Just as it relates to Microsoft, you called out five supply-side client wins that launch in the first half of the year. Anything else to share just on investments that are needed to support these clients and then cadence of capturing the other 15 or so supply-side retailers?
No. I mean, there's not too much. I mean, we have to compete effectively and show them the value that Commerce Yield brings to them. You just have to go through a process with procurement and then contracting. It takes a little while. The investment then is just getting them migrated over to our platform and then getting things up and running. Very much in our wheelhouse. You just kind of have to work through each retailer at the speed that their process allows them to go.
OK. You recently communicated about the reduced scope with your largest client and then also Uber Eats in the U.S. What gives you the confidence that this won't spread to other partners?
Yeah. Yeah, so a couple of things. One, it takes a lot of scale to be able to take on your entire demand generation effort. Just not very many retail networks are big enough to have the economics to support that, right? I do think that that situation with our largest client is pretty unique in that regard. The other thing would be that I do not think the ecosystem supports too many retailers sort of going out as full media platforms that way on their own. I can say that as a former head of an agency, Holdco, you just only have so much time for strategic partnerships. You will make time for maybe the top couple retailers that want to go that path.
You do not have the headspace or the time in the day to make time for number four, five, or six on the list because you have social partners you have to work with, data and identity partners to work with, other MarTech partners to work with. It is just not really feasible to go deep and have strategic relationships. For a couple of reasons, I think we are pretty confident, not the least of which is the demand generation that we provide to our other clients is really complementary and rides side by side. Even if they want to have some of their direct brand on some of the larger brands and we take the mid or the tail, it is all very complementary. I really do not see any reason why that would be disrupted.
OK. You cited softer April macro trends and some macro choppiness that could weigh on client spending and ad budgets. Are there any verticals that stand out in particular? Are you seeing any pauses or slowdown in spend currently?
Yeah. I think what we were trying to do with that was take some of the signals that we were seeing in what was a softer April and just be really prudent in the approach to the rest of the year. Within that, we did not see an across-the-board slowdown across all categories. You certainly saw some on very discretionaries. Think big household consumer purchases or things of that nature. I think the whole world was sort of taking a little bit of a pause in April. Just out of being prudent in our guide, it felt like it made sense to factor some of that in.
OK. Let's talk about profitability. The 2025 adjusted EBITDA margin guide, 33%-34%, that was unchanged coming out of 1Q earnings despite the lower revenue base. How should we think about your commitment to growth investments just depending on that top-line trajectory?
Yeah. Look, we're going to keep going with our growth investments. We have a long-term focus. As I sort of started off the conversation here, right, we've got great roadmaps and opportunities in front of both of our segments. We can't slow down on either one of those. That said, we can tighten up on some of our discretionary spending. We can scrutinize some of what it takes to deliver that roadmap in some places. Equally, we catch a little bit of a tailwind in some places, like with Google's announcement. We have maybe some engineering resources devoted to Privacy Sandbox that I now can redeploy to other near-term revenue opportunities on the roadmap.
I would say between a mix of discretionary, a little extra scrutiny, a couple of tailwinds with some of the recent events, that's what allowed us to maintain guidance on the bottom line. We are committed to doing what it takes to deliver that.
It sounds like, I mean, you think there's ability just to kind of slow hiring, rationalize discretionary spend, ramp productivity despite some of that contribution ex-TAC headwind?
Yes.
OK. Capital allocation, the company continues to repurchase shares. How do you balance those growth investments against margin expansion and capital returns?
Yeah. So yeah, we would reiterate the policy that we have had or the strategy, right, which is we continue to focus on organic growth as the best use of capital. We would opportunistically look at M&A where it is able to accelerate our roadmap in a significant way. We are committed to returning capital to shareholders, right? We have got an active 10b-5. We have made progress against the approval limit that the board gave us earlier in the year. We are going to continue with that program. Pretty much steady as it goes from a capital allocation strategy standpoint.
OK. Cool. All right, we're going to wrap up with a quick word association.
All right.
Ten terms, whatever just quickly comes to mind for you. Macro.
Better.
Meta.
Partner.
Agentic shopping.
The future.
Durability.
Need to.
Performance media.
Underappreciated.
Full funnel.
Getting there.
Google.
Partner.
Growth investments.
Many.
AI.
One of our strong suit. I keep cheating with two words, Doug. I'm sorry.
Lastly, retail media.
Industry leader.
All right. I'm going to leave it there. Thank you, Michael.