Criteo reports Q2 2024 results, 1% revenue growth

On August 1, 2024, Criteo, a global commerce media company, released its financial results for the second quarter of 2024 and announced an expanded partnership with Microsoft in the retail media space. The earnings report revealed strong revenue growth and profitability, while the Microsoft collaboration aims to accelerate Criteo's position in the rapidly growing retail media advertising market.

According to Criteo's earnings release, the company reported revenue of $471 million for Q2 2024, representing a 1% increase year-over-year. However, on a constant currency basis, revenue grew by 3%. More importantly, Criteo's key performance metric of Contribution ex-TAC (gross profit minus traffic acquisition costs) reached $267 million, growing 14% year-over-year at constant currency.

Criteo CEO Megan Clarken highlighted the company's third consecutive quarter of double-digit organic growth, achieving record top-line performance and adjusted EBITDA margin for a second quarter. The strong results reflect Criteo's ongoing transformation into a commerce media platform, leveraging its unique commerce data assets, artificial intelligence capabilities, and relationships with both advertisers and media owners.

A significant development announced alongside the earnings was Criteo's expanded partnership with Microsoft Advertising. This collaboration has two main components that aim to strengthen Criteo's position in the retail media landscape:

1. Demand Integration: Criteo will integrate Microsoft Advertising's extensive advertiser base, comprising over 500,000 advertisers, into its global network of 225 retailers. This integration will allow retailers using Criteo's platform to access new advertising budgets and expand the reach of their inventory.
2. Preferred Onsite Partner: Microsoft has chosen Criteo as its preferred partner for onsite retail media advertising. As part of this agreement, Microsoft Advertising will transition its existing retail media clients to Criteo's platform, with the process expected to begin in 2025.

The partnership also includes a focus on leveraging artificial intelligence to enhance retailer monetization and advertiser outcomes across the consumer journey. Both companies plan to collaborate on developing advanced AI-driven capabilities for targeting, product recommendations, campaign workflows, and creative formats.

Criteo's Retail Media segment showed strong performance in Q2 2024, with Contribution ex-TAC growing 24% year-over-year at constant currency to $54 million. The company reported a 30% year-over-year increase in activated media spend for retail media, outpacing overall market growth. Criteo now claims to work with 65% of the top 30 retailers in the Americas and 50% of the top 30 in Europe, Middle East, and Africa (EMEA).

In the Performance Media segment, which includes Criteo's targeting capabilities and ad tech services, Contribution ex-TAC grew 11% at constant currency to $213 million. The company saw particularly strong growth in its Commerce Audiences product, which increased by 41% year-over-year. Notably, Criteo's traditional retargeting business returned to growth for the second consecutive quarter.

Criteo's financial results also demonstrated improved profitability. Adjusted EBITDA for Q2 2024 reached $93 million, representing a 67% increase compared to the same period last year. The company attributed this growth to strong top-line performance, disciplined cost management, and operational efficiencies.

In light of the strong Q2 performance, Criteo raised its full-year 2024 guidance. The company now expects Contribution ex-TAC to grow between 10% and 12% year-over-year at constant currency, up from its previous forecast of high single-digit growth. Additionally, Criteo increased its projected adjusted EBITDA margin from 31% to 32% for the full year.

For the third quarter of 2024, Criteo anticipates Contribution ex-TAC to be between $264 million and $268 million, representing year-over-year growth of 8% to 10% at constant currency. The company expects adjusted EBITDA for Q3 2024 to fall between $72 million and $76 million.

During the earnings call, Criteo executives also addressed recent developments in the digital advertising landscape, particularly Google's announcement regarding changes to its plan for deprecating third-party cookies in the Chrome browser. Google is now proposing a new framework that would continue to support third-party cookies with user choice, rather than fully eliminating them as originally planned.

Criteo views this development positively, as it could potentially lead to a smaller impact on signal loss than previously anticipated. The company remains committed to its multi-pronged addressability strategy, which includes leveraging first-party data, developing privacy-centric targeting solutions, and exploring alternatives to third-party cookies.

The strong Q2 2024 results and expanded Microsoft partnership come at a time when the retail media advertising market is experiencing rapid growth. According to eMarketer, U.S. retail media ad spending is projected to reach $51.36 billion in 2023 and grow to $61.15 billion by 2024, representing a 19% year-over-year increase. This growth is driven by retailers' desire to monetize their first-party data and brands seeking more targeted advertising opportunities closer to the point of purchase.

Criteo's position in this market is bolstered by its extensive relationships with retailers and brands, as well as its technology capabilities in areas such as first-party data activation and AI-driven optimization. The Microsoft partnership, in particular, is expected to enhance Criteo's competitive position by providing access to a larger pool of advertisers and consolidating more retail media supply onto its platform.

As the digital advertising industry continues to evolve in response to privacy regulations and changing consumer expectations, Criteo's focus on commerce media and its investments in AI and first-party data solutions appear well-aligned with market trends. However, the company still faces challenges, including potential impacts from macroeconomic uncertainties and ongoing changes in the digital advertising ecosystem.

Criteo has scheduled a Retail Media investor update for November 18, 2024, where it plans to provide more detailed information about its retail media business and future opportunities in this growing market segment.

Key facts from Criteo's Q2 2024 earnings report and Microsoft partnership

Revenue: $471 million, up 1% year-over-year (3% at constant currency)

Contribution ex-TAC: $267 million, up 14% year-over-year at constant currency

Adjusted EBITDA: $93 million, up 67% year-over-year

Retail Media Contribution ex-TAC growth: 24% year-over-year at constant currency

Performance Media Contribution ex-TAC growth: 11% year-over-year at constant currency

Full-year 2024 Contribution ex-TAC growth guidance: 10% to 12% at constant currency

Microsoft partnership to integrate 500,000+ advertisers into Criteo's retail media network

Transition of Microsoft Advertising's retail media clients to Criteo's platform starting in 2025

Retail media activated media spend growth: 30% year-over-year

Commerce Audiences product growth: 41% year-over-year

Retargeting business returned to growth for second consecutive quarter

Criteo now works with 65% of top 30 retailers in Americas and 50% in EMEA