Criteo this week reported fourth quarter and full year 2025 financial results showing the commerce media company grappling with significant client relationship changes that will suppress growth through 2026. The company disclosed revenue of $541 million for Q4 2025, declining 2% year-over-year, while contribution ex-TAC fell 1% to $330 million, reflecting a $25 million headwind from previously communicated scope reductions with two retail media clients.

The global advertising technology provider, which powers retail media networks for approximately 225 retailers, confronts a strategic inflection point as its largest client relationship undergoes major restructuring. The shift from managed services toward self-service technology platforms carries profound implications for Criteo's business model and competitive positioning within the rapidly expanding retail media sector.

"Criteo delivered strong performance for the year," said Michael Komasinski, Chief Executive Officer, in the company's earnings announcement. The statement, notably subdued compared to typical quarterly declarations, acknowledged execution challenges while emphasizing investments in agentic commerce technology that the company positions as foundational to future growth.

For full year 2025, revenue increased 1% to $1.9 billion while contribution ex-TAC rose 5% to $1.2 billion. The performance masked deeper underlying dynamics - retail media contribution ex-TAC grew only 2% year-over-year at constant currency, substantially decelerating from the 23% growth rate achieved in Q4 2024.

Client defections shadow retail media segment

The retail media segment, once positioned as Criteo's primary growth engine, generated $76 million in revenue during Q4 2025, plunging 17% year-over-year. Contribution ex-TAC for the segment fell 17% to $75 million, reflecting the full impact of client scope changes disclosed during earlier quarters.

According to Sarah Glickman, Chief Financial Officer, the $25 million fourth quarter headwind represents approximately 700 basis points of contribution ex-TAC growth suppression. The company maintains that excluding these two specific clients, underlying retail media contribution ex-TAC grew 20% in Q4 across its remaining client base.

Media spend in Q4 grew 25% year-over-year as Criteo's 4,100 global brands increased allocations to retail media channels. Same-retailer contribution ex-TAC retention reached 99% - or 110% excluding the largest retailer - driven by multi-year contracts and exclusive partnerships with most retailer clients.

The dichotomy between aggregate media spend growth and revenue decline illustrates fundamental shifts in take rate dynamics. Glickman acknowledged during the earnings call that take rate compression stems partly from changes with the large retailer client and partly from increasing mix toward display advertising, which commands lower rates than onsite sponsored product ads.

Criteo added Lidl and JB Hi-Fi to its retail media footprint during 2025, expanding geographic diversification across European and Asia-Pacific markets. The retail media sector is projected to capture 20% of global advertising revenue by 2030, representing approximately $300 billion in spending according to research from Omdia.

Performance media segment demonstrates resilience

Performance media revenue reached $465 million in Q4 2025, increasing 1% year-over-year, while contribution ex-TAC grew 5% to $255 million. At constant currency, contribution ex-TAC advanced 2%, driven by the Commerce Growth solution, which utilizes large-scale commerce data and AI-powered audience modeling for cross-channel activation.

Travel emerged as the fastest-growing vertical with 37% growth acceleration, followed by classifieds expanding 12%. Retail categories demonstrated softness, including a 13% decline in department stores and a 12% decline in fashion verticals.

By geography, media spend growth accelerated in EMEA while trends softened in the United States and Asia-Pacific markets. AdTech services reduced performance media contribution ex-TAC growth by approximately 100 basis points due to lower spending in Criteo's media trading marketplace.

For full year 2025, performance media contribution ex-TAC totaled $915 million, up 4% at constant currency. The Commerce Growth solution advanced 5% while AdTech services declined 3%, reflecting broader industry shifts toward platform technology solutions rather than managed service offerings.

The performance aligns with patterns observed across commerce media platforms globally, where brands working with four to six retail media networks doubled in 2025, signaling diversification strategies among advertisers navigating fragmented retail media inventory.

Agentic commerce positioning shapes 2026 strategy

Criteo introduced several agentic commerce initiatives during the quarter, including an Agentic Commerce Recommendation Service designed to power AI shopping assistants with product recommendations built on Criteo's commerce intelligence. The company launched an Audience Agent for smarter audience planning and an Insights Agent to empower platform users with data-driven decisions.

Komasinski emphasized positioning Criteo as "the AI-driven commerce intelligence and orchestration platform across an increasingly complex ecosystem." The strategic narrative positions agentic commerce - AI agents automating purchasing decisions - as a fundamental shift requiring new advertising infrastructure.

However, the company's 2026 guidance explicitly excludes revenue contribution from agentic commerce initiatives given their early stage. This conservative approach reflects uncertainty around monetization timelines even as Criteo invests aggressively in the technology.

The experimentation phase focuses on discovery mechanisms rather than immediate monetization. During the earnings call, executives acknowledged that while enthusiasm for agentic tools runs high internally, Criteo lacks signed contracts justifying revenue assumptions at this stage.

Industry observers note that agentic AI threatens traditional DSP business models through automated campaign management functions, creating both opportunity and existential risk for advertising technology providers.

Financial performance and cash generation

Criteo delivered adjusted EBITDA of $120 million in Q4 2025, representing a 17% year-over-year decline. Adjusted EBITDA margin compressed to 36% from 43% in Q4 2024, reflecting higher non-GAAP operating expenses related to growth investments and lower contribution ex-TAC.

Non-GAAP operating expenses increased 12% year-over-year to $184 million, driven by planned growth investments and foreign exchange headwinds on euro-based costs, partially offset by productivity initiatives.

Net income reached $46 million in Q4 2025 compared to $72 million in Q4 2024. Diluted earnings per share totaled $0.90 versus $1.23 in the prior year quarter. Adjusted diluted EPS declined to $1.30 from $1.75.

For full year 2025, adjusted EBITDA totaled $407 million, increasing 4% year-over-year, with adjusted EBITDA margin holding steady at 35%. Net income reached $149 million, up 30% from $115 million in 2024.

Cash flow from operating activities reached $161 million in Q4 2025 and $311 million for the full year, representing 21% growth. Free cash flow totaled $134 million in Q4 and $211 million for 2025, up 16% year-over-year. The company achieved record low days sales outstanding at 57 days, demonstrating operational discipline.

Glickman highlighted cash generation strength: "We generated strong margins and cash flow in 2025, demonstrating the strength of our operating model." The company deployed $152 million, representing 72% of free cash flow, to repurchase 5.4 million shares during 2025.

Criteo's board increased the remaining share repurchase authorization to $200 million from $67 million remaining under the prior program. As of December 31, 2025, the company maintained $389 million in cash and marketable securities with no long-term debt, providing $891 million in total liquidity.

Guidance signals extended headwinds

For 2026, Criteo expects contribution ex-TAC flat to up 2% at constant currency. The modest forecast reflects a $75 million headwind from retail media client scope reductions. Excluding this impact, underlying contribution ex-TAC growth is projected at high single digits.

The company anticipates Q1 2026 representing the low point of the year, with contribution ex-TAC between $245 million and $250 million, declining 9% to 11% at constant currency. The quarter faces an approximately $27 million headwind, creating a 10 percentage-point drag on growth, related to the two retail media clients. Sequential improvement is expected through the year with a return to growth in the second half.

In retail media specifically, contribution ex-TAC is expected to decline year-over-year in the mid- to high-teens at constant currency due to the $75 million client impact. Excluding the two clients, underlying retail media contribution ex-TAC growth for 2026 should accelerate into the high-teens to 20% range compared to 16% in 2025.

Performance media contribution ex-TAC is projected to grow mid-single digits at constant currency in 2026, reflecting expected ramp-up of GO (Growth Optimization) over the course of the year, while experiencing lower spend in fashion and department store categories in the United States.

Adjusted EBITDA margin is anticipated at approximately 32% to 34% for 2026, down from 35% in 2025. The margin compression reflects continued disciplined investments in agentic commerce and AI innovation, costs associated with return-to-office initiatives, and foreign exchange headwinds on euro-based costs, partially offset by productivity actions.

Capital expenditures are expected to reach approximately $190 million in 2026, primarily related to renewal of certain data centers as the company optimizes AI infrastructure. Free cash flow conversion rate should approximate 40% of adjusted EBITDA before non-recurring items.

Corporate restructuring progresses

Criteo's proposed redomiciliation from France to Luxembourg via cross-border conversion advances toward completion in Q3 2026, subject to shareholder approval at a February 27, 2026 meeting. The company will replace its American Depositary Shares structure with ordinary shares directly listed on Nasdaq.

Following the Luxembourg redomiciliation, Criteo intends pursuing subsequent corporate redomiciliation to the United States as early as Q1 2027 if the board determines such action serves shareholder interests, subject to works council consultation.

The restructuring reflects strategic efforts to optimize corporate structure and broaden access to U.S. capital markets. Glickman noted the company is "pleased that our proposed redomiciliation to Luxembourg and direct Nasdaq listing are progressing as planned with no material French tax impact."

Industry context and competitive dynamics

Criteo's challenges occur as the broader retail media ecosystem undergoes rapid transformation. IAB Europe data shows European retail media spending reached €13.7 billion in 2024, representing 21.1% growth and substantially outpacing the broader advertising market's 6.1% expansion.

However, commerce media maturity lags across industries despite widespread adoption ambitions, according to research from Forrester Consulting commissioned by Koddi. Only 13% of organizations meet criteria for "trailblazers" across strategy, technology, measurement, and operations.

The shift from managed services to self-service platforms reflects industry-wide patterns. Major platforms including The Trade Desk have enabled programmatic retail media buying through partnerships that provide unified management interfaces, increasing competitive pressure on specialized retail media technology providers.

Criteo's announcement that guidance excludes agentic commerce revenue contrasts with aggressive AI monetization claims from larger competitors. Meta reported $58.1 billion in advertising revenue during Q4 2025, with AI improvements across ranking systems and creative tools driving conversion acceleration. Google's advertising revenues climbed 14% as Gemini app reached 750 million users, demonstrating how platform giants leverage AI at scale.

Payment networks have entered commerce media, with Mastercard launching its network in October 2025 leveraging permissioned transaction data from more than 160 billion annual payments. The expansion signals intensifying competition as non-traditional players leverage first-party data advantages.

Criteo's strategic positioning emphasizes differentiated commerce data, AI-driven decisioning, and global reach. Whether these advantages prove durable against well-capitalized competitors with established advertiser relationships and expanding commerce capabilities represents the central question facing investors.

The client retention rate of 90% suggests underlying business stability despite headline revenue pressures. However, the concentration risk exemplified by a single client relationship creating $75 million annual revenue impact raises questions about customer diversification and strategic dependencies.

Timeline

Summary

Who: Criteo S.A., the global commerce media platform company, announced financial results with CEO Michael Komasinski and CFO Sarah Glickman leading earnings discussions.

What: Criteo reported Q4 2025 revenue of $541 million (down 2% year-over-year) and contribution ex-TAC of $330 million (down 1%), reflecting a $25 million headwind from retail media client scope reductions. Full year 2025 revenue reached $1.9 billion (up 1%) with contribution ex-TAC of $1.2 billion (up 5%). The company provided 2026 guidance for contribution ex-TAC growth of flat to up 2% at constant currency, suppressed by a $75 million headwind from two retail media clients transitioning from managed services to self-service technology platforms.

When: Results were announced on February 11, 2026, covering the quarter and fiscal year ended December 31, 2025. The company expects Q1 2026 to represent the low point of the year with sequential improvement through 2026 and return to growth in the second half.

Where: Criteo operates globally with revenue distributed across Americas (45% of Q4 revenue), EMEA (37%), and APAC (18%). Media spend growth accelerated in EMEA while softening in U.S. and Asia-Pacific markets. The company powers retail media networks for approximately 225 retailers worldwide and serves 4,100 global brands.

Why: The results matter because they demonstrate how platform shifts from managed services to self-service technology can dramatically impact even established advertising technology providers. The $75 million revenue headwind from two client scope changes represents approximately 6% of total contribution ex-TAC, illustrating concentration risk in the retail media sector. Criteo's conservative 2026 guidance excluding agentic commerce revenue, combined with aggressive AI infrastructure investments ($190 million capex), signals the company's strategic bet that emerging AI-powered shopping experiences will require specialized commerce intelligence platforms - a thesis that remains unproven as monetization timelines extend.

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