Criteo reported its first-quarter 2025 earnings on Friday, May 2, delivering financial results that were more impressive under the surface than the headline numbers suggest. While gross revenue growth was flat, and net revenue ex traffic-acquisition costs (TAC) grew only somewhat faster, the earnings call and supporting materials revealed a company in progression—pivoting toward higher-margin business, navigating changing client relationships, and showing early signs of success in building a full-funnel, AI-powered commerce media platform.
Strong Profitability Despite Flat Revenue
Criteo generated $451 million in gross revenue for Q1 2025, representing a modest year-over-year increase of 0.3%. Net revenue ex TAC grew faster, by 4% to $264 million, implying better TAC management. While these growth rates are sluggish compared to peers like The Trade Desk—which consistently showed double-digit quarterly revenue growth for more than the past four years—it masks a much stronger story underneath.
In other words, Criteo didn’t grow much in terms of topline revenue, but it made far more money from every dollar it earned. Net income surged by 367% to $40 million, and adjusted EBITDA rose 30% to $92 million, translating to an impressive 35% adjusted EBITDA margin. The company also delivered a hefty free cash flow of $45 million, compared to just $1 million a year ago, driven by disciplined expense management and operational efficiency. Diluted EPS came in at $0.66, a 450% increase year-over-year, and crushed analyst expectations of $0.28.
By contrast, The Trade Desk’s focus on rapid growth and long-term brand investment has led to recurring double-digit revenue growth, but it typically reports slimmer margins. The divergence in growth and profitability reflects two different playbooks: The Trade Desk as a growth machine, and Criteo as a disciplined performance marketer pivoting toward a broader platform strategy.
A Tale of Two Segments: Retail Media and Performance Media
Criteo divides its business into two core segments: Retail Media and Performance Media. Retail Media focuses on enabling retailers to monetize their digital real estate and allows brands to advertise their products on retailers’ Web sites. Performance Media serves advertisers with lower-funnel campaigns targeting in-market consumers across the open web and, increasingly, social platforms. It is the successor of Criteo’s former bread-and-butter retargeting business, comprised of the formerly broken out segments retargeting, commerce audiences (data) and the iponweb acquisition.
In Q1, Retail Media contributed $59 million in contribution ex-TAC, growing 18% year-over-year at constant currency – not shabby. Performance Media delivered $206 million in contribution ex-TAC, growing 4% at constant currency. In terms of revenue share, Performance Media remains the larger business, but Retail Media is the faster-growing and more strategically important one. Retail Media has consistently grown its share of contribution to the top-line.
This shift mirrors an industry-wide trend. Retail Media has been the fastest-growing segment in digital advertising, and Criteo’s deep investment in this space—highlighted by new formats like onsite video and full-funnel campaign capabilities—is beginning to pay off. Retail Media now accounts for 22% of contribution ex-TAC, up from approximately 17% in early 2023, and is poised to grow further as legacy performance products mature.
Compared to The Trade Desk, which doesn’t break out a specific Retail Media segment, Criteo’s heavy tilt toward retail partnerships gives it a unique differentiation. The Trade Desk is more diversified across CTV, open web display, and video, whereas Criteo is more concentrated and going deeper in retail and commerce.
Global Business, Regional Complexity
Criteo reports its revenue by geography but does not provide detailed regional breakdowns in earnings releases. However, investor commentary and call transcripts suggest continued strength in international markets. Retail Media growth was particularly strong in Europe and Asia, with new client wins including Endeavour in Australia, d shopping in Japan, and Elkjop in the Nordics. In the U.S., the company added Dick’s Sporting Goods and expanded collaborations with E. Leclerc and Costco.
While The Trade Desk historically skews more heavily toward North America -something I have consistently pointed out as a weakness-, Criteo’s European roots and diverse global footprint are key differentiators. Its international scale, especially in retail partnerships, may prove to be an asset as more global brands seek unified campaign execution across regions.
Profitability That Surpasses Expectations
Criteo’s operating income margin was particularly strong this quarter. The company delivered a 35% adjusted EBITDA margin on $264 million in contribution ex-TAC, a jump from 28% a year ago. Operating expenses decreased by 9% year-over-year, even as the company expanded its client base and rolled out new products.
These results exceeded both Criteo’s own guidance and analyst expectations. The company had guided to modest growth and mid-30s margin range, but actual results came in above forecast on both counts. In contrast, analyst consensus had expected weaker earnings amid macro uncertainty and possible headwinds in Retail Media. Instead, Criteo surprised on the upside on nearly every profitability metric.
Sharp Stock-Price Drop Not About Performance, But About Future Risks
Despite the solid results, the market saw a sell-off of Criteo’s shares, depressing its stock price by 12% after earnings. This sharp drop was primarily driven by investor concerns over two key developments announced in the earnings report: a significant reduction in services expenses from its largest Retail Media client (see below) and a downward revision of the company’s 2025 Retail Media growth guidance. In short, the selloff wasn’t about Q1 performance—it was about forward-looking risk.
Strategic Cash and Shareholder Returns
Criteo ended Q1 with $329 million in cash and marketable securities and total liquidity of over $800 million. It returned $56 million to shareholders in share repurchases, signaling confidence in its valuation and strategy.
This cash reserve is more than sufficient to fund ongoing product innovation, expansion of its AI and commerce infrastructure, and potential mergers and acquisitions. For instance, Criteo had been in talks to acquire Skai back in August of last year—a specialist in omnichannel commerce and search advertising—for a reported $500 million. While talks seem to have petered out, Criteo would theoretically have the financial capacity to pursue it without threatening its operational flexibility—even if an acquisition of Skai would perhaps be unwise.
Retail Media Reset: Client Cuts and Platform Upside
The biggest headline from Criteo’s earnings wasn’t in the income statement—it was in the client update. The company revealed that its largest Retail Media customer—perhaps Walmart or BestBuy?—will curtail managed services starting in November 2025. This change will reduce net revenue ex-TAC by approximately $25 million in Q4 —perhaps an almost 10% hit—and by about $75 million over the first ten months of 2026.
The loss stings but isn’t fatal. The client will continue to use Criteo’s technology platform under a multi-year contract, and Criteo emphasized that the impact is limited to professional services, which represent a small portion of the business going forward. Meanwhile, same-retailer revenue retention in Retail Media remained strong at 120%, and Criteo continues to expand its platform with over 3,800 global brands. That retention rate shows just how much Criteo has managed to improve net revenue per client. So much so that even as the number of clients has declined over the last few years (the decline leveling out lately), total revenue has increased.
The underlying theme is a strategic pivot: away from services and toward a self-serve, AI-powered commerce media platform. While painful in the short term, this transition could make Criteo’s model more scalable and profitable over time.
Looking Ahead: Will Tariffs Hurt Criteo’s Retail Media Business?
Looking ahead, Criteo guided to low-single-digit growth in contribution ex-TAC for full-year 2025, with adjusted EBITDA margins in the 33–34% range. For Q2, the company expects revenue to be flat to slightly down, factoring in the expectation of a forthcoming Retail Media slowdown and macro uncertainty. One important factor are the Trump administrations’ import tariffs: As duties, especially those on China, increase prices on cheap consumer products, consumer spending will slow down, potentially hurting Retail Media sales. Interestingly, tariffs were neither mentioned in the earnings call—perhaps not to raise too much of a fuzz-, nor asked about by analysts. What’s worse, as tariffs start to bite, the United States may enter a recession soon—which however would hurt both Retail Media specialists and more general advertising plays alike.
Criteo’s strengths include a solid cash position, improving margins, and momentum in Retail Media. Weaknesses include a reliance on a few large clients and a slower-than-expected revenue growth rate. Opportunities lie in AI-powered campaign automation (such as the Commerce GO! product), expanding agency partnerships, and broadening its Retail Media footprint globally. Challenges include platform competition, potential client in-housing, and geopolitical risks like the trade tariffs which I already mentioned.
Industrywide, digital advertising remains robust but increasingly fragmented. With Google maintaining third-party cookies and AI becoming central to media buying, Criteo’s ability to adapt with advanced AI and cross-channel integration may prove to be its secret weapon.
Conclusion: Quiet Confidence from an Underrated Player
Criteo may not be the headiest game in AdTech, but its Q1 2025 results show a company under a new CEO that’s playing the long game—one that prioritizes sustainable profitability, platform innovation, and strategic flexibility. While it still has work to do to reignite topline growth, the core business is healthy, the commerce media strategy is working, and AI is beginning to reshape how it serves advertisers.
As the digital advertising ecosystem continues to evolve, Criteo’s bet on commerce media—anchored in retail partnerships and powered by AI—could make it a quiet but formidable competitor.
Criteo S.A. is a global technology company specializing in Commerce Media. Learn more at www.criteo.com.
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