Criteo (CRTO) Q3 2026 earnings review
Criteo beats its profit plan, but core ad sales drop
Criteo, the digital advertising technology group, held its full-year targets through cost cuts while its core ad business shrank further. Net revenue after publisher traffic fees fell 17% to $240 million, and even excluding known contract cuts at two large retail clients, it dropped 10% by our math. Lower staff pay helped operating profit before one-offs beat the third-quarter plan, and chief executive Michael Komasinski kept the full-year outlook steady after two straight reductions.
| Net revenue, excluding two-client scope cuts | -9.6% from a year ago by our math (-17% reported) |
|---|---|
| Adjusted EBITDA (operating profit before one-offs) | $64.5M -39% from a year ago (beat $54–58M plan) |
| Retail Media net revenue, excluding two-client cuts | +10% down from +20% last quarter (-23% reported) |
| Full-year net revenue outlook | Unchanged -12% to -10% at constant currency |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because holding a twice-cut outlook does not fix the slide in Criteo's main open-web ad business. Performance Media net revenue fell 15% and underlying Retail Media growth slowed by half to 10%, while the fourth-quarter profit plan of $105–111 million sits below what the full-year target previously implied by our math. One bright spot: strict cost control ended the streak of full-year outlook cuts.
The question now is whether Criteo can return to growth in 2027 once the two retail contract cuts finish lapping at year-end. Bulls point to ChatGPT ads in 89 countries and 4,700 retail brands, while bears see a shrinking client list and a falling fee rate on ad spend. Management's initial 2027 outlook next quarter will settle it.
🐂 Bull Case
Cost Cuts Beat the Profit Plan
"We maintained cost discipline in the third quarter while investing in our growth priorities, and we see further opportunities to improve efficiency," finance chief Connor McGogney said. Criteo tracks Adjusted EBITDA, which is operating profit before depreciation, taxes, stock pay and restructuring charges. That measure beat the company's $54–58 million plan by 15% at the middle of the range, reaching $65 million, and management held its full-year targets after cutting them twice.
- Research and development: 13.7% of revenue, down 0.7 percentage points from a year ago
- General and administrative overhead: 10.2% of revenue, down 0.5 percentage points
- Sales and operations: 20.9% of revenue, up 2.4 percentage points as revenue shrank
- Nine-month restructuring and transformation charges excluded from profit: $25.5 million, up from $9.3 million
Lower staff pay, smaller bonus accruals and a 4% headcount reduction drove the beat, but they did not stop margins from falling. Gross margin dropped 5 percentage points to 50% because traffic acquisition costs, the fees paid to publishers for ad space, rose 3.6 percentage points to 42.3% of revenue. Criteo also helped its profit metric by "excluding employer social contribution expense" on stock pay starting in the second quarter.
What to watch: fourth-quarter Adjusted EBITDA against the $105–111 million outlook. A figure above $114 million would meet what the full-year margin plan previously implied by our math.
Retail Media Grows Outside Two Client Cuts
Retail Media is Criteo's software that lets brands place ads directly on online retailers' websites. The company measures top-line performance using Contribution ex-TAC, which is revenue left after paying publishers for ad space. Reported net revenue in Retail Media dropped 23% from a year ago to $50.9 million because of "previously communicated scope changes with two specific Retail Media clients", which cost $20 million this quarter.
When Criteo strips out those two client contract reductions, underlying Retail Media net revenue grew 10% from a year ago. That is slower than the 20% underlying pace in the second quarter and 24% in the first quarter, which management blamed on tougher comparisons from last year. The ad group expanded adoption to about 4,700 brands, up from 4,100 at year-end, and signed new retailers including Notino in Europe and PayU in India.
What to watch: fourth-quarter Retail Media net revenue as the two-client contract reduction shrinks to an expected $7 million hit. That reading will show whether underlying growth holds near 10% once the contract losses fade.
🐻 Bear Case
Performance Media Slide Deepened Across All Regions
Performance Media, Criteo's main business of buying ad space across the open web to target shoppers, brings in 88% of total revenue. Its net revenue fell 15% from a year ago (13% at constant currency) to $189.4 million, which management said was "primarily reflecting soft performance in Commerce Growth", its main retargeting tool. The decline worsened from a 10% drop in the second quarter and a 2% gain in the first.
- Americas revenue: $174.0 million, down 14% from a year ago
- EMEA (Europe, Middle East and Africa) revenue: $159.2 million, down 9%
- Asia-Pacific revenue: $83.3 million, down 11%
- Live clients: 16,703, down 2% from a year ago and down 49 from last quarter by our math
This matters because the weakness is no longer limited to the two Retail Media contract changes. Even when we add back the $20 million Retail Media hit, total company net revenue fell 9.6% from a year ago by our math, down from a 5.3% underlying drop in the second quarter. The fourth-quarter outlook points to an 8.5% underlying decline by our math, showing that core ad budgets are still shrinking.
What to watch: Performance Media net revenue growth in the fourth quarter. A drop worse than 10% at constant currency would show that large ad clients are still cutting open-web spending heading into 2027.
Ad Spending Rose While Net Revenue Fell
Criteo opened its release by highlighting that media spend — the total ad budgets clients run through its software — reached $1.2 billion in the third quarter, up 9% from a year ago at constant currency. Over the last 12 months, total media spend reached $4.6 billion. Management presents this volume growth as proof that brands and agencies still rely on its platform.
The income statement tells the opposite story, because Criteo kept a much smaller slice of those ad dollars. While client ad spending rose 9%, reported revenue fell 11% to $416.5 million and Contribution ex-TAC dropped 17% to $240.4 million. By our math, net revenue as a share of media spend fell by 7.5 percentage points from a year ago, dropping from 27.5% to 20.0%.
That gap exists because Criteo lost high-fee service work at its largest retail partner while low-fee ad volume kept flowing, and higher-margin Commerce Growth spending shrank. Activity on the platform is growing, but the fee Criteo earns per dollar of ad spend has dropped.
What to watch: media spend growth alongside net revenue growth in the fourth quarter. If media spend keeps rising while net revenue falls 9–11% as planned, Criteo's fee rate is still compressing.
ChatGPT Ad Reach Expanded Without Disclosed Revenue
"Despite near-term headwinds, we are making tangible progress across our business, with momentum in newer channels and a growing pipeline of opportunities," chief executive Michael Komasinski said. In March, Criteo became OpenAI's first ad-tech partner, "enabling thousands of brands to advertise on ChatGPT; the offering is now available in 89 countries", up from seven countries last quarter. It also partnered with e-commerce group THG Ingenuity on AI search ads.
Management previously pitched AI shopping assistants as a growth driver for 2027, while bears worry that campaign budgets will stay small or pull money away from Criteo's existing open-web ads. This quarter expanded the country rollout twelve-fold, yet the release did not update the brand count beyond "thousands" and gave no revenue or ad spend figures. Because fourth-quarter net revenue is still set to fall 9–11% at constant currency, the AI rollout is not yet offsetting core ad declines.
What to watch: any initial 2027 outlook next quarter that quantifies revenue from ChatGPT and conversational search ads. Without a dollar figure, investors cannot tell if the 89-country rollout brings new spending.
Server Spending Wiped Out Nine-Month Cash Flow
Criteo is renewing two large data centers this year, which management previously projected would lift full-year capital expenditures to about $190 million. In the third quarter, capital spending rose 61% from a year ago to $35.8 million, or 8.6% of revenue by our math. For the first nine months of 2026, capital spending jumped 69% by our math to $126.9 million, plus $27.7 million of equipment booked in payables.
Combined with lower profit, that equipment bill cut third-quarter free cash flow by 69% to $21.1 million, or 33% of Adjusted EBITDA, down from 64% a year ago. Across the first nine months, free cash flow turned slightly negative at -$0.4 million, down from $76.3 million last year. As cash generation tightened, Criteo slowed share buybacks to $4.1 million in the third quarter, down 87% from $30.4 million in the second quarter by our math.
What to watch: fourth-quarter capital expenditures and free cash flow against the full-year target of converting 35% of Adjusted EBITDA into cash. Hitting that target requires over $105 million of fourth-quarter free cash flow.
Risks This Quarter Didn't Answer
Several standing business questions and watch items are usually discussed on the earnings call and were not readable in the press release alone.
- Same-retailer net revenue retention: not in the release after reading 84% overall (113% excluding the largest retailer) last quarter; the call remarks will show if existing retailers spent more.
- Criteo GO self-service adoption and sales pipeline growth: not in the release; management previously cited these to argue commercial execution is improving.
- Fashion and discretionary retail ad demand: not broken out in the release after falling 21% in the second quarter.
- State privacy regulations and past take-private speculation: unmentioned in the release; the quarterly filing will update regulatory disclosures.
👓 Other Themes
US Legal Move and Global TV Rollout
After moving its legal registration from France to Luxembourg, Criteo expects to complete its transfer of legal domicile to the United States on January 1, 2027, pending a shareholder vote. The ad-tech group also appointed former Google and Microsoft executive Jianchang Mao to its board and will expand its connected-TV ad product to Brazil and Mexico by year-end, with Europe, Canada and Australia following in 2027.
💲 Other KPIs
Trade receivables — money customers owe for ads already run — fell 20.1% from a year ago by our math, shrinking faster than the 11.3% drop in revenue. Days sales outstanding, the average time Criteo takes to collect a bill, held steady from last quarter at 58 days and improved from 64 days a year ago, which supported operating cash flow.
Diluted shares fell 7.4% from a year ago by our math and declined 1.5% from the second quarter. Criteo spent $65.4 million on share buybacks across the first nine months of 2026 and cancelled treasury shares during its move to Luxembourg, which cushioned per-share profit by about 5 cents in the third quarter.
Total cash and marketable securities rose by $22.3 million from the second quarter as working capital turned positive and buybacks slowed, though the balance remains $63.2 million below year-end 2025. Net cash (cash and equivalents plus restricted cash) reached $275.5 million, up 7.9% from a year ago against just $8.5 million of current financial debt.
🔮 Guidance
Unchanged. The full-year plan still calls for net revenue to fall 10% to 12% at constant currency. This is the first quarter management held the target after cutting it twice in a row: from +1% at the middle of the range at year-end, to a low-single-digit drop in the first quarter, and to -11% in the second quarter.
Unchanged. Criteo still plans for full-year operating profit before one-offs and depreciation to equal about 30% of net revenue, down from 35% in 2025. After delivering $202.7 million across the first nine months (a 27.2% margin), hitting 30% for the year requires a fourth-quarter margin of about 36.6% at the middle of the quarterly outlook ranges.
New. The fourth-quarter plan points to a 10% constant-currency drop at the middle of the range (10.6% reported by our math), improving from the 15% constant-currency drop in the third quarter. Even excluding the final $7 million Retail Media client cut, net revenue would fall 8.5% by our math, and management said "Foreign exchange is expected to be a greater headwind in the fourth quarter".
New. The plan calls for $108 million at the middle of the range, down 10.1% from a year ago by our math and below the $114–125 million that the full-year outlook previously implied. Criteo has beaten its quarterly profit target seven straight times by an average of 12.1% over the last four quarters; if the pattern holds, fourth-quarter profit would reach $121.1 million by our math.
❓ Key Questions
How much revenue came from the 89-country ChatGPT ad rollout?
Criteo expanded its OpenAI partnership from seven countries to 89 and cited "thousands of brands", but disclosed no revenue or ad spend. Investors need to know whether these campaigns bring new budgets or just shift money from existing open-web ads.
What was same-retailer net revenue retention this quarter?
The press release omitted same-retailer retention, which stood at 84% overall and 113% excluding the largest retailer in the second quarter. Without it, investors cannot tell how much of the 10% underlying Retail Media growth came from existing partners versus newly signed retailers.
Why did underlying Retail Media growth slow from 20% to 10%?
Excluding the two client contract cuts, Retail Media net revenue growth slowed from 24% in the first quarter and 20% in the second to 10% in the third. Management cited tougher comparisons, but the two-quarter step-down raises questions about organic demand entering 2027.
What drove the $25.5 million of nine-month restructuring charges?
Restructuring, integration and transformation costs nearly tripled from $9.3 million in the first nine months of 2025, and Criteo excludes them from Adjusted EBITDA. Management has not detailed how much is tied to the US legal move versus severance, or when the charges end.
Why did share buybacks drop to $4.1 million in the third quarter?
Criteo repurchased $31.0 million of stock in the first quarter and $30.4 million in the second, then cut buybacks by 87% in the third despite holding $325.5 million in cash and securities. Investors need to know if data-center spending or the US merger restricted repurchases.