Criteo SA Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ygal Arounian - Citi - Analyst : So I guess first, not surprisingly, on Retail Media. Over the past few quarters, you guys have highlighted the competitive environment, how Criteo has been getting stronger within that competitive environment in a pretty meaningful way. And the combined impacts here that we're talking about are roughly a third -- it would be roughly a third of your Retail Media contribution ex TAC in 2025. So that's a pretty meaningful impact. And I just want to kind of expand on, a, with your largest retail partner, why -- maybe why you think this is happening again after this happened 15 years ago, why they're pulling back further, given the support you offer maybe a little bit on Uber Eats also happening why that's happening and the confidence that your competitive positioning remains as it plays out. Is there further risk of in-housing and just how we think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, CRTO.OQ - Q1 2025 Criteo SA Earnings Call And then a follow-up just on maybe if we could expand on the comments around April and the softer macro, a little bit more detail on what you're seeing there?

Question: Ygal Arounian - Citi - Analyst : Okay. And then maybe just on the macro trends in April and what you're seeing?

Question: Mark Zgutowicz - The Benchmark Company LLC - Analyst : Welcome, Michael. I just wanted to get a sense -- I appreciate the color, Sarah, on the verticals that you saw a weaker in April. But in terms of spending patterns across income demographics, I know you see a lot of data and -- just curious if you're starting to see any weakness at the upper income levels relative to the low to mid, that would be interesting. And then in terms of the OpEx leverage, Sarah, that you saw across all line items in the first quarter. I'm just curious how that should trend into Q2 and through the year, I think you have a better picture perhaps of the top line this year, but I would be interested in just getting a sense of how you plan to manage that. And then just initially, how we should be thinking about the 12-month revenue impact that begins in fourth quarter from your large client downtick.

Question: Mark Kelley - Stifel Nicolaus and Company, Incorporated - Analyst : Great. A couple of just quick ones on surprisingly on Retail Media. Just starting with your largest Retail Media client. Any way to give us a sense for what percent of the demand you were generating versus what they were doing in-house before this change? And then second, just on the Uber relationship, can you just walk through what that process was like? I can see who the competitor is that starting to work with them in the US, but was there like an RFP process that -- where they were testing you against other solutions and the other solutions out. I'm just trying to get a sense for just the dynamics at Uber.

Question: Richard Kramer - Arete Research - Analyst : Michael, you mentioned and Sarah as well, you mentioned the onboarding of the Microsoft clients, capturing budget from multiple funnel DSPs and you talked about the growth rates in agencies, both larger and midsized agencies, but we're not really seeing this come through in numbers this year. And Sarah, it seems like you're mentioning more 2026 figures. Can you talk through what you could do to speed up the ramp of these both new cohorts of clients and also these new channels. It does seem like you're calling out a lot of areas where you're winning share, you've got a big pipeline. But again, it's hard to see that flowing through in numbers this year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, CRTO.OQ - Q1 2025 Criteo SA Earnings Call

Question: Richard Kramer - Arete Research - Analyst : Okay. And maybe a quick follow-up for Todd and Sarah since you have the history there with respect to privacy sandbox, does retargeting somehow revive itself down the road? Or has this sort of third-party cookie ship already sailed. And maybe, Sarah, what sort of incremental testing costs were you wearing in the past year or two to make the transition to privacy sandbox that may now no longer be needed.

Question: Justin Patterson - KeyBanc Capital Markets Inc. - Analyst : Great. Sarah, you mentioned managing expenses during this period, while still investing for growth. Could you give us just how much -- a sense on how much flexibility there is around expense management this year. And maybe stepping back for Michael. We've seen a lot of interest on Retail Media more so from the video side as Connected TV ramps up. Any views on just how you might approach a channel like that and where that could fit on the long-term road map?

Question: Alec Brondolo - Wells Fargo Securities, LLC - Analyst : Maybe one for Sarah and one for Michael Sarah. Could you maybe help us think about the percent of Retail Media contribution ex TAC after backing out the $100 million large customer that's generated the ad sales or, I guess, demand generation services. I'm trying to think about like how much of the business pro forma is on the supply side, which seems a little bit safer, more defensible versus -- side. And then maybe for Michael, I guess, could you help us think about early impressions of Criteo's self-service kind of tools? How do you raise the sophistication of self-service campaign setup and management at Criteo right now relative to maybe -- Advantage Plus or Google Performance MAX? And how do you think about maybe closing the capability gap over time? .

Question: Alec Brondolo - Wells Fargo Securities, LLC - Analyst : I'll take the one on the self-service ability. Look, I would say that Criteo is on a journey as it pertains to that. But we are very excited about the rollout of Commerce Go. And I think we have the benefit there, have seen what has worked in terms of what's come before us and frankly what hasn't. I can tell you from my agency background, really what agency partners are looking for in a solution like that is the ability to manage parameters. They actually enjoy AI automation, but certainly want to have hands on the key critical levers, want to understand placement. They want to have a good understanding of the measurement component. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 12:00PM, CRTO.OQ - Q1 2025 Criteo SA Earnings Call And so Commerce Go designed with all of those in mind, right? We refer to it as our box solution because it offers those types of parameters and transparencies that other solutions in the market do. And so we think that we potentially will be differentiated with that as we roll it out, and we're excited about that has for the business.

Question: Bryan Smilek - JPMorgan - Analyst : It's Bryan Smilek on for Doug. Just thinking about the '25 guide, can you just help parse out the trade-off of contributions from new clients, specifically Microsoft versus macro headwinds that are factored into the guide? And then separately, by vertical overall to social continues to grow well, and you obviously integrated at the SKU level on Facebook and Instagram. Just curious, can you help us think about the demand there and the cross-selling opportunity with the new channels such as social over time?