The difference a quarter makes.
After reporting its Q1 numbers in February, Criteo’s stock popped more than 20% thanks in large part to strong growth in its retail media segment.
On Friday morning, despite a 3% uptick in Q1 revenue to $451 million, Criteo’s stock fell by roughly 15% on news of a pullback by a major retail media client and tepid guidance.
Sudden changes
Last week, without warning, Criteo was told by its largest (and unnamed) retail media client that although it plans to keep using Criteo’s self-service retail media tech platform, it’ll stop using Criteo’s managed services and dial down on remaining sales services by November 1.
“This is a sudden change that will result in a significant impact on the growth rates of our retail media business for the 12-month period starting in Q4 2025,” said newly appointed CEO Michael Komasinski in his first call with investors since taking the reins from Megan Clarken earlier this year.
Sarah Glickman, Criteo’s CFO, stressed that “the curtailment largely relates to services,” which represents roughly 20% of Criteo’s revenue base, but this unidentified client “is the only significant client that has services.”
Criteo is also dealing with other recent customer turmoil.
In early April, Uber ended its US ad sales partnership with Criteo, opting instead to work with Instacart to support ad sales for Uber Eats in the US. Criteo will still power Uber’s ad business in several non-US markets, though, including the UK, Mexico and Canada.
“While we’re disappointed with the change, I think it’s worth a reminder that we’re continuing our global partnership with Uber Advertising and remain focused on deepening that collaboration and driving shared success,” Komasinski said.
Why did Uber choose Instacart over Criteo in the US?
According to Komasinski, Criteo didn’t place second in a bakeoff or lose a head-to-head competition with Instacart. It was just one of those things.
“We were driving significant demand for that client, and they made a decision that they think there’ll be some, maybe, stronger synergy with another provider,” he said. “That’s about the best I can surmise.”
Howdy, partners
Criteo’s long-term strategic priorities remain unchanged, according to Komasinski, including driving growth for the retail media business by bringing more demand into the platform.
On Friday’s call with investors, Komasinski announced a preferred partnership with independent performance marketing agency Tinuiti to use Criteo’s performance media solutions.
He also pointed to Criteo’s new partnership with Microsoft Advertising, announced in January, which brings Microsoft Advertising demand to Criteo’s retailers and made Criteo the preferred on-site media monetization partner for Microsoft’s retailer clients.
“With the transition of retailers from Microsoft Advertising to our platform,” Komasinski said, “we now partner with 70% of the top retailers in the US, an increase from 65%.”
It’ll take until next year, however, for these relationships to have a noticeable and positive impact on revenue.
Retail media “is still maturing,” said Todd Parsons, Criteo’s chief product officer. And as much as people in the industry talk about creating a more integrated, streamlined approach, retail media remains fragmented across on-site, search, display and off-site placements.
“That’s why we talk about the long-term implications of our partnership with Microsoft and other demand platforms,” Parsons said, “because we have to make sure that all of those things trade in a full-funnel, cross-channel setup and in an efficient manner.”
Sandbox spin
What about the long-term implications of Google’s decision to keep third-party cookies in Chrome?
Criteo was one of the earliest and most ardent testers of the Privacy Sandbox APIs – and later became one of the project’s most vocal critics.
But now that the industry has “greater clarity” from Google, Komasinski said, “we’re bullish about the long-term prospects of our performance media segment.” (“Performance media” houses Criteo’s legacy retargeting business, which remains an important driver of revenue.)
Criteo claims it doesn’t regret all of the time, money and engineering resources it poured into testing the Chrome Privacy Sandbox over the years.
“It took us into the world of deep learning for our audience setups, for our bidding, for our product recommendation and for our optimization in new ways,” Parsons said. “We’re going to carry those long term.”
