Criteo cuts 2026 outlook as Q2 profit nearly halves amid retail media slowdown

New York: Criteo may be talking up the future of AI-powered commerce, but its latest quarterly numbers struck a quieter note. The global commerce intelligence platform reported weaker second quarter earnings, lowered its full-year outlook and announced a finance leadership change as it looks to sharpen execution in a challenging advertising market.

Revenue for the three months ended June 30 fell 11 per cent year-on-year to $428 million, while gross profit declined 14 per cent to $222 million. Net income nearly halved to $12 million, with diluted earnings per share dropping to $0.22 from $0.39 a year earlier.

On a non-GAAP basis, Contribution ex-TAC fell 13 per cent to $255 million, while adjusted EBITDA declined 18 per cent to $73 million. Adjusted diluted earnings per share stood at $0.80, down from $0.92 in the same period last year.

The company also announced the appointment of Connor McGogney as chief financial officer, effective August 10. He succeeds Sarah Glickman, who will remain as an adviser until the end of September to ensure a smooth transition.

Commenting on the results, Criteo, chief executive officer, Michael Komasinski said the company’s second quarter top-line performance was disappointing but added that its long-term Commerce Intelligence strategy remains unchanged. He said Criteo is focused on strengthening execution, diversifying its business and helping shape the next generation of AI-driven commerce.

Retail Media remained under pressure, with revenue and Contribution ex-TAC both declining 21 per cent. The company attributed much of the weakness to previously announced scope changes involving two major retail media clients, which created a $21 million headwind. Excluding those changes, Contribution ex-TAC from the underlying client base grew 20 per cent during the quarter.

Performance Media revenue declined 10 per cent as softer Commerce Growth performance offset improvements in AdTech Services.

Despite the weaker financial performance, Criteo highlighted continued momentum in strategic initiatives. The company said media spend reached $1.1 billion during the quarter, up 9 per cent year-on-year at constant currency, taking media spend over the past 12 months to $4.5 billion.

Its AI ambitions also gathered pace. After becoming OpenAI’s first advertising technology partner earlier this year, Criteo now supports more than 2,000 brands advertising on ChatGPT across seven countries. The company plans to expand the offering into Mexico and Brazil, while making ChatGPT advertising inventory available through its Criteo GO self-service platform.

Criteo also expanded its Retail Media network with new retail partners across Canada, Europe and Asia-Pacific, while launching sponsored product placements in AI-powered conversational search with Albertsons.

The company generated $20 million in operating cash flow during the quarter, although free cash flow remained negative at $38 million. It ended June with $303 million in cash and marketable securities and total financial liquidity of around $767 million. During the first half of the year, Criteo returned $61 million to shareholders through share buybacks, including $30 million in the second quarter.

Looking ahead, the company lowered its expectations for 2026. It now expects Contribution ex-TAC to decline between 10 per cent and 12 per cent at constant currency and forecasts an adjusted EBITDA margin of around 30 per cent. For the third quarter, Criteo expects Contribution ex-TAC of $237 million to $241 million and adjusted EBITDA of $54 million to $58 million, reflecting the continued temporary impact of the retail client scope changes.

While near-term growth remains under pressure, Criteo is betting that its expanding AI advertising ecosystem, disciplined capital allocation and broader commerce intelligence strategy will position it for stronger long-term growth once market conditions improve.