The CRTO (NASDAQ: CRTO) “Retail Media Rally”: Ad Tech Revival or Competition Crunch?

Criteo is capitalizing on the retail media surge, with Q3 2025 results highlighting robust growth in its diversified ad platform. Revenue edged up 2% to $470M—beating estimates by 1.1%—while net income soared to $40M, delivering diluted EPS of $0.70 (adjusted $1.31, a 36% YoY leap). This caps a transformative year, as AI integrations and partnerships like Google drive onsite/offsite expansions amid digital ad recovery. Operationally, the momentum stems from Contribution ex-TAC, up 6% YoY at constant currency to $288M, fueled by Retail Media media spend +26% to over $450M across 235 retailers. Performance Media grew 4%, with GO! self-service adoption doubling to 25% of small campaigns, but client scope changes and tiered fee lapping shaved 100bps off growth. Adjusted EBITDA margins expanded 500bps to 36%, though opex rose on AI investments and return-to-office costs. Geopolitical rerouting and forex added friction, but new wins (e.g., Sephora, Zepto) and CTV pilots signal multi-year upside—yet intensifying competition from Google and Amazon tempers the outlook. The balance sheet is fortress-like: $811M in liquidity (cash strong post-ops), zero long-term debt, and Q3 free cash flow of $67M (+74% YoY) funding $11M in buybacks. No dilution—diluted shares down to 53.8M from 58.4M. Guidance held FY25 Contribution ex-TAC +3-4% at constant currency (~$1.15B implied), with Q4 at $325-331M (down 3-5%) and EBITDA $113-119M; 2026 eyes low growth early before AI/agentic pivots accelerate. If partnerships scale, FCF conversion could exceed 45%. 

The bull case amplifies: AI-driven self-service and Retail Media partnerships could fuel 10-15% Contribution CAGR into 2026, lifting margins toward 38%. 

The bear case bites: if client headwinds persist or ad budgets tighten, growth stalls at low-single digits, pressuring ROIs. CRTO trades at $19.91 today—up 5% post-earnings—and at just 9x forward EPS, it’s undervalued in ad tech’s upswing. 

The Filing: 

• Oct 29 Press Release/10-Q: $470M revenue (+2% YoY)

• Net income: $40M (vs. $10M).

• Adjusted EBITDA: $105M (+28%).

The Context: 

• Contribution ex-TAC: +6% to $288M. 

• Liquidity: $811M; Zero debt; Q3 FCF $67M. 

• Stock +5% post-earnings — 0.6x sales. 

The Sharper Take: 

• Bull: Partnerships + AI agents = 15% CAGR 2026. 

• Bear: Client changes = margin compression drag. 

Investor Action:

1. (Buy Signal): Ride the Retail Media tailwind; FCF trajectory undervalued vs. peers.

2. Monitor Q4 Contribution ex-TAC at $328M+; shortfalls here cap the rally to $22.

3. Accumulate below $19; pass if ad market probes escalate competitive risks.