Criteo Q2 2026 earnings: Revenue falls 11% on client scope changes and media softness

Criteo (NASDAQ: CRTO) reported Q2 2026 revenue of $428.0 million, down 11% from $482.7 million, while GAAP diluted EPS fell 44% to $0.22 from $0.39. Scope changes involving two Retail Media clients and softness in Performance Media weighed on adjusted EBITDA, while higher investment spending kept free cash flow negative despite an improvement in operating cash flow.

Core financial results

Revenue contracted across both operating businesses. Gross profit fell faster than revenue because traffic acquisition costs declined only 9% and other cost of revenue was nearly unchanged, reducing gross margin by two percentage points.

Operating expenses fell 9% through tighter resource allocation, productivity gains and the absence of a company-wide event held in the prior year. Those savings did not fully offset the $36.3 million decline in gross profit, leaving operating income approximately 51% lower.

The following figures are in U.S. dollars, with amounts in millions except per-share data and margins.

Contribution ex-TAC, adjusted EBITDA, adjusted diluted EPS and free cash flow are non-GAAP measures. Beginning in Q2 2026, Criteo also excluded employer social contribution expenses related to employee equity awards from its adjusted measures; prior periods were not recast because the company considered the amounts immaterial.

Business and segment performance

Retail Media recorded the larger percentage declines, while Performance Media remained the company’s substantially larger business. Constant-currency trends were close to reported results, indicating that foreign exchange was not the main reason for the quarterly contraction.

Retail Media absorbed a $21 million headwind from previously announced scope changes involving two clients. Criteo said contribution ex-TAC across the underlying Retail Media client base grew 20% when that effect was excluded, with additions to its retail partner base in Canada, EMEA and APAC.

Performance Media was affected by weak results in Commerce Growth, partly offset by better year-over-year trends in AdTech Services. Revenue declined across every region: 12% in the Americas, 8% in EMEA and 17% in APAC. The total client count fell 2% to 16,752.

Higher media spend did not translate into revenue growth

Media spend reached $1.1 billion and increased 9% at constant currency, even as reported revenue declined 11% and contribution ex-TAC fell 12% on a constant-currency basis. Media spend measures working media allocated to Retail Media campaigns and spending activated for Performance Media clients, rather than Criteo’s own revenue.

The divergence shows that higher campaign activity alone did not overcome the financial effect of the two Retail Media client scope changes and weakness in Performance Media. The 20% underlying Retail Media contribution growth excluding the client impact provides a contrasting signal, but the company’s Q3 outlook indicates that the temporary scope-change pressure will continue into the next quarter.

Profitability, cash flow and balance sheet

Adjusted EBITDA declined because of lower contribution ex-TAC and planned growth investments. Lower-than-expected bad debt expense and employee costs provided a partial offset. Total non-GAAP operating expenses fell 10% to $158.1 million, although restructuring, integration and transformation costs rose to $9.9 million from $0.6 million and widened the difference between GAAP and adjusted results.

Operating cash flow improved to $20.3 million, but spending on intangible assets, property and equipment increased to $58.2 million from $35.3 million. That increase was enough to keep quarterly free cash flow negative at $37.5 million. On a trailing 12-month basis, however, free cash flow remained positive at $180 million.

Criteo ended June with $303 million in cash and marketable securities, down $86 million from December 2025. It spent $61 million on share repurchases during the first half, including $30 million in Q2. Total liquidity was approximately $767 million, consisting of $252 million in cash, $51 million in marketable securities and $464 million available under its revolving credit facility.

Business outlook

Criteo updated its 2026 outlook to reflect what management described as a more conservative view of business trends for the remainder of the year. Numerical ranges from its previous outlook were not included in the supplied materials, but the latest guidance anticipates continued contraction in contribution ex-TAC.

The outlook assumes no acquisitions or divestitures during Q3 or fiscal 2026 and uses the exchange rates specified by the company.

Management perspective

CEO Michael Komasinski characterized the quarter’s top-line performance as disappointing but said Criteo’s Commerce Intelligence strategy remains unchanged. The company is focusing on execution, business diversification and AI-enabled commerce, including its advertising technology partnership with OpenAI. Criteo said more than 2,000 brands were advertising on ChatGPT across seven countries, although it did not quantify the initiative’s financial contribution.

Criteo also appointed Connor McGogney as chief financial officer effective August 10, 2026. Sarah Glickman will remain an adviser through the end of September to assist with the transition.

Risks investors should monitor

• Retail Media client scope changes: The $21 million Q2 headwind will also affect Q3, making the timing and extent of normalization important to reported growth.
• Performance Media softness: Continued weakness in Commerce Growth could pressure the company’s largest revenue and contribution source despite improving trends in AdTech Services.
• Margin pressure: Lower contribution ex-TAC and planned growth investments reduced adjusted EBITDA and its margin, while the full-year outlook assumes only an approximately 30% margin.
• Cash conversion: Operating cash flow improved, but higher spending on intangible assets, property and equipment kept quarterly free cash flow negative.

Summary

Criteo’s Q2 2026 results were shaped by a broad revenue contraction, with two Retail Media client scope changes and Performance Media softness outweighing growth in the underlying Retail Media base. Expense reductions cushioned but did not offset the decline in gross profit, and higher investment spending limited cash conversion. Investors’ next focal points are the persistence of the client-related headwind, stabilization in Performance Media and whether Criteo can deliver its approximately 30% full-year adjusted EBITDA margin while contribution ex-TAC remains under pressure.