Despite enthusiasm over its ChatGPT tie-up, Criteo’s shares slide on downgraded revenue forecast

Criteo reported first-quarter revenues of $425 million, down 6% year-on-year, as weakness in its retail media business offset continued growth in media spend and ongoing investments in AI-led products.

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Contribution ex-TAC, i.e., excluding traffic acquisition costs, the company’s preferred profitability metric, fell 5% year-on-year to $250 million, while net income declined 79% to $9 million.

Criteo leadership claimed the decline was primarily driven by earlier disclosed reduction in spend from two retail media clients, which created a $27 million headwind during the quarter. Meanwhile, retail media revenues declined 31% year-on-year to $41.3 million, with retail media contribution ex-TAC also down 31%. Despite this, Criteo said contribution ex-TAC from its broader retail media client base grew 24% during the quarter.  

Meanwhile, performance media revenues declined 2% year-on-year to $383.4 million, reflecting softer commerce growth in the Americas and APAC, partially offset by growth in EMEA and momentum in its supply-side platform and ad tech services businesses.  

Despite the revenue decline, Criteo said activated media spend actually grew 8% year-on-year during the period, surpassing $1 billion in the quarter for the first time.  

Criteo forecast Q2 revenues ex-TAC of between $260 million and $264 million, representing a year-on-year decline of between 9% and 11%, citing macroeconomic volatility, geopolitical tensions, and softer U.S. performance marketing budgets.

“We now expect contribution ex-TAC to decline by low single digits,” said Criteo CFO Sarah Glickman, when describing the company’s expectations for the remainder of 2026, citing overspill from the Middle East conflict on consumer sentiment on marketing budgets. “Our guidance does not assume any material revenue contribution from agenetic AI initiatives, given their early stage,” she added, “although we are seeing strong early traction.” 

Michael Komasinski, Criteo’s CEO, said the company continued to prioritize AI-related initiatives, including its partnership with OpenAI — the “fastest growing in the company’s history” — and expansion of its self-service Criteo GO platform.

Predictably, on the company’s subsequent earnings call, analysts leaned hard into its partnership with OpenAI — the previous day, Criteo announced that more than 1,000 brands are already live on ChatGPT via Criteo — with inquiries centering on how much of a first-mover advantage Criteo has through the tie-up.

Criteo leadership responded by noting how the ad budgets it has attracted through the partnership are “largely incremental,” i.e., not cannibalizing existing spend, with Komasinski noting how it could help the company tap into advertisers’ search budgets. 

“The main KPI [for the impact on Criteo’s business] is client-count, but as we get into ’27 we probably will start to guide more around contribution and some additional disclosure,“ Komasinski added.   

Elsewhere, Criteo leadership also noted its plans to further redomicile from Europe — last year, it moved from France to Luxembourg — to the U.S. as soon as next year, “with the objective of further broadening our access to US capital markets,” according to Glickman.