Criteo S.A.

Good morning, and welcome to Criteo's first quarter 2025 earnings call. All participants will be in the listen-only mode. Should you need assistance, please press star, followed by zero. After the prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star, then one. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Melanie Dombre, Vice President, Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Credo's first quarter 2025 earnings course. Joining us on the course today, Chief Executive Officer Michael Komaczynski and Chief Financial Officer Sarah Glickman are going to share some prepared remarks. Top persons or chief product officer will join us for the Q&A session. As usual, you will find our investor presentation on our investor relations website now, as well as our prepared remarks and transcripts after the course. Before we get started, I would like to remind you that our remarks will include forward-looking statements which reflect CREDO's judgments, assumptions, and analysis in the as of today. Our actual resource may differ materially from current expectations based on a number of factors affecting CREDO's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to the risk factors discussed in our earnings release, as well as our most recent scores, 10-K and 10-Q, filed with the SEC. We will also discuss non-GAAP measures of our performance. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings release published today. Finally, unless otherwise stated, all board comparisons made during this course are against the same period in the prior year. With that, let me now hand it over to Michael.

Thanks, Melanie, and good morning, everyone. Thank you all for joining us today. I'm proud to be here for my first earnings call as CEO of Criteo, and it's a tremendous opportunity to lead the company forward with focus and ambition. Over the past two months, I've had the chance to meet with many of our teams across regions, along with clients and partners. I want to start by sharing a few reflections on why I took the role what I've observed in my first couple months, and how we're thinking about the road ahead. But before I do that, I want to address two important recent developments. First one is related to Google's recent decision to keep third-party cookies, which has positive near-term and long-term implications. In addition to a modest benefit this year, we now operate from a position of strength and with greater clarity. We're bullish about the long-term prospects of our performance media segment. Our investments in addressability have led to significant AI innovation that will continue to pay off across all environments. With a future-proofed approach to privacy-protecting addressability, we're moving full steam ahead to execute tailored, full-funnel, cross-channel campaigns that drive measurable outcomes for our clients in any scenario and for the long term. The second development impacts us in the near term and is related to our largest retail media client, who has been a longstanding partner. This client unexpectedly notified us this week that while they will continue to use our industry-leading retail media technology platform under a multi-year committed contract, they will discontinue our managed services and curtail the remaining brand demand sales services in November of this year. Instead of a natural and gradual evolution of the support we provide them with, this is a sudden change that will result in a significant impact on the growth rates of our retail media business for a 12-month period starting in Q4 2025. However, this near-term change does not affect our substantial opportunities to continue to grow faster than the market across the rest of our retailer base and for the long term. More broadly, it's important to highlight that Criteo, as a leading and independent ad tech player, has built something unique, a robust AI-powered performance media business combined with leading capabilities in retail media, one of the fastest-growing segments of digital advertising. Criteo sits right at the center of commerce and media, and that combination is powerful. We have deep commerce data, advanced AI capabilities, a large and diversified global client base, impressive talent, and a strong position across the digital advertising ecosystem. Criteo is increasingly viewed as a must-have agency partner in the evolving advertising landscape, and I saw firsthand that our relationships with leading global agencies are growing more strategic every quarter. For my first couple of months, I can see that Criteo hasn't yet realized its fullest potential. My key priorities are to re-accelerate growth and improve its durability, fortify our leadership position in retail media, re-energize our performance media business, and amplify the power of our platform, all with a sharp focus on maximizing shareholder value. The opportunity ahead is to intensify our focus, scale our strengths, and double down on a few core strategic initiatives to deliver durable, strong, and profitable growth. First, we have early momentum behind our platform strategy. We've elevated our positioning in the market, and we have major enterprise clients like Office Depot and ODP Business Solutions now utilizing our comprehensive commerce media platform. They leverage our demand side capabilities with Commerce Growth and Commerce Max, and our supply side solutions through Commerce Grid and Commerce Yield. demonstrates the value of our integrated approach. We're also expanding our global agency partnerships to activate more of the overall platform. These strategic partnerships will continue to be a key growth lever for us moving forward. As a multi-product platform company, we have many synergies across our products. There's a real opportunity to amplify these connections and enable our flywheel. Second, we're focused on driving more demand to our platform. That's key to re-accelerating growth. After establishing a strong foothold in retail media supply, we're deepening agency and API partnerships and expect to incorporate more demand sources moving forward, including through Microsoft and other partnerships. In performance media, we're excited about the rollout of Commerce Go, our new AI-powered automation and optimization toolset to launch high-performing campaigns in just five clicks. and onboard more advertisers faster. Third, we're leaning into brand performance, helping brands build awareness that's actionable and linked to measurable outcomes. Our reach across multiple buyer types and our unique ability to deliver performance across the buyer journey gives us optionality. No one else delivers performance everywhere like we do, and it's powered by a rock-solid foundation and sustained innovation. That's a strength we plan to build on with new product extensions. For the second quarter in a row, we've seen success in capturing budgets from traditional upper funnel DSPs, which reinforces our growing relevance across the full funnel. Underpinning all of this is our AI innovation. We have world-class capabilities, including the right training data, and we intend to continue to accelerate the pace of our innovation. In performance media, our AI delivers greater automation and performance breakthroughs. More broadly, as AI agents become a new interface for consumers, we see a clear opportunity for Criteo to play a central role in helping brands show up where it matters, in real time, with measurable outcomes. In retail media, AI is a key enabler for our full funnel relevancy and holistic page optimization strategies. As we look to the future, here's what you can expect from us. We intend to continue to lead in commerce media and maintain our disciplined approach to growth through our build, partner, and buy framework. We'll hold ourselves accountable, aligning ambition with execution. We're shifting from transformation to scale with continuous innovation and disciplined execution. That means further expanding across multiple channels, including retail media, open web, and social to serve the full buyer journey. We're investing in new formats. such as outcome-based, native display, on-site video, and CTV, all expanding our SAM. Importantly, we are evolving from a largely managed service model to a more scalable self-service platform. We're excited about this new chapter, and we have a world-class team to execute. For my part, I lead with transparency, operational rigor, and a focus on measurable impact. I take a hands-on approach to understanding the business dynamics, enabling smart decisions to turn high ambitions into tangible results. Now turning to our first quarter performance, we delivered solid results reflecting continued execution and momentum. Starting with retail media, we activated $335 million in media spend, up 21% year-over-year from over 3,800 brands globally. Our media spend growth was primarily driven by our multi-year partnerships with leading agencies, with a year-over-year increase of approximately 50% in U.S. agency spend again this quarter. At the same time, our growing relationships with independent agencies are fueling the expansion of our small and mid-sized brand roster. With the transition of retailers from Microsoft advertising to our platform, we now partner with 70% of the top 30 retailers in the U.S. an increase from 65% previously, and our pipeline is strong. We're expanding globally with new wins across all regions, including Dick's Sporting Goods in the US, Endeavor in Australia, D Shopping in Japan, Cooperative U in France, and Elkshop, our first retailer in the Nordics. We're also expanding our collaboration with Yves Leclerc in France. Additionally, We're building from our success with sponsored ads to expand to newer formats, including on-site video, which we recently launched into general availability, and our outcome-based native on-site display offering coming later this year. Shoppable video is a powerful addition to on-site advertising, expanding inventory, boosting engagement, and elevating the overall shopping experience. For retailers, it unlocks new revenue streams while enhancing how shoppers discover and interact with products. For brands, it raises awareness at the point of sale and drives purchases, all backed by closed-loop measurement. We're excited to see early adoption of on-site video from several key retail partners, including Albertsons Companies and Costco, and we look forward to rolling this out over the next several quarters. Overall, we're confident that our comprehensive, full-funnel on-site advertising capabilities combining video, display, and sponsored product ad formats in one unified platform can increase our market share gains. Retail media offsite represents a complimentary opportunity for retailers and brands to expand their reach across the open web. Most recently, we launched offsite with Office Depot, ODP Business Solutions, and Costco Canada in our Commerce Max DSP. A recent campaign with HP and Costco showcased the power of our full funnel retail media strategy. Shoppers exposed to both on-site and off-site ads saw an 855% uplift in conversion rates, an over 10x increase in revenue per user, and a 58% lift in click-through rates, all a clear demonstration of how our integrated approach drives measurable business impact. In addition, we now have several retailers running off-site monetization through our Commerce Grid SSP, enabling brands to access retailer audiences via third-party DSPs. This demonstrates our platform synergies and further expands the scale and flexibility of our retail media offering. Moving on to performance media. We're encouraged by the sequential increase in media spend growth, excluding ad tech services. Our growth was led by commerce audiences, our set of precision targeting tactics that leverage our large commerce data set and best-in-class AI to help advertisers acquire and retain customers. We've successfully capitalized on cross-selling and increasingly benefit from third-party demand via our Commerce Grid SSP. We're now focused on expanding beyond these initial levers to unlock even greater scale and opportunity. We believe our ability to drive performance for clients is the strongest it has ever been and will continue to expand. We're focused on unifying the buyer journey in a single, independent platform for advertisers to drive brand performance and reach shoppers wherever they are. To this end, we further expanded our social offering in the first quarter, enabling advertisers to activate Facebook and Instagram inventory at the SKU level for their commerce audience campaigns globally. While still early days, this led to a 40% sequential increase in social campaigns this quarter. Our value proposition is resonating, and we're pleased to announce a new preferred partnership with Tenuity, one of the largest independent full funnel agencies in the U.S. to leverage our performance media solutions. More broadly, our goal is to deliver an end-to-end self-service streamlined workflow with Commerce Go, allowing advertisers to plan, buy, and optimize across ad formats and channels, all while onboarding clients faster and reducing our cost to serve. Our advanced AI automates decisions around audiences, channels, ad formats, and creatives to maximize results. While we're still in the early stages of the rollout, we're seeing steady adoption from small clients and lower churn. We've grown Commerce Go campaign volume by 45% quarter over quarter, predominantly coming from small clients. We are focused on our go-to-market efforts to build on this progress over the next several quarters. To summarize, We believe Criteo is well positioned with many growth vectors in front of us. Our diversified global business and robust financial foundation give us a strong position and our focus on performance enables us to be resilient. By staying focused and operating with rigor, we're confident in the long-term potential of our platform and are firmly committed to driving sustained value for our shareholders. In performance media, we've gained greater clarity and have even more confidence in our long-term outlook. In retail media, the fundamentals and momentum of our business remain strong despite the near-term challenges. Overall, we have momentum behind our holistic platform strategy, and we anticipate growth in our business. We will pull cost and productivity levers as needed to maintain 2025 adjusted EBITDA margins in the 33% to 34% range. and generate industry-leading cash flows. Credio sits at the heart of commerce media, uniquely powered by cutting-edge AI and unmatched commerce data at scale. We're firmly committed to driving shareholder value, and we intend to continue our share buyback, underscoring our confidence in our strategy and financial strength and our belief in the intrinsic value of our shares. We know there is more to do, and the management team and board continue to explore all ways to enhance value for our shareholders. With that, I'll hand it over to Sarah, who will provide more details on our financial results and our outlook.