CRTO: Share Repurchases And Retail Media Partnerships Will Drive Outperformance Ahead

Key Takeaways

• Expansion into AI-driven ad targeting, Retail and Commerce Media, and strategic partnerships is boosting platform reach and strengthening Criteo's ability to capture rising digital ad spend.
  
• Strong privacy-compliant data assets, full-funnel cross-channel capabilities, and disciplined capital allocation position Criteo for enhanced profitability and shareholder returns.
  
• Heavy competition, uncertain AI monetization, client risks, sluggish growth in newer segments, and rising operational costs threaten future revenue and sustained earnings expansion.

Catalysts

A technology company, provides marketing and monetization services and infrastructure on the open internet in North and South America, Europe, the Middle East, Africa, and the Asia-Pacific.

• The rapid adoption of AI-powered ad targeting and the development of Agentic AI solutions leveraging Criteo's structured commerce data is expected to boost campaign performance and unlock new monetization channels-supporting both revenue growth and potential margin expansion as productized, automated offerings gain scale.
  
• Accelerating investments and product rollouts in Retail Media and Commerce Media (such as auction-based display and on-site video), along with strategic partnerships (WPP, dentsu, Mirakl, Microsoft), are broadening Criteo's platform reach and enabling share gains-positioning the company to capture a larger slice of the fast-growing digital ad spend and drive top-line growth.
  
• The market-wide transition toward privacy-safe, first-party data-driven advertising, as third-party cookies are phased out, puts Criteo's commerce dataset and AI-powered audience tools at the center of demand from retailers and brands seeking compliant, high-performing ad solutions-potentially enhancing net margins as Criteo increases its market differentiation.
  
• The increasing shift of advertiser budgets into full-funnel, cross-channel campaigns (including CTV and social) enables Criteo to tap into higher-growth segments and win incremental spend from agencies and brand clients, likely driving both revenue acceleration and margin improvement due to greater platform scale and efficiency.
  
• Ongoing share buybacks and disciplined capital allocation-enabled by strong cash generation and a debt-free balance sheet-are expected to support earnings per share growth, providing additional upside for shareholders even in periods of moderate revenue expansion.

Criteo Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Criteo's revenue will decrease by 19.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 7.0% today to 14.4% in 3 years time.
• Analysts expect earnings to reach $147.8 million (and earnings per share of $2.87) by about September 2028, up from $136.5 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.0x on those 2028 earnings, up from 8.9x today. This future PE is lower than the current PE for the US Media industry at 20.3x.
• Analysts expect the number of shares outstanding to decline by 5.17% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.28%, as per the Simply Wall St company report.

Criteo Future Earnings Per Share Growth

Risks

• Uncertainty in monetizing Agentic AI and AI-driven commerce, as leading large language model (LLM) vendors have not determined commercial models, creating visibility risk around future revenue streams from AI agent-based advertising in the long term.
  
• Competition and market share pressures from tech giants (such as Amazon, Google, and Meta) with entrenched first-party data assets and broader platform control, which could constrain Criteo's ability to scale innovations like Retail Media and AI-driven solutions, ultimately impacting revenue growth and margins.
  
• Client concentration risk and recent data showing stagnant overall activated media spend due to lower ad tech trading and reduced spend from certain large clients, highlighting ongoing vulnerability if Criteo cannot revitalize top-line growth-affecting both revenue and net margins.
  
• Slow and uncertain ramp-up for key growth areas (Retail Media, programmatic display, CTV, and newer partnerships), combined with the challenge of onboarding new retailers and brands at scale, may result in lower-than-anticipated long-term revenue acceleration and operational leverage.
  
• Rising investment needs in AI, engineering, and compliance amid intensifying competition for talent; if these expenses are not matched by sustained increases in gross profit, margin expansion and long-term earnings growth may be at risk.

Valuation

• The analysts have a consensus price target of $38.167 for Criteo based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $51.0, and the most bearish reporting a price target of just $25.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.0 billion, earnings will come to $147.8 million, and it would be trading on a PE ratio of 14.0x, assuming you use a discount rate of 7.3%.
• Given the current share price of $23.13, the analyst price target of $38.17 is 39.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.