AI And Retail Media Will Redefine Digital Commerce Platforms

Key Takeaways

• Criteo's advanced AI and first-party data infrastructure uniquely position it to capture new ad spend and surpass current growth expectations, especially as commerce journeys evolve globally.
  
• Structural shifts like cookie deprecation and rapid retail media adoption provide Criteo avenues for durable market share gains, increased operational leverage, and sustained margin expansion.
  
• Reliance on retargeting, regulatory changes, and dominance by tech giants threaten Criteo's growth and margin expansion as it faces high execution risk in pivoting to new offerings.

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.

• While analyst consensus expects AI-driven product innovation and organizational agility to bring solid execution and margin benefits under Michael Komasinski, this view likely understates Criteo's disruptive role in defining agentic AI commerce; Criteo's unmatched real-time commerce data infrastructure puts it in pole position to capture an outsize share of new AI-driven ad spend as agents and LLM integrations transform purchase journeys globally, potentially unlocking a multi-year period of double-digit top-line growth and rapid margin expansion.
  
• Analyst consensus points to Retail Media's 31% year-over-year growth as a key lever, but this may significantly underestimate the revenue acceleration possible as programmatic, auction-based display and video formats scale rapidly; with less than 10% on-site display penetration compared to up to 40% client media mix, Criteo could see a structural step-up in Retail Media revenue exceeding Street expectations as product adoption normalizes across its 230+ retailer network.
  
• The sector-wide deprecation of third-party cookies is creating a structural growth opportunity as advertisers and retailers urgently seek privacy-centric, consent-based alternatives; Criteo's years-long investment in first-party data and shopper journey signals at global scale positions it as a critical partner, likely driving a sustained influx of new agency, brand and SMB clients, thus boosting both revenue and increasing operational leverage.
  
• The rapid proliferation of retail and marketplace networks globally-especially mid
• and long-tail enabled by partnerships like Mirakl-provides a unique growth runway outside Amazon; by powering the ad infrastructure for these new commerce ecosystems, Criteo can compound platform revenue and build deeper first-party data moats faster than currently modeled, contributing to durable market share gains and higher earnings through network effects.
  
• As industry demand coalesces around cross-channel, full-funnel, self-service solutions, Criteo's unified Commerce Media Platform, Commerce Grid SSP, and Commerce GO! automation unlock significant margin expansion potential through automation, reduced tech tax, and high ROI for clients; the flywheel from combining proprietary data, AI, and global reach is set to sustainably improve both net margins and free cash flow beyond consensus forecasts.

Criteo Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Criteo compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Criteo's revenue will decrease by 15.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 7.0% today to 13.4% in 3 years time.
• The bullish analysts expect earnings to reach $156.2 million (and earnings per share of $3.4) 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 price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 17.7x 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

• The ongoing deprecation of third-party cookies and tightening of global data privacy regulations could significantly reduce Criteo's ability to access and leverage data for ad targeting, which would negatively impact both revenue growth and the effectiveness of its core offerings.
  
• Criteo remains heavily dependent on retargeting as a primary revenue driver, and as retargeting becomes less viable and increasingly commoditized, the company risks stagnating topline revenue and persistent pressure on long-term earnings.
  
• Increasing market consolidation among major tech platforms like Google, Meta, and Amazon continues to reduce the market share available to independent players, which undermines Criteo's pricing power and could compress both revenues and net margins over time.
  
• The company's transformation towards a Commerce Media Platform carries significant execution risk, and if adoption is slow or underwhelms relative to larger diversified competitors, efforts to diversify revenues and expand net margin could fall short.
  
• The industry shift toward walled gardens and demand for first-party data gives structural advantage to platforms with direct consumer relationships, placing Criteo at a long-term disadvantage in expanding its total addressable market and dampening future revenue and profit growth.

Valuation

• The assumed bullish price target for Criteo is $51.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Criteo's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• 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 bullish analysts, you'd need to believe that by 2028, revenues will be $1.2 billion, earnings will come to $156.2 million, and it would be trading on a PE ratio of 17.7x, assuming you use a discount rate of 7.3%.
• Given the current share price of $23.13, the bullish analyst price target of $51.0 is 54.6% 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.