Prepared remarks
Good morning, and welcome to Criteo's Second Quarter 2026 Earnings Call. Please note that this event is being recorded. I would now like to turn the conference over to Melanie Dambre, Senior Vice President, Investor Relations and Corporate Communications. Please go ahead.
Good morning, everyone, and welcome to Criteo's Second Quarter 2026 Earnings Call. Joining us on the call today, Chief Executive Officer Michael Komasinski and Chief Financial Officer Sarah Glickman are going to share some prepared remarks. Joining us for the Q&A session is Todd Parsons in his role as Chief Product Officer. As usual, you will find our investor presentation on our Investor Relations website now, as well as our prepared remarks and transcript after the call. Before we get started, I would like to remind you that our remarks will include forward-looking statements, which reflect Criteo's judgment, assumptions and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting Criteo'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 Forms 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 growth comparisons made during this call 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. Before we begin, I'd like to share an important leadership update. After six years as Chief Financial Officer, Sarah Glickman will be stepping down from her role on August 10 and will remain with Criteo as an adviser through the end of September. On behalf of our Board and everyone at Criteo, I want to thank Sarah for her exceptional leadership and many contributions to Criteo. She has been instrumental in strengthening our financial foundation and driving greater operational discipline during a period of significant transformation for the company, and we are grateful that she will continue to support the business and ensure a seamless transition. I am also pleased to announce that Connor McGogney has been appointed Chief Financial Officer effective August 10. Currently serving as Chief Strategy Officer, Connor brings a unique combination of finance, strategy and capital markets experience together with deep knowledge of our business and our financial operations. Having served in senior finance and strategy leadership roles across the company, he has been a key partner in shaping our long-term strategy, capital allocation priorities and transformation. His broad perspective across the business and strong relationships throughout the organization make him exceptionally well positioned to lead our finance organization as we execute against our strategy. Connor looks forward to meeting many of you in the weeks and months ahead. With that, let me turn to our quarterly results. The second quarter was a challenging one for Criteo. We did not meet the expectations we set for ourselves, and we will be transparent about the factors behind our revised outlook and the actions we are taking. Primary drivers were the client-specific Performance Media dynamics that we discussed last quarter, which became more pronounced during the quarter. Several large enterprise clients further reduced spending, primarily driven by client-specific decisions and softer demand in specific verticals. While the vast majority of our client base remained resilient, these spending decisions more than offset the progress we made across the broader business. As a result, while we are confident in the actions underway to improve the performance of the business, we have taken a more conservative approach to our outlook. Our guidance reflects what we see in the business today and assumes no improvement in spending from those large enterprise clients through the balance of the year. We believe this provides a prudent and achievable baseline for the remainder of 2026. Our focus is on consistently delivering against the commitments we make. While we are not providing any outlook beyond this year, in Performance Media, we are focused on commercial execution while continuing to advance our full funnel cross-channel and self-service strategy. We believe these initiatives will improve the trajectory of our business over time, although our current outlook does not assume any meaningful benefit from them this year. In Retail Media, the previously communicated client scope reductions are largely behind us after Q3, providing a more supportive backdrop for the business as we move beyond those headwinds. Even as we face these top line headwinds in the second quarter, we delivered strong adjusted EBITDA through disciplined cost management and productivity gains without reducing investment in our strategic priorities. Importantly, while our near-term assumptions have changed, our long-term strategy has not. In fact, the progress we are seeing across our strategic priorities reinforces our conviction that we are investing in the right opportunities. We remain committed to disciplined execution while continuing to evaluate every opportunity to maximize shareholder value. At the core of that strategy is commerce intelligence, combining large-scale commerce data with AI decisioning to predict shopper intent and optimize outcomes across increasingly fragmented shopper journeys. We believe AI is creating a new commerce paradigm, and Criteo is uniquely positioned to help brands and retailers navigate that transition. The rapid evolution of AI is creating entirely new opportunities for Criteo and our partnership with OpenAI is a great example. Only a few months ago, we became OpenAI's first advertising technology partner. Today, that partnership continues to exceed our expectations, attracting new advertisers and expanding our addressable market. The number of brands running campaigns through OpenAI has now surpassed 2,000, more than double the 1,000 brands we announced at the end of April. We continue to attract incremental budgets from both existing advertisers and new clients, making OpenAI both our fastest-growing partnership and our fastest-growing channel. Advertisers benefit from dedicated support for campaign setup, prompt strategy and ongoing optimization. We are quickly expanding internationally, and our demand integration is now available across seven countries with additional country launches planned, including Mexico and Brazil. This follows our recent launches in Japan and South Korea. We've also integrated OpenAI directly into Criteo GO, enabling advertisers to activate ChatGPT alongside display, social and other channels through our self-service platform. The early performance validates the opportunity. Traffic from ChatGPT converts at approximately 1.5 to 2x the rate of traditional referral traffic, while roughly 80% of paid traffic is new to the brand. This demonstrates that AI is creating an entirely new discovery channel that complements existing media rather than replacing it, expanding advertisers' reach and unlocking incremental budgets. We are also pioneering a new category of retail media. With Metro Canada, we became the first to bring AI-enriched retailer product catalogs into ChatGPT. We believe this opens an entirely new source of demand for brands and a new monetization opportunity for retailers. We are particularly excited about OpenAI's new custom audiences capability because it reinforces one of Criteo's core differentiators. We bring rich commerce audiences built on years of investment in commerce data and identity, enabling advertisers to activate AI campaigns with a level of relevance and scale that is difficult to replicate. We believe this combination represents a durable competitive advantage as AI advertising continues to scale. Beyond our OpenAI partnership, we are embedding agentic capabilities across our platform. Our AI-powered conversational ad format transforms advertising across the open web into guided shopping experiences, helping brands engage consumers earlier in the discovery journey while generating richer intent signals that improve relevance over time. We are also unlocking a new retail media monetization opportunity through sponsored recommendations and retailer AI assistance. Albertsons became the first retailer to launch this capability with us, and we expect additional retailers to follow as conversational shopping is gaining traction. Together, these innovations show how Agentic AI is reshaping commerce and helping brands engage consumers earlier in their shopping journey while enabling retailers to participate in the next generation of AI-powered shopping experiences. We are also seeing encouraging adoption of our MCP capabilities across agencies. Major agency holding companies have now integrated our MCP server into their workflows, enabling planners to build and activate campaigns using natural language. This is making campaign execution faster and more efficient while embedding Criteo more deeply into our clients' day-to-day workflows. Turning to Performance Media. Our near-term challenges do not change the actions we are taking to restore growth. We remain focused on expanding self-service, increasing cross-channel activation and extending performance further up the funnel. We are also taking targeted actions to enhance our measurement capabilities, further strengthening our platform and the value we deliver to clients. Starting with our self-service offering, GO is making encouraging progress in strengthening our ability to serve the large and underpenetrated SMB market. Adoption among our existing clients is progressing faster than we anticipated. Today, more than half of our small clients globally have adopted GO, driving accelerated productivity gains while lowering our cost to serve. While it remains early for new client acquisition, we are beginning to see encouraging leading indicators. Account creation in June was approximately 3x higher than during the initial months following launch, giving us confidence that awareness and adoption continue to build. Client feedback has also been positive. Advertisers consistently tell us they value the platform's ease of use, enterprise-grade targeting capabilities and AI-powered creative automation, which enable them to launch and optimize campaigns with minimal manual effort. Just as importantly, advertisers are embracing the platform's cross-channel capabilities. Close to 80% of our revenue from GO in the U.S. is already cross-channel, demonstrating that advertisers increasingly value managing display, social, video and AI platforms through a single interface rather than separate point solutions. GO is more than a self-service platform. It is becoming an increasingly important part of our full funnel strategy. During the quarter, we introduced Discovery Audiences, enabling advertisers to engage consumers earlier in the shopping journey while optimizing performance from discovery through conversion. We are already seeing encouraging client results. For example, Agape Diamonds used Criteo GO to expand beyond traditional retargeting, combining AI-powered customer acquisition with performance campaigns across the open web and social channels. This approach increased return on ad spend and conversion rate by 20%, while increasing average cart value by 13%. This is what Commerce intelligence looks like in practice. It enables advertisers to engage consumers wherever they are while measuring and optimizing outcomes across the funnel. Momentum across both social and OpenAI continues to build with these channels nearly doubling their share of Commerce Growth campaigns compared with the first quarter. Every new channel expands the value we deliver to advertisers and creates new opportunities for Criteo to grow. Alongside product innovation, we have also been sharpening our commercial execution. The leadership changes we made have strengthened sales discipline, pipeline management and client engagement across the organization. While these efforts take time to translate into revenue, we are encouraged by the early leading indicators we are seeing. Compared with a year ago, our qualified pipeline has grown by approximately 30%, reflecting a broader mix of clients and verticals. In the U.S., we delivered 24% year-over-year growth in new business revenue during the second quarter, while our opportunity mix continued to diversify beyond our largest clients. We also continue to expand our agency business with agencies now representing approximately 55% of our pipeline, up from about 35% a year ago. While the challenges affecting several large enterprise clients remain a near-term headwind, these leading indicators reinforce our confidence that the actions we have taken to strengthen our commercial engine are positioning us to deliver more durable growth over time. Turning to Retail Media. Our execution remains strong. Excluding the two previously announced retailer scope reductions, our underlying Retail Media business grew 20% during the quarter, and we remain confident in our strategy and our outlook for the year. Our momentum is driven by progress across demand, supply and product innovation. Starting with demand. We are expanding relationships with both brands and agencies. During the quarter, Retail Media spend growth outpaced the market, while the number of brands on our platform continued to grow. Commerce Max now extends beyond Criteo managed campaigns to include retailer-sold campaigns, giving brands a single platform to activate, optimize and measure campaigns across retail environments. Adoption is off to a strong start. Several leading grocery retailers are already participating, making it easier for advertisers to consolidate budgets and scale their retail media investments. We are also seeing strong adoption of conquesting, which helps brands reach shoppers considering competing products and is already driving incremental budgets across multiple retailers. On the supply side, we added new retailer partners across every region, including Loblaw Advance in Canada, Monoprix and Druni in EMEA and Olive Young and Golf Digest Online in Asia Pacific, while continuing to grow with our existing partners. One example is DoorDash. Momentum with DoorDash is building with growing advertiser participation, media spend and a strong second half pipeline across multiple categories, including beauty, personal care and food and beverage. Innovation is also driving stronger monetization across our network. Auction-based display remains our fastest-growing advertising format and is now live with more than 85 retailers globally, up from 60 retailers last quarter. Retailers are increasingly adopting auction-based buying because it improves monetization and attracts more advertiser demand. We are also excited about Page Intelligence, our AI-driven orchestration layer that optimizes merchandising, monetization and shopper experience together rather than independently. This helps retailers maximize shopper monetization while maintaining full control over the shopping experience. During the quarter, we secured our first retailer launch with one of our largest retail partners, an important milestone as we bring this next-generation capability to market. As I mentioned earlier, AI-powered shopping assistance represent another compelling long-term opportunity, and we believe Criteo is well positioned to help retailers monetize the emerging shopping experiences. These initiatives reinforce our confidence in the long-term potential of our Retail Media business and position us well as we move beyond the previously announced retailer scope reductions. As we execute through this period of transformation, disciplined capital allocation remains a core priority for Criteo and a key driver of long-term shareholder value. Despite our revised outlook for the year, we continue to generate attractive profitability and strong cash flow while maintaining a robust balance sheet. Last week, we successfully completed our redomiciliation to Luxembourg and direct listing of ordinary shares, an important milestone in simplifying our corporate structure. Looking ahead, we intend to pursue a subsequent redomiciliation to the United States as early as January of next year, subject to the necessary approvals. This would complete the simplification of our corporate structure, position Criteo for U.S. index inclusion and broaden access to U.S. investors. In closing, our top line performance this quarter was disappointing, and we have responded with a more conservative outlook. We are confident in our plan to improve commercial execution while maintaining disciplined profitability and investing in our strategic priorities that we believe will shape Criteo's next phase of growth. The progress we are making across Agentic AI, Criteo GO, Retail Media and our commercial organization reinforces our confidence that we are building a broader, more resilient company with multiple drivers of sustainable long-term growth. With that, I'll turn the call over to Sarah, who will provide more details on our second quarter financial performance and our outlook for the remainder of the year.
Thank you, Michael, and good morning, everyone. Our second quarter results reflect the continued headwind from several large Performance Media clients that Michael discussed earlier, partially offset by disciplined execution across the rest of the business. Our second quarter media spend grew 9% to $1.1 billion. Revenue was $428 million and contribution ex-TAC was $255 million, including a $1 million year-over-year foreign exchange headwind. Overall, client retention remains high at close to 90%. At constant currency, Q2 contribution ex-TAC was down 12% year-over-year, including a $21 million impact related to previously communicated scope changes with two retail media clients. The approximately $7 million shortfall relative to the midpoint of our contribution ex-TAC guidance was primarily driven by the Performance Media dynamics we discussed earlier. We experienced lower budgets than anticipated from several large enterprise clients, while our broader Performance Media client base remains resilient. Performance Media revenue was $380 million and contribution ex-TAC was $208 million, down 10% at constant currency. This reflects soft performance in Commerce Growth, partially offset by improved year-over-year trends in adtech services. Within Commerce Growth, the decline in media spend was driven primarily by client-specific spending decisions among several large enterprise clients. Media spend declined across all regions with EMEA proving more resilient than the U.S. and Asia Pacific, although travel moderated after several years of exceptional performance. Retail remained softer overall, particularly in discretionary categories such as Fashion, which was down 21%. In Retail Media, revenue was $48 million and contribution ex-TAC was $47 million, reflecting the previously communicated $21 million headwind in the quarter. Excluding this impact, trends remained strong with contribution ex-TAC growing 20% across the underlying client base. We continue to add new innovative capabilities and benefited from the strong adoption of our auction-based display offering, our fastest-growing retail media format. Our growth was supported by both strong expansion across our existing client base and new retailer additions. Same-retailer contribution ex-TAC retention was 84% or 113% excluding our largest retailer, demonstrating the strength of our multiyear, often exclusive, retailer partnerships. Media spend in Q2 grew 31% year-over-year, sustaining the strong momentum we saw last quarter as over 4,500 global brands continue to prioritize retail media as a key channel for their investments to reach relevant audiences and grow sales. We delivered adjusted EBITDA of $73 million in Q2 2026, reflecting lower top line performance and planned growth investments, partially offset by lower-than-expected employee costs and bad debt expense due to strong cash collections. Non-GAAP operating expenses decreased 10% year-over-year as productivity improvements more than offset planned growth investments. Continued deployment of AI and increased adoption of self-service capabilities improved efficiency, streamlined execution and enabled better resource allocation. Moving down the P&L, depreciation and amortization expense declined to $32 million, while share-based compensation expense declined to $17 million. Our income from operations was $15 million, and our net income was $12 million in Q2 2026. Our weighted average diluted share count was 50.5 million, which resulted in diluted earnings per share of $0.22 compared to $0.39 last year. Our adjusted diluted EPS was $0.80 in Q2 2026 compared to $0.92 last year. Operating cash flow was $20 million. And as expected, free cash flow was negative $38 million in Q2, reflecting seasonality and payment of 2025 income taxes. Our trailing 12-month free cash flow was $180 million. We anticipate positive free cash flow generation in the second half of the year. Criteo is a resilient cash-generative business with the financial strength to invest for growth and return capital to shareholders. We have a strong balance sheet with no long-term debt and significant liquidity. Our priorities are to invest in high ROI organic investments and value-enhancing acquisitions and to return capital to shareholders via our share buyback program. We are committed to driving shareholder value and deployed $30 million to repurchase 1.7 million shares this quarter. There was $160 million remaining under the current authorized share repurchase program as of the end of June. In July, we canceled a total of 4.5 million treasury shares in conjunction with our redomiciliation to Luxembourg. Turning to our financial outlook, which reflects our expectations as of today, August 5, 2026. Our revised outlook incorporates year-to-date performance and reflects a more conservative approach by extrapolating current Performance Media spending trends through the balance of the year with no recovery assumed from the large enterprise clients that affected our second quarter results. We have maintained prudent macroeconomic assumptions. Our Retail Media outlook is unchanged. We now expect contribution ex-TAC to decline by 10% to 12% at constant currency in 2026. Our 2026 outlook does not assume meaningful contributions from OpenAI or our broader agentic AI initiatives. We anticipate these capabilities to become a meaningful growth driver beginning in 2027. We estimate foreign exchange will provide a year-over-year modest benefit to contribution ex-TAC for the full year. Turning to our outlook by segment. Our Retail Media guidance remains unchanged. We expect media spend growth ahead of the market with contribution ex-TAC declining in the mid- to high teens year-over-year at constant currency due to the $75 million client scope reduction impact. Excluding those two clients, the underlying Retail Media contribution ex-TAC growth for 2026 is expected to be in the high teens to 20% range we previously provided. In Performance Media, we now expect contribution ex-TAC to decline in the high single digits at constant currency in 2026. This assumes that the lower spending levels from certain large clients continue through the second half of the year, more than offsetting the ramp-up of GO. We expect lower travel growth in Europe as well as continued softness in discretionary retail driven by inflation and weaker consumer sentiment. These dynamics remain largely concentrated in our international markets, EMEA and Asia Pacific, which together represent approximately two thirds of our Commerce Growth media spend. We now anticipate an adjusted EBITDA margin of approximately 30% for 2026, given our lower top line expectations. This is partially offset by continued disciplined cost management and productivity gains while investing in agentic AI and other growth initiatives. We have a resilient business model that allows us to continue to fund our highest priority growth investments while maintaining rigorous cost discipline. We do not view 30% as a normalized profitability level for the business, and we continue to believe our model has meaningful operational leverage as top line growth improves over time. We believe these investments position Criteo to return to sustainable top line growth while continuing to generate strong cash flow. We expect a normalized tax rate of 27% to 32% under current rules, driven by our evolving revenue mix and certain one-time items related to our redomiciliation. As a reminder, we anticipate higher CapEx in 2026, primarily related to the renewal of certain data centers with total CapEx expected to be approximately $190 million. We expect operating cash flow conversion from adjusted EBITDA to improve to approximately 85% in 2026, up from 76% in 2025, driven by continuous improvement in working capital. We also expect free cash flow conversion of about 35% of adjusted EBITDA before any nonrecurring items. For Q3 2026, we expect contribution ex-TAC of $237 million to $241 million, down 14% to 15% at constant currency. Our outlook reflects the current spending levels of certain large Performance Media clients, which have remained consistent with the trends we saw in June and assumes no improvement throughout the quarter. We have also maintained prudent macroeconomic assumptions. In Retail Media, this reflects the previously communicated client scope reductions as well as tougher year-over-year comparisons for the underlying business in the second half. We estimate foreign exchange to be a larger headwind in Q3, reflecting more unfavorable rates compared to three months ago. We expect a $6 million to $8 million negative year-over-year impact on contribution ex-TAC in Q3, about $4 million worse than under the rates assumed in our prior guidance. We expect adjusted EBITDA between $54 million and $58 million, reflecting lower top line, continued investments in high ROI agentic AI and other growth initiatives, partially offset by disciplined cash cost management and productivity gains. In closing, our updated outlook reflects a prudent view of the business as we see it today. At the same time, I remain confident in Criteo's financial strength and its ability to execute against its strategic priorities. Before we open the call for questions, I would like to say what a privilege it has been to serve as Criteo's CFO. I am incredibly proud of what we have accomplished together over the past six years, and I'm grateful to have worked alongside such a talented team. I would also like to thank our investors and analysts for their partnership and support over the years. I look forward to continuing to support Connor and the team during the transition. And with that, I will open up the call for questions.
Questions and answers
The first question comes from Ygal Arounian from Wedbush.
Sarah, it's been great to work with you. Good luck on the next phase. So on the lower budgets than anticipated from the large enterprise clients, I guess a couple of things. First, can you give a little more color on exactly what's happening here with these clients, why they're pulling back? What changed from last quarter as they got worse? And more broadly, we've been facing this type of environment where you talk about the core underlying business being strong, and there've been one or two clients that are getting in the way of that. As we get to the point where we're delivering and the strength of the core business is overriding client-specific issues — because it's been a little while that we've been dealing with this — what's the visibility in fixing all this? And then I have a follow-up.
I'm happy to take it. Thanks, Ygal. So let me take the point on the extra-large clients first, and then we can talk about the broader business. On the handful of enterprise clients, as we said, the trends that we saw earlier in the year continued to accelerate a little bit. Unfortunately, there isn't one common thread across that set of clients. For example, there might be a client that's been impacted in the travel vertical by the conflict in the Middle East. It could be a client that's been impacted by tariff changes and de minimis import rules, or, in some cases, a client where they have changed investment tactics and we were unsuccessful in retaining that budget as they shifted to other tactics in the funnel. Now that one in particular points to the upgrades we've made in our commercial organization because we need to be able to capture that share shift when that happens. That's an execution issue that we're addressing. We have products available now, given the evolution of our product portfolio, to move up and down the funnel. But we need to be at the table with those clients as they make those decisions to make sure that we continue to keep that investment in the Criteo platform, and that's something that we're focused on over the course of the year. So a couple of those root causes are harder to deal with and a couple are execution issues. The other point I'd add, which speaks to your second question, is we need to have our new business engine and our new products performing at a level that overcomes those ups and downs that we will see periodically with enterprise clients. These fluctuations in budgets are not unheard of. We need our new business machine and our new product initiatives to be scaling at a rate that can overcome down cycles in that client segment. Unfortunately, we're in a period right now where we're ramping up several exciting products but they aren't scaled enough yet to make up the difference. There are encouraging signs on the new business front: in Q2, new business performance in the U.S. was up 24% year-over-year. Product initiatives like the partnership with OpenAI or Criteo GO are exciting, and we expect those to be meaningful contributors next year, which will give us a more diversified growth stack as we go into 2027. So hopefully that gives you perspective on the extra-large clients and how we think about the durability of growth as we go into next year, but happy to talk more about it.
That's helpful. On a more positive note, on Agentic Commerce and the OpenAI partnership, I understood Sarah's comments to be more of an impact next year. Can you bridge us from where we are today to that bigger impact? One thing we see across earnings is traffic coming to many sites — travel, for example — continues to be minimal, and e-commerce players are seeing similar patterns. Agentic Commerce has been a strong top-of-funnel discovery product as you discussed. How is the ecosystem shaping up when we're not seeing transactional elements layered in yet, but discovery is getting stronger?
I think what you've expressed is what many clients are working through as they test the platform. They see highly qualified traffic coming from paid referrals on the platform: conversion rates of 1.5 to 2x and roughly 80% of that traffic being new to brand. That creates a new discovery tactic. Many clients are trying to figure out how that fits into their overall mix and where they would take budget from to fund larger spend as they scale into next year. Right now, many clients are in a testing phase, figuring out how this discovery vector fits with the rest of their mix. We're still only live in seven countries, with two more launching in the near term, and most of Western Europe yet to come. There's substantial geographic ramp-up ahead. Additionally, powerful product features that drive performance spending, like custom audiences, CAPI and improved measurement, only came online in the last couple of weeks. We need to give this platform a chance to scale. OpenAI is moving at an incredible pace, and we're proud to be one of their leading partners. That's why we're confident it will be a meaningful contributor next year. What we see now is clients working through operational setup, adopting new features, and figuring out how it fits into their mix across the seven live countries and the others to come. Lots of work to do, but it's an exciting platform.
Your next question comes from Ron Josey with Citigroup.
This is Jamesmichael Sherman-Lewis on for Ron. On the Performance Media headwinds, could you add more color to the monthly cadence of spending patterns through the quarter, especially given the outlook is extrapolating June trends? Any update on those patterns into July? And then, could you provide more color on your more conservative outlook philosophy and any conviction that the revised outlook has upside?
Specific to the clients, it really does relate to distinct dynamics, especially in Asia Pacific where e-commerce spend was lower. In Europe, travel was a significant growth vector for us last year and has been impacted by macroeconomic and other drivers this quarter, creating a continued drag over the next couple of quarters. We are assuming the current levels we're seeing will not evolve into significant growth this year. In the Americas, our commercial execution focus is front and center as we work to turn this around. In terms of concentration, about 19% of our revenue relates to our largest clients; that includes our largest retail media client as well. So it's a meaningful base for us with some areas where we have new products in those clients but with a lower growth rate than we had anticipated for the year.
Appreciate it. A quick follow-up: Any early performance data that we're seeing from the AI conversational ad format and the timeline for enabling those from pilots to scaled commercial deployment?
You broke up a little, but I think the question was about the conversational ad format and retail AI shopping assistance. We don't assume much build in the guidance for this year, but we do think those will be meaningful contributors next year. You can group the conversational ad format with sponsored products and retailer shopping assistance. We went live with Albertsons on their shopping assistant and have other retailers in the pipeline. We also went live with one travel client in Europe on the conversational ad format and have more behind that. Those are nice proof points in the market for two interesting ad units. We'd like to see more traction this year as the pipeline converts and believe these can be meaningful contributors next year.
The next question comes from Justin Patterson with KeyBanc.
Could you talk about how the competitive market has shifted in the past couple of quarters? There are more people competing for retail media budgets. Who are you seeing in bake-offs and any changes in ROAS or meaningful changes in the competitive landscape?
Thanks, Justin. In Retail Media, we aren't seeing a material change in competitive dynamics. We continue to gain share. Our Retail Media spend grew 31% in the quarter, which outpaced the market. According to published industry figures, the market grew about 26% in Q2. There are some smaller competitors doing bespoke or custom work on a smaller scale, but our win rate remains high. We continue to secure major multiyear retailer renewals and add new partners as highlighted earlier. We're rolling out new products to help retailers monetize and grow their businesses, whether that's conquesting, auction-based display, or Page Intelligence, which brings merchandising and retail network stakeholders together to optimize the shopping experience. So while there are more entrants in pockets, we maintain a leadership position and remain confident in the outlook.
The next question comes from Tim Nollen with SSR.
I've got a few questions consolidated. Michael, you said ad budgets for commerce spending with OpenAI seem to be incremental. I'm curious where that money is really coming from if it's not shifting from search into chatbot spending. Relatedly, tying in the enterprise client slowdown, you're doing a lot with chatbot spending — are clients ready to put money into these efforts? Is something slipping because you're perhaps a bit ahead of the market? And lastly, you had a take-private offer during the quarter. Any update on the Board's views?
The budget for OpenAI today is largely test budgets. Clients reserve a portion of their media plan for testing new formats and that's what we see going into OpenAI today. As the budgets scale, they likely won't come from a single platform; they could draw from traditional search, brand keywords, product listing ads, online video, or other discovery channels. There is also potential incrementality — some studies show ad spend outpacing GDP due to advertising effectiveness, so OpenAI could benefit from that divergence. Regarding enterprise clients, I don't think we're ahead of the market per se, but we need stronger commercial execution. We must be a trusted adviser and have a closer seat at the table. Our product set has expanded from mainly lower-funnel remarketing to full funnel multichannel solutions, which requires advisory selling. We're investing in the commercial organization with training, certifications and go-to-market work, and Ed has reinforced talent across the team. We believe these actions will pay off over time. On the take-private speculation, we don't comment on market rumors. The Board continues to evaluate every opportunity to maximize shareholder value, and that's our position.
The next question comes from Alec Brondolo with Wells Fargo.
A couple questions. On Performance Media, some think underlying issues relate to supply — degradation in traffic to open web publishers may cause customers to look elsewhere. How much of the solution is shifting the aperture of what media you buy against and could that improve advertiser sentiment on your products? Second, on Criteo GO self-service campaigns, you said account creation in June was about 3x higher than initial months. What are you seeing on spend per advertiser for those acquired thus far? Help us understand the size of the customers you're acquiring.
On the open web, there is pressure on lower-intent traffic and long-tail publishers, but engagement from high-intent users remains strong. We have access to broad, diversified high-quality supply and see many opportunities to engage users to drive performance. Performance is driven by the quality of user intent and outcomes, and those fundamentals remain stable. We're on a diversification path: 85% of our total media spend is already outside of desktop display. Clients moving to cross-channel setups spend up to three times more on average than single-channel clients, reducing reliance on any single environment. Todd, do you want to add?
Clients are very focused on reaching consumers with new-to-brand and new-to-product audiences. We're strong at finding high-intent traffic on the open web and combining that with emerging channels like OpenAI and social. The net result is clients get new, highly qualified traffic and we're delivering that across channels. On GO, it's still early days. We're seeing adoption across the small to medium business spectrum, which is encouraging. We don't disclose spend per advertiser, but you can infer how that maps between medium and small clients on a daily and monthly basis, and these trends are pulling through. We'll keep a close eye on this as it develops.
Your last question comes from Richard Kramer with Arete Research.
Can you discuss whether Criteo has opened its user graph to third-party advertisers via SSPs or enabled buys by rival DSPs? How might your user graph and retail engagement be impacted by new privacy and consent laws like the one recently enacted in New Jersey? And a quick question for Sarah: you mentioned positive cash flow in the second half, but with rising CapEx and other costs, are you expecting to sustain the share buybacks through the end of the $160 million remaining authorization? Any comments on the capital structure as you transition?
Exposing the graph to third-party demand has always been part of our strategy, whether the brand comes directly through a curated deal or through an SSP — that's a variation of the same approach. We expect that while we maintain a strong position in data and ownership over the graph, opening it up to SSP traffic will increase demand paths into the business, which we're excited about. On privacy, we were born from GDPR and we closely monitor every emerging regulation. We hope for more coordinated federal regulation in the U.S. to ensure consistent compliance. New Jersey's law is another item on that list, and we have a dedicated group that watches these developments to ensure we're compliant.
We canceled 4.5 million shares in July, in addition to the 1.9 million shares we canceled in April. The Board is very supportive of our share buyback program, which was renewed as part of the redomiciliation to Luxembourg. We always evaluate opportunities to maximize shareholder value. Regarding CapEx and cash flow, this is a higher CapEx year due to data center renewals and will normalize in 2027. We're very happy with our cash position. Our operational cash flow conversion is improving — expected to be about 85% of adjusted EBITDA in 2026 — and we continue to drive strong cash generation. We have strong liquidity and will continue to consider ways to maximize shareholder value.
That concludes our call for today. Thank you, everyone, for joining us. If you have any follow-up questions, the Investor Relations team is available to assist. Have a nice day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.