Criteo S.A. (CRTO) stock intrinsic value fair value estimate & owner earnings analysis

Criteo sells online advertising to brands, retailers and agencies. Its Performance Media segment (about $1.68 billion of 2025 revenue) finds shoppers likely to buy and shows them ads; its Retail Media segment (about $264 million of revenue) lets retailers sell ad space and audiences on their own sites. 2025 revenue was $1,944.9 million, essentially flat for three years, while Contribution ex-TAC (revenue less the cost of buying ad space, the company's own measure of gross profit) grew 5% to $1,174.6 million. About 39% of revenue comes from the United States, with large Europe, Middle East and Africa and Asia-Pacific businesses. How we measured earnings. We start from operating cash flow, remove the swings in receivables and payables (in 2025 a $246 million change in receivables was almost fully offset by payables), subtract stock compensation as a real cost, and subtract only the maintenance share of capital spending (spending on software, servers and intangibles, roughly $65 to $115 million a year). Owner earnings per share for 2021 to 2025 were $2.66, $1.07, $(0.92), $2.15 and $3.00. 2023 was depressed by a one-time $43.3 million regulatory payment; excluding it the figure would be about $(0.20). We use the middle value of 2021 to 2025, $2.15 per share, as the normal level. We did not use 2025's $3.00 because stock compensation that year was flattered by forfeitures when the CEO and Chief Revenue Officer left, and because the business has shown it can swing widely. Earlier years are less representative because the business has since shifted toward retail media. Growth check. Owner earnings per share rose about 40% in 2025 versus 2024 ($3.00 vs $2.15). We assume none of that continues: the base case starts and stays flat at $2.15. Contribution ex-TAC growth has been real but the 2025 gains came largely from a low starting point in costs, and nothing contracted supports assuming more. Base case: about $20.63 per share. Owner earnings hold at $2.15 per share for ten years, then fade in a straight line to zero over the following ten years, because no contract or franchise we can point to secures earning power beyond that horizon. We credit no growth from Retail Media expansion, share gains or buybacks, since none is locked in. Bear case: about $6.15 per share. Criteo's largest customer (5% of 2025 revenue) told the company it would curtail the scope of its services from November 1, 2025, and a large U.S. retailer client filed for bankruptcy in 2025 (a $5.9 million receivable was fully reserved). The filing warns that further revenue declines could force a goodwill write-down in Retail Media. Browser and phone-maker privacy changes (Apple's opt-in for its advertising identifier, changes by Google, Mozilla and Microsoft) are named risks. Here owner earnings fall back to the $1.07 seen in 2022 and shrink 5% a year for ten years, then end. Criteo has almost no borrowing (cash interest paid was about $1.6 million in 2025), so debt does not drive this case. Bull case: about $28.78 per share. Owner earnings stay at the $3.00 already delivered in 2025, held for ten years, then fade to zero over ten years. This does not assume growth, only that the 2025 level proves sustainable as Contribution ex-TAC continues to rise (up 10% in 2024 and 5% in 2025, with Retail Media up 25% in 2024). What would make this estimate wrong: a faster loss of large clients than the one announced, or a further change by Google or Apple that reduces the effectiveness of Criteo's targeting, would push results toward the bear case. Sustained growth in Retail Media contribution beyond the current low single digits would support the bull case. Shares are Nasdaq-listed American Depositary Shares. The margin-of-safety price is $11.00, well under the base case, because advertising technology depends on decisions by a few large platforms and customer concentration is rising in visibility. About the stock compensation and regulatory payment adjustments: we treated the regulatory payment as one-time for judging the normal level but left it in the stored 2023 figure.