What happened

Criteo (CRTO -1.29%) investors beat the market on Wednesday, as shares rose 9% by 3 p.m. ET, compared to a 1.7% spike in the S&P 500. The rally erased a portion of the digital-advertising specialist's recent losses, although shares remained lower by about 30% so far in 2022.

The rally was sparked by Criteo's latest earnings report.

A man at work on a laptop.

Image source: Getty Images.

So what

Criteo said before the market opened that revenue declined 6% in the Q1 selling period that ended in late March. That result marked a weaker performance than the prior quarter, when sales fell 1%. Criteo's growth, excluding traffic acquisition, also slowed but remained positive.

The deceleration was a bit better than many investors expected, considering new challenges in the digital-advertising niche posed by Apple's new privacy rules. Management also highlighted Criteo's rising non-GAAP profitability. "We are off to a solid start in 2022," CEO Megan Clarken said in a press release.

Now what

Investors were just as happy to hear that Criteo is as bullish today about the current fiscal year as it was back in February. Sales growth will be slightly weaker, management warned, running at between 8% and 10%, compared to the prior forecast calling for gains of between 10% and 12%. But that downgrade mainly reflects suspended operations in Russia. Criteo affirmed key parts of its financial forecast, including around non-GAAP profitability and cash flow.

That stability was enough to send shares higher for the day. But shareholder returns will ultimately depend on Criteo's success in building a bigger, more technologically advanced advertising platform that delivers lots of value to its customers over the next several years. That's Criteo's surest path toward long-term growth.