Executive Summary / Key Takeaways

• Ibotta is strategically transforming the CPG promotions industry into an omnichannel performance marketing channel via its IPN, leveraging its scale and unique item-level purchase data to offer measurable, incremental sales lift.
• Recent financial performance reflects rapid growth in third-party publisher redemptions (+38% YoY in Q1 2025), driven by major partnerships like Walmart (WMT), Instacart (CART), and DoorDash (DASH), despite temporary supply constraints from CPG brands impacting overall redemption volume and D2C revenue (-24% YoY in Q1 2025).
• A core technological differentiator is the development of the Cost Per Incremental Dollar (CPID) framework and a programmatic Campaign Manager, enabling CPG brands to measure true ROI in near real-time and optimize spend for profitable growth, moving beyond traditional, less measurable promotional tactics.
• Near-term outlook anticipates gradual revenue growth acceleration throughout 2025, driven by improved sales execution, the ramp-up of new publishers, and increasing adoption of CPID-based buying, supported by flattish operating expenses after Q1 2025, leading to expected sequential Adjusted EBITDA margin expansion.
• Key risks include the pace of CPG adoption of the new performance marketing paradigm, maintaining sufficient offer supply to meet surging redeemer demand, effective integration and monetization of new publisher partnerships, and intense competition from diverse players in advertising and promotions.

The Dawn of Performance Marketing for CPG

Ibotta, Inc. is on a mission to redefine how consumer packaged goods (CPG) brands engage with consumers, transforming the historically opaque world of promotions into a measurable, performance-driven marketing channel. Founded in 2011 with a direct-to-consumer (D2C) mobile app, Ibotta has strategically evolved into the Ibotta Performance Network (IPN), a powerful omnichannel platform connecting CPG brands with millions of consumers across its own properties and a rapidly expanding network of third-party publishers, primarily major retailers. This shift, significantly catalyzed by the multi-year strategic relationship with Walmart established in 2021, positions Ibotta at the forefront of bringing digital commerce's performance marketing principles – setting targets, measuring ROI, and optimizing spend – to the massive, yet often less technologically advanced, CPG industry.

At the heart of Ibotta's differentiation lies its ability to track item-level purchases, both online and in-store, providing a unique dataset that enables precise measurement of consumer behavior and, crucially, incremental sales. This capability is foundational to the company's strategic pivot towards a Cost Per Incremental Dollar (CPID) framework. Unlike traditional promotional metrics or even standard return on ad spend (ROAS), CPID aims to quantify the true, fully loaded cost for a CPG brand to generate an additional dollar of revenue that would not have occurred without the Ibotta campaign, measured against a statistically identical control group. This level of rigor, delivered in near real-time via a planned dashboard, represents a significant technological leap for the CPG industry, offering brands an unprecedented ability to understand the true profitability of their promotional spend and optimize campaigns dynamically.

The company is actively investing in its technology roadmap to support this vision. Beyond the CPID measurement framework, Ibotta is developing a programmatic Campaign Manager tool, currently in beta and slated for broader rollout in 2025. This tool is designed to streamline offer setup, enable more self-service capabilities for clients (particularly emerging brands), and eventually leverage AI to recommend and optimize campaign configurations based on performance goals. These technological advancements are intended to make it easier for CPG brands and their agencies to invest on the IPN, moving towards an "always-on" performance marketing model that can tap into larger national marketing budgets, not just traditional, episodic promotions.

Navigating a Competitive Arena

Ibotta operates in a highly competitive environment, vying for CPG brand budgets, publisher partnerships, and consumer engagement against a diverse set of players. Direct competitors include companies in digital promotions and ad tech like Rakuten, Criteo (CRTO), Publicis Groupe (PUBGY), and The Trade Desk (TTD).

Compared to Rakuten, which operates a broader global rewards ecosystem, Ibotta's strength lies in its U.S.-centric, CPG-specific focus and its ability to offer potentially higher redemption rates (estimated 20-30% higher) through AI-driven personalization. While Rakuten has greater global scale and diversified revenue streams, Ibotta's specialized approach and performance-based model offer a differentiated value proposition in the North American CPG market.

Against ad tech players like Criteo and The Trade Desk, Ibotta's competitive edge is its direct link between promotions and verified, item-level sales data, enabling a level of ROI measurement (CPID) that is often more challenging for platforms focused solely on ad impressions or clicks. While Criteo and The Trade Desk excel in programmatic advertising and retargeting with potentially faster ad processing and operational efficiencies, Ibotta's model offers a pay-per-sale guarantee that derisks marketing investments for CPG brands. Ibotta's gross margins (85.21% TTM) appear strong, though direct comparison to ad-focused platforms like TTD (81% TTM gross margin) requires considering different revenue recognition models. IBTA's R&D investment (17% of revenue in 2024) is significant, underscoring its commitment to technological innovation as a competitive moat against both traditional promotions providers and broader ad tech platforms.

Indirect competitors include large platforms like Google (GOOGL) and Meta (META), which offer vast advertising reach and increasingly sophisticated targeting tools. While these platforms may offer lower costs for certain types of ad targeting, they typically lack Ibotta's direct integration with retailer purchase data necessary for item-level, verified redemption and incremental sales measurement in the physical world.

Ibotta's strategic partnerships with major retailers like Walmart, Dollar General (DG), Family Dollar, Instacart, and DoorDash are crucial competitive assets. These relationships provide access to vast consumer audiences and valuable first-party data, creating network effects that are difficult for competitors to replicate. The speed of publisher onboarding (e.g., Schnucks in under 90 days) demonstrates operational efficiency in expanding this network. However, dependence on these key partnerships also represents a risk, as highlighted by recent securities litigation alleging failure to adequately disclose risks related to the Kroger (KR) contract's at-will nature.

Performance and Strategic Execution

Ibotta's recent financial performance reflects the dynamics of its rapid network expansion and the strategic shift underway. In Q1 2025, revenue grew 3% year-over-year to $84.6 million, exceeding guidance. This growth was primarily driven by an 8% increase in total redemption revenue, fueled by a robust 38% surge in third-party publisher redemption revenue. This underscores the success of recent publisher launches and expansions, significantly increasing the total redeemer base, which grew 37% year-over-year to 17.1 million in Q1 2025.

However, this rapid redeemer growth, particularly on third-party platforms with lower redemption frequency per user compared to Ibotta's D2C properties, has outpaced the supply of offers from CPG brands. This resulted in a 15% year-over-year decrease in total redemptions per redeemer in Q1 2025 and a 24% year-over-year decline in D2C redemption revenue, as offers were consumed more quickly across the larger network. Ad and other revenue also saw a 22% year-over-year decrease in Q1 2025, consistent with the D2C trend and a broader industry shift away from non-performance-based ad spend.

Despite the top-line impact of these supply constraints in late 2024 and early 2025, management highlighted positive signs of strategic execution. Successful pilots of the new CPID framework with two large CPG clients in Q4 2024 led to significantly higher investment levels from these partners in Q1 2025 (one expected to almost double redemption revenue in 1H 2025, the other up 8x), validating the value proposition of measurable incremental sales. The company is now expanding these pilots to additional clients and focusing sales efforts on socializing the new measurement capabilities.

Operational expenses saw increases in Q1 2025, with Sales & Marketing up 6%, R&D up 32%, and G&A up 63% year-over-year. These increases were significantly influenced by higher stock-based compensation and public company costs following the April 2024 IPO, as well as investments in R&D and facilities for a new headquarters. Cost of revenue also increased 63% year-over-year, primarily due to revenue share and technology costs associated with new publishers like Instacart. Adjusted EBITDA in Q1 2025 was $14.7 million (17% margin), exceeding guidance due to revenue outperformance and expenses largely as forecasted.

Financially, Ibotta maintains a strong liquidity position. As of March 31, 2025, cash, cash equivalents, and restricted cash totaled $297.5 million,

supported by $19.9 million in net cash provided by operating activities in the quarter. The company has $99.0 million available under its revolving credit facility. Net cash used in investing activities increased due to investments in property/equipment (new headquarters) and capitalized software development. Net cash used in financing activities reflected significant share repurchase activity, with $73.4 million spent to repurchase 1.84 million shares in Q1 2025, leaving $96.1 million authorized under the program. The company expects existing liquidity and operating cash flows to be sufficient for the next 12 months.

Outlook and Risks

Ibotta's outlook for Q2 2025 reflects the ongoing transition. Guidance calls for revenue between $86.5 million and $92.5 million (2% growth at midpoint) and Adjusted EBITDA between $17 million and $22 million (22% margin at midpoint). Management anticipates gradual revenue growth acceleration throughout 2025, driven by sequential improvements in offer supply (resulting from better sales execution and increasing CPID adoption), the continued ramp of Instacart and DoorDash, and the expansion into categories like alcoholic beverages on third-party platforms.

A key assumption for margin expansion is flattish non-GAAP operating expenses from Q1 2025 levels through the rest of the year, allowing anticipated revenue growth to drive sequential Adjusted EBITDA margin improvement. Full-year 2025 guidance includes an adjusted tax rate in the low 20s and free cash flow as a percent of adjusted EBITDA in the 60% to 65% range, factoring in higher cash taxes and one-time capital expenditures related to the new headquarters.

Despite the optimistic long-term vision and strategic initiatives, several risks could impact Ibotta's trajectory. The pace of CPG adoption of the new CPID framework and performance marketing mindset is not guaranteed and could be slower than anticipated, limiting the unlock of larger budgets. Maintaining sufficient offer supply to keep pace with the rapid growth in redeemer demand remains a critical challenge. Effective integration and monetization of new, large publisher partnerships like Instacart and DoorDash, including navigating technical requirements and aligning on marketing best practices, is crucial. Competition is intense and evolving, with players in ad tech and traditional promotions potentially adapting their offerings. Data privacy regulations and the reliance on third-party platforms (mobile OS, app stores, cloud providers) also pose ongoing risks. The recent securities class action lawsuit adds legal uncertainty and potential costs. Finally, the dual-class stock structure concentrates voting control with the founder, which could impact corporate governance and investor influence.

Conclusion

Ibotta is undertaking a significant strategic evolution, aiming to transform the CPG promotions market into a sophisticated, performance-driven ecosystem. By leveraging its expanding IPN and unique purchase data to enable rigorous, real-time measurement of incremental sales via the CPID framework, the company is addressing a key pain point for CPG brands seeking demonstrable ROI in a challenging macroeconomic environment. While the rapid growth of its network has created temporary supply-side imbalances and impacted near-term financial performance, particularly in its D2C segment, management's focus on improving sales execution, rolling out the CPID framework, and integrating major new publishers like Instacart and DoorDash provides a clear path for potential reacceleration of revenue growth and margin expansion in 2025. The success of this transition hinges on the pace of CPG adoption of this new performance marketing paradigm and Ibotta's ability to consistently deliver sufficient offer supply to meet the surging demand from its growing redeemer base. For investors, the story is one of a company with a differentiated technological approach and significant network scale attempting to disrupt a large market, balanced against execution risks and competitive pressures in a dynamic industry.