Ibotta, Inc. Q2 FY2025 earnings call

• Introduced new CFO Matt Puckett, who will start on August 25, and thanked Interim CFO Valerie Shepppard for her work during transition. - Discussed broader business transformation to capture a larger portion of the CPG marketing spend, including changing promotion measurement/purchasing, streamlining operations, and bringing in new talent. - Faced challenges with initial pilot partners, such as needing third-party validation for one client and administrative hurdles with another. - Reorganized sales from a territory-based model to an industry subvertical model, reducing account load for enterprise sellers. - Rolled out offers to majority of DoorDash customers and collaborated with Walmart to increase program awareness for digital manufacturer offers.

Revenue in the second quarter was $86 million, a decline of 2% year-over-year. Redemption revenue was $73.2 million, down 1% year-over-year. Third-party publisher redemption revenue was $48.6 million, up 17% year-over-year, while D2C redemption revenue was $24.7 million, down 24% year-over-year. Ad and other revenues, representing 15% of revenue, were $12.8 million, down 8% year-over-year. Non-GAAP gross margin was 80%, down nearly 660 basis points year-over-year. Non-GAAP operating expenses as a percent of revenue were 61%, an increase of approximately 180 basis points year-over-year. Adjusted EBITDA was $17.9 million, with an adjusted EBITDA margin of 21%.

• Q3 revenue is guided to be in the range of $79 million to $84 million, representing a 17% revenue decline at the midpoint. - Q3 adjusted EBITDA is guided to be in the range of $9.5 million to $13.5 million, with an adjusted EBITDA margin of about 14% at the midpoint, a 7% decrease from Q2. - Anticipates operating expenses in Q4 to increase sequentially due to investment in the sales organization and seasonal marketing expenses. - Expects de minimis cash taxes due to lower full-year performance and new tax legislation.

• Short-term headwinds from business transformation, including delays in rolling out campaigns with pilot partners due to third-party validation and administrative challenges. - Disruption from sales reorganization leading to revenue decline in Q3. - Macro environment causing CPGs to be cautious with net new expenditures, delaying budget allocation for pilots.

Q: Ron Josey from Citi asked about CPID rollout and third-party data provider results.

A: Bryan Leach discussed third-party measurement showing statistically significant lift and the 6 new pilots in the back half.

Q: Eric Sheridan from Goldman Sachs asked about strategy execution and budget timing.

A: Bryan Leach talked about consolidating sales execution, implementing new go-to-market, and product challenges, and budget allocation timing.

Q: Mark Mahaney from Evercore asked about Walmart partnership.

A: Bryan Leach discussed strong collaboration with Walmart, increased awareness, and growth in the publisher side.

Q: Ken Gawrelski from Wells Fargo asked about supply side environment and investment levels.

A: Bryan Leach talked about the macro environment causing CPGs to be cautious, and heavy R&D investment.

Q: Chris Kuntarich from UBS asked about general merchandise and CPI offering.

A: Bryan Leach discussed general merchandise reaction to the environment and CPI pilot timeline.

Q: Bernie McTernan from Needham asked about Amazon same-day delivery and Q2 guidance.

A: Bryan Leach talked about Amazon same-day delivery's positive impact and Q2 guidance changes.

Q: Andrew Boone from JMP Securities asked about measurement automation and timeline.

A: Bryan Leach discussed measurement automation needs and timeline for implementation.

Q: Andrew Marok from Raymond James asked about CPI framework budget allocation.

A: Bryan Leach talked about budget parking and transition in CPG budgets.