Ibotta, Inc. Q4 FY2025 earnings call

• Improved execution: Leveled up sales leadership, restructured sales organization, emphasized consultative approach, overhauled B2B marketing function, addressed CPGs' need for third-party measurement. • Strengthened core product: Set clearer goals for campaigns, focused on incremental sales, improved profitability metrics, revisited pricing. • LiveLift: Next-generation capabilities allowing clients to see projected incremental sales and CPID during campaigns, with positive feedback, more LiveLift campaigns in Q4 than previous quarters combined, and expected 80% expansion or renewal of LiveLift campaigns. • Future vision: Envision CPG clients moving to outcomes era, determining desired outcomes and using AI for better resource allocation.

Fourth quarter revenue was $88.5 million, a decline of 10% versus last year. Redemption revenue was $78.5 million, down 5% year-over-year. Live lift revenue was better than projected. Third-party publisher redemption revenue was $56.4 million, up 8% versus last year. Direct-to-consumer redemption revenue was $22.2 million, down 26% year-over-year. Other revenues were $10 million, down 38% versus last year. Total redeemers were 20.4 million in the quarter, up 19% year over year. Redemptions per redeemer were 4.6, down 16% versus last year. Redemption revenue per redemption was 83 cents, down 5% versus last year. Q4 non-GAAP gross margin was 79%, down approximately 570 basis points versus last year. Non-GAAP operating expenses were up 1% versus last year and slightly above expectations. Q4 adjusted EBITDA was $13.7 million, representing an adjusted EBITDA margin of 15%.

• Q1 2026 revenue expected in the range of 78 to 82 million, a 5% year-over-year decline at the midpoint. • Q1 adjusted EBITDA expected in the range of 6 to 8 million, about a 9% adjusted EBITDA margin at the midpoint. • Anticipate low single-digit sequential revenue growth in Q2 versus Q1, and slight year-over-year revenue growth in Q3. • Expect modest sequential increase in quarterly non-GAAP cost of revenue and operating expenses in 2026. • Expect stock-based compensation expense to be approximately $10 million higher than 2025. • Expect free cash flow to be approximately 65% of adjusted EBITDA.

Q: For Brian, could you elaborate on the relationship between the core product and the new LiveLift solution and how you see each of these offerings progressing?

A: Brian explained that the core product has broad improvements making it profitable revenue growth, and LiveLift is the core product plus the capability to project and measure profitability, incremental sales on a more regular cadence during the campaign.

Q: With the new sales leadership and the sales reorg in place for a full quarter, could you share an update on the evolution of your client approach and any specific benefits from verticalized teams or the more consultative approach?

A: Brian said they're doing a better job understanding clients' industries, being more proactive, going further upstream with clients, and multi-threading reaching different parts of organizations.

Q: Brian, just the sentiment of your clients right now as we get into the year. How does this year compare to what you're hearing?

A: Brian said there's focus on AI's impact, value, and agentic shopping, and they're well positioned.

Q: Alex Vigilante with Goldman Sachs asked about third-party redeemer results.

A: Brian said success across third-party publishers, including DoorDash rollout and existing publishers finding ways to feature content.

Q: Ken Gawrowski with Wells Fargo asked about LiveLift sales cycle and profitability.

A: Brian said LiveLift exceeded expectations, has strong feedback, and profitability characteristics over long term are similar.

Q: Mark Mahaney with Evercore ISI asked what LiveLift changes economically.

A: Brian said LiveLift allows checking profitability regularly, adjusting campaigns, and is a dramatic TAM expander.

Q: Miten Bensal with Bank of America asked about budget allocation and strategy elements.

A: Brian said saw more companies testing and expanding campaigns, and strategy elements include challenging industry paradigm and standardizing/automating systems.

Q: Steven Jew with UBS asked about third party redemptions per redeemer.

A: Brian and Matt said focus on total redemptions and total redeemers, offer supply improving.

Q: Andrew Boone with Citizens asked about LiveLift expansion and moving off annual planning cycle.

A: Brian said build credibility, automate systems, and annual planning cycle is a set shift.

Q: Andrew Merrick with Raymond James asked about publisher expansion and AI models.

A: Brian said adding publishers diversifies network and provides more data for AI models.