Ibotta, Inc. Q4 FY2024 earnings call

Key Points

• Bryan mentioned revenue and adjusted EBITDA were below guidance, and they're guiding to a softer first quarter outlook. They believe steps to improve near-term execution are underway.
• They identified three main factors for current softness: insufficient offer supply from CPG brands, sales execution issues, and not being on cycle with some CPG clients.
• Hired Chris Riedy as Chief Revenue Officer to upgrade sales execution.
• Focus on two strategic goals: establish unrivaled value via a new measurement framework for incremental sales lift (CPID) and change the way clients buy via a programmatic media buying interface.
• D2C ads expect ongoing weakness in first half of 2025, with plans to improve performance using a new ad server and CPM pricing.
• Sunit discussed Q4 results: revenue $98.4 million, adjusted EBITDA $27.8 million, free cash flow $19.4 million for the quarter, and full year 2024 free cash flow $105.7 million.

In Q4, redemption revenue was $82.4 million, up 7% year-over-year on a non-GAAP basis. Ad and other revenues, making up 16% of revenue, were $16 million, down 27% year-over-year. Third-party publisher redemption revenue was $52.3 million, up 39% year-over-year, while D2C redemption revenue was $30.1 million, down 24% on a non-GAAP basis excluding the one-time breakage benefit in Q4 last year.

Q1 2025 Guidance

• Expected revenue in the range of $80 million to $84 million (flat growth).
• Expected adjusted EBITDA in the range of $10 million to $14 million, with an adjusted EBITDA margin of about 15% at the midpoint.
• Anticipate revenue growth to moderate the year-over-year decline, with improvement throughout the year driven by better execution, offer supply recovery, ramp of Instacart and DoorDash, and progress in winning CPIT-based campaigns.
• Adjusted EBITDA margin expected to improve every quarter as revenue grows with flattish expenses.

• Insufficient offer supply from CPG brands relative to redeemer growth, leading to lower redemptions per redeemer and lower redemption revenue.
• Sales execution issues including inadequate account coverage and crisper account handoffs.
• Not being fully on cycle with certain CPG clients, complicating budget allocation and tapping into e-commerce budgets.

Q: Andrew Marok asked about the timeframe to address measurement framework, sales execution, and CPG client cycles, and what mile markers to assess progress.

A: Bryan responded that the measurement framework is live with pilots and some clients in green-lit programming; sales execution issues are being addressed with new CRO and process improvements; CPG client cycle alignment is ongoing daily with progress seen but taking time to fully resolve.

Q: Andrew Boone asked about targeting with new grocers like DoorDash and Instacart and cost savings details.

A: Bryan said new publishers like DoorDash allow targeted personalization; cost savings focus on D2C not being a strategic priority, scaling back B2B marketing, and streamlining operations while not cutting strategic areas.

Q: Eric Sheridan asked about CPG advertiser receptivity to changes and quantifying redeemer growth impact from offer supply.

A: Bryan said pilots led to quick green-lighting of programming, and there's an interrelationship between offer supply and redeemer usage, with hope for snap back when inventory improves; Sunit added third-party publisher redeemer growth is strong while D2C redeemer count was flat.

Q: Ron Josey asked about salesforce changes, go-to-market, and measurement improvement for CPGs.

A: Bryan discussed salesforce optimizations like better account prioritization, playbooks, and campaign manager tool to free up seller time; measurement improvement involves real-time incremental sales lift measurement using CPID to show profitable growth.

Q: Chris Kuntarich asked about growth visibility and supply visibility into 2Q.

A: Sunit said they have good visibility into March, feel good about Q2 but still have headwinds from ongoing issues; Bryan added gradual improvement with new clients and long-term vision, and ad product improvements expected later in the year.

Q: Curt Nagle asked about Instacart scaling and progression.

A: Bryan said Instacart has healthy implementation and redemption rates but is in a depleted offer supply posture, confident it will ramp as offer supply recovers.

Q: Bernie McTernan asked about redemptions and feedback from publishers on offer content.

A: Sunit said Q1 is seasonally slow but redeemer base is strong; Bryan added publishers see Ibotta as a leader in innovation and expect growth as they prove the new measurement and targeting model