Ibotta Files for IPO, Showcasing Impressive Growth and Profitability
On March 22, Ibotta, a 13-year-old cash-back startup, confidently submitted an S-1 filing with the SEC, signaling its intent to list shares on the New York Stock Exchange. The company’s decision to go public comes after a year of remarkable financial performance, with revenue growth and profitability taking center stage.
Impressive Financial Performance
In 2023, Ibotta reported a staggering $320 million in revenue, representing a 52% increase from the previous year’s $210 million. The company’s gross profits also saw a significant boost, growing 68% from $164.5 million in 2022 to $276 million in 2023.
Expanding into Enterprise Solutions
Initially launched as a consumer-focused app offering cash back on purchases through brand partnerships, Ibotta has since diversified its offerings. The company now develops back-end software for reward programs catering to enterprise customers such as Exxon, Shell, and Walmart. This strategic move into the B2B2C space has likely contributed to Ibotta’s recent financial success and increased investor interest in the upcoming IPO.
“The fact that [Ibotta] has become, with Walmart, more of an enterprise software play, basically being the back-end for its Walmart cash rewards program, that lends more credence to it. [Compared to] ‘Hey we have this app and we need to grow users and continue down that avenue.'”
Nicholas Smith, a senior equity research analyst at Renaissance Capital, highlights the significance of Ibotta’s partnership with Walmart and its enterprise program, known as Ibotta Performance Network (IPN), which launched in 2020.
Enterprise Business Drives Growth
Ibotta’s enterprise business, referred to as “third-party publishers revenue” in its filing, experienced a remarkable 711% growth from 2022 to 2023, increasing from just under $10 million to over $80 million in a single year. In comparison, the company’s direct-to-consumer business grew by a respectable 19% during the same period. The rapid growth of the enterprise segment, coupled with improved gross margins (from 78% in 2022 to around 86% in 2023), played a crucial role in Ibotta’s transition from persistent net losses to consistent profitability.
Path to Profitability
Ibotta’s quarterly data reveals the company’s swift journey to profitability. From Q1 2022 to Q1 2023, the company experienced decreasing net losses, with negative net income shrinking from $22.9 million to $4.3 million. Starting in Q2 2023, Ibotta began generating regular profits, which grew to an impressive $18.6 million by the last quarter of the year.
Promising Future Prospects
Ibotta’s growth potential looks promising, with the company having secured IPN partnerships with notable brands such as Family Dollar, Kroger, Exxon, and Shell. Although the extent of these relationships remains less clear compared to the Walmart partnership, they suggest a strong demand for Ibotta’s enterprise solutions. However, the company acknowledges that losing the Walmart partnership would have a material impact on its business.
Pricing Uncertainty
The biggest question surrounding Ibotta’s IPO is how the company will price its shares. Despite the recent success of IPOs from Astera Labs and Reddit, Ibotta’s unique business model makes it challenging to find a perfect comparison. The company’s multiple revenue streams, spanning adtech and enterprise software, could lead to varying valuations depending on investor perception.
“It’s hard because there is no perfect comp. It’s a little bit of an adtech company, maybe getting more [into] enterprise software. [If it’s] looked at truly from a tech perspective, it will probably go for a high multiple, if it’s more sort of adtech or even consumer it might be lower.”
Smith suggests that if Ibotta is viewed more as an advertising or marketing company, it might be priced similarly to Klaviyo, a digital marketing company that went public last fall. Klaviyo priced its shares at $31, slightly above its target of $30, resulting in a valuation of $9.2 billion, just below its previous primary round valuation of $9.5 billion. Currently, the company has a market cap of $6.8 billion.
Funding and Valuation
To date, Ibotta has raised over $90 million in venture capital from funds such as GGV Capital, Great Oak Ventures, and Teamworth Ventures, as well as numerous angel investors, including Thomas Jermoluk and Jim Clark, co-founders of Beyond Identity. The company’s most recent valuation stood at $1.08 billion.
As Ibotta prepares for its public debut, the company’s impressive financial performance, strategic partnerships, and expanding enterprise business make it an intriguing prospect for investors. However, the uncertainty surrounding its share pricing and the potential impact of losing key partnerships remain factors to consider. Nonetheless, Ibotta’s IPO is set to be a closely watched event in the tech industry.
3 Comments
Ibotta’s leap into enterprise is bold—wonder if they’ll cash in or crash out at the IPO!
Wow, looks like Ibotta’s not just clipping coupons, they’re aiming for the stock market jackpot!
Ibotta hitting the enterprise scene, huh? Guess it’s time to see if they soar or stumble with their IPO vision.