Ibotta, Inc.

Greetings and welcome to the Ibotta Second Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you will require any operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Shalan Patel, Head of Investor Relations. Thank you, Shalin. You may begin.

Good afternoon, and welcome to Ibotta's Q2 2024 earnings conference call. With us today are Brian Leach, founder and CEO, and Sunit Patel, CFO. Today's press release and this call may contain forward-looking statements, including our guidance for Q3 2024, that are subject to inherent risks, uncertainties, and changes, and reflect our current expectations and information currently available to us. and our actual results could differ materially. For more information, please refer to the risk factors in our recent SEC filings. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures and should be considered in addition to, and not as a substitute for, our GAAP results. Reconciliations to the most comparable GAAP measures are available in today's earnings press release. which is available on our investor relations website at investors.ibata.com. Also, during the call today, we'll be referring to the slide deck posted on our website. Unless otherwise noted, revenue and adjusted EBITDA comparisons to prior periods are provided on a year-over-year basis. Lastly, references to non-GAAP revenue growth reflect the exclusion of one-time breakage revenue benefits in 2023. This is due to an update we made in 2023 to fix a software error to correctly charge maintenance fees to inactive direct-to-consumer redeemers, which resulted in a short-term benefit to GAAP revenue last year. Please see slide 26 in the appendix for more detail. With that, I'll turn it over to Brian.

Thanks, Shalin, and good afternoon, everyone. Thank you for joining us to discuss our second quarter results. We're happy to announce that we delivered revenue and adjusted EBITDA above the high end of the guidance range we provided on our first quarter earnings call. The IPN is resonating strongly with all three of our key constituencies, consumers, publishers, and CPG brand clients. The total number of redeemers on the IPN continues to grow at a rapid pace, increasing 158% year-over-year and 10% sequentially from Q1. We successfully rolled out the IPN to new publishers in the second quarter while announcing two new publisher wins with Schnucks and with Instacart, demonstrating our success in building the Ibotta flywheel. Our redemption revenue grew 51% year-over-year on a non-gap basis, highlighting the value that our clients are seeing by leveraging the unique scale of the Ibotta platform. I'll dive into all three of these areas in more detail. First, regarding consumers, the IPN is reaching more Americans than ever before, setting a new record for redeemers at 13.7 million in Q2, which is higher than our seasonally strong Q4 last year. With persistent elevated prices and high levels of household debt, US consumers are looking for value more than ever, and they are finding a greater quantity of Ibotta digital offers across a larger number of categories in more and more locations. We are still in the early phases of driving penetration and adoption across the large customer bases of our existing third-party publishers and are working hand in hand with each publisher to increase discoverability of our offers for both online and in-store shopping experiences. We have a long list of initiatives in the pipeline and expect our partners to continue upgrading their savings programs between now and the end of the year. The implementation of these best practices will help consumers more easily discover, clip, and redeem offers on each of our publishers' digital properties, ultimately resulting in continued redeemer growth. Moving on to publishers, we've seen an acceleration of inbound interest from potential partners over the last few months. I've never been more excited about our publisher pipeline. and I view it as confirmation of the market's strong desire for a new, more technologically advanced platform for delivering digital promotions. We're working hard to diversify our network by signing up new category-leading publishers across different verticals. In this way, we hope to accelerate the Ibotta flywheel, better serve our CPG brand clients, and capture the related network effects. On that note, we are pleased to announce that Instacart, a leading grocery technology company in North America, will soon be joining the IPN, giving Instacart's customers access to Ibotta's industry-leading catalog of offers and promotions. Instacart's marketplace of more than 1,500 retail banners with a footprint of more than 85,000 stores will give our CPG brand partners even greater opportunity to reach high-intent audiences as they build their shopping baskets. We believe Instacart's decision to entrust Ibotta as its preferred third-party coupon provider reflects their commitment to delivering the greatest possible value to their consumers as well as an alignment regarding the importance of technological innovation in shaping the future of the grocery industry. We expect our depth of offers combined with our targeting capabilities and Instacart's UX to result in strong redemption rates similar to or above what we have seen in the online-only businesses of our current publisher partners. To put in perspective the potential value of our deal with Instacart, according to eMarketer, Instacart's share of the grocery e-commerce market is two-thirds the size of Walmart, at 18% and 27%, respectively. Our teams are working hard to get our digital offers live on the Instacart platform during the fourth quarter, and we believe that once this is wrapped up, it will be a significant ongoing contributor to our growth. Specifically with regard to Walmart, we are pleased with the growth of our audience there. While we don't break out our Redeemers by publisher, we are tracking ahead of our expectations. We are in regular dialogue with our counterparts at Walmart, working together to drive greater awareness of our cashback offers and improve the online and in-store redemption experience for Redeemers. In terms of our other publishers, we anticipate a successful launch with Schnucks later this quarter, which will deliver a more personalized savings experience for their customers. The joint R&D initiatives that we envision with Schnucks are still in their nascent stages, but we remain excited about the potential to integrate our digital offers into their retail media and other in-store technologies. We are more than one quarter through our rollout at Family Dollar, which began in early April. The partnership is off to a strong start, and we are continuing to refine the UX and the marketing communication around the new and improved Smart Coupon program. We also began to roll out Ibotta offers to the retailers in the AppCard network at the start of April. Because individual grocers are coming online at their own pace, this is a more gradual ramp than that of a typical publisher partner. That being said, it is in line with our expectations, and we are pleased with the progress being made. We have seen a step up in daily redemptions as more retailers have gone live. We expect that we should be fully rolled out to all retailers that ingest digital coupons from AppCard by the end of the year. Finally, switching gears to talk about clients. Our team of sellers and account managers has been focused on growing our budgets with existing CPG clients while adding new brand partnerships and expanding into new verticals and product categories. As we look out onto the horizon, we see three important tailwinds for Ibotta's business. First, there is a growing desire within CPG companies to use digital promotions to recapture consumers who are price sensitive, many of whom have trended away from national brands and toward private label alternatives. Several of our CPG clients have recently commented publicly that they plan to increase promotional spending in the back half of the year to combat weaker volumes and respond to increasing price sensitivity among consumers. As an example, the CEO of General Mills made a comment in their last earnings call about their plan to increase coupon spend in 1H fiscal 2025, by 20%, citing Ibotta as an example and underscoring the value of using first party data to target specific customers in a more sophisticated way. We believe that the size and scale of the IPN will make it one of the biggest beneficiaries of the greater promotional investments these companies intend to make. Second, many large CPG companies are pulling back on marketing investments that have a less definite return on investment. In this environment, we believe our business is especially well positioned because we offer a pay-per-sale alternative that de-risks their marketing investments and delivers measurable incremental sales in a highly cost-effective manner. When every dollar invested either converts to a measurable sale or you don't pay, CPG brand managers and their media agencies can invest with greater confidence. Third, We continue to hear from CPG leaders that they want to see a much higher degree of rigor when it comes to measuring the return on investment of their marketing spend. Until now, marketers have relied heavily on assumption-driven models to determine how much credit to attribute to various forms of media they buy. This can be a difficult task. After all, how can you disentangle whether it was your TV commercial, billboard, radio ad, or paper coupon promotion that led to sales? How much did each tactic contribute? Should the attribution window be seven weeks or 70 weeks? These are thorny problems and different models often yield different results depending on their underlying assumptions. Further complicating matters, these modeling exercises can take up to 12 months, which prevents a brand manager from using them to optimize marketing mix in real time. Previously, promotions have been measured in a less rigorous way because these models assumed they were one size fits all, and little data existed on how consumers actually behaved after redeeming an offer. What if instead you could look at purchase trends over time, paying careful attention to whether redeemers continue buying the product, and if so, whether they pay full price? Ibotta's data allows for more definitive answers to these questions. It also allows brand marketers to receive these answers right away, unlocking a much more agile approach to budget allocation that can become an important strategic advantage for brands. What becomes clear is that Ibotta's promotions are both far more measurable and more effective than historical forms of promotion. In short, this is not your grandma's coupon, and that message is starting to sink in. It takes time to affect a sea change in how marketing spend is measured, but we're encouraged by the momentum we see in the market. The median CPG budget on Ibotta for advertisers spending more than $50,000 year-to-date has grown by more than 50% on a year-over-year basis. increasingly, CPG brands not only view Ibotta as a way of quickly moving the needle on sales to close a quarter, but also as one of their more efficient marketing investments. When it comes time to determine their annual marketing budgets, we anticipate that CPG brands will continue to increase their investments in the IPN, particularly as we socialize the scale of the new opportunities on Instacart, the growth of our existing publisher audiences, and the addition of new publishers. Within our existing CPG clients, Some of our biggest year-over-year increases have occurred in the home care and personal care categories. In addition, some of our biggest category wins outside of grocery include general merchandise such as toys, pet, home, and lawn and garden care. We continue to make progress in these areas with general merchandise redemption revenue as a percentage of total redemption revenue almost doubling as compared to the same quarter last year. To wrap up, we believe our initiatives with our existing retailers Our recently announced publisher wins and our growing confidence in our network effects and ability to continue adding new third-party publishers sets us up very well for strong redemption revenue growth in 2025 and beyond. With that, let me hand the call over to Sunit to discuss our second quarter results as well as our third quarter guidance. Sunit?