Ibotta, Inc.

Good afternoon, and welcome to Ibotta's Q1 2026 earnings conference call. With us today are Brian Leach, founder and CEO, and Matt Puckett, CFO. Today's press release in this call may contain forward-looking statements. Forward-looking statements include statements about our future operating results, our guidance for Q2 2026, our ability to grow our revenue, factors contributing to our potential revenue growth, our key initiatives, our partnerships, and the capabilities of our offerings and technology, all of which are subject to inherent risks, uncertainties, and changes. These statements reflect our current expectations and are based on the 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 gap measures are available in today's earnings press release, our 10Q, and our Q1 2026 earnings presentation, which are all available on our investor relations website at investors.ibata.com. Unless otherwise noted, revenue and adjusted EBITDA comparisons to prior periods are provided on a year-over-year basis. With that, I'll turn it over to Brian.

Good afternoon, everyone. Thank you for joining our discussion of first quarter results. We're pleased to report first quarter revenue and adjusted EBITDA that are both above the top end of the guidance range we provided on our fourth quarter earnings call. We continue to anticipate that our year-over-year revenue trends will improve sequentially, returning us to overall revenue growth in the third quarter of 2026, which is consistent with the outlook we provided in February. The improved trajectory of our business is mostly the result of our sales team's success in deepening and broadening the supply of offers available to us. Our core promotions product is demonstrating strong market fit, while our more recent offering, LiveLift, continues to receive positive early feedback. On the publisher front, we've added two new partners in quick succession, both of which have entered into multi-year exclusive partnerships with us. In late March, we announced the addition of Uber, meaning that later this year, Ibotta's digital promotions will appear within the Uber, Uber Eats, and Postmates apps. And today, we announced that Giant Eagle is also joining the Ibotta Performance Network. I'll say more about the significance of these new publisher wins later on, but first, I'd like to provide a bit more context on our recent financial performance and share additional details about the from-to pathway we see ourselves on. On a year-over-year basis, our redemption revenue performance has almost fully recovered. In the first quarter, it was down 1% year-over-year, compared to being down 15% in the third quarter of last year and down 5% in the fourth quarter. This gradual recovery has been partly driven by redeemer growth, with 15% more redeemers in Q1 than in the same quarter last year. That said, increased demand for offers alone doesn't move the needle unless we also source enough offers to take advantage of it. This is all about having the right team in place, spending more time in market, multi-threading our outreach to stakeholders at different levels within an organization, and being more immediately responsive to our clients' needs. Building trust in these ways is allowing our team to continue moving forward further upstream in our client's strategic planning processes. We are also doing a better job of supporting our sellers and account managers with B2B marketing, training and enablement, and client-specific insights. Our product team is working hard to deliver new tools that make each step in the quote-to-cash process easier, faster, and more efficient. Encouragingly, our success has been broad-based, which continues to increase our conviction in the path we're on. Our sales team is adding new clients, securing new commitments from existing clients, and retaining the overwhelming majority of our clients. Our strategic partnership with measurement leader Cercana continues to generate sales and marketing momentum. We recently published a case study available on our website that independently validates Ibotta's ability to deliver successful results for our clients. CHOMPS, the fastest growing meat snack brand in the United States, ran a campaign earlier this year to drive trial and household penetration. The results were outstanding and were independently verified through a sales list study conducted by Cercana. Households exposed to the Ibotta campaign spent an average of 15% more on CHOMPS than their unexposed counterparts. Even more impressively, the campaign outperformed Cercana's snack category benchmarks for sales lift by more than 4.5x and surpassed household penetration benchmarks by a staggering 9x. Stacey Hartnett, the SVP of Marketing at Chomps, summarized the impact well. She noted that achieving strong on-shelf presence was only their first milestone. Their strategy has now shifted toward winning new buyers through smarter promotional strategies. She stated that our partnership has become a key lever in that effort and that the study reinforces that the IPN delivers impact well beyond a discount, helping them reach the incremental shoppers critical to their long-term growth. Turning to LiveLift, we continue to see positive signs of product market fit, even though it's still early days. We continue to limit access to those clients willing to spend a certain amount and run their campaigns for a certain duration. For this reason, the revenue contribution from LiveLift remains modest for now, and we aren't forecasting a significant ramp in revenue until we loosen those eligibility requirements. I'll have more to say on what that will require in a moment. Actual re-up rates among clients that have completed a LiveLift campaign remain consistent with the approximately 80% level we've discussed in prior quarters. Those clients who have not yet re-upped are primarily smaller CPGs, which we believe reflects our eligibility criteria, rather than any dissatisfaction with the product consistent with what we've said previously. Repeat users represented approximately 60% of LiveLift campaigns in the quarter, with the remainder being first-time users running pilots. The average campaign size for LiveLift campaigns remains meaningfully larger than for our core product. The most common question I received after our last earnings call was, can you help me better understand what the pathway to greater adoption of LiveLift will look like? So let me try to shed some light on what that entails and why I believe we're making solid progress. Of course, as with any innovative product development process, it's impossible to know in advance everything we will learn along the way or exactly how long that will take. Our goal is to make it as easy as possible for our CPG clients to buy campaigns on the Ibotta Performance Network. Some will prefer to stick with managed service, while others may take advantage of our self-service tools, which we will continue to refine and improve. In the future, our clients may also rely on agents to make more autonomous media buying decisions. Whichever interface they choose, clients will start by identifying the goals of their campaign. Our LiveLift platform then takes this information and evaluates a wide range of possible campaigns and chooses the best fit for their goals, projects the amount of redemptions, incremental sales, and cost per incremental dollar we think they will achieve, tracks these metrics on an ongoing basis, providing profitability readouts at various points during the campaign, and optimizes the campaign as necessary along the way. Scaling LiveLift to our wider client base will require greater automation of these processes. With that in mind, we are focused on a few key initiatives. First, we're building a more sophisticated programmatic API layer so that our software, as well as any agents we create, can interface with the various models and systems that power LiveLift, allowing our system to fully harness the power of AI and programmatically design, build, launch, optimize, and report on a campaign. This includes considering different scenarios and making the best possible projections and recommendations more quickly and at lower cost. Second, we are refining the underlying models that power LiveLift. These models become more robust as we train them on the data generated by running these early LiveLift campaigns, as we receive additional data from existing publishers, and as we expand the publisher network, gaining access to new sources of data. Widening the availability of LiveLift requires continued model training through repeated experiments, and those take time. We are building a novel capability in this industry, and that necessitates a disciplined, phased approach to scaling. Third, we are working on what I would broadly call AI enablement. That means documenting processes to create additional context for AI, defining standard operating procedures, and simplifying our product catalog to reduce complexity. Creating this scaffolding takes time, but once we have a simpler set of products with the appropriate context, more reliable agentic AI flows become possible. We believe that the progress we're making along all these fronts will ultimately allow us to more meaningfully inflect the level of CPG offer supply. Switching to the demand side of the equation, we continue to see strong results this quarter with healthy redeemer growth driven by organic growth at our existing publishers and the 2025 launch of DoorDash. One of our top priorities has been diversifying our publisher base, and we have begun doing that with the recent additions of Uber and Giant Eagle, both of which entered into multi-year exclusive partnerships with Ibotta. Adding Uber to the IPN allows us to intercept consumers in high intent commerce moments and solidifies our leadership position in the fast growing and important e-commerce delivery space. Our partnership with Giant Eagle further validates the strength of our model and enhances our presence in the traditional grocery channel. As one of the nation's largest multi-format food and pharmacy retailers and a recognized industry thought leader, Giant Eagle chose to transition to Ibotta in order to access a more robust and relevant offer gallery that moves the needle for their customers. We're pleased with the terms and the economic profile of both of these new partnerships. These partnerships demonstrate the extensive work of our business development and technology teams behind the scenes to enable these milestones. I'll now turn the floor over to our Chief Financial Officer, Matt Puckett, to walk through our financial results and guidance in more detail.

Thank you, Brian, and good afternoon, everyone. Right off the top, I'll repeat Brian's comments. We're pleased to have delivered another quarter that was ahead of our initial outlook, further validating that we are very much on the right track. With that, let me jump into the Q1 results. We delivered revenue and adjusted EBITDA that were respectively 3% and 25% above the midpoint of the guidance range that we provided on our fourth quarter earnings call. Now to unpack our top line results for the quarter. Revenue was 82.5 million, a decline of 2% versus last year. Within that, redemption revenue was 73 million, down approximately 400,000, or 1% year over year. Both redemption revenue and add another revenue trends improved on a year-over-year basis as compared to the fourth quarter. We continue to be pleased with the results our sales organization is driving and how both our core product offerings and LiveLift are resonating with our clients. As Brian noted, the LiveLift re-up rate remains healthy, underscoring that clients are realizing the measurable benefits that these next-generation capabilities deliver. Third-party publisher redemption revenue was $54 million, up 12% versus last year, and accelerating sequentially versus the prior quarter's increase of 8%. Direct-to-consumer redemption revenue was $19 million, down 25% year-over-year, and similar to Q4's result. We are as anticipated. We've continued to see redemption activity shift to our third-party publishers. Ad and other revenues, which represented 11% of our revenue in the quarter, were $9.5 million, down 15% versus last year due primarily to continued pressure on ad revenue as a result of lower direct-to-consumer redeemers. This reduction was partially offset by growth in data revenue. Turning now to the key performance metrics supporting redemption revenue. Total redeemers were 19.7 million in the quarter, up 15% year over year. We saw another quarter of significant growth in third-party redeemers across the IPN, including strong growth with our largest publisher partner, highlighting the continued health of the demand side of our network. In addition to organic growth with existing publishers, the quarter also benefited from the launch of DoorDash in the second quarter of 2025. Redemptions per redeemer were 4.5, down 6% versus last year, a meaningful improvement in trend versus the second half of last year when redemptions per redeemer were down 22%. But where the decline continues to be driven by both the quantity and quality of offers available to each redeemer, as well as the growth in third-party redeemers, which have a lower redemption frequency as compared to our direct-to-consumer redeemers. Redemption revenue per redemption was 83 cents, which was flat versus Q4 and down 7% versus last year, driven primarily by the mix of redemption activity. Summing it all up, total redemptions were 88 million, up 6% versus last year, driven by 15% redemption growth on our third-party publishers. This represents a more measurable return to year-over-year growth in redemptions for the first time since the first quarter of 2025 after being flattish in the fourth quarter. Now switching to the cost side of our business. As anticipated, non-GAAP cost of revenue was up 2 million versus a year ago, largely driven by an increase in technology-related costs, along with a more modest increase in publisher costs. This resulted in a Q1 non-GAAP gross margin of 78% down approximately 300 basis points versus last year. As we discussed last quarter, much of the increase in technology-related costs is a function of increased investment in product development, as well as a higher allocation of certain costs from R&D expense to cost of revenue. Before I review non-GAAP operating expenses, let me point out that we've made a change in how non-GAAP operating expenses are defined and shown on page 12 of the presentation that accompanies our earnings materials. You'll notice we are now including depreciation and amortization in non-GAAP operating expenses. Now, turning back to the results, non-GAAP operating expenses were up 5% versus last year and were 71% of revenue, an increase of approximately 470 basis points year over year. Within that, non-GAAP sales and marketing expenses were up 17%, driven by higher sales labor, the cost of third-party lift studies, and B2B marketing expenses. Non-GAAP research and development expenses decreased by 21%, primarily a result of higher capitalization of software development costs and a higher allocation of labor expense to cost of revenue. This is due to more of our investment in R&D being directly focused on product development. Lastly, non-GAAP general administrative expenses increased by 5%, while depreciation and amortization increased by approximately 600,000, or 60%. Similar to the last couple of quarters, while overall non-GAAP operating expenses grew modestly year over year, our investments in areas related to our transformation, inclusive of both the P&L and what is being capitalized to the balance sheet, increased at a faster pace. This increase was approximately 12%, and again was highlighted by higher labor costs in the sales organization and other technology-related costs. We delivered Q1 adjusted EBITDA of $8.7 million, representing an adjusted EBITDA margin of 11%. non-GAAP net income of $6 million and non-GAAP diluted net income per share of $0.24. Our non-GAAP net income excludes $16.7 million in stock-based compensation and it includes a $0.3 million adjustment for income taxes. We ended the quarter with $164.6 million of cash and cash equivalents. And in Q1, we spent approximately $45 million repurchasing approximately 1.9 million shares of our stock at an average price of $22.92. We had 25.6 million fully diluted shares outstanding as of 3-31, and as of the end of the quarter, we had 90.3 million remaining under our current share repurchase authorization, which, as previously disclosed, was increased by $100 million upon authorization from the Board of Directors on March 11th. And finally, we generated $23.3 million in free cash flow, an increase of 56% versus last year, largely driven by higher cash flow from operations as a result of decreases in working capital compared to the first quarter of 2025. Now shifting to Q2 guidance, we currently expect revenue in the range of 82 to 86 million, representing a 2% year-over-year decline at the midpoint, and at the same time, a 2% sequential increase versus Q1 at the midpoint. And we expect Q2 adjusted EBITDA in the range of 9 to 12 million, representing about a 12.5% adjusted EBITDA margin at the midpoint. With that, let me provide a little more color on our outlook. First off, as both Brian and I have mentioned, we continue to be pleased with the consistency of our execution with our clients and publisher partners, both with core product offerings and with live-live pilots. This has been the driver of improving revenue trends during the last couple of quarters, and we expect that to continue. One other point to make on Q2 revenue. At the midpoint of our revenue outlook, we would expect redemption revenue to return to growth for the first time since Q1 of 2025. Beyond our specific Q2 revenue guidance, we are confirming our expectation of a return to year-over-year growth in total revenue in Q3 in the low single-digit range. It's probably on your mind, so let me highlight the assumptions implied in our outlook specific to the two new publishers we are adding to the network. We've assumed an immaterial impact on Q2 during the testing and piloting phase and expect a small benefit to revenue in the second half of the year as we ramp up with these partners. I'll note that All4Supply will be the governor on the near-term revenue impact of this expansion on the demand side of our network. As it relates to costs, our expectations are broadly unchanged from last quarter. We continue to expect to see a modest, sequential increase in quarterly non-GAAP cost of revenue and operating expenses throughout the balance of the year. That continues to be a function of investing in areas that are critical to our transformation. Specifically within cost of revenue, as we said last quarter, we expect to have substantially less growth in publisher-related costs as compared to what we saw in 2025. And we do expect, similar to the first quarter, that the biggest factor driving an increase in cost of revenue will be higher technology costs, which is partially a function of where these costs are allocated in the P&L relative to last year. Lastly, with a healthy balance sheet and positive free cash flow, we'll continue to prioritize investing in organic growth and the strategic priorities of the business while also returning cash to shareholders. We remain excited and energized by the opportunities ahead and look forward to returning to year-over-year revenue growth in the second half of this year. With that, operator, let's please open up the line for Q&A.