Ibotta confidently submitted one S-1 filing with the SEC on March 22 to list its shares on the New York Stock Exchange. The 13-year-old cash-back startup looks set to make its public debut after turning profitable and recording impressive revenue growth in 2023.
The company reported revenue of $320 million in 2023, up 52% from 2022, when it generated revenue of $210 million. Ibotta’s gross earnings are up 68% from 2022, $164.5 million, to 2023, $276 million.
The Denver-based company started as an app for consumers to get cash back on purchases made through Ibotta’s corporate brands. The company has since expanded into building back-end software for rewards programs for corporate clients including Exxon, Shell and Walmart.
Ibotta’s move to B2B2C — selling to companies that then use those products to sell to consumers — is probably a key reason why investors might be interested in this IPO, says Nicholas Smith, senior analyst equity research at Renaissance Capital, a research firm focused on upfront and IPO-focused ETFs. Corporate sales likely also played a big role in Ibotta’s recent financial gains.
“The fact that [Ibotta] it’s become, with Walmart, more of an enterprise software play, which is essentially the back-end for the Walmart cash rewards program, which gives it more credibility,” Smith said. “[Compared to] “Hey, we have this app and we need to grow users and continue down this avenue.”
The company began building its business program, known as the Ibotta Performance Network (IPN), in 2020. Its partnership with Walmart also began in 2020, but it extended IPN’s partnership with the retail giant in 2022. According to S -1, this partnership plays a big role in increasing Ibotta’s revenue.
“Our revenue growth was significantly accelerated by the addition of new publishers to IPN,” according to the S-1. “More recently, placing our offers on Walmart’s digital property has attracted a larger audience and subsequently resulted in higher spend from CPG brands and a higher number of offers redeemed. These developments have increased our scale, growth and profitability.”
Based on Ibotta’s commentary, from 2022 to 2023 its direct-to-consumer business grew by 19%, a respectable amount. In contrast, the company’s business (“third-party publisher revenue” in its filing), grew 711% over the same time period, scaling from just under $10 million to just over $80 million in a single year. That growth and the subsequent improvement in its gross margins — from 78% in 2022 to around 86% in 2023 — helped the company turn from persistent net losses to solid profitability.
Quarterly data from Ibotta underscores how recently — and quickly — it has become a profitable company. From Q1 2022 to Q1 2023, the company posted regular, narrowing net losses. In the first quarter of 2022 it had negative net income of $22.9 million, which fell to $4.3 million a year later. Then, starting in the second quarter of 2023, it started generating regular profits, which increased to $18.6 million in the last quarter of last year.
Rapid revenue growth, an expanding bottom line, improving revenue quality and GAAP earnings all came together for Ibotta to list its shares. If it stumbles even with these supporting features, venture-backed startups could see its debut as a cautionary tale.
But there is reason to expect that its growth will continue. The company has signed IPN partnerships with Family Dollar, Kroger, Exxon and Shell, implying broad corporate demand, even if the extent of those relationships is less clear compared to Ibotta’s partnership with Walmart. The S-1 did not specify how long Ibotta’s partnership with Walmart has been in place, but said that if the retailer ended the relationship, it would have a significant impact on Ibotta’s business.
The biggest question that remains is how Ibotta will price its shares. While the company likely chose to file its intent now — it initially hired bankers in November — to ride the recent wave of successful IPOs from Astera Labs and Reddit, Ibotta is very different from those two companies.
Ibotta has seen very little, if any, secondary activity according to secondary data platforms, making it difficult to gauge how investors are currently valuing the startup. Smith said the pricing could go a number of ways, given that the company has multiple revenue streams that have traditionally been valued quite differently.
“It’s hard because there’s no such thing as a perfect band,” Smith said. “It’s a bit of an adtech company, maybe it gets more [into] enterprise software. [If it’s] If we really look at it from a tech perspective, it will probably go for a high multiple, if it’s more of an adtech or even consumer kind of thing, it might be lower.”
Smith added that if investors pegged it more as an advertising or marketing company, it could price similarly to what Klaviyo, the digital marketing firm, did last fall. Klaviyo was priced at $31 per share, $1 above the $30 target, which gave it a valuation of $9.2 billion, a hair below its previous initial valuation of $9.5 billion. The company currently has a market capitalization of $6.8 billion.
Ibotta has raised just over $90 million in venture capital from funds including GGV Capital, Great Oak Ventures and Teamworth Ventures, among others, in addition to a number of angel investors including Thomas Jermoluk and Jim Clark, the co-founders of Beyond Identity . The company was last valued at $1.08 billion.
