Ibotta, Inc. (IBTA) Earnings Call Transcript & Summary

The North Star for us is profitable incremental growth. That's really, we think if you can deliver a profitable dollar of growth, if you can show that that growth is incremental, i.e., it wouldn't have happened otherwise, you've got something very durable. And given where we are in the macro, more and more in more and more media buyers, CMOs, and CFOs in particular are saying, what did we get for that dollar? Please show me what we got for that. And so that is why that is our North Star, because we're not in this for 1 to 2 months or 1 to 2 years. We're really trying to build a world-class marketing platform that CPGs can leverage every single day. To do that really well, you have to have the scale that we talked about earlier. You have to have the data that we're able to collect from not only our first party app, but from our third parties. And then you get to be able to build models that will tell you how incremental something is. There's a lot of work to do there. I feel that we are really well positioned to do this. When we talk to customers and we lay that vision out for them, that's something that they want to get a hold of. On board with. And they understand, you know, like we talked about this last year, it's a year later, we're still working on this. Hopefully we'll be back in a year and there's still work to do. This is not an overnight build for us, but it is that commitment to delivering value on behalf of the CPG. And we just... It's a consistent theme for us. And so we feel good about where we are. I think we're very well positioned. I think we're in a pretty unique space to do this well. And we have a lot of work to do to continue to execute here.

So sticking on that theme of sort of the evolution of CPG and you becoming more critical to them, the other interesting dynamic is CPGs have very unique budgeting cycles, which is both a pro and a con to this, right? You have a lot of time to prepare for the next budgeting window with a lot of CPGs, but if you miss a window, it obviously can be quite a while before you get a CPG to want to engage with you again. Talk a little bit about both the opportunities and the challenges of frequently you get to engage with customers where there's a budget decision that's tied to those conversations.

Well, you're right. CPGs at times can have very long decision-making cycles. And I I guess that does give you a little time to get your business in order and to show up hyper effectively. But I'd much rather take, bless you, I'd much rather take multiple swings than just one swing. I think that gives you a better shot. So what we're really trying to do is just have an opportunity to win more frequently. And if you think about how digital media works outside of promotion or outside of CPG, you know, if you're buying a CTV campaign right now, connected television campaign. You're looking at results in your campaign. You might be, you know, moving up on some programming, moving down on other programming. You might find that one provider is meeting your needs or meeting your goals more effectively, and you're going to move budget around accordingly. A very practical and pragmatic approach. What we're trying to get to is something similar, where you might have an annual allocation that you think is the right number to put forward to a partner like Ibotta. But over the course of the year, Ibotta, we might add retail partners. This year, we've added Giant Eagle, added Uber, their properties. We'll launch 7-Eleven soon. And so whatever you hadn't played for us at the end of last year, it's a different world now. And that's the one side. The second is that we might just start, maybe we're meeting your needs more effectively. Maybe we're actually meeting the target that you've set forward. And that's what's so important about delivering that incremental or profitable growth, because in a performance marketing ecosystem, you tend to have dollars continue to follow when you're meeting the goals, and you know, dollars do not follow when you're not meeting the goals. And so I think about how to, an opportunity every single day to sell to our customer and the way that we do that is by highlighting the results that we're doing and when we're beating benchmarks or beating the goals that they have set forward we're going to ask for more not because we want more just to have more but because we've already agreed on what good looks like yes and when we can achieve good let's do more of that. That's very common in digital media, less common in this world of promotions, and that's why, it's one of the reasons we're so excited about what we're doing. We really think we can cross a bit of a chasm here where you start to buy this much more like you would a connected television or a social campaign, where it becomes very normal to, okay, let's look at the results. Yes, we got a heavy up there because it's going really well. A year or two ago, that wasn't as common.

Well, sticking with that theme, you guys have introduced this concept of make it easy. From a platform standpoint, where do those initiatives sit today in terms of reducing as much friction as possible that's in the system to make it as easy as possible for people either on the advertiser side or the publisher side to engage with you as a company and even on the internal employee side, you know, we're trying to make it easy for our employees as well.

So, I think, the most simple answer is it's going really well. I'm very encouraged by the work that our technology team is doing this year, not to go as fast as they possibly can forward, but to really survey the full scene and to understand where are we in a place to go forward today or where are we in a place where we might want to take a step back and do a little backwards work before we go forward such that we build a really durable solution. If you think about this year, it's really building the underlying systems, those foundational elements that will allow us to start scaling on top of. I think we'll start to see that pay off in 2027. But it gives me a lot of confidence that we are making it not only easier for one of our client partners or account managers to do their day-to-day job, but as that gets easier, the infrastructure that gets to expand through APIs that could go elsewhere. That could make it much easier for the advertiser to interact either inside of Ibotta, potentially inside of an environment that they appreciate. Obviously the team will still be present. So we still want our sales team, managed service, to be there for them. But I think that the work that's happening right now is really about just putting us in a much, a much better place to scale effectively. And kudos to our teams because they're doing a lot of work. I think it's often underappreciated. You know, Ibotta as a 14-year-old company. That means there's lines of code that are 14 years old in some repository somewhere that are still running the business. And when you're trying to evolve that technology stack and you're running a business every single day, it's like that treadmill thing that they say, you know, you're running on one treadmill and you've got to jump to the other one. You can't fall over because we've got to deliver the revenue every single day. And so the technology team is just doing a really nice job of, going forward, but doing it in this methodical way such that we don't, oh my gosh, forward and fall over, because that would be... That'd be hard.

Broadly, let's talk a little bit about how AI continues to evolve as both an input in the business and how your processes are changing and the other side of putting more of it into the company overall. Love to get a quick update there. We're 22 minutes in according to the clock in front of us and this is the first AI. But I am contractually obligated to bring it up in every conversation.

I'm amazed that it was 22 minutes. It brings a smile to my face. Okay. Gosh, it's everywhere, isn't it? So the first thing that I would say, if you just take this artificial intelligence and a cousin of machine, to machine learning, the thing that's really exciting for me is leveraging AI and ML on top of this really rich corpus of data that we have. We've got 14 years of business that's happened inside of Ibotta. There's a lot of data that we're sitting on top of. There's a lot of data that we're collecting every day. And when you have all that transaction data, you can start to ask yourself, what is the right offer offer variant for somebody that's never bought this product? What is the right offer variant for somebody that seems to buy this product occasionally? What is the right offer variant to get person A who's in category, but not with the product that I sell, but with a competitive product? You know, historically, a lot of the offer variants or what the requirements were, were driven by the CPG because they said, hey, we've seen this, we understand. And that makes a lot of sense because it's their business. We're now able to provide a perspective based on our data. Ultimately, it is 100% their choice. If they want to do a dollar off, they can do a dollar off versus 50 cents off, that's going to be their choice there and control there. But we can use the data and then the AI and ML on top of that to really help make informed recommendations to them. And as campaigns are going, we have the ability to think about, okay, is this campaign hitting the marks that we said? Is it ahead? Do we need to scale it left? Do we need to scale it right? This goes back to what we were talking about a few minutes ago, which is every day you're talking about the results. Every day you're striving to deliver better results on behalf of the customer based on what you talked about earlier. So I would say that's thing one. It's really working through data at a much larger scale than you or I can do. Reasonably. The next thing is just kind of the run the business, the make it easy stuff. It's tasks that are either done through a series of technical technological steps or through human steps and just automating those. That's something that's really exciting. I think you probably see that in most businesses right now and but it's something that we're paying hyper, we're paying close attention to, because we do believe we can make it easier, drive more effectiveness and efficiency. The last thing that you have to mention with AI is agentic commerce. I don't really know what that is going to be. I think there's a lot to be determined where that lives. Does it live inside of a retailer? Does it live inside of one of these third-party applications, the GPTs, if you will? But what I believe, just as a consumer, is that if I'm looking for a product, I'm interested in a few things every time. How much does it cost? Is it available? When can I get it? And so for us, being a lever in that how much does it cost acting as metadata around price, that is very important. And so however the consumer application comes to life, fact that we're helping all of these CPGs deliver the right price to the right customer at the right time, whether that's in the Ibotta experience, the DoorDash experience, the Walmart experience, or some other one, that's okay. So we're excited about where that goes, but I think that's a little bit of the future that I don't know that we know yet.

Okay, understood. But sticking with the idea of the partnerships you've built on the publisher side, you obviously have expanded into a lot more verticals. You did come to the public markets on the back of what you had done with Walmart, and it continued to expand the publisher side. What are you most excited about on the publisher side to either do? Deepen relationships that exist today, or look at new avenues of growth on the publisher's side that maybe you haven't tapped into yet.

Awesome, awesome question.

And similar to, we've got this technology team that's doing great work. We have a business development and a strategic account management team that's just really operating on all cylinders right now. And it's happening in, you know, on two sides. One side, there's bringing new businesses in, right? So Giant Eagle is something that is launched recently with us. Uber Eats, something that's launched recently. We've talked about 7-Eleven. 7-Eleven's very exciting because it is it's it is the convenience channel, you know, it is a really, really anchor tenant there. And that is very exciting to us because for our CPG customers, it's a it's something new, you know, it's single service. It's beverage centric, snack centric. And we might be working with the beverage manufacturer on larger pack sizes. And now we have a new opportunity to go down into more single or a few different SKUs. So that's very exciting for us. And I think that team is doing a really good job putting forth the value proposition. whereby we're trying to deliver profitable revenue growth to the customer we share, that CPG that we have in common. That's going really well. The other thing that I think you just have to call out is that the work that we're doing, whether it's with Walmart, the oldest partner, or anyone in between, really spending more time with our existing partners just to talk about what's going well from their perspective, what's going well from our perspective. You know, as we look at our shared customers, how are they using us? How are they using them? What could we do together? It's not a one size fits all. All of these partners are their own businesses and there are different stages of growth and different stages of digital penetration. But I am really happy with the work that we're doing just to lean in to deliver the best outcomes we possibly can, not only to the consumer, but also to the CPG. And that's just all kudos to our business development team.

So maybe a quick follow-up there, because you kind of addressed a lot of what I wanted to ask next, but what I want to build on it is the network effects inside this business, where you have advertisers on one side, consumers, public sector. You're collecting a lot of data, you sit in the middle of all of this. Budget and transactional dynamic that plays out in the CPG space. Talk about how you could see scaled effects of network over time that continue to build. Yeah, I think...

It's a great question and it's something that we're really excited about. I started to mention it with the 7-Eleven example. And it's something that I hadn't really thought of in advance of, but when we announced 7-Eleven, I got a level of response from some of our customers that surprised me. You know, we're always, hey, just want to let you know we've signed a new partner, and you always get back a nice note, congratulations, happy to see your business is going well. But this one was, congratulations, glad to see your business is going well, can we get on the phone to talk about this? And that's because it's such an important channel to some of these manufacturers because they move a lot of units through it and it's just a different SKU set. So that's a specific example. I think if you widen out, publishers beget publishers. So each publisher that joins, it gives more confidence to the next publisher that okay, this makes sense. You know, whatever could be holding you back from joining, as you're starting to add more and more kind of blue chip companies, I think that just makes more people say, hey, let's have the conversation. The other thing is that publishers beget advertisers. So some advertisers thrive in in the mass channel. Some thrive in grocery, some thrive in convenience. As we're moving through, that opens up the opportunity for new advertisers. And then I think it happens in the other way too, where advertisers that we start to build really good relationships with will say to us, hey, where are you trying to expand next? And could we maybe be helpful to you? Could we maybe join you in a meeting with another publisher? Ultimately, we're doing this in service of the American consumer. Ibotta, the motto, the belief in Ibotta is to make every purchase rewarding. That is a cool concept, but it's about driving value for the American consumer. And that's what we are really focused on. And the way we do that best is by being in as many outlets as possible, be it last mile delivery, be it mass, be it club, convenience. We just want to be wherever we can be. And then we want to be the best partner possible for these CPGs because it's a competitive world for them and it's a challenging world. It's not getting any easier to be a CPG today, so we are seeing some of those network effects. We're proud of the work we're doing, and we have a long ways to go. I'm excited about what's happened in a year since we spoke, and I'm excited about what I might be able to tell you about a year from now.

All right. Well, I think that's a good way to maybe leave it there.

Chris, thanks so much for the opportunity to talk. Please join me in thanking Ibotta for being part of this to the conference this year. This live transcript is auto-generated without human intervention or review.