Ibotta (IBTA)
We see solid potential in Ibotta. Its rapid revenue growth gives it operating leverage, making it more profitable as it expands.― StockStory Analyst Team
1. News
2. Summary
Why We Like Ibotta
Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE:IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.
- Market share has increased this cycle as its 28.3% annual revenue growth over the last two years was exceptional
- Performance over the past two years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 53.4% outpaced its revenue gains
- Healthy adjusted operating margin shows it’s a well-run company with efficient processes
We have an affinity for Ibotta. The price looks fair in light of its quality, so this could be a good time to buy some shares.
Why Is Now The Time To Buy Ibotta?
Ibotta is trading at $53 per share, or 16.9x forward EV-to-EBITDA. Looking at the business services space, we think the valuation is fair - potentially even too low - for the business quality.
It’s an opportune time to buy the stock if you like the business model.
3. Ibotta (IBTA) Research Report: Q1 CY2025 Update
Cash-back rewards platform Ibotta (NYSE:IBTA) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 2.7% year on year to $84.57 million. The company expects next quarter’s revenue to be around $89.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.36 per share was 7.8% below analysts’ consensus estimates.
Ibotta (IBTA) Q1 CY2025 Highlights:
- Revenue: $84.57 million vs analyst estimates of $82.06 million (2.7% year-on-year growth, 3.1% beat)
- Adjusted EPS: $0.36 vs analyst expectations of $0.39 (7.8% miss)
- Adjusted EBITDA: $14.67 million vs analyst estimates of $12.56 million (17.3% margin, 16.8% beat)
- Revenue Guidance for Q2 CY2025 is $89.5 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q2 CY2025 is $19.5 million at the midpoint, in line with analyst expectations
- Operating Margin: -3.3%, down from 19.3% in the same quarter last year
- Free Cash Flow Margin: 17.6%, down from 20.5% in the same quarter last year
- Market Capitalization: $1.47 billion
Company Overview
Originally launched as a way to make grocery shopping more rewarding for budget-conscious consumers, Ibotta (NYSE:IBTA) is a mobile shopping app that allows consumers to earn cash back on everyday purchases by completing tasks and submitting receipts.
Ibotta operates at the intersection of retail, advertising, and financial technology. The platform works by partnering with consumer packaged goods (CPG) companies, retailers, and brands who pay to promote their products through targeted offers on the Ibotta app. When users purchase these promoted items and verify their purchases by uploading receipts or linking loyalty accounts, they receive cash back rewards that can be transferred to their bank accounts or redeemed as gift cards.
The company's business model creates value for multiple stakeholders. For consumers, it provides financial incentives on purchases they would likely make anyway. For brands and retailers, it offers a performance-based marketing channel that drives sales and provides valuable consumer purchase data. Ibotta only gets paid when a consumer actually buys a product, making it an attractive alternative to traditional advertising for brands seeking measurable returns on their marketing investments.
A typical Ibotta user might open the app before heading to the grocery store, browse available offers (like $1 back on a specific brand of cereal or 50 cents back on any brand of milk), add these offers to their account, and then upload their receipt after shopping to claim their rewards. The company has expanded beyond groceries to include cash back opportunities at restaurants, travel sites, online retailers, and subscription services.
Ibotta's technology platform incorporates elements of machine learning to personalize offers based on user shopping patterns and preferences. The company has built an extensive network of partnerships with major retailers including Walmart, Target, Kroger, and Amazon, as well as with hundreds of consumer brands.
Beyond its consumer app, Ibotta also operates the Ibotta Performance Network (IPN), which extends its cash back offers to partner platforms and retailer websites, allowing brands to reach consumers through multiple digital touchpoints. This network approach has helped Ibotta scale its reach beyond its direct user base.
4. Advertising & Marketing Services
The sector is on the precipice of both disruption and growth as AI, programmatic advertising, and data-driven marketing reshape how things are done. For example, the advent of the Internet broadly and programmatic advertising specifically means that brand building is not a relationship business anymore but instead one based on data and technology, which could hurt traditional ad agencies. On the other hand, the companies in the sector that beef up their tech chops by automating the buying of ad inventory or facilitating omnichannel marketing, for example, stand to benefit. With or without advances in digitization and AI, the sector is still highly levered to the macro, and economic uncertainty may lead to fluctuating ad spend, particularly in cyclical industries.
Ibotta competes with other cash-back and shopping rewards platforms including Rakuten (formerly Ebates), Fetch Rewards, and Shopkick, as well as with credit card rewards programs and retailer-specific loyalty programs like Target Circle and Walmart+.
5. Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $369.5 million in revenue over the past 12 months, Ibotta is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels. On the bright side, it can grow faster because it has more room to expand.
As you can see below, Ibotta’s 28.3% annualized revenue growth over the last two years was incredible. This is a great starting point for our analysis because it shows Ibotta’s demand was higher than many business services companies.
This quarter, Ibotta reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 3.1%. Company management is currently guiding for a 1.8% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and indicates the market sees some success for its newer products and services.
6. Operating Margin
Ibotta’s operating margin has shrunk over the last 12 months and averaged 4.2% over the last three years. Although this result isn’t good, the company’s elite historical revenue growth suggests it ramped up investments to capture market share. We’ll keep a close eye to see if this strategy pays off.
This quarter, Ibotta generated an operating profit margin of negative 3.3%, down 22.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
7. Earnings Per Share
Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Ibotta’s full-year EPS flipped from negative to positive over the last two years. This is a good sign and shows it’s at an inflection point.
In Q1, Ibotta reported EPS at $0.36, down from $0.54 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.
8. Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Ibotta has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.3% over the last three years, better than the broader business services sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.
Ibotta’s free cash flow clocked in at $14.89 million in Q1, equivalent to a 17.6% margin. The company’s cash profitability regressed as it was 2.9 percentage points lower than in the same quarter last year, but it’s still above its three-year average. We wouldn’t put too much weight on this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.
9. Balance Sheet Assessment
One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.
Ibotta is a profitable, well-capitalized company with $297.1 million of cash and $24.51 million of debt on its balance sheet. This $272.6 million net cash position is 18.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.
10. Key Takeaways from Ibotta’s Q1 Results
We enjoyed seeing Ibotta beat analysts’ revenue and EBITDA expectations this quarter. On the other hand, its EPS missed. Overall, this was a mixed quarter. The stock traded up 12.7% to $56.61 immediately after reporting.
11. Is Now The Time To Buy Ibotta?
Updated: May 22, 2025 at 11:52 PM EDT
Are you wondering whether to buy Ibotta or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.
Ibotta is a high-quality business worth owning. First of all, the company’s revenue growth was exceptional over the last two years. And while its projected EPS for the next year is lacking, its astounding EPS growth over the last two years shows its profits are trickling down to shareholders. On top of that, Ibotta’s strong operating margins show it’s a well-run business.
Ibotta’s EV-to-EBITDA ratio based on the next 12 months is 16.9x. Analyzing the business services landscape today, Ibotta’s positive attributes shine bright. We like the stock at this price.
Wall Street analysts have a consensus one-year price target of $60.50 on the company (compared to the current share price of $53), implying they see 14.2% upside in buying Ibotta in the short term.
Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.
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