Ibotta (IBTA) Q4 2025 Earnings Call Transcript

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DATE

Wednesday, Feb. 25, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• President & Chief Executive Officer — Bryan Leach
• Chief Financial Officer — Matt Puckett

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TAKEAWAYS

• Revenue -- $88.5 million, reflecting a 10% decline year over year with improvement in sequential revenue trends during the quarter.
• Redemption Revenue -- $78.5 million, down 5% year over year and demonstrating broad-based sequential improvement versus the previous quarter.
• Third-Party Publisher Redemption Revenue -- $56.4 million, up 8% year over year, highlighting continued demand for the Ibotta Performance Network’s publisher ecosystem.
• Direct-to-Consumer Redemption Revenue -- $22.2 million, down 26% year over year, directly impacted by ongoing migration of activity to third-party channels.
• Ad and Other Revenue -- $10.0 million, representing 11% of total revenue and down 38% year over year due to ongoing pressure on direct-to-consumer redeemers.
• Total Redeemers -- 20.4 million, a 19% increase year over year, driven by the launches of DoorDash and Instacart and growth at existing publishing partners.
• Redemptions per Redeemer -- 4.6, a 16% decrease year over year, with the trend improving from the 28% decline observed in the previous quarter.
• Redemption Revenue per Redemption -- $0.83, down 5% year over year, reflecting lower like-for-like fees and shifts in mix.
• Non-GAAP Gross Margin -- 79%, down approximately 570 basis points year over year, primarily due to increased publisher and technology expenses.
• Non-GAAP Operating Expenses -- Up 1% year over year, comprising 65% of revenue and influenced by higher professional fees and variable compensation.
• Non-GAAP Sales and Marketing Expenses -- Flat year over year, as higher labor and lift study costs offset lower marketing spend.
• Non-GAAP Research and Development Expenses -- Decreased 11% with higher software capitalization reflecting an emphasis on product development.
• Non-GAAP General and Administrative Expenses -- Increased 16% due to professional fees and temporarily higher facilities costs.
• Transformation-Related Investment -- Up approximately 15% year over year (inclusive of P&L and capitalized costs), driven by higher labor in sales and technology functions.
• Adjusted EBITDA -- $13.7 million, translating to a 15% margin.
• Adjusted Net Income -- $8.1 million with adjusted diluted net income per share of $0.29; this excludes $12.9 million in stock-based compensation and includes a $3.8 million income tax adjustment.
• Share Repurchases -- 2.1 million shares repurchased in the quarter, totaling $55.0 million at an average price of $25.78 per share; $34.9 million authorization remaining at quarter-end.
• Cash Position -- $180.6 million in cash and cash equivalents at period end, with no debt outstanding.
• Q1 2026 Guidance -- Revenue expected between $78.0 million and $82.0 million (implying a 5% year-over-year decline at midpoint); adjusted EBITDA forecast between $6.0 million and $8.0 million, or ~9% margin at midpoint.
• 2026 Outlook -- Low single-digit sequential revenue growth expected in Q2, slight year-over-year revenue growth targeted for Q3, with improvement primarily driven by redemption revenue.
• Publisher Mix Shift -- Third-party channels now represent a greater share of redeemers, with new and existing publishers (such as the addition of Instacart and DoorDash) fueling network expansion.
• LiveLift Adoption -- Fourth quarter LiveLift campaigns outnumbered the first three quarters combined; revenue from LiveLift exceeded forecast, with about 80% of piloting clients expected to expand or renew campaigns.
• B2B Sales Execution -- Enhanced by the recruitment of sales leadership from digital media, team verticalization, consultative approaches, and B2B marketing overhaul, which translated strategic client needs into incremental revenue.
• Third-Party Measurement -- Partnerships with Circana and ABCS Insights enable clients to purchase independent sales lift studies, building trust and providing transparency for campaign performance.
• Pricing Evolution -- Transition from tiered to a percentage-of-product-price model, streamlining fee structures and supporting automation objectives.
• Cost Structure Expectations -- Anticipated modest sequential increases in non-GAAP cost of revenue and operating expenses through 2026, with less publisher-related cost acceleration than in 2025.
• Stock-Based Compensation -- Projected to rise by approximately $10.0 million in 2026 compared to the prior year.
• Free Cash Flow Guidance -- Expected to total about 65% of adjusted EBITDA for 2026, reflecting ongoing operational cash generation.

SUMMARY

Management indicated that improving execution, product enhancements, and LiveLift’s growing contribution underpinned sequential improvements in revenue trends despite year-over-year declines across several key metrics. The call provided explicit guidance for a return to year-over-year revenue growth in the second half of the year, with near-term revenue pressure concentrated in direct-to-consumer and advertising-related segments. Executives announced that eligibility restrictions currently limit LiveLift access but affirmed ongoing investments in automation and standardization should enable broader adoption in the future.

• Management expects the cost headwinds tied to publisher additions will moderate in 2026 compared to 2025, reducing negative gross margin impact.
• The company described a shift among CPG clients toward “outcomes-driven, rule-based resource allocation,” emphasizing the role of AI and real-time performance analytics in campaign planning.
• Executives highlighted that LiveLift campaigns necessitate longer duration and larger spend, resulting in higher average campaign sizes versus the core product, with pilot clients showing a high intent to repeat.
• B2B marketing initiatives, such as quick response to SNAP program changes, generated incremental revenue and addressed client needs in real time.
• Publisher network expansion provides not only redeemer growth but also enriches the company’s data set, supporting enhanced modeling capabilities for LiveLift and the broader platform.
• Management reported 2.1 million shares repurchased at an average price well above the current market level, underlining capital deployment strategy and current authorization details.
• The company anticipates allocation of roughly 1% of revenue in the near term to the subsidization of third-party lift studies, with an expectation that this cost could be transferred to clients over time.

INDUSTRY GLOSSARY

• CPID (Cost Per Incremental Dollar): A proprietary performance metric quantifying the cost paid per additional sales dollar credited to a marketing campaign, essential for measuring profitability of incremental promotions.
• LiveLift: Ibotta, Inc.’s advanced feature set allowing clients to model, track, and optimize projected incremental sales and profitability metrics throughout campaign duration with real-time analytics.
• SNAP program: The Supplemental Nutrition Assistance Program, a federal aid initiative whose structural changes prompted specific promotional campaigns on Ibotta’s network.
• Third-party publisher: External digital partners integrating the Ibotta Performance Network to distribute offers, as distinguished from Ibotta’s direct-to-consumer platform.

Full Conference Call Transcript

Bryan Leach: Good afternoon, everyone. Thank you for joining our discussion of fourth quarter results. We are pleased to report fourth quarter revenue and adjusted EBITDA that are both above the top end of the guidance range we provided on our third quarter earnings call. This represents an improvement in year-over-year revenue trends when compared to the third quarter. Based on the trends we saw in our business in the second half of Q4 and quarter-to-date, we are also guiding to first quarter 2026 results that are above our previous expectations. There were three main drivers of our fourth quarter outperformance: improved execution, the strengthening of our core product, and the continued expansion of LiveLift.

Let me give you an update on each. In terms of improved execution, here are a few specific things we have been focused on. First, we leveled up our sales leadership, bringing in elite talent from the digital media space. Second, we restructured and reorganized our sales organization. This included rebalancing our account loads and verticalizing our teams to better speak the language of our clients' industries. Third, we emphasized the consultative approach that ensures our team is providing a solution that meets our clients' needs. We are doing a better job of getting further upstream in client strategic planning and budgeting cycles.

This involves building relationships not just with the procurement department and promotion centers of excellence, but also with brand leaders and senior executives such as CEOs, CMOs, and CCOs, chief commercial officers. Fourth, we overhauled our B2B marketing function. That team is enabling our sellers to be more timely, relevant, and proactive in their outreach. For example, when the SNAP program underwent significant changes for millions of U.S. consumers, our B2B marketing team developed a fourth quarter playbook which allowed our sellers to quickly communicate how clients could respond using the Ibotta, Inc. Performance Network. This initiative generated additional revenue, solved a real problem for our clients, and helped consumers in a time of need.

Fifth, we addressed the concern that CPGs have never had access to independent third-party measurement. For the first time, we made it possible for our clients to purchase sales lift studies just as they would for other forms of digital media. In the third quarter, we announced our partnership with Circana, and then last quarter, we added ABCS Insights, giving our clients another choice of measurement partner. Based on early feedback, it appears that the availability of third-party measurement is helping our sellers build trust with our clients. In addition to better sales execution, we strengthened our core product offering in important ways. Here are some examples of the improvements we made.

One, setting clearer goals for each campaign in advance. Two, focusing on the incremental sales our campaigns deliver. Three, improving the profitability metrics that we use to measure our campaigns. And four, revisiting our approach to pricing, including tying our fees more clearly to the price of the products being promoted. I want to stress that these things I just mentioned are not LiveLift per se. They are simply an evolution of our industry-leading core product. We are now seeing clients lean into these core capabilities, which is improving offer supply and driving the recent trends we have seen in our redemption revenue.

LiveLift is best understood as a set of generation capabilities that allow clients to see the projected incremental sales and cost per incremental dollar, CPID, at various intervals during their campaigns, thereby enabling them to better optimize the performance of those campaigns. A helpful way to think about LiveLift is using the following analogy. Our core product is like a best-in-class luxury car. It is already seen as the leading performance vehicle in the category. Each year, there is a new and improved model making it an even better, higher-performing car. LiveLift is like a powerful new feature that is added on to the vehicle for certain customers—say, for instance, like autopilot.

That feature enhances the car's performance, and it also generates buzz and excitement. It continues to improve as well over time until it more closely resembles something like fully autonomous driving, which holds the potential to transform how we think about driving. So the operative question is not how fast can Ibotta, Inc. transition clients away from its core product and into LiveLift, but how much can Ibotta, Inc. grow revenue based on the strength of its continually improving core product, and then how much can LiveLift further accelerate that growth and ultimately transform the category?

Clients whose campaigns meet certain criteria—for instance, they are spending a certain amount and the campaign is running for a certain duration—are eligible to pilot and adopt these exciting new LiveLift capabilities. As we continue to improve the models that power LiveLift and work towards greater automation, we expect that more and more clients will take advantage of these features over time. In terms of the limited number of clients who have already piloted LiveLift, the feedback has been extremely positive. As we shared on our last earnings call, we launched more LiveLift campaigns in the fourth quarter than we did in the first, second, and third quarters combined.

We also exceeded our revenue forecast associated with LiveLift for the fourth quarter. Of the clients that have executed a LiveLift campaign, we expect to see about 80% expand or renew their campaigns. In summary, we believe our performance in fourth quarter and our continued momentum in the first half of the first quarter confirms that thanks to our team's hard work, we are very much on the right track. As we look out to the future, we envision our CPG clients allocating resources in a manner that more closely resembles that of digitally native companies.

Today, most still rely heavily on the annual planning process and budgeting process, whereby they agree to place certain bets over the course of the upcoming year, then measure the outcome of those bets six to twelve months after the fact. We believe this way of working is fundamentally incompatible with the goal of harnessing the full power of artificial intelligence. Instead, we see the CPG industry moving into what has been called the outcomes era. Going forward, we believe CPG clients will determine what their desired outcomes are, input any constraints or conditions that are important to them. For instance, they might want to gain three points of market share, but they want to do so without eroding profitability.

Or they might want to put in place a standing rule that they want every incremental dollar they can get as long as it does not cost them more than $0.35 per incremental dollar. Once these goals are outlined, what constitutes a winning outcome will be clear. It will be possible to test a larger number of offer permutations and solve for whichever combinations yield the best results. This is what artificial intelligence is especially good at doing. We expect that the faster a CPG company transitions away from annual discrete allocations of dollars to outcomes-driven, rule-based resource allocation, the more agile it will become, the better it will be able to translate its investments into market share gains.

In closing, we remain focused on delivering unrivaled value to our CPG partners. By bringing the proven principles of performance marketing to the CPG industry, we believe we can capture a greater portion of the total addressable market for CPG marketing spend beyond what has historically been available to promotions. We are confident that the combination of a stronger core offering alongside more LiveLift campaigns will help Ibotta, Inc. return to year-over-year revenue growth later this year. We are beginning to see the fruits of all the hard work our team put in during 2025, and we look forward to what lies ahead in 2026. With that, let me turn it over to Matt.

Matt Puckett: Thank you, Bryan, and good afternoon, everyone. Jumping straight into Q4 results. We delivered revenue and adjusted EBITDA that were, respectively, 731% above the midpoint of the guidance range provided on our third quarter earnings call. To unpack our top line results in the quarter, revenue was $88.5 million, a decline of 10% versus last year. Within that, redemption revenue was $78.5 million, down 5% year over year. We saw broad-based sequential progress in our year-over-year redemption revenue trends throughout the quarter. In addition, LiveLift revenue was better than projected, and the SNAP program that Bryan referenced in his remarks also resulted in incremental revenue versus our forecast.

I will just add, when we talk about improving execution, the SNAP program is a great example of that in action, from ideation to the building of the program, to selling it in to the marketplace, and having an impact on business performance. Great work by our team. Third-party publisher redemption revenue was $56.4 million, up 8% versus last year, while direct-to-consumer redemption revenue was $22.2 million, down 26% year over year. As anticipated, we have continued to see more redemption activity shift to our third-party publishers. Ad and other revenues, which represented 11% of our revenue in the quarter, were $10.0 million, down 38% versus last year, due primarily to continued pressure on direct-to-consumer redeemers.

Turning now to the key performance metrics supporting revenue. Total redeemers were 20.4 million in the quarter, up 19% year over year. We saw continued growth in third-party redeemers across the IPN versus last year, highlighting the health of the demand side of our network. Growth was driven by the launch of DoorDash in 2025, organic growth at our existing publishers, and the launch of Instacart in November 2024. Redemptions per redeemer were 4.6, down 16% versus last year, 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.

It is worth noting this represents an improvement in trend versus Q3, where redemptions per redeemer were down 28% year over year. Redemption revenue per redemption was $0.83, down 5% versus last year, driven primarily by slightly lower like-for-like fees and the mix of redemption activity. Now shifting to the cost side of our business. As anticipated, non-GAAP cost of revenue was up $3.6 million versus a year ago, driven by an increase in publisher-related and technology costs. This resulted in Q4 non-GAAP gross margin of 79%, down approximately 570 basis points versus last year.

Over the course of 2025, we have seen a meaningful increase in costs related to new publishers as well as an increase in technology-related costs within cost of revenue, which is reflective of an increased investment in product development. Non-GAAP operating expenses were up 1% versus last year and slightly above our expectations due to higher professional fees and variable compensation. This resulted in non-GAAP operating expenses being 65% of revenue, an increase of approximately 700 basis points year over year due to the lower revenue. Within that, non-GAAP sales and marketing expenses were flat, as lower marketing spend offset higher labor and the cost of third-party lift studies.

Non-GAAP research and development expenses decreased by 11%, primarily a result of higher capitalization of software development costs. This is due to more of our investment in R&D being directly focused on product development. Lastly, non-GAAP general and administrative expenses increased by 16%, reflecting higher professional fees and temporarily higher facilities costs in the quarter. Similar to last quarter, while overall non-GAAP operating expenses changed minimally 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, were up in the quarter. This increase was approximately 15% and again was headlined by higher labor costs in both the sales and technology organizations.

We delivered Q4 adjusted EBITDA of $13.7 million, representing an adjusted EBITDA margin of 15%. Adjusted net income of $8.1 million and adjusted diluted net income per share of $0.29. Our adjusted net income excludes $12.9 million in stock-based compensation and includes a $3.8 million adjustment for income taxes. We ended the quarter with $180.6 million of cash and cash equivalents. In Q4, we spent approximately $55.0 million purchasing approximately 2.1 million shares of our stock at an average price of $25.78. We had 26.1 million fully diluted shares outstanding as of 12/31, and as of the end of the quarter, we had $34.9 million remaining under our current share repurchase authorization. Now turning to Q1 guidance.

We currently expect revenue in the range of $78.0 million to $82.0 million, representing a 5% year-over-year decline at the midpoint. And we expect Q1 adjusted EBITDA in the range of $6.0 million to $8.0 million, representing about a 9% adjusted EBITDA margin at the midpoint. With that, let me provide a little more color on what we anticipate the shape of revenue for 2026 to look like. First off, we are pleased with the improvement in execution, the upgrades to our product capabilities in our core business, and the growing contribution of LiveLift. We expect that this will gradually translate into improving revenue trends just as we began to experience in Q4.

Beyond our specific Q1 revenue guidance, we anticipate low single-digit sequential revenue growth in Q2 versus Q1, then to generate slight year-over-year revenue growth in Q3. We believe the anticipated improvement in our revenue trajectory will primarily show up in redemption revenue, while ad and other revenues will remain under pressure. Part of the story here is that ad and other revenue continues to shrink as a percentage of total, meaning the drag on the aggregate business should become smaller. In addition, within ad and other, the data business is expected to grow and become a larger percentage of that total.

While we are working hard to improve the offer supply to the point that direct-to-consumer redeemers stabilize, we have not assumed that in our planning for 2026. As it relates to the cost side of the equation, there are a few things to note. While in some aspects we outperformed on costs in 2025, it is important to recognize that we faced greater vacancy rates than we would typically see, particularly within the sales team. We expect to be more fully staffed for the entirety of 2026 across that organization. In addition, we saw lower variable compensation expense during 2025.

As we mentioned last quarter, we are committed to investing in areas critical to our transformation, which will show up in both higher year-over-year cost of revenue and non-GAAP operating expenses in 2026. From a modeling standpoint, you should expect to see a modest sequential increase in quarterly non-GAAP cost of revenue and operating expenses throughout the course of the year. However, we expect to have substantially less growth in publisher-related costs within cost of revenue as compared to what we saw in 2025. It is not going to be zero growth, but it likely will not be nearly the headwind we faced last year.

We also expect higher technology costs in cost of revenue, which is partially a function of where these costs are allocated relative to last year, to have approximately a negative 100 basis point impact on gross margins. As it relates to non-GAAP operating expenses, one area I would reiterate we are investing is third-party measurement. We expect to purchase, on behalf of our clients, a significant number of third-party lift studies from our measurement partners that will allow them to independently validate the incremental sales lift of our platform.

This number could approximate 1% of revenue in the near term, but would likely moderate over time as we substantiate the benefits of our platform and, in some cases, shift the cost of these studies to our clients. A few other data points to mention as it relates to the full year 2026. We expect stock-based compensation expense to be approximately $10.0 million higher than 2025. And as it relates to cash generation, we expect free cash flow to be approximately 65% of adjusted EBITDA. And finally and importantly, we exit 2025 with a healthy balance sheet and no debt.

And that, in conjunction with continued free cash flow generation, gives us the flexibility to continue investing in the organic growth and strategic priorities of the business and at the same time return cash to shareholders. As I hope you can tell, we are energized by what lies ahead. In 2026, we expect to move from a year of transition and learning to a year of greater consistency and execution. While there is still significant work ahead, we feel good about the progress we are making today, optimistic about our trajectory moving forward, and confident we will see an inflection to revenue growth later this year. With that, Operator, let us please open up the call for Q&A.

Operator: For today's Q&A session, we will be utilizing the raise hand feature. If you would like to ask a question, click on the raise hand button at the bottom of the screen. Once prompted, please unmute yourself and begin with your question. We will now pause a moment to assemble the queue. Thank you. Our first question comes from Ronald Victor Josey with Citi. Your line is open. Please unmute and ask your question.

James Michael Sherman Lewis: Good afternoon. This is James Michael Sherman Lewis on for Ronald Victor Josey. Thank you for taking my questions. First off, for Bryan, could you elaborate on the relationship between the core product and the new LiveLift solution and how you see each of these offerings progressing? And then I have a follow-up.

Bryan Leach: Yes. Thanks, James Michael. Happy to. We have been learning a lot over the last year in the market, listening to our clients and focusing on how we can improve the core offering of Ibotta, Inc. And we have made some broad improvements that I alluded to in my remarks that I think have made clearer that what we deliver is profitable revenue growth. And that is things like focusing on incremental sales, focusing on the cost per incremental dollar, providing access to third-party measurement, thinking differently about our approach to pricing. And those are things that are applied across the board to our foundational promotions. Then there is this capability we call LiveLift, which is all those things plus.

Plus the capability to project and measure profitability, incremental sales, on a more regular cadence during the campaign, and then be able to use that to optimize those campaigns, take into account those metrics as they are evolving. And that is what we mean when we say LiveLift, is that sort of most capability, which is where we see the industry heading. But I want to stress that we have a very popular and getting-better-all-the-time core product that is driving most of the outperformance that we described just now.

James Michael Sherman Lewis: Great. Thank you, Bryan. Moving on to the go-to-market transformation. With the new sales leadership and the sales reorg in place for a full quarter, could you share an update on the evolution of your client approach and any specific benefits from verticalized teams or the more consultative approach?

Bryan Leach: Yes. I think I made some high-level remarks about this, and we are doing a much better job in terms of understanding our clients' industries in detail, meeting them where they are, being proactive and timely with our outreach so that when they are confronting something in the market that arises, we are in there with a potential solution.

I think it is fair to say we are further up with a lot of these clients, going beyond just the department, going beyond just the center of excellence that has traditionally bought things like digital promotions, and really encouraging the senior leaders of these organizations to take a step back and think about this concept of the outcomes era and this idea of how they can take advantage of being able to set targets and metrics for profitability and market share growth, and then allowing the power of artificial intelligence to, over the coming years, make their businesses more and more efficient and profitable.

And I think that what we refer to internally as multithreading, the idea of reaching out to different parts of the organization simultaneously at different levels within that organization, I think that has been paying dividends.

Matt Puckett: Yes, James Michael, I will just add. The questions that you asked kind of hit on the three areas around core product, LiveLift, and execution. In all three of those areas the results we saw in Q4 were greater than what we were forecasting. So we saw all of that benefiting our financial results in the quarter, which is really encouraging.

James Michael Sherman Lewis: Perfect. Thank you both.

Operator: Our next question comes from Bernard Jerome McTernan at Needham and Company. Your line is open. Please unmute and ask your question.

Bernard Jerome McTernan: Great. Thanks for taking the question. Maybe just to start, I want to start on the macro, and Bryan, just the sentiment of your clients right now as we enter the year. I think the macro over last year was characterized by a lot of uncertainty. How does this year compare to what you are hearing?

Bryan Leach: Yes. I mean, I think there are different kinds of uncertainty, I suppose. Bernard, there is still some conversation that we are hearing about things like tariffs, but I think that people have adjusted their businesses for that. And that is not a primary factor, I would say, in people's evaluation of whether to invest with Ibotta, Inc. I think now there is a lot of focus on what does the acceleration of AI mean for the industry. How does it present opportunities for these companies to think differently and to gain a competitive advantage, to regain market share after they have lost a certain amount of market share to private label.

I think that there is a real emphasis on value still. We put out a state of the spend report recently that underscored this very, very clearly, that a high percentage of consumers go into the store with their minds still open about what they want to buy, and they want to decide that primarily based on value. And I think that message has gotten across to the CPG companies.

And then there is some conversation about other ways in which consumer shopping may evolve, things like agentic shopping, where we think we are particularly well positioned, and they are thinking about, okay, what does that imply in terms of the kinds of investments I want to make and things that affect value and ultimately the price and promotion. Those are core foundational things that they know they need to spend more time focused on. So I think we are well positioned in terms of the macro at the moment, broadly speaking.

Bernard Jerome McTernan: Yes, Bryan, that was one of the things I wanted to ask on was commerce and how you think you are situated. Is it too early to be having conversations with some of the LLMs to see if there can be integration opportunities there, or is that something that should be further down the future?

Bryan Leach: I mean, it remains to be seen exactly how this is going to shake out. I think we have got, certainly, we have got some shopping agents that exist on retailer websites. Walmart reported some data on that in a recent earnings call. There are some people who believe that these LLMs will aggregate demand and be a front door for shopping. I think our strategy is clear, which is that wherever that purchase intent is arising for these types of nondiscretionary items, we want our content to be influencing those algorithms and for those systems to be taking into account the availability of offers on the Ibotta, Inc. Performance Network.

It is just another reason why it is so important to be part of the Ibotta, Inc. Performance Network. I think that it is too early to tell, but I will say I believe that I think it is likely that the retailers who are part of our network will have a pretty large role to play in whatever form agentic commerce takes. And that is why it is that much more powerful that we have direct relationships with them so we can ensure that our content is presented in all the different touch points that consumers may have, in the store, online, etc. Makes a lot of sense. Thanks, Bernard.

Operator: Our next question comes from Alex Vigilante with Goldman Sachs. Your line is open. Please unmute and ask your question.

Alex Vigilante: Hey, thanks for taking my question. This is Alex on for Eric James Sheridan. Congrats on the really solid quarter. I just want to dig in a little bit more on the third-party redeemer results—really strong results both sequentially and year over year. I know you mentioned really all of your publisher partnerships humming along. But are there any one to two drivers of that really strong sequential growth, or is it sort of all of your partners continuing to have success?

Bryan Leach: I would say we are seeing success across all of our third-party publishers in one form or another, Alex. Of course, we rolled out DoorDash last year, and that was a driver. That was important because it was new to our network, and they rolled out gradually. And so I guess I would call that out. But with our current publishers, we are also seeing them find ways of leaning into this content in different forms. Right? So it might be that there is more of an emphasis on making their shoppers aware of this in the store, for example, through something like in-store mode that they might have, featuring or highlighting, surfacing this type of content.

Or it might be something that they are experimenting with along the lines of in-store messaging through audio or through visuals on screens throughout the store. And those things are still very much in the kind of testing phases. But as those roll out more broadly, there should be more awareness of this type of content in the physical store environment. And then, just generally speaking, e-commerce and these types of ways of buying are growing. Right?

So if you, again, look at the Walmart earnings, they still have really strong growth in their e-commerce in the U.S. and their grocery e-commerce in particular, and we benefit from those tailwinds in terms of just more people coming in and finding that content. And I think that we are always working with our publishers, whether it is improving our ability to put the right offer in front of the right consumer, improve conversion, or another surface area that they may be coming out with that allows us to reach consumers in a different place. Those are all, I think, drivers of third-party redeemer growth over the past period.

Matt Puckett: I will just add, to give you a little bit of quantification I think validates this, we actually grew, as you can see in our numbers, we grew third-party redeemers by almost 3.5 million in the quarter. And about a third of that was from existing publishers. So it was not a small increase in existing publishers, which highlights, I think numerically, the points Bryan was making.

Alex Vigilante: That is really helpful. Thanks for the additional color. One more if I can. Just in terms of—you mentioned fees being more tied to the underlying price of the items. Is that a new policy that you have been implementing, and is that coming from your CPG partners, or is that more something that you are proactively pushing? And how can diversification on the types of items that you offer more than offset that going forward? Thanks.

Bryan Leach: Yes. I mean, I think everything comes from our CPG partners in the sense that we listen to our clients. Right? And we did a lot of that over the last 18 months and took a step back and said, how could we be a more client-centric organization? And there are many ways in which I alluded to us doing that. But on the topic of pricing, we wanted to have a more continuous approach to pricing.

So rather than having a tiered system where if you are on one side of the tier or the other side of the tier, there could be a meaningful step-off in terms of the fee per redemption that you are paying, to have a percentage of the price of the product is just more logical. Right? It does not have those kinds of breaks in it, and that also makes sense when you are beginning to think about automation and optimization, being able to have a simpler, more universal form of rules for pricing rather than differentiated depending on category or client.

Just as you think about it more broadly, it is part of a larger effort for us to streamline and automate, and that really starts with standardizing our approach, making sure it is the one that fits the next chapter of how we want to serve our clients. I think that has been very well received by our clients. I would not say that our clients specifically demanded that. I think we took a step back, like I said, and said what would be better for them and came up with this approach, and it has been well received to date.

Operator: Our next question comes from Kenneth James Gawrelski with Wells Fargo. Your line is open. Please unmute and ask your question.

Kenneth James Gawrelski: Thank you. Can you hear me okay? Okay. Thanks so much for the opportunity. A couple of questions, if I may. First, Bryan, could you talk about the LiveLift sales cycle? I know you talked about eventually moving the CPG industry off the annual budgeting cycle. But could you talk about your progress to date on shortening that sales cycle in LiveLift? And you talked in previous calls about how there was a lot of test and learn. Can you talk about if you are seeing any acceleration in the adoption or the time to market in some of those sales cycles? That is question one.

The second question, please, is if you think about, in the longer term—not in the shorter term when you are still refining the go-to-market—but in the longer term, if you think about your historical IPN and third-party business relative to a business that has a heavier tilt towards LiveLift, do you see profitability similarly, or is there anything we should think about either from a cost of goods sold side or a profitability of the new go-to-market in the longer term versus the historic method?

Bryan Leach: Thank you, Ken. Both great questions. I will take them in turn. The first one, yes, a couple things I can say about LiveLift. We have been pleased with the progress. It exceeded our expectations in a number of different respects. I mean, first of all, the number of companies that have had a chance to experience this, the number of pilots, like I said, was more around the fourth quarter than in the previous three combined. So we have just gotten a greater breadth of feedback from more categories, more clients. What do they think about it? How does it change the way they think about the promotional space more broadly and about their relationship with Ibotta, Inc.?

We also have been able to look at the median or the average campaign size in LiveLift compared to the average campaign size in the core Ibotta, Inc. offer from those same companies that have been piloting LiveLift, and it is a substantially larger amount of investment in the LiveLift campaign. And part of the reason for that is that the idea of LiveLift has generated enough interest and excitement that we have been able to get higher up in these organizations to folks who have authority to make bigger bets, and if it goes well in the pilot, even bigger bets still.

I think they look at it as a driver of profitable revenue growth, not a tactic they need to do a little bit of because their merchant said they should. And that mindset shift has a lot to do with why there is significantly more being spent per campaign. It is also because, in order to be eligible for the LiveLift product at the moment, you need to run a slightly longer or larger campaign so we have the requisite material data so that the statistics of LiveLift can be delivered with confidence. And so that tends to steer clients into larger investments, which has been noteworthy.

Now, the fact that last time when we told you we had an 83% re-up rate, that was on a pretty small denominator. And, like I said, we had more in the fourth quarter than the previous three. To be still at or around 80% is what we expect to re-up is powerful. And when you think about what is the other 20%, those are small and emerging brands that, as far as I know, love LiveLift and would plan to continue to do it in the future, but just do not necessarily have the budget at the moment to go right back into it at the level required for it to be eligible.

And so I am not aware of actually a single one of our LiveLift clients saying they are not really excited about the value proposition, and I have seen some publicly available research that corroborates that as well. So that is something that we are really excited about. In terms of shortening the cycle, I mean, yes, look, the more times somebody uses LiveLift, we get a baseline. They get excited. They see that we defined a goal upfront, we delivered on that goal, they want to come back and they want to do it again. And so they are not going to require the same length of time that they did on the front end.

In most cases, they are going to re-up based on the fact that they are familiar with it. Maybe they bought a third-party lift study. Maybe that has given them additional confidence in the results. And so we should see that those companies that are more familiar with it start to introduce it to other brands, for example, or start to make it more part of their plans on a larger scale. And so I do think there will be some acceleration. And over time, we anticipate that as we automate, we will be able to make this available to more of our clients and kind of open the aperture for that product.

In terms of your second question, broadly speaking, I think the profitability characteristics over the long term are the same. We envision taking the market in the direction of LiveLift, and that is very much what we see as pointing to the future of the industry. And so we believe that once we are making that available to the great majority of our clients, they will adopt that and use that, and we will see that those characteristics are about the same because it is not like we are charging a price premium to use LiveLift or anything like that.

It is just going to encourage people to spend, I think, significantly more than they have spent in the category in the past. Thank you.

Operator: Our next question comes from Mark Mahaney with Evercore ISI. Your line is open. Please unmute and ask your question.

Austin Riddick: Hey, thanks for taking the question. This is Austin Riddick on for Mark Mahaney, and if I missed it, what I wanted to ask is, what does LiveLift change economically? Is it increasing conversion? Is it improvements in pricing power? Is it reducing churn? Is it a TAM expander? And what milestones should we track in 2026? Thanks.

Bryan Leach: Yes. I think, first of all, just to reiterate, I think it is worth just stating what it is and how it is different from a regular Ibotta, Inc. core capability or offers. What is different is the ability to get a projected range of incremental sales and a projected cost per incremental dollar before you start your campaign, and then to check in regularly during that campaign at more frequent intervals on the profitability of that campaign as measured by incremental sales, as measured by cost per incremental dollar, and then be able to optimize and course-correct and adjust the parameters of that offer during the campaign against those profitability metrics.

To be clear, we have always allowed people to see performance metrics during the pendency of a campaign—things like how fast is the campaign moving along, how many redemptions are there. Those are important forms of performance, and that was the standard. LiveLift introduces this idea of profitability being something you want to be able to check more regularly and do something about much more regularly, which gives them a sense of control. It gives them the optimism. And we have proven that by making those optimizations, you can actually tack in the direction you want.

So let us say, for example, you have a goal of $0.30 cost per incremental dollar, and you are trending toward $0.40 cost per incremental dollar. With LiveLift, you can adjust the parameters of your offer to make them less generous, for example, or the thresholds different so that you could come in closer to your original goal. Or conversely, you are coming in at $0.15—you are leaving a ton of profitable revenue on the table, and you do not want to do that. You want to adjust those parameters so that you are capturing things up to that last threshold of profitability that you define upfront.

So that is what is so revolutionary and exciting about the prospect of LiveLift. It is a dramatic TAM expander over the long term, is the way to answer your question, I think, Austin, because in the past, promotions have been principally viewed as something that was a lever that you did necessarily to spike sales—which is still an important use case—or introduce a new product to market—which is still an important use case.

But when it came to it being perceived as one of the most profitable drivers of revenue growth, there were some who felt that it engaged in subsidy or whatever the received wisdom was from the era of paper coupons kind of carried over and made it harder to make this a primary category out of the couple hundred billion dollars that are spent across trade and marketing and media and so forth in the CPG industry in the U.S. So we believe that by reframing this, what we are doing is getting the industry to think differently about our entire category. Like I said, we were already the leaders in that category. That is my luxury car analogy. Right?

This takes it and reframes and elevates the category, expanding the TAM in the process.

Austin Riddick: Thank you. Super helpful.

Operator: Our next question comes from Nitin Bansal with Bank of America. Your line is open. Please unmute and ask your question.

Nitin Bansal: Thank you for taking my question. So in Q4 and quarter-to-date, did you see any changes in budget allocation or renewal patterns that could serve as a leading indicator for trends for the balance of the year? And secondly, as we look forward to 2026, how should we think about the key elements of your strategy that still need to be put in place to fully execute your plan, particularly the parts that are within your control?

Bryan Leach: Great. Thanks, Nitin. I will answer those. First, yes. We had more companies coming in and testing something and piloting something. And the great majority of them were pleased with that enough to want to add or expand those campaigns. And so that would lead us to believe that they are going to continue to do that and continue to broaden the number of brands that they introduce. We did see instances where companies added additional budget to the same brand. We saw instances where they added additional brands into the program.

We had instances where, when we socialized this relatively late in the quarter, midway through the quarter, people said, “Well, I want to use this to help close the sales gap in my quarter right now,” and we were able to stand that up inside of a week of hearing about this capability, which was, I think, a powerful leading indicator that this is something they do not otherwise have access to but which is valuable. So those are all leading indicators, and we have seen that momentum carry forward, as we said, which is why we are raising our guidance for the current quarter.

As far as your second question on the elements that still need to be put in place, there are a number of things that need to happen. I mean, first of all, you are talking about an industry that has been accustomed to a certain way of thinking about promotions and a certain way of allocating their annual resources and measuring their tactics using mixed media models and so forth. And we are challenging that paradigm, broadly speaking. We are envisioning a world in which they can define outcomes upfront the way a digitally native company would, and then, using these systems that are getting smarter and smarter over time, help them deliver that outcome.

And that requires a level of agility and a level of clarity around what the rule set needs to be in order to harness the power of these new technological capabilities. So, to be seen how long that behavioral shift will take to effectuate. That is within our control, of course. We are out there leading the thought leadership in the industry. We are socializing the power of these tools, getting more companies to try it. It is also the case that we need to continue to standardize and automate our systems so that we can accommodate—we have a couple thousand brands that use Ibotta, Inc. for promotions.

Right now, a very small number of them are seeing or testing LiveLift, and that is because we are working hard this year to make everything we do easier. Easier to set up offers automatically, easier to report quickly, accurately, and automatically, easier to project these things in a more scalable fashion. And as that happens, as our models get more data running through them, our predictions are getting better, tighter, more confidence in those. I think that the system will get to the point where we can introduce it to a broader and broader swath or widen the aperture of availability. Right now, we have imposed those conditions essentially on the market.

And so those are the kinds of things that we are going to be working on to make this a higher and higher percentage of what our offering looks like going forward.

Operator: Our next question comes from Steven Ju with UBS. Your line is open. Please unmute and ask your question.

Steven Ju: Hey, great. Thanks for allowing the question. So, Bryan, the third-party redemptions per redeemer seem to have bottomed sequentially and seem to be heading higher, but it still remains below where it was last year. So do you think the path to get back up there in terms of where you were a year ago plus is just a normalization of CPG ad budgets? And what kind of conversations are you having with your clients to come back with offers that will be attractive and more compelling to the redeemers, as we think about the quality side of the quality versus quantity equation in terms of what you are putting in front of the redeemers? Thank you.

Bryan Leach: Yes. I will answer it, and then I will let Matt jump in with some backup data in terms of that statistic. I mean, what I would say is that offer supply—right? The more offers, the better quality offers, the longer they stay up across our network, the more redemptions per redeemer you are going to see. The higher percentage of the basket you hit, the more people are going to avail themselves of these offers, and we get paid more. And you will see it in that metric.

I think all the things I mentioned on the call are designed to create a climate where our sellers, coupled with their better and better execution, can win and get more offer supply. And that applies to our core capabilities—things like saying, here is a better approach to pricing. Here is a better approach to measurement broadly. At the end of your campaign, you are going to get a cost per incremental dollar. You are going to get focus on the number of incremental dollars sold. Those are just broadly creating a climate where people view our company as having greater credibility. There is more continuity in their contacts with us. There is more credibility in what we are selling.

And as things like LiveLift, which have never been introduced to this market before, come online, that is just another stimulus to get more offer supply up there longer. Now I would say our focus is primarily, Steven, on total redemptions and total redeemers. Because you could have a huge bolus of new redeemers, and they could depress your redemptions per redeemer. But if your overall redemptions are going up, that is a healthy indicator. And we did see almost just shy of a 25% increase year over year in redeemers. So that is a really positive indicator.

That does mean that the offer supply we have comes under more pressure from the people who want those offers, but ultimately, the core metric that we get paid on is a fee per redemption. So total redemptions is always our focus. I will let Matt add to that.

Matt Puckett: Yes. I would just say, it is an outcome metric. Right? And when you think about the publishers and the access to consumers, and as that has grown, that impacts that metric. I think we all understand that. But what is really important, I think really at the crux of your question—you said bottomed out—certainly we saw that number improve at least relationally quarter over quarter. It is really kind of manifest in how we opened this call, which is great execution and, in many ways, the strength of our core product. Then you add on top of that the benefits of an ever-expanding LiveLift program.

All of that is factoring into more redemptions because the offer supply has gotten better. Is it where we want it to be? It is not. It has gotten better. And I think it is really important to recognize that all of those things coming together is what we saw to help change the trend of the business in the near term and what gives us confidence as we move into 2026 with the trajectory that we are heading and our ability to see the business return to growth later this year.

Operator: Our next question comes from Andrew Boone with Citizens. Your line is open. Please unmute and ask your question.

Andrew Boone: Thanks so much for taking the questions. Sticking on LiveLift, Bryan, how do you get LiveLift out to more clients? What are your key operational hurdles as you think about expanding the product more broadly? And then one of the other things you talked about was just moving off of the annual planning cycle with CPGs. Can you help us understand how exactly you do that? What are the key operational hurdles that you have in terms of moving to more always-on budgeting? Thank you.

Bryan Leach: Thanks, Andrew. Yes, and I will answer that. I think the first thing is build credibility as a company with our partners and make sure they understand the power of our core capabilities whether they are eligible for LiveLift or not. And that is kind of this foundational thing, reminding them that we can reach a Walmart and Instacart shopper right where they are, right when they are shopping, full of opportunity to do that. Then as they are starting to see, “Wow, that is pretty powerful.

And you have third-party measurement, and you have more favorable pricing, and you have the ability to tell me my cost per dollar at the end of the campaign in most cases.” Now we go to them and say, now if you are willing to spend a little bit more in terms of the duration of your campaign, in terms of the amount we would require you to spend for it to have the signal that we need to give you the LiveLift capability—right?

Imagine if you are coming in and saying, “I want to run a two-week campaign to spike sales for this period of time.” That is not going to be possible to run LiveLift because we need a certain number of purchase cycles. We need to be able to create matched audiences and look at the statistically significant differences to isolate what is caused by the promotion. And there are just certain restrictions on that. And we think that what we are having success doing is saying to people it is worth it. If you invest in our most sophisticated capability, you are going to get this kind of more frequent readout.

It is going to unlock the ability for you to capitalize on the core things that artificial intelligence does well sooner. And so it sort of naturally follows from the foundational excellence of our core product. And so, as far as barriers, of course we want to continue to automate our systems so that when we create these readouts, it does not require the amount of time and manual effort that it does right now. And so if we were to try to do this across 2,500 brands, it would be impossible. It would not be scalable.

And this year, our mantra is “make it easy.” We want to make it easy to set up offers, to measure offers, to create these projections, to create these rolling metrics, to create the reporting, to put everything into our portal so that people can start to understand these things without having to pick up the phone and call their rep, and it sort of gunking up the efficiency of it. But we are making good strides in that direction. We have really defined what we think it is the market wants and gotten a very clear signal back from the market that they want more of this.

And for a while, it may be that these are the eligibility requirements and they are precluding a decent number of our clients from using it. But over time, we will relax those barriers, and more and more folks will come into this product. And we will be able to brief you on how that is going along the way. As far as the annual planning cycle concept, yes, look, that is a century-old construct. And so it is one that is a set shift. If you have always operated in the sense that a person has a hypothesis, they get the dollars approved, it is like the federal government—there is an annual budget process. They get it approved.

They go run it, then they measure it a year later. That is very different than how you would manage, say, a Google campaign or a Trade Desk campaign or an AppLovin campaign. And the brands that are thinking about the implications of the changing way that consumers are shopping—the growth of e-commerce, the rise of AI—really get that. And we are sort of hitting them at a moment where they are willing to revisit that. And I think the first thing they have to do, though, is validate. They are not going to spend always-on money right out of the gate.

They want to understand what is your measurement, how does it work, what is your methodology, let me check it against the third party. So there is a certain amount of kicking the tires that has to happen before you can realistically ask someone to turn on the fire hose always-on. But we have had more than one of our LiveLift partners say to us things in the room like, “Why would I not put all of my X budget into this?” Turning and looking to their colleagues as if to say, can someone explain to me here why we do not spend dramatically more money on this?

And I am sitting there thinking, I am not going to say a word. This guy is selling the product for me. So I think that people are along those lines, but they just need to develop a level of conviction that is pretty high because it really goes against the grain with how people have vied for resources for so long.

Operator: Our last question comes from Andrew Marok with Raymond James. Your line is open. Please unmute and ask your question.

Andrew Marok: Hi. Just one for me. Can we talk a bit about the prioritization of publisher expansion? And as you are talking about training your internal AI models, the way that potentially expanding publisher reach could offer a little bit more in terms of diversity of signal for your internal models?

Bryan Leach: Thanks. Yes. It is a very astute question. You are right. I mean, adding more publishers is valuable in many, many ways. Obviously, it diversifies the network. It increases the number of redeemers. It makes us able to influence these markets in an even greater way that really pops out and goes, “Wow, I have to have a strategy for this.” This is something that is touching my business in a way that is showing up in my weekly numbers.

You are also right that having more publishers gives us more data, and being able to run in more locations with different permutations of these offers makes the models smarter and allows us to kind of widen the aperture by coming back and saying, “Alright. We have enough signal now at four weeks,” or at two weeks. Theoretically, the more data you have, the more you are getting those signals from across the economy, the sooner you have a statistically significant readout.

And so part of our strategy for continuing to accelerate into this part of our business is to continue to add publishers, and also to make sure that when we do that, we have access to the kind of data, the kind of proprietary data sources that are so important in the era of AI. It is ultimately our ability to build on top of this data that nobody else has access to that is going to make this such a compelling and powerful and unique differentiated solution that is sustained into the future. So that is why that is very much still a priority for us.

Operator: This concludes the Q&A section of the call. I would now like to turn the call back to the management team for closing remarks.

Bryan Leach: Thank you very much to everyone for your questions and for your attention. We are excited about some of the trends that we are seeing in the business right now, and we look forward to engaging with you in the future. For those of you who we will see at the upcoming investor conference next week, we look forward to your questions there as well. Thanks, everyone.

Operator: Thank you for joining today's session. The call has concluded. You may now disconnect.

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