8. Ibotta Inc. (NYSE:IBTA)
Average Upside Potential: 30.37%
Number of Hedge Fund Holders: 22
Ibotta Inc. (NYSE:IBTA) is a technology company that offers a rewards platform that allows consumers to earn cash back on their purchases at various retailers. Its Ibotta Performance Network (IPN) enables consumer packaged goods brands to deliver digital promotions to consumers. Through the IPN, it offers promotional services to publishers, retailers, and advertisers.
It reported strong second-quarter results, driven by significant third-party publisher (3PP) business growth. Total revenue reached $87.93 million, a 29% year-over-year increase, excluding one-time revenue from the previous year. The Ibotta Performance Network (IPN) has resonated strongly with consumers, publishers, and CPG brand clients.
It is actively expanding its reach through partnerships with publishers like Schnucks and Instacart, optimizing the platform to enhance the user experience and drive higher redemption rates. The partnership with Instacart is a significant milestone, expanding the reach to millions of new consumers. The rise in promotional spending and the need for more effective marketing strategies are benefiting the business. The data-driven approach and pay-per-sale model provide a compelling value proposition for brands.
Ibotta Inc. (NYSE:IBTA) is focused on expanding the company’s reach into new categories, such as general merchandise, and deepening relationships with existing clients. As it continues to innovate and grow its network, the company is well-positioned for long-term success.
Baron Small Cap Fund stated the following regarding Ibotta, Inc. (NYSE:IBTA) in its Q2 2024 investor letter:
“We initiated a position in Ibotta, Inc. (NYSE:IBTA) in its April IPO. Ibotta offers cashback rewards on various purchases through its Ibotta Performance Network (IPN) and direct-to-consumer app. Ibotta partners with retailers (e.g., Family Dollar and Kroger) who want to offer loyalty programs, and earns money from brands (e.g., Nestle and Unilever) who want to offer digital cashback rewards on their products. For example, brands find these cashback rewards useful as a measurable way to attract customers away from private label brands and launch new items. Ibotta gets paid on a measurable basis, averaging $0.80 per cashback redemption. In total, Ibotta serves over 2,400 brands, and through its third-party retailer network, reaches over 200 million potential end consumers (“redeemers”). Given the scalability of offering online rewards across its platform, Ibotta has a highly profitable and cash flow generative model, with 70% incremental margins in its third-party business.
Ibotta was founded in 2011 as a direct-to-consumer app in a highly competitive space. In 2021, Ibotta began powering cashback rewards programs with the IPN for large third-party retailers, which is a much faster growing space and is already half of Ibotta’s revenue today. To date, Ibotta has credited American consumers with $1.8 billion in cash rewards through its network. With the IPN, Ibotta competes in a very large, digital total addressable market, and we believe that Ibotta, which enables effective return on brand spending, has significant room to grow from a base of $320 million in revenue in 2023….” (Click here to read the full text)
