Ibotta Inc

The following tables set forth our results of operations in dollars and as a percentage of total revenue for each of the periods presented:

(1)Amounts include stock-based compensation expense as follows (in thousands):

Comparison of the year ended December 31, 2024 and 2023

Revenue

Total redemption revenue increased $64.9 million, or 27%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to a $100.1 million increase in revenue from third-party publishers, partially offset by a $35.1 million decrease in revenue from the Ibotta D2C properties. The increase in third-party publishers revenue was primarily driven by the expansion of revenue related to Walmart, Dollar General, Family Dollar, and Instacart. Walmart initially launched in the third quarter of 2022 to members of Walmart’s paid membership program, Walmart+, and expanded to all Walmart customers with a Walmart.com account in September 2023. Dollar General launched in the third quarter of 2023, Family Dollar launched in the second quarter of 2024, and Instacart launched in the fourth quarter of 2024. The decrease in D2C redemption revenue was driven by the one-time breakage benefit of $13.5 million incurred during the year ended December 31, 2023, as well as a decrease in Ibotta D2C redemptions driven by the quantity and quality of offers available to each D2C redeemer.

Ad & other revenue decreased $17.7 million, or 23%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to a shift in CPG client spend from ad & other revenue to redemption revenue and the deprecation of our consumer insights business.

Cost of Revenue

Cost of revenue increased $6.1 million, or 14%, during the year ended December 31, 2024, compared to the year ended December 31, 2023. Cost of revenue as a percentage of revenue was unchanged during the year ended December 31, 2024, compared to the year ended December 31, 2023. The primary drivers of cost increases were the addition of new publishers and data hosting costs.

Sales and marketing

Sales and marketing increased $24.5 million, or 21%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to increases of $23.7 million in stock-based compensation, $5.2 million in B2B marketing, $1.7 million in media spend, and $1.0 million in other personnel-related costs, partially offset by a decrease of $7.2 million in self-funded user awards. The increase in stock-based compensation was comprised of $16.1 million related to the Walmart Warrant and $7.4 million related to equity awards for which expense recognition commenced after the IPO. The increases in B2B marketing and media spend were driven by campaigns to build company brand awareness, and the decrease in self-funded user awards resulted from a shift in marketing strategy.

Research and development

Research and development increased $13.3 million, or 27%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to increases of $7.1 million in stock-based compensation related to equity awards for which expense recognition commenced after the IPO and $5.0 million in other personnel-related costs driven by an increase in headcount.

General and administrative increased $31.1 million, or 60%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to increases of $24.0 million in stock-based compensation related to equity awards for which expense recognition commenced upon IPO, $3.9 million in other personnel-related costs, and $3.3 million in ongoing public company costs. The increase in other personnel-related costs includes $1.5 million related to one-time IPO costs, with the remaining increase driven by an increase in headcount.

Depreciation and amortization

Depreciation and amortization increased $0.3 million, or 9%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily driven by an increase in capitalized software.

Interest income (expense), net

Interest income, net, increased $16.3 million, or 237%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to an increase in interest earned on cash and cash equivalents largely driven by the IPO proceeds and a decrease in interest expense resulting from the extinguishment of the convertible notes.

Loss on debt extinguishment

(1)NM - not meaningful

Loss on extinguishment of debt increased $9.7 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, due to the conversion of the convertible notes into shares of our Class A common stock concurrently upon the closing of the IPO.

Other expense, net

Other expense, net, decreased $1.9 million, or 38%, during the year ended December 31, 2024, compared to the year ended December 31, 2023, due toa $1.9 million decrease in the loss on the convertible notes derivative liability, which was settled in connection with the IPO.

Benefit from (provision for) income taxes

(1)NM - not meaningful

Benefit from income taxes increased $50.2 million during the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to the release of our $58.6 million valuation allowance recorded against our deferred tax assets, partially offset by the impact of non-deductible items, including certain stock-based compensation and executive compensation costs. See Note 13 -Income Taxes to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Liquidity and Capital Resources

As of December 31, 2024, our principal sources of liquidity included $349.7 million of cash, cash equivalents, and restricted cash and $99.0 million of available capacity under a revolving line of credit. On April 22, 2024, we closed our IPO and received net proceeds of $198.0 million after deducting underwriting discounts and commissions of $13.2 million and offering costs of approximately $8.8 million.

Our primary cash needs are for personnel-related expenses, sales and marketing expenses, user award payables, data hosting costs, and software licensing costs. We believe our existing liquidity will be sufficient to meet our projected operating and capital requirements for at least the next 12 months. Our future cash requirements will depend on many factors, including our pace of growth, the timing and extent of spend to support research and development efforts, the timing of cash collected from clients, the expansion of sales and marketing activities, the introduction of new and enhanced platform offerings, the continuing market acceptance of the platform, and the volume and timing of our share repurchases. As a result of these and other factors, we may be required to seek additional equity or debt financing. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. Further, volatility in the global financial markets due to the change in the U.S. presidential administration, heightened inflation, rising interest rates, a potential government shutdown, and geopolitical events, could reduce our ability to access capital and negatively affect our liquidity in the future. If we are unable to raise additional capital when desired, our business, financial condition, results of operations, and prospects would be adversely affected.

2024 Credit Facility

On December 5, 2024, we entered into a Credit Agreement with Bank of America, N.A., as administrative agent, swingline lender, and L/C issuer, which provides us with revolving commitments in an aggregate principal amount of $100.0 million and matures on December 5, 2029 (2024 Credit Facility). The 2024 Credit Facility also allows the Company to request incremental revolving commitments of up to $100.0 million. As of December 31, 2024, we had no outstanding borrowings under the 2024 Credit Facility and availability of $99.0 million, which is net of a $1.0 million outstanding letter of credit related to an office space lease. For further details regarding credit agreements, see Note 6 -Long-Term Debt to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Common Stock Warrant

On May 17, 2021, we issued the Walmart Warrant in connection with a multi-year strategic relationship that makes Ibotta the exclusive provider of digital item-level rebate offer content for Walmart U.S. If the shares available for exercise as of December 31, 2024 were fully exercised, the warrants could provide up to $245.6 million in proceeds to us. However, the exercisability of a portion of the Walmart

Warrant is subject to certain performance conditions and forfeiture features, and we cannot make assurance that any such warrant will be exercised. For further details regarding the Walmart Warrant, see Note 9 - Redeemable Convertible Preferred Stock and Stockholders' Equity to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Share Repurchase Program

On August 22, 2024, we announced that our board of directors approved a share repurchase program, with authorization to purchase up to an aggregate of $100.0 million of the Company’s Class A common stock (Share Repurchase Program). The Share Repurchase Program has no expiration date. Repurchases under the Share Repurchase Program may be made from time to time through open market repurchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended (Exchange Act). We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of our Class A common stock under this authorization. We are not obligated under the Share Repurchase Program to acquire any particular amount of Class A common stock, and we may terminate or suspend the Share Repurchase Program at any time. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

During the year ended December 31, 2024, we repurchased 518,683 shares of our Class A common stock for an aggregate repurchase amount of$31.3 million, inclusive of broker commissions and legal costs. As of December 31, 2024, $68.8 million remains available and authorized for repurchase under the Share Repurchase Program.

Cash Flows

The following table summarizes our cash flows for the periods presented:

Operating Activities

Our collection cycles can vary based on payment practices from our clients, and we are required to pay our third-party publishers within a contractual timeframe, regardless of whether we have collected payment from our client. As a result, timing of cash receipts related to accounts receivable and due to third-party publishers can vary from period to period and significantly impact our cash provided by operating activities for any period.

Net cash provided by operating activities increased $93.2 million during the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was the result of a $30.6 million increase in net income and a $63.7 million increase in non-cash charges, partially offset by $1.2 million increase in net cash outflows as a result of changes in operating assets and liabilities.

The increase in net income was largely driven by the release of our valuation allowance and an increase in revenue, partially offset be an increase in non-cash charges as a result of the IPO, including accelerated stock-based compensation and losses on the extinguishment of the convertible notes and derivative liability. The increase in net cash outflows from changes in operating assets and liabilities was primarily due to a $79.4 million increase in other current and long-term assets due the release of our valuation allowance recorded against our deferred tax assets and an increase in prepaid expenses, a $39.9 million decrease in liabilities due to third-party publishers related to the timing of third-party publishers joining the IPN, and a $11.6 million decrease in accrued expenses driven primarily by the timing of payroll. These cash outflows were partially offset by cash inflows from a $110.1 million decrease in accounts receivable driven by a larger increase in gross billings in 2023 as compared to 2024, a $16.2 million increase in other current and long-term liabilities driven by an increase in uncertain tax positions, and a $3.4 million increase in the user redemption liability.

Investing Activities

Net cash used in investing activities increased $29.9 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by a $27.9 million decrease in maturities of short-term investments and a $1.7 million increase in additions to capitalized software development costs.

Financing Activities

Net cash provided by financing activities increased $179.0 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, driven by $200.7 million of net IPO proceeds and a $13.2 million increase in proceeds from stock option exercises and the ESPP, partially offset by $31.3 million in purchases of treasury stock and $3.3 million of taxes paid related to the net share settlement of equity awards.

Material Cash Requirements

Operating leases

Our operating lease commitments include our corporate office space. As of December 31, 2024, we had noncancellable lease obligations of $1.5 million, all of which is payable within 12 months. In addition, as of December 31, 2024, the Company had executed a new office space lease that had not yet commenced, with minimum lease payments of approximately $22.8 million over a term of approximately 11 years anticipated to commence during fiscal year 2025. For additional discussion on our operating leases, refer to Note 8 – Operating Leases to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Purchase Commitments

The Company has non-cancelable purchase obligations which relate to minimum commitments with certain third-party publishers and other contractual commitments primarily with software as a service providers and marketing vendors in the ordinary course of business. As of December 31, 2024, we had fixed noncancellable purchase obligations of $171.1 million through 2029. For additional discussion on these contractual commitments, refer to Note 16 – Commitments and Contingencies to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we apply accounting policies and estimates that affect the reported amounts and related disclosures. Inherent in such policies are certain key assumptions and estimates made by management, which we believe best reflect the underlying business and economic events. Our estimates are based on historical experience and various other factors and assumptions that we believe are reasonable under the circumstances. We regularly re-evaluate our estimates used in the preparation of the consolidated financial statements based on our latest assessment of the current and projected business and economic environment. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these estimates.

Our significant accounting policies are described in Note 2 - Basisof Presentation and Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, and of these, management believes the following accounting policies involve a greater degree of judgment and complexity and are therefore the most critical in determining the amounts reported in our consolidated financial statements.

Revenue Recognition

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. We primarily derive revenues from the set-up and redemption of cash back rewards and digital media services on the IPN. Revenue is recognized when, or as, control of the promised goods or services is transferred to our clients, in an amount that represents the consideration we expect to be entitled to in exchange for those goods or services. The following is a description of principal activities from which we generate our revenue:

Redemption Revenue

Consumers earn rewards on the IPN through loyalty account linking, receipt upload, or purchasing a gift card. As a result of the cash back reward being both client determined and funded, the cash back reward is passed through to the consumer. We earn a fee per redemption in the period in which the redemption occurs. We may also charge setup fees, which are deferred and recognized over the respective promotion period. Penalties or early terminations are recognized as revenue as the associated event occurs. We recognize revenues from redemptions net of consumer cash back rewards as we act as the agent in the transaction. Redemption campaigns are available on both Ibotta D2C and third-party publisher properties. We also contract with third-party gift card providers to facilitate the delivery of digital gift card codes and recognize revenue gross of user award but net of the cost of the gift card, at a point in time when the exchange occurs.

Ad & other Revenue

Our clients may also run advertisements (banners, tiles, newsletters, feature placements, etc.) on Ibotta D2C properties to promote their redemption campaigns. When a consumer clicks on an advertisement, they are linked directly to the associated campaign. Ad products are billed and revenue is recognized as the marketing services are performed. Ad products run in conjunction with the associated redemption campaign, either over the entire redemption campaign life or some portion of it. We recognize revenue from client run advertisements on a gross basis as we act as the principal in the transaction.

We also offer audience targeting and data licensing services to clients, which are primarily billed as a flat fee amount. Data revenue is recognized as it is delivered and on a gross basis as we act as the principal in the transaction.

Stock-Based Compensation

Stock-based compensation for equity awards, including stock options, restricted stock units (RSUs), and awards granted under our employee stock purchase plan (ESPP), is measured based on the grant date fair value of the award. For awards with service conditions only, we recognize compensation expense, net of actual forfeitures, on a straight-line basis over the requisite service period, which is generally four years. For awards with both service and performance conditions, we recognize compensation expense, net of actual forfeitures, under the accelerated attribution method when performance conditions are considered probable of being achieved.

The fair value of RSUs with only service or performance conditions is equal to the fair value of the underlying common stock at the date of grant. For RSUs with market-based conditions, we determine the grant date fair value utilizing a Monte Carlo simulation, which incorporates the probability of achievement of the market-based condition. The fair value of stock options and ESPP awards is estimated on the grant date using the Black-Scholes option-pricing model. Our use of the valuation models requires the input of subjective assumptions. The assumptions used in our valuation models represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment.

These assumptions and estimates are as follows:

•Expected Dividend Rate. The expected dividend assumption is based on our history and expectation of dividend payouts. We have not paid dividends and do not expect to do so in the foreseeable future, and as such, the dividend yield has been estimated to be zero.

•Expected Volatility. The expected volatility is determined with reference to historical stock volatilities of comparable guideline public companies over a period equivalent to the expected term of the award as we do not have an extensive trading history for our common stock.

•Expected Term. The expected term is the period of time for which the award is expected to be outstanding, assuming that it vests. We estimate the expected term for stock options using the simplified method, calculated as the midpoint between the requisite service period and the contractual term of the award. The simplified approach is applied as we do not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. For ESPP awards, the expected term is the time period from the grant date to the respective purchase dates included within each offering period.

•Risk-Free Interest Rate. The risk-free rate is determined based on the U.S. Treasury Yield Curve with respect to the stock options' expected term.

•Fair Value of Common Stock. Prior to the IPO, as our common stock was not yet publicly traded, we engaged a valuation specialist to estimate the fair value of our common stock. Subsequent to the IPO, the fair value of our common stock is based on the closing price of our Class A common stock.

We will continue to use judgment in evaluating the assumptions related to our stock-based compensation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to our estimates, which could materially impact our future stock-based compensation expense.

Common Stock Valuations

Prior to our IPO, the fair value of our common stock underlying our stock-based compensation awards has historically been determined by our board of directors, with input from management and corroboration from an independent third-party valuation specialist, in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held- Company Equity Securities Issued as Compensation. In the absence of a public trading market, our board of directors exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each grant, including the following factors:

•contemporaneous valuations performed by third-party valuation firms;

•the nature of the business, including its history;

•the economic outlook in general and of the specific industry at the date of the valuation;

•our book value and financial condition;

•our earnings capacity;

•the existence or lack of goodwill, or other intangible assets;

•sales of stock and the size of the block to be valued;

•the market prices of stocks of corporations engaged in the same or similar lines of business as the Company and whose stocks are activity traded in a free and open market, either on an exchange or over-the-counter;

•the prices of convertible preferred stock sold by us to third-party investors in arms-length transactions;

•the lack of marketability of our common stock; and

•the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our business given prevailing market conditions.

In valuing our common stock, the board of directors used the income and market approach valuation methods. The income approach values a company by estimating future cash flows that could potentially be taken out of the business without impairing future operations and profitability. These forecasted annual cash flows plus the terminal value are discounted to their present value to estimate the value. The discount rate is a rate of return which provides potential investors a sufficient return on their investment. The market approach estimates value by comparing the subject company to similar firms whose stocks are publicly-traded. A group of comparable publicly-traded companies are selected and market multiples are developed using each company’s stock price and other financial data. An estimate of value for the subject business is completed by applying selected market multiples to the subject company’s financial results.

After completing the income and market approaches, the enterprise value is allocated to our common stock using the Option Pricing Model, or OPM. Under this method, the common and preferred stock are treated as a series of call options on the enterprise’s value, with the exercise price reflecting a series of “break points” and where the different securities are allocated their respective value based on the specific characteristics and value participation features. The value of the common stock is then based on the allocation of the call options according to the specific facts and circumstances specific to our capital structure. The common stock is modeled as a call option that gives its owner the right, but not the obligation, to buy the underlying enterprise value at a predetermined or exercise price. In the model, the exercise price is based on a comparison with the enterprise value rather than, as in the case of a “regular” call option, a comparison with a per share price. Thus, the value of the common stock is considered to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the preferred stock is liquidated. The OPM often uses the Black-Scholes Option Pricing Model to price the call option. After the value of the common stock is determined and allocated to the various classes of shares, a discount for lack of marketability, or DLOM, is applied to arrive at the fair value of the common stock. A DLOM is meant to account for the lack of marketability of a stock that is not traded on public exchanges.

Application of these valuation approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our common stock.

For valuations after the completion of our IPO, the fair value of our Class A common stock is determined by using the closing price of our Class A common stock as listed on the New York Stock Exchange on the date of grant.

Recent Accounting Pronouncements

See Note 2 – Basis of Presentation and Summary of Significant Accounting Policies in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.

Emerging Growth Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Act of 2012 and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen to not take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.