Ibotta outlines 17% Q3 revenue decline guidance amid strategic transformation and client delays

Earnings Call Insights: Ibotta, Inc. (IBTA) Q2 2025

MANAGEMENT VIEW

* Bryan W. Leach, CEO, announced the appointment of Matt Puckett as the new CFO, highlighting his experience at VF Corporation and expected start on August 25. Leach noted, "We reported revenue below the guidance range we provided on our first quarter earnings call, while adjusted EBITDA was in the lower half of the range. We are also guiding to third quarter results that are significantly below our prior expectations." He emphasized the company is undergoing a bold business transformation to capture a larger share of CPG marketing spend, shifting towards a performance marketing model that aims to replicate digital media buying and measurement. Leach explained, "We are in the process of bringing our clients a powerful new set of tools that we believe will allow them to buy and measure their promotions like never before."
* CEO Leach attributed the revenue shortfall to two major clients pausing campaigns pending third-party validation and internal budget alignment, and provided details on new organizational changes, including a revamped sales structure and several new leadership hires in sales and marketing.
* Valerie L. Sheppard, Interim CFO, stated, "We delivered revenue and adjusted EBITDA that were 4% and 8% below the midpoint of the guidance range we provided on our first quarter earnings call. Redemption revenue underperformed our expectations, while operating expenses were slightly lower than forecasted."

OUTLOOK

* Sheppard provided Q3 revenue guidance in the range of $79 million to $84 million, representing a 17% revenue decline at the midpoint, and Q3 adjusted EBITDA in the range of $9.5 million to $13.5 million, with an approximate 14% adjusted EBITDA margin at the midpoint. She explained, "Combined with the short-term challenges in scaling up our new performance marketing clients as well as the disruption caused by the sales reorg that Bryan discussed, we are guiding to a year-over-year decline in revenue in the third quarter."
* Management indicated that Q3 guidance does not assume any participation from the two paused performance marketing clients.

FINANCIAL RESULTS

* Revenue for Q2 was $86 million, a 2% decline year-over-year. Redemption revenue was $73.2 million, down 1% year-over-year. Third-party publisher redemption revenue reached $48.6 million, up 17%, while D2C redemption revenue declined to $24.7 million, down 24%. Ad and other revenues totaled $12.8 million, down 8%.
* Total redeemers grew to 17.3 million, up 27% year-over-year, driven by launches with Instacart and DoorDash. Redemptions per redeemer fell to 4.6, down 21%. Redemption revenue per redemption was $0.91, down 1%. Non-GAAP gross margin was 80%, down nearly 660 basis points year-over-year.
* Adjusted EBITDA was $17.9 million (21% margin), adjusted net income was $14.9 million, and adjusted diluted net income per share was $0.49. The company ended Q2 with $250.5 million in cash and cash equivalents and repurchased approximately 1.4 million shares at an average price of $46.59.

Q&A

* Ronald Victor Josey, Citi: Asked about third-party measurement validation and new pilot comparisons. Leach responded that third-party studies confirmed Ibotta’s conservative reporting and that new pilots include both emerging and top CPG clients, noting, "We're talking to the people who manage multibillion-dollar sales organizations and the P&L."
* Eric James Sheridan, Goldman Sachs: Inquired about execution milestones and alignment with client budget cycles. Leach outlined three focus areas: sales execution, expanding go-to-market, and automating product tools, acknowledging, "It has taken anywhere between 9 to 12 months so far" for major clients to scale.
* Mark Stephen F. Mahaney, Evercore: Asked about retention and partnership momentum with Walmart. Leach highlighted closer collaboration and growing adoption, calling Walmart a "real bright spot."
* Kenneth James Gawrelski, Wells Fargo: Probed on supply environment and investment needs. Leach cited macro headwinds and client caution but emphasized R&D and analytics investment, stating, "We are investing very, very heavily in R&D."
* Christopher Louis Kuntarich, UBS: Queried about general merchandise client adoption. Leach reported positive reception but noted the need for more pilot data and highlighted the novelty of digital promotions in this segment.
* Bernard Jerome McTernan, Needham: Asked about Amazon’s same-day delivery and client spending impacts. Leach stated omnichannel readiness and acknowledged that missing two client campaigns led to the revenue shortfall.
* Andrew M. Boone, JMP Securities: Sought clarity on measurement automation and growth timeline. Leach said scaling automated measurement is underway with a target for 2026 and described the client transition as taking 9-12 months.
* Andrew Jordan Marok, Raymond James: Asked about the fate of paused budgets. Leach said some budgets are simply parked, while others shift to different channels, stressing the need for continuity in client relationships.

SENTIMENT ANALYSIS

* Analysts pressed management on the causes and duration of revenue headwinds, reflecting a slightly negative to cautious tone. Questions repeatedly focused on delays, client adoption, measurement automation, and budget timing.
* Management’s tone during prepared remarks was measured, acknowledging short-term setbacks but expressing conviction in the transformation. In Q&A, Leach frequently used explanatory language and emphasized patience, stating, "It can be difficult to predict the precise time lines for when these things will happen and to what degree."
* Compared to the previous quarter, both analysts and management appeared more concerned about immediate financial impacts and the pace of transformation, while maintaining long-term optimism.

QUARTER-OVER-QUARTER COMPARISON

* Q2 guidance and actuals fell below Q1 expectations, with Q3 guidance signaling a sharper revenue decline (17% decline at midpoint) versus Q2’s 2% year-over-year drop.
* Strategic focus in Q2 shifted toward executing a comprehensive sales reorganization and integrating third-party validation, while Q1 focused more on ramping pilot programs and early CPID adoption.
* Analyst questions in Q2 concentrated on the duration of client delays, sales execution disruptions, and measurement automation, a shift from Q1’s focus on pilot successes and new partner launches.
* Management’s tone grew more cautious regarding near-term results, repeatedly describing the transformation as disruptive but necessary, compared to Q1’s stronger emphasis on positive pilot outcomes and expanding partnerships.

RISKS AND CONCERNS

* Management cited delays in client activation due to the need for third-party validation and administrative hurdles, as well as macroeconomic and political headwinds impacting client budgets.
* The company acknowledged disruption from sales team reorganization, with handoffs leading to revenue declines for affected accounts.
* Analysts repeatedly questioned the predictability of revenue and the timeline for scaling new business models.

FINAL TAKEAWAY

Ibotta’s leadership emphasized that the current revenue and guidance shortfalls are tied to deliberate, transformative changes in its business model aimed at unlocking larger market opportunities. While acknowledging short-term challenges from paused client campaigns and organizational changes, management reiterated confidence in the new performance marketing approach, third-party validation, and expanded pilot activity as paving the way for greater long-term value creation.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ibta/earnings/transcripts]

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