Ibotta shares slip on guidance; 13 mln float should drive volatility tomorrow
AInvestTuesday, Aug 13, 2024 4:31 pm ET
2min read
IBTA --

Ibotta (IBTA) reported strong Q2 earnings, significantly outperforming analyst expectations on both revenue and earnings per share (EPS). The company posted an EPS of $0.68, a remarkable $1.73 better than the consensus estimate of a loss of $1.05 per share. Revenue for the quarter increased by 13.6% year-over-year to $87.9 million, also exceeding the consensus estimate of $85.74 million. This robust performance underscores Ibotta's solid execution and strong market position.

Key metrics from the quarter highlight the company's impressive growth in its redemption network. The Ibotta Performance Network (IPN) saw 13.7 million redeemers in Q2, a 158% increase from the 5.3 million redeemers in the same quarter last year. This surge was largely driven by the expansion of Ibotta's partnership with Walmart, which extended from Walmart+ members to all Walmart customers with a Walmart.com account. As a result, redemption revenue grew by 27% year-over-year, and excluding a one-time breakage benefit, non-GAAP redemption revenue growth was even more impressive at 51%.

Despite the strong top-line growth, Ibotta reported a net loss of $34.0 million, representing 39% of its revenue. However, on an adjusted basis, the company generated net income of $19.9 million, which is 23% of revenue. Adjusted EBITDA for the quarter was $25.3 million, resulting in a margin of 29%. This margin expansion reflects the company's focus on operational efficiency and cost management, even as it continues to invest in growth initiatives.

An important strategic development for Ibotta during the quarter was the announcement of a new partnership with Instacart. This partnership will integrate Ibotta’s coupons into Instacart’s platform, providing Instacart customers with timely and relevant discounts. As part of the deal, Ibotta will become Instacart's preferred third-party coupon provider across all eligible product categories. This collaboration opens up significant opportunities for consumer packaged goods (CPG) brands to reach a broader audience through Instacart’s vast network of over 1,500 retail banners and more than 85,000 stores across North America. The revenue contribution from this partnership is expected to begin by the end of the year.

Looking ahead, Ibotta provided guidance for Q3 that was slightly below analyst expectations. The company expects Q3 revenue to be between $91 million and $96 million, which is below the consensus of $98.65 million. Adjusted EBITDA is expected to range from $28 million to $32 million, representing a margin of 32% at the midpoint. While the guidance indicates continued growth, it suggests a more conservative outlook for the remainder of the year, reflecting potential challenges in the broader market environment.

In terms of valuation, Ibotta's stock carries a high forward earnings multiple, reflecting strong investor expectations. The company has a low float of 13 million shares and a significant short interest of 5%, which could lead to volatility in the stock price. Despite these factors, Ibotta’s strong performance in Q2, combined with its strategic partnership with Instacart, positions it well for future growth, though investors should remain mindful of the risks associated with its current valuation.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.