We're all set. Well, great. Thanks everyone for joining us. My name is Bernie McTernan. I'm the Internet Analyst here at Needham & Company. My pleasure to be joined by Ibotta Chief Financial Officer, Matt Puckett. Thank you so much for joining us today.
Thanks a lot. Happy to be here, Bernie.
Maybe just to start, Ibotta's been a public company for just over two years now.
Okay.
Can you maybe just, to level us up, provide a brief introduction to the company for investors?
Yeah, absolutely. You're right, fairly new public company, two years. Company overall is, I don't know, 14 years old or so. Originally started, you know, with the idea of, in essence, digitizing the promotion space. You know, from the old coupons, cut out of the newspaper, you know, bringing that into the digital world. You know, the original business proposition was to create a direct-to-consumer app, a mobile app.
That ultimately allowed for the digitization of those coupons. Led to, I think, about 50 million downloads of that app over the course of time, the early years of the company. Which was so clearly a big appetite for making that change and moving the promotion space, you know, into your hand, into your pocket versus having to clip them out of the paper. You know, there's obviously still some of that exists, but by and large, in the digital space. Real benefit. Clearly a market proposition that consumers appreciated.
Given the downloads. Over time, that evolved to the idea of creating a broader network beyond just a direct-to-consumer app. Ultimately, that was catalyzed by the partnership that was established in 2021 with Walmart. We're today and beginning to really the creation of the IPN, the Ibotta Performance Network, with Walmart. Which in essence is a white label product where their Walmart Cash. We're the exclusive provider of item level digital promotions, digital coupons in Walmart, both online, obviously, is where the majority of the business is done, but as well as in store.
That partnership ultimately led to, you know, growing the network, growing the publisher base on the network, to, you know, Walmart led to, in some ways led to Dollar General, which led to Family Dollar. We got into the third party delivery, food and grocery delivery space with the addition of Instacart to the network a couple of years ago, or a year and a half ago or so, I guess, at this stage, which led to DoorDash, which has now recently led to the announcement of Uber.
One of the things that we see is, as you kind of get into a vertical, and you grab one of the big guys, then you have a better opportunity to bring more partners onto the network, which is certainly what we've been able to do. We certainly have some grocery as well. We have Schnucks, which is a regional grocer. We now have Giant Eagle recently as well. The network has expanded to where we're now, you know, able to reach, you know, a couple hundred million consumers, you know, who have the ability to interface with the promotional offers that we're serving up on the network. Today, we would see the D2C app, which still is out there, the Ibotta app.
You can still work, you know, as a consumer, you can use that, and many do, importantly. Many do, and you know, I'm sure we might get into that, but many do use that. We would view that as a publisher on the network alongside any other publisher. That's kind of the evolution of the company. Again, I think the Walmart partnership was a big catalyst for kind of the growth, and the opportunity that that began to unlock for a much bigger audience of consumers, which, you know, was, in some ways probably led to the opportunity to IPO.
Yeah. No, absolutely. Yeah, just seeing that growth from the DTC to, you know, establishing the IPN, certainly phenomenal. You guys reported earnings last week. I know, you know, it was a bit of a blur. You know, it feels like it was a year ago, but it was just last week. What were some of the key highlights from the report?
Yeah. I think, you know, a few things I'll talk, I'll try to cover both the qualitative and the quantitative highlights maybe a little bit. I think, you know, qualitatively, one leads to the other, for sure. Qualitatively, we've, you know, we've been on a somewhat of a journey over the last few quarters after, you know, a challenging 2025 for our company, which, you know, a lot of that was attributed to, in essence, you know, execution in many ways. You know, in, you know, of the job to be done on a daily basis, in particular, probably in the sales organization. There was changes that we needed to make and made last year.
We've been kind of on a journey of improving execution, becoming better partners with our clients. More face time, more meetings, leading to more opportunities. That has continued, you know, and we've talked about kind of leading indicators of these meetings and the outcomes of those meetings as leading indicators that will eventually lead to more offer supply, which leads to more redemptions, which leads to more revenue. We've seen a steady progress from an execution standpoint over the last two or three quarters. I highlight that, Bernie, because that was such a big part of our story going back the middle part of last year and, you know, what ultimately foretold a pretty challenging back half of the year for us.
A lot of that was around execution in many ways. We've been working really hard to change those outcomes from an execution standpoint. We did some very specific things to do that around sales reorganization, sales restructuring, I should say, as well as reorganization of the sales function and how we go to market. Those things have progressed. We've seen good results of those changes beginning to show up in the business. We've, you know, we've seen our products resonating with our clients, both our core products and certainly our newer capabilities, you know, which is in the LiveLift area, and I'm, you know, imagine we'll talk some about that. Our products are resonating, which is really important.
We talked a lot about continuing to grow the network. We just talked about the network a little bit, continuing to grow the network with, during the quarter, announcing Uber coming onto our network, on earnings day, we also announced Giant Eagle coming onto the network. Both of those will, you know, will ramp up over the balance of this year as we, you know, we do the work to onboard them and ramp up. Those were some, I think, some really important things that we talked about. Good progress against the objectives we've set out this year around kinda execution as well as product enhancements, and continuing to grow the network.
As it relates to, you know, financial results, we're happy with a, you know, two quarters now in a row of kind of beating and raising our outlook, which was important to us. I think we also recognized that we needed to begin to build back credibility in the marketplace, you know, with our investors and with our stakeholders. Hitting objectives was really important to us, and we've done that now for a couple quarters in a row, both top and bottom line. Still down a little bit YoY, but in line with our expectations and improving sequentially. Q3 of last year, we were down 16%. Q4 of last year we were down 10%, and now here in Q1 we were down 2%.
Redemption revenue, which is the core part of our business, nearly 90% of our business is done in redemption revenue. The rest is kinda ad and data. That part of the business kinda moved in that same sequentiality, down 15, I think, you know, down five, and now down one, almost nearly flat.
Progress being made, also meeting expectations. From a profitability standpoint, you know, down YoY, as expected, but above the high end of the range. Again, kind of executing what we say we're going to execute, that's translating and, or manifesting itself into numbers that we were expected to deliver and we have delivered. Again, it's for me, it's kind of a second quarter of doing this. And you know, it's early days of building back that credibility in the marketplace, both, you know, and we're kind of building credibility across the company, and Bryan's talked about this.
Credibility as it relates to being partners to our clients, credibility as it relates to who we are as a company and what our products of value to, and credibility as a stock as well. You know, not declaring victory in any of those.
Right
Check mark. Another good quarter.
Right. Importantly, expect it to continue into the second half of the year with redemption revenue and total revenue expected to get back to growth here.
Yeah, that's right. We actually, it's a little bit of a nuance and hopefully not to confuse anybody. We said that we expect to see growth in our total business in Q3 of this year.
We actually also said we expect to see redemption revenue, the midpoint of our guide range for Q2 would imply redemption revenue growing just a little bit. Again, that's nearly, I think, 89% to be exact in the last quarter of our total business.
Right. wanted to touch on the supply side of the business, the advertisers. What types of CPG advertisers do you generally work with, trying to think about the major categories, but then also the size of those advertisers too?
Yeah. Kinda all. We more or less work with really all of the CPGs by and large. I think today we have most recent disclosure was over 900 clients and over 3,000 brands.
You know, obviously some of those clients have multiple brands, you know, think P&G. That generally runs the gamut of certainly large CPGs in the United States. We're organized I talked about the sales reorganization. This is an important point both in terms of how we access these CPGs. We're organized by verticals. We have a food vertical.
Kind of how we go to market from a sales motion standpoint. We have a food vertical, we have a beverage vertical, we have a health and beauty vertical, and we have a kind of a household goods, general merchandise vertical.
By the way, that wasn't the way we were always organized. We were organized more based on geography and territory, which, you know, you make arguments for that. Maybe people are closer to clients, they can somehow maybe get there more or whatever. You're kinda spreading yourself too thin. If you're a sales leader and you gotta know all of those categories, you gotta know every CPG category known to man, and be able to go in and talk to them about how Ibotta can help them and support them. You know, that's doable. We think it's actually a lot more efficient, a lot more effective, a lot more strategic for someone to be operating just with food clients. That's the change we made, that's how we're organized.
Again, those are the focus areas. Certainly food is a big one and a needle mover in many ways.
Because a lot of those, you know, the biggest CPG sit in, you know, in the food space. You got products in there that turn pretty fast too, right?
Right.
Sell a lot of them.
Right. The supply and the advertisers on the platform has been the, at least in our view, the main bottleneck of growth. What can you do to unlock greater supply of advertising dollars onto the platform?
Yeah. I would, I'd corroborate your view there. That, that has been the main challenge to growth in the near term. Now, the reasons to why that's been the challenge, I've kind of articulated some of those. Clearly offer supply right now, I mean, we have kind of the two sided thing. We got demand, which is the publishers or the access to consumers, then you got the supply. You'd like for those to be kind of totally in equilibrium or something. Right now, presumably, we have more demand than we have supply.
Okay.
I think your assessment there is spot on, Bernie. I think, you know, as it relates to offer supply, there's probably a few things that we are doing and can do and will do as it relates to that. One, you know, I talked about the sales reorganization and the sales restructuring as well. An outcome of that was this verticalization, which we think is a much better way to go to market. Another outcome of that is we've upskilled and upleveled the talent, both at the leadership level, Chris Riedy and the team that he's brought in, and then across the board. We've changed out, call it, roughly half of the sales organization since this time last year. Kind of simple way to say it.
Wow. Okay.
Most of that change happened in the summer of last year. The biggest part of that occurred kind of in the, you know, Q3 timeframe. We've elevated what we've got from a capability standpoint.
That sophistication and that elevation of, you know, the go-to-market capability, and how we're actually organized to do that, I think allows us to access greater supply. Because we're having more strategic conversations. More consistently at the right levels to be able to access more budget dollars from them. We're showing up in the right way at the right time. We're not changing the person that they talk to every time they meet with us.
Which can happen more frequently when you've got a geographic dispersion, 'cause things get moved around a lot more frequently. Those things that you might call basic blocking and tackling, in some ways, yes, but there's also really a strategic benefit of that. That's one way. I think the other way kind of gets more to the product itself. Couple things inside the product. One, you know, we're on a journey to transform the industry. I talked a little bit about that, and LiveLift sits, and the LiveLift capabilities sit, kind of at the crux of that.
As we've done that, though, I think we've understood that some of the aspects that, ultimately came about as we were, determining the steps to take to move more toward performance marketing, you know, something more akin to performance media, performance marketing to be judged against. Some things that came out of that evaluation and kind of the, kind of the product development of that, we determined actually should be part of the core product. You know, things like deciding upfront more clearly what is the goal of your campaign. Things like being able to You know, a lot of what's in LiveLift is really leaning more into profitability metrics of campaigns.
I think generally, in coupons, the measurement of coupons historically is about the number of redemptions, how many units you're moving, how quickly are you moving through budgets from a velocity standpoint. Actually, bringing to bear more profitability metrics is a big part of LiveLift. Which is things like incremental sales. Things like cost per incremental dollar, which is, you know, for every $1 of sale we give you, we're gonna charge you $0.30.
That's CPID, cost per incremental dollar. Bringing those In LiveLift, those show up in different ways than they do in standard campaigns. We've now learned, in many cases in standard campaigns, when they're statistically significant, we can provide that view at the end of a campaign.
If not necessarily at the beginning or during, but at the end of a campaign, we're able to provide that view, and we're beginning to do that. Again, we're available. The other thing that we have talked a lot about is third-party validation.
The partnership with Circana, the partnership with ABCS, which has been really important in a lot of ways. We're doing that certainly for lift campaigns in many cases, but we've also opened that up to standard campaigns. Again, where certain thresholds are met in terms of the size of the campaign, et cetera, but we're able to do that. Maybe that's, you know, we provide one of those per brand per year, those kinds of things. Offering that up is a. We're getting a lot of receptivity on that, as you might imagine.
Which is, one, it's a validation for what we're delivering. It's also, in some ways, cover for them inside their organization because Circana is kind of a you know, that carries a lot of weight because of their status in the industry. If Circana is validating and, oh, by the way, we're supporting that, and we've got that partnership with Circana, we're paying for that study. Those things are also available in many instances in what I'll call a core product offer or a core campaign. That's another element of unlocking greater offer supply.
Right.
Obviously LiveLift itself and the transformation, which we've said is a relatively small part of our business today. We've also said it's not a key catalyst to what we're expecting to deliver over the next few quarters, but it is there. It is progressing. It is increasing. That's another way obviously, as we think about unlocking offer supply both in the near term, but in particular in the longer term.
Very comprehensive there. I wanted to key in on the last one, LiveLift. Maybe can you help us understand I think when Bryan Leach first talked about, like, CPID and LiveLift, there was some confusion between those two. Can you just help define what's the difference between CPID and then what LiveLift is?
Yeah. LiveLift is a set of capabilities that ultimately you're leveraging models and data.
Allows you to understand from a client what outcome they want. You have the conversation, you understand what outcome are you trying to achieve. What is your sales expectation? What kind of profitability would you like to deliver? How are you thinking about household penetration of this program? You set very clear and measurable objectives around sales and around cost of the program itself. Then you're able to, throughout the course of the campaign, assess the progress you're making at intervals. Clearly, you need some statistical significance to do that, which gets into kind of some of the gating that we've talked about and how fast we roll this out, you need statistical significance to be able to kind of draw conclusions on how you're progressing against those goals, then you can turn the dials. You can optimize.
If you're meeting or not meeting, you can be happy with what you're getting and keep going, or you can potentially adjust those dials inside of a campaign. Those measures are incremental sales and CPID. Those are the core measures.
CPID is cost per incremental dollar. It's a measure that in essence comes out of running an effective LiveLift campaign where you've got everything you need to be able to make those measures, draw those conclusions, and assess those values. CPID is in essence at the end of the day, that's kind of the Holy Grail, what is the CPID.
Right.
Because if you give an organization, if you give someone like me who leads finance, who oftentimes that's where these conversations sometimes start and stop inside of an organization to get more budget dollars, if you can have a conversation to say, "We're confident we delivered $X in revenue, and it cost us $0.XX per dollar," then an organization can say, "Well, that's too much. You know.
It's $0.50, that's more than we want to spend. They can say, "It was $0.15. Oh, spend more.
Right.
We'd actually like more of that. Actually, we can afford a bit more of that.
It allows for more sophisticated conversations, which also, oh, by the way, allows you to then compare yourself from a return standpoint.
To other measurable items in the marketing budgets, which then ultimately the longer term vision allows us to access TAM dollars that are harder for us to access today.
Right. As you mentioned, number one, that Salesforce reorganization, what's the larger opportunity? Is it for the Salesforce to be, you know, going deeper with existing clients, or does this reorganization help, you know, potentially add new clients? Just trying to think about.
Yeah
The best way to add more supply.
It's, you know, in some ways it's both, but I would say probably more, more depth.
Because we're working with most all the clients. We're certainly working with all the large clients.
900 seems like a lot.
Yeah, we're working with all the clients, certainly all the large clients. Yeah, I can't think of a big client that's on our radar that we would say we're missing today. maybe we don't have the volume we need, or maybe we had, you know.
Of a rough patch, and we backtracked or something. Generally speaking, we're working with all the right partners. The opportunity is to go deeper, both certainly in their promotional spend inside of their marketing budgets, but also more broadly, you know, grabbing dollars that are being allocated to other types of marketing today because we can prove that we're very effective at driving both top and bottom line results.
Right. One of the things that Bryan's been mentioning on the call is these, like, tests and pilot programs are happening as part of LiveLift. How are those going? Can you just give us some quantitative stats in terms of how many, how they're going?
Yeah
Like anything to help, provide more context there?
Yeah. I think what we've said there, Bernie, a few things, and hopefully I'll give you some meat here. It's progressing well. The feedback has been, it's been positive, right?
In terms of just the, I would say the qualitative feedback from our clients is positive. Okay, so that's great. I'll have to take your word for that.
Let's say quantitative.
On the quantitative side, I think what we've seen is a steady progression of the number of clients that are trialing. Last year we were talking about a fairly small list. You know, a handful of clients were trialing this over the first couple of quarters. That began to expand in the fourth quarter and continued in the first quarter to I'll call it, tens of clients.
The number of clients has increased. I think we've also, a couple of numbers that we have disclosed is that what we've seen from a re-up rate standpoint, so clients who've used it who are, you know, back in, has been, you know, approximately 80%. We also said, just to indicate, give some indication for the fact that we're continuing to expand and bring new clients into the program, so to speak. In the first quarter, about 60% of the clients that ran LiveLift campaigns were repeats, so they had done it before, and the other 40% were new in the quarter.
That's just, you know, specific to that quarter.
Yeah.
The other thing we've said, we haven't quantified it, but we said the campaign size for a LiveLift campaign is significantly larger than a standard campaign, by the or, you know, a fairly sizable multiple.
Right. As we think about where LiveLift can go, you know, in the coming quarters, coming years, is the goal to have all clients on LiveLift? Is the goal to have all clients transacting on CPID? Like, how should we think about the interplay here?
Yeah, I think, realistically speaking, we think Our goal, our ultimate goal is to transform to be evaluated more like a performance marketing tool.
For the CPG space. You know, clearly we think the way to best do that will be through leveraging the LiveLift capabilities. We'd expect over time that more and more of the business will be done via that. That said, will it ever be 100%? No. There will always be use cases where it just won't work because, you know, a client needs to run, needs to move through some units in a 10-day timeframe, and, you know, that may or may not make sense for LiveLift. Today, we've said we need a longer horizon. Over time, that'll get much narrower as we build out the models and can get a lot more precision in our predictions on, you know, with shorter timeframes and fewer transactions.
There'll always be, I think, some use case for standard types of programs.
There may be smaller clients where it won't make as much sense. You know, over time, we think a large percentage of it should move toward that. In CPID, by the way, the ability to calculate CPID is kind of in place now, as long as we can get to a statistically significant, you know, population from a data standpoint.
Right. Okay. Well, I'll move over to the demand side of the equation. You mentioned this earlier, but first you start with your own app, then expand to Walmart and now, you know, Instacart, Kroger, Dash, Uber. How has that redeemer scale just changed in the platform over the past couple years?
First of all, you gave us Kroger. We'd love to have Kroger. We don't have Kroger.
Oh, okay.
Yeah, your point is right. It's changed dramatically. You know, when I talked about where we were prior to the network, a couple of million redeemers to today, you know, approximately nearly 20 million redeemers, right? 10x or so from where we were before we really began to build out the network. That's a function of adding a Walmart and adding, you know, all the others that we've talked about. You know, one of the things that we've seen is, you know, you add publishers and they beget other publishers, right?
It's also what's important about adding publishers is that we've seen historically, and we believe that will be true moving forward, is that over time, as you add more publishers, which means you add more redeemers equal consumers, so you add more consumers who have access, or who have their shopping baskets intercepted by promotional offers on the network. Over time, we believe that will lead to more offer supply. You asked about offer supply earlier.
That's another thing that we think that's not always linear. It's certainly not a light switch. We do think, and it's been evidenced historically, that as you add publishers, you see the opportunity to add offer supply.
Right. Okay. I think I know the answer to this one, but which if you know, it's asking you to choose your favorite child, but like what partnership has been most impactful for the company on the demand side?
I think you probably do know the answer. I mean, the inaugural partner with Walmart, the partnership with Walmart has been terrific and continues to be terrific. The access that that's provided us to the number of consumers, the ability to, you know, link loyalty cards and the data that provides us, which enables a lot of what we're doing from a modeling standpoint, the access to that data, the longitudinal data across time.
From that. The data access has been really important. Obviously, just the size and scale and breadth of them, the ability to leverage that relationship again with the supply base, with the clients, to access greater offer supply has been, you know, a key catalyst to the growth that the company's enjoyed to date. Then ongoing, the partnership remains strong. We've seen, you know We talk about redeemer growth with existing publishers. We've kind of highlighted that on recent earnings calls. Certainly, you don't have redeemer growth with existing publishers without redeemer growth from Walmart.
Just because of their size and scale. The math doesn't necessarily work. That's been good. We're continuing to see the expansion of the program there from a consumer standpoint as they continue to. This is where the partnership's really important, is they continue to kind of market Walmart Cash. Their consumer doesn't know who Ibotta is, but they understand Walmart Cash.
Yeah
They understand the ability to get, you know, cash back, cash rewards, put into their account. Obviously we sit behind and enable that, you know, with the offer supply, the national offer supply we're bringing to Walmart. They're doing more to market it, you know, things like, you know, broadcasting that on Walmart Radio in store, putting it on screens in their electronics department, call to action signs up front as you walk in the store, end caps, things like that. We're really pleased with that. Yeah, all of our partnerships are really important.
Right
Because of, you know, the scale that that provides us, the access to, you know, unique data sets. We certainly like to see new publishers come in and are really happy with the ones we have.
Yeah. What's a way for investors to think about just how much reve- 'Cause as we talked about previously being supply constrained, so thinking about how much more revenue could generate just given your current potential redeemer base, given all these partnerships.
Yeah. Yeah. Well, the good news is the redeemer base, you know, keeps growing. That's a great, I won't call it problem, but that's a good thing to have in terms of demand keeping, you know, continuing to grow. As we normalize supply and get offer supply back up, there's a place for that to go, which will be great. I think maybe, you know, without answering that super precisely from a quant standpoint, what I'll say is if you look back in time at our redemptions per redeemer.
To where we are today, at our peak, you know, we're somewhere in the neighborhood, probably a little, you know, 20%, maybe a little less than 20%, below that. We would probably expect that the peak is not. We could go higher than that over time, given the work that we're doing on the product side, that we've talked about. I think we would certainly believe, and we think there's a great opportunity for growth with the current redeemer base itself and the current partnerships.
Right. Okay. There's about 10 minutes left. Wanna make sure we at least see if there's any questions from the audience. In the meantime, I'll ask one more. Just the macro, how has this impacted your conversation with advertisers? With gas prices going significantly higher, do coupons matter more now?
Yeah, I mean, it's clear that value is critically important right now for consumers, and providing greater value to them. You know, our conversations with CPGs, you know, at all levels of those organizations, that's in their mind as well. So, clearly the ability to promote and promote in an efficient and effective and presumably profitable way.
Is great. I think, you know, in some ways we're set up to support that kind of environment. If you think about the math of it, even if the number of units that are being purchased with a promotion attached to it is going up, and it might be in a macro like this, if the number of purchases are still going down.
Yeah
The denominator is still going down, the math doesn't always work, to where it's gonna translate into, you know, meaningful, incremental, you know, growth or more revenue than otherwise. All that said, I would say from a macro standpoint, You know, something we pay attention to, we certainly can be influenced by it a little bit on the edges. We think by and large, we're able to because of the nature of what I've described in kind of a performance standpoint, we're able to operate pretty effectively in any macro.
Right. Okay. Just wanted to see if there was any questions in the audience. If not, certainly happy to keep going here. All right, we're a little bit shy today. That's fine. Can we talk about advertising a little bit? It has been a, you know, a drag on the business, let's say. Maybe just start by defining what advertising is for Ibotta. Just how you generate that revenue?
Yeah
Where is it, and just the outlook going forward.
Yeah. It's, you know, it's placement of banner ads and things of that nature. It's all on our direct-to-consumer platform.
Right.
All of that advertising gets generated on D2C, on the Ibotta app. Really it's pretty simple in many ways. What's going on there, as we've seen the business decline in D2C.
While it's, you know, in some cases being offset with increases in 3PP from a redemption standpoint, you have fewer active users as a result of that. That ad revenue kind of correlates directly to that. The declines we've seen in D2C kind of correlate to the declines we've seen in our ad revenue. Now, part of that, there's been a little bit of an offset there with data revenue, which has been, you know, part of our ad and other line item in our financial statements, the monetization of our data asset. We've seen, you know, it's not a huge business obviously, but we've seen some growth there that provides a bit of an offset.
Okay. Got it. Just want to move over to margins and capital allocation. As revenue begins to scale, what types of incremental margins should we expect you to be able to convert revenue growth at?
Yeah, the flow-through on consistent sustained growth, we, you know, we would expect to be pretty high. I would say that there's a lot of operating leverage in this business. I mean, we did make some investments certainly last year as part of the sales and marketing reorganization, and we're making some investments in the technology space to build the products and build the capabilities that I've, you know, talked a lot about. Those numbers are kind of in the base by and large. We're lapping a lot of that over the next, you know, couple of quarters, the investments that we've made.
You know, from here, there's not a, there's not a further step change that's required from an investment standpoint to support what we've laid out as the strategy today. There'll be some things that will be there. I mean, we've talked about the lift studies, and I referenced that third party validation lift studies we're paying for some of those, right? That's a bit of a one-off. There'll always be probably a little bit of that, but we're leaning into that more aggressively now because we've got a new product we're bringing into the market.
Right
We're using that to help encourage, you know, trial, for sure. Then clearly as we continue to build, and make more robust the data models and all the activities that I've talked about in support of LiveLift, the predictive capabilities, the ability to optimize during a campaign, there's a compute cost associated with that. There'll be some increase in that over time, but we'd expect that will be, you know, relatively modest in the overall scheme of things. There's enough of our cost base that's fixed, and such that we will see a nice flow through to the bottom line with incremental sales growth. As you move over the next couple of years, if we're growing, like we would expect.
Yeah
You know, you'll see margin expansion would be our expectation.
Okay. Can you talk to your capital allocation philosophy, whether it be, you know, buybacks, M&A, organic investments in the business, just how we're thinking about those three?
Yeah, I think first and foremost is ensuring we've got investments in organic growth.
Which obviously by and large flow through the P&L. Investments to support the strategy itself, some of which is certainly capitalizable costs. Those are the priorities.
We won't shortchange anything there that we think makes sense strategically and economically. We're generating a lot of cash. You know, free cash flow is good, remains good even in a year, last year, a down year for the business from a top-line perspective and from an earnings perspective too. We generate really healthy free cash flow. We're generating a lot of cash. We've got quite a bit of cash on the balance sheet, no debt, so very strong.
Yeah
And healthy balance sheet. With that excess, you know, capital and cash, you know, we've been buying back our stock, 'cause we like, we like that from a opportunity standpoint. I think that continues to be outside of supporting the organic and growth of the business, that continues to be our biggest priority.
Yeah. Can we touch on the buyback? You have been active buyers of the stock, about $230 million in buybacks last year, $45 million in 1Q.
What's the biggest disconnect you see with your share price versus what the market's pricing in?
Yeah. You're right. We've been buying a lot, I think cumulative at the end of the third quarter, like $310 million or so in the life of the program. I think it's everything I've described around, you know, what we have is where we see the opportunity from a for the company moving forward, which is to much better operate in the space we've always operated, which is in that, you know, traditional kind of promotional bucket inside of the marketing budgets, promotional spend. But to broaden the TAM and the access to a much greater TAM as we become-
Yeah
...much more, able to be, you know, kind of, measured against in other forms of marketing in a way that we think will view pretty favorably for us and open up greater growth opportunities in the long term. When you, when you think about where we think the potential of the business is and where valuation is today versus, you know, where it was at a point in time, you know, we think it's, we think it's a good investment.
Yeah. Makes a lot of sense. Maybe with just last minute here, last question, pretty open-ended one, what would make 2026 a successful year for Ibotta?
Yeah, pretty simple. I think for us it's, nothing heroic. We need to deliver what we've said we're gonna deliver consistently quarter after quarter. We need to make the progress on our core strategy that we've, you know, which is, which is both the go-to-market motions, and, you know, some of the improvements there, the automation that's supporting, you know, go-to-market inside of our company.
Then the progress on the development of LiveLift and the product side.
Yeah. Sounds great. Well, thank you so much. Thanks everyone for joining us. We'll catch up soon.
Yeah. Thanks, Bernie.