November 14, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-42018

IBOTTA, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)						35-2426358 (I.R.S. Employer Identification Number)

1801 California Street, Suite 400 Denver, Colorado (Address of principal executive offices)						80202 (Zip Code)

(303) 593-1633

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.00001 per share	IBTA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of October 31, 2024, the registrant had outstanding 27,490,186 shares of Class A common stock and 3,137,424 shares of Class B common stock, each with a par value of $0.00001 per share.

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		Page
Special Note Regarding Forward-Looking Statements		2

Part I	FINANCIAL INFORMATION	5
Item 1	Financial Statements (Unaudited)	5
	Condensed Balance Sheets	5
	Condensed Statements of Operations	6
	Condensed Statements of Comprehensive Income (Loss)	7
	Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	8
	Condensed Statements of Cash Flows	10
	Notes to the Condensed Financial Statements	12
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4	Controls and Procedures	50

Part II	OTHER INFORMATION	50
Item 1	Legal Proceedings	50
Item 1A	Risk Factors	51
Item 2	Unregistered Sales of Equity Securities , Use of Proceeds , and Issuer Pur chases of Securities	100
Item 3	Defaults upon Senior Securities	100
Item 4	Mine Safety Disclosures	100
Item 5	Other Information	100
Item 6	Exhibits	101
	Signatures	102

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” “aim,” “look,” “wish,” “hope,” “pursue,” “propose,” “design,” “forecast,” “try,” “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our expectations regarding financial results and performance, including our operational and financial targets, key metrics, and our ability to maintain profitability and generate profitable growth over time;

•our ability to successfully execute our business and growth strategy;

•our expectations regarding the capabilities of our platform and technology;

•the sufficiency of our cash, cash equivalents, and marketable securities to meet our liquidity needs;

•the demand for the Ibotta Performance Network (IPN) including the size of our addressable market, market share, and market trends;

•our ability to renew, maintain, and expand our relationships with publishers, specific products or groups of products identified by particular names and owned by a company that sells consumer packaged goods, including in the grocery and general merchandise categories (CPG brands (or brands)), and retailers;

•our ability to grow the number of redeemers that use our platform and the amount redeemed by our redeemers;

•our expectations regarding the macroeconomic environment, including rising inflation and interest rates, and uncertainty in the global banking and financial services markets;

•our ability to develop and protect our brand;

•our ability to effectively manage costs;

•our ability to develop new offerings, services, and features, bring them to market in a timely manner, and make enhancements to our platform;

•our ability to compete with existing and new competitors in existing and new markets and offerings;

•our expectations regarding outstanding litigation and legal and regulatory matters;

•our expectations regarding the effects of existing and developing laws and regulations, and our ability to comply with such laws and regulations, including privacy matters;

•our ability to collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, and share data about redeemers and our publishers, CPG brands, and retailers;

•our ability to manage and insure operations-related risk associated with our business;

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•our expectations regarding our market opportunity and new and evolving markets;

•our ability to maintain the security and availability of the IPN;

•our expectations and management of future growth;

•our expectations concerning relationships with third parties, including with Walmart Inc., a Delaware corporation, Dollar General Corporation, a Tennessee corporation, and Family Dollar Stores, LLC, a Delaware limited liability company;

•our ability to expand into new verticals;

•our ability to maintain, protect, and enhance our intellectual property;

•the need to hire additional personnel and our ability to attract and retain such personnel;

•our ability to obtain additional capital and maintain cash flow or obtain adequate financing or financing on terms satisfactory to us;

•our expectations that we will not rely on the “controlled company” exemption under the listing standards of the New York Stock Exchange;

•our expectations regarding our Share Repurchase Program;

•the increased expenses associated with being a public company; and

•the impact of the COVID-19 pandemic, or a similar public health threat, or the ongoing conflicts between Russia and Ukraine and Hamas and Israel, on global capital and financial markets, political events, general economic conditions in the United States, and our business and operations.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate, and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties, and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events, or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

We announce material information to the public through filings with the U.S. Securities and Exchange Commission, the investor relations page on our website (https://www.ibotta.com), press releases, public conference calls, and public webcasts. The information disclosed through the foregoing channels could be deemed to be material information. As such, we encourage investors, the media, and others to follow the

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channels listed above and to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Ibotta, Inc.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share amounts)



	September 30, 2024		December 31, 2023
	(unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	341,274	$	62,591
Accounts receivable, less allowances of $3,825 and $3,160, respectively	227,792		226,439
Prepaid expenses and other current assets	6,992		9,314
Total current assets	576,058		298,344
Property and equipment, less accumulated depreciation of $9,548 and $8,905, respectively	2,057		2,541
Capitalized software development costs, less accumulated amortization of $17,216 and $13,482, respectively	15,437		12,844
Equity investment	4,531		4,531
Other long-term assets	183		1,530
Total assets	$	598,266	$	319,790
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,251	$	8,937
Due to third-party publishers	96,337		73,155
Deferred revenue	4,756		2,628
User redemption liability	80,032		84,531
Accrued expenses	18,500		24,582
Other current liabilities	3,596		4,317
Total current liabilities	211,472		198,150
Long-term liabilities:
Long-term debt, net	—		64,448
Convertible notes derivative liability	—		25,400
Other long-term liabilities	8,836		3,864
Total liabilities	220,308		291,862
Commitments and contingencies (Note 13)
Redeemable convertible preferred stock, $0.00001 par value: zero and 17,245,954 shares authorized, issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	—		—
Stockholders’ equity:
Preferred stock, $0.00001 par value: 100,000,000 shares authorized and zero shares issued and outstanding as of September 30, 2024; zero shares authorized, issued, and outstanding as of December 31, 2023	—		—
Common stock, $0.00001 par value: zero shares authorized, issued, and outstanding as of September 30, 2024; 40,000,000 shares authorized and 9,207,337 shares issued and outstanding as of December 31, 2023	—		—
Class A common stock, $0.00001 par value: 3,000,000,000 shares authorized, 27,750,593 shares issued, and 27,475,691 shares outstanding as of September 30, 2024; zero shares authorized, issued, and outstanding as of December 31, 2023	—		—
Class B common stock, $0.00001 par value: 350,000,000 shares authorized and 3,137,424 shares issued and outstanding as of September 30, 2024; zero shares authorized, issued, and outstanding as of December 31, 2023	—		—
Additional paid-in capital	610,263		237,116
Treasury stock, at cost, 274,902 shares at September 30, 2024 and zero shares at December 31, 2023	(15,687)		—
Accumulated deficit	(216,618)		(209,188)
Total stockholders' equity	377,958		27,928
Total liabilities, redeemable convertible preferred stock, and stockholders' equity	$	598,266	$	319,790

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenue	$	98,621	$	85,287	$	268,874	$	220,363
Cost of revenue	12,172		10,777		34,970		31,671
Gross profit	86,449		74,510		233,904		188,692
Operating expenses:
Sales and marketing	27,761		37,639		105,908		81,449
Research and development	16,285		12,391		47,452		36,306
General and administrative	20,631		12,109		62,493		38,180
Depreciation and amortization	1,065		1,501		3,096		3,015
Total operating expenses	65,742		63,640		218,949		158,950
Income from operations	20,707		10,870		14,955		29,742
Interest income (expense), net	4,436		(1,556)		5,303		(4,773)
Loss on debt extinguishment	—		—		(9,630)		—
Other expense, net	(16)		(1,511)		(3,132)		(3,252)
Income before (provision for) benefit from income taxes	25,127		7,803		7,496		21,717
(Provision for) benefit from income taxes	(7,888)		610		(14,926)		(2,246)
Net income (loss)	$	17,239	$	8,413	$	(7,430)	$	19,471
Net income (loss) per share:
Basic	$	0.56	$	0.94	$	(0.34)	$	2.19
Diluted	$	0.51	$	0.31	$	(0.34)	$	0.73
Weighted average common shares outstanding:
Basic	30,663,263		8,960,311		21,909,949		8,887,966
Diluted	33,567,489		26,830,524		21,909,949		26,629,394

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	17,239	$	8,413	$	(7,430)	$	19,471
Other comprehensive income:
Net unrealized gain on short-term investments	—		—		—		126
Total other comprehensive income	—		—		—		126
Comprehensive income (loss)	$	17,239	$	8,413	$	(7,430)	$	19,597

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

(unaudited)


	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance, December 31, 2022	17,245,954	$	—	8,793,880	$	—	$	212,637	$	(247,305)	$	(126)	$	(34,794)
Net loss	—	—		—	—		—		(4,283)		—		(4,283)
Other comprehensive income	—	—		—	—		—		—		77		77
Exercise of stock options	—	—		23,991	—		262		—		—		262
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		1,886		—		—		1,886
Release of restricted stock purchase shares from repurchase option	—	—		25,551	—		212		—		—		212
Balance, March 31, 2023	17,245,954	$	—	8,843,422	$	—	$	214,997	$	(251,588)	$	(49)	$	(36,640)
Net income	—	—		—	—		—		15,341		—		15,341
Other comprehensive loss	—	—		—	—		—		—		49		49
Exercise of stock options	—	—		52,228	—		409		—		—		409
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		1,898		—		—		1,898
Release of restricted stock purchase shares from repurchase option	—	—		25,552	—		212		—		—		212
Balance, June 30, 2023	17,245,954	$	—	8,921,202	$	—	$	217,516	$	(236,247)	$	—	$	(18,731)
Net income	—	—		—	—		—		8,413		—		8,413
Exercise of stock options	—	—		95,006	—		483		—		—		483
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		10,896		—		—		10,896
Release of restricted stock purchase shares from repurchase option	—	—		25,551	—		212		—		—		212
Balance, September 30, 2023	17,245,954	$	—	9,041,759	$	—	$	229,107	$	(227,834)	$	—	$	1,273

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT), CONT.

(In thousands, except share amounts)

(unaudited)


	Redeemable Convertible Preferred Stock			Common Stock(1)			Treasury Stock			Additional Paid-In Capital		Accumulated Deficit		Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2023	17,245,954	—		9,207,337	$	—	—	—		$	237,116	$	(209,188)	$	27,928
Net income	—	—		—	—		—	—		—		9,297		9,297
Exercise of stock options	—	—		187,777	—		—	—		1,799		—		1,799
Other	—	—		(3,000)			—	—		(91)		—		(91)
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		—	—		4,950		—		4,950
Release of restricted stock purchase shares from repurchase option	—	—		25,551	—		—	—		212		—		212
Balance, March 31, 2024	17,245,954	—		9,417,665	$	—	—	$	—	$	243,986	$	(199,891)	$	44,095
Net loss	—	—		—	—		—	—		—		(33,966)		(33,966)
Exercise of stock options	—	—		244,112	—		—	—		2,913		—		2,913
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		—	—		44,912		—		44,912
Release of restricted stock purchase shares from repurchase option	—	—		25,552	—		—	—		212		—		212
Conversion of convertible debt	—	—		1,177,087	—		—	—		103,584		—		103,584
Conversion of redeemable convertible preferred stock	(17,245,954)	—		17,245,954	—		—	—		—		—		—
Initial public offering, net of issuance costs of $22.0 million	—	—		2,500,000	—		—	—		197,952		—		197,952
Balance, June 30, 2024	—	—		30,610,370	$	—	—	$	—	$	593,559	$	(233,857)	$	359,702
Net income	—	—		—	—		—	—		—		17,239		17,239
Exercise of stock options	—	—		246,693	—		—	—		2,946		—		2,946
Stock-based compensation expense (inclusive of capitalized stock-based compensation)	—	—		—	—		—	—		13,792		—		13,792
Release of restricted stock purchase shares from repurchase option	—	—		25,551	—		—	—		212		—		212
Repurchase of common stock	—	—		—	—		(274,902)	(15,687)		—		—		(15,687)
Issuance of common stock upon settlement of restricted stock units	—	—		9,474	—		—	—		—		—		—
Common stock withheld for tax obligation and net settlement	—	—		(4,071)	—		—	—		(246)		—		(246)
Balance, September 30, 2024	—	$	—	30,888,017	$	—	(274,902)	$	(15,687)	$	610,263	$	(216,618)	$	377,958

_____________

(1)Amounts combine the Company’s common stock, Class A common stock, and Class B common stock. See Note 7 - Redeemable Convertible Preferred Stock and Stockholders' Equity for discussion of the establishment of the Company’s two series of common stock and the reclassification of its common stock into Class A common stock in connection with the Company’s initial public offering in April 2024.

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)


	Nine months ended September 30,
	2024		2023
Operating activities
Net (loss) income	$	(7,430)	$	19,471
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	6,160		5,749
Impairment of capitalized software development costs	437		130
Stock-based compensation expense	36,253		5,307
Common stock warrant expense	27,084		9,052
Credit loss expense	1,217		441
Loss on extinguishment of debt	9,630		—
Amortization of debt discount and issuance costs	1,036		2,475
Change in fair value of convertible notes derivative liability	3,085		3,200
Other	36		51
Changes in assets and liabilities:
Accounts receivable	(2,561)		(63,270)
Other current and long-term assets	(977)		472
Accounts payable	188		826
Due to third-party publishers	23,182		26,215
Accrued expenses	(5,926)		(2,773)
Deferred revenue	2,128		955
User redemption liability	(4,499)		(7,936)
Other current and long-term liabilities	4,887		(1,317)
Net cash provided by (used in) operating activities	93,930		(952)
Investing activities
Additions to property and equipment	(655)		(372)
Additions to capitalized software development costs	(7,001)		(5,871)
Maturities of short-term investments	—		27,900
Net cash (used in) provided by investing activities	(7,656)		21,657
Financing activities
Proceeds from exercise of stock options	7,649		1,154
Proceeds from initial public offering, net	206,692		—
Deferred offering costs	(5,972)		(4)
Purchase of treasury stock	(15,611)		—
Taxes paid related to net share settlement of equity awards	(246)		—
Other financing activities	(103)		—
Net cash provided by financing activities	192,409		1,150
Net change in cash and cash equivalents	278,683		21,855
Cash and cash equivalents, beginning of period	62,591		17,818
Cash and cash equivalents, end of period	$	341,274	$	39,673

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

CONDENSED STATEMENTS OF CASH FLOWS, CONT.

(In thousands)

(unaudited)


	Nine months ended September 30,
	2024		2023
Supplemental disclosures of cash flow information
Interest paid	$	2,529	$	3,464
Income taxes paid	$	8,134	$	1,903
Supplemental disclosures of non-cash investing and financing activities
Deferred offering costs not yet paid	$	65	$	421

Stock-based compensation included in capitalized software development costs	$	317	$	320

See accompanying notes to the condensed financial statements.

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

1. Nature of Operations

Ibotta, Inc. (Company, we, or our) is a technology company that allows consumer packaged goods (CPG) brands to deliver digital promotions to millions of consumers through a single, convenient network called the Ibotta Performance Network (IPN). We provide promotional services to publishers, retailers, and advertisers through the IPN, which includes our direct-to-consumer (D2C) mobile, web, and browser extension properties and our growing network of third-party publisher properties. The majority of the Company’s revenues are derived from the fees we earn from customers when consumers redeem offers. The Company also derives revenue from fees we earn from customers for ad products across the Company’s platform in support of their promotional campaigns, as well as from data products.

Initial Public Offering

On April 22, 2024, the Company closed its initial public offering (IPO), in which we issued and sold 2,500,000 shares of our Class A common stock at $88.00 per share (IPO price). The Company 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. Certain selling stockholders (Selling Stockholders) offered an additional 4,060,700 shares of the Company’s Class A common stock at the IPO price in a secondary offering, for which the Company received no proceeds. In connection with the secondary offering, on April 25, 2024, the underwriters for the IPO exercised their option to purchase an additional 984,105 shares of the Company’s Class A common stock from the Selling Stockholders at the IPO price less underwriting discounts and commissions, with all proceeds going to the Selling Stockholders.

In connection with the IPO, 17,245,954 shares of redeemable convertible preferred stock automatically converted into an equal number of shares of the Company’s common stock, which were then reclassified into an equal number of shares of the Company’s Class A common stock, 9,511,741 shares of the Company’s common stock outstanding were reclassified into an equal number of shares of the Company’s Class A common stock, 3,668,427 shares of the Company’s Class A common stock were exchanged for an equivalent number of the Company’s Class B common stock shares, and $75.1 million of convertible notes automatically converted into 1,177,087 shares of the Company’s Class A common stock. In addition, an anti-dilution adjustment to the common stock purchase warrant to Walmart, Inc., a Delaware corporation, (Walmart Warrant) increased the number of shares of the Company’s Class A common stock issuable under the Walmart Warrant by 592,457 shares resulting in $17.5 million of incremental stock-based compensation expense. Certain equity awards with liquidity event-based vesting conditions accelerated in vesting, resulting in $14.0 million of additional stock-based compensation expense.

2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and pursuant to the applicable rules and regulations of the U.S. Securities and Exchange Commission (SEC) for interim financial information. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2023, which can be found in the Company’s final prospectus dated April 17, 2024, filed with the SEC pursuant to Rule 424(b)(4) (Prospectus) under the Securities Act of 1933, as amended (Securities Act). Certain prior year amounts have been reclassified to reflect to the current year presentation.

The condensed financial statements reflect all adjustments and reclassifications that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

condition as of and for the periods presented. These operating results are not necessarily indicative of the results that may be expected of the full year performance.

Other than those described below, there were no significant changes to the significant accounting policies from those that were disclosed in the audited consolidated financial statements and accompanying notes for the year ended December 31, 2023 included in the Prospectus.

Emerging Growth Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The Company expects to use the extended transition period for any other new or revised accounting standards during the period in which it remains an emerging growth company.

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenue and expenses, and the related disclosures of contingent liabilities in the condensed financial statements and accompanying notes. Management evaluates its estimates that include, but are not limited to, revenue recognition, breakage, stock-based compensation, allowance for credit losses, income taxes and associated valuation allowances, leases, contingent liabilities, convertible notes derivative liability, software development costs, including capitalization and the allocation of labor costs between cost of revenue and research and development expense, and the useful lives and impairment of long-lived assets. The Company believes that the estimates, judgments, and assumptions used to determine certain amounts that affect the condensed financial statements are reasonable, based on information available at the time they are made. Actual results could differ materially from these estimates.

Segments

The Company manages its operations and allocates resources as a single operating segment, and therefore, one reportable segment. Operating segments are components of a company for which separate financial information is internally produced for regular use by the Chief Operating Decision Maker (CODM) to allocate resources and assess the performance of the business. The Company’s CODM is its Chief Executive Officer who makes operating decisions, assesses financial performance, and allocates resources based on Company-wide financial information.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents, and accounts receivable. At times, such amounts may exceed federally insured limits. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions within the United States. Credit risk with respect to accounts receivable is dispersed due to the large number of customers. The Company does not require collateral for accounts receivable.

User Redemption Liability and Due to Third-Party Publishers

Consumers earn user awards by redeeming offers on both Ibotta’s D2C properties and our third-party publisher properties. The undistributed user awards earned by consumers on D2C properties are

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

reflected in the user redemption liability in the condensed balance sheets. The user redemption liability is reduced as consumers cash out and through breakage (see Note 3 – User Redemption Liability Extinguishment). User awards earned by consumers on third-party publisher properties represent a payable reflected in the due to third-party publishers in the condensed balance sheets. The due to third-party publishers liability also includes a revenue share payable for certain publishers that is a negotiated fixed percentage of our fee per redemption on the third-party publishers’ properties.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The principal activities from which the Company generates revenue are as follows:

Redemption Revenue

The Company’s customers promote their products and services to consumers through cash back offers on the IPN, and the Company earns a fee per redemption. The Company recognizes revenue from redemption campaign customers as fees are earned, net of awards to consumers, as the Company acts as the agent to the Company's customers in the facilitation of the sale to the consumer. The Company may also charge fees to set up a redemption campaign which are deferred and recognized over the average duration of historical redemption campaigns.

Ad & Other Revenue

The Company’s customers may also run advertisements such as banners, tiles, newsletters, and feature placements on Ibotta D2C properties to promote their redemption campaigns, referred to as marketing services. Ad products are billed, and revenue is recognized, as the marketing services are performed over the advertising period. The Company also offers a number of data products and services to customers, including audience targeting and data licensing. Some products and services are billed as a flat fee amount while others are billed based on usage. Data revenue is recognized as it is delivered.

Stock-Based Compensation

Stock-based compensation for equity awards, including stock options, restricted stock units (RSUs), and awards granted under the Company’s employee stock purchase plan, or ESPP, is measured based on the grant date fair value of the award. For awards with service conditions only, the Company recognizes 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, the Company recognizes 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, the Company determines 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. The Company’s use of the valuation models requires the input of subjective assumptions. The assumptions used in the Company’s 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 the Company’s history and expectation of dividend payouts. The Company has not paid dividends and does 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

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

term of the award, as the Company does not have an extensive trading history for its 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 the Company’s common stock was not yet publicly traded, the Company engaged a valuation specialist to estimate the fair value of its common stock. Subsequent to the IPO, the fair value of common stock is based on the closing price of the Company’s common stock.

Deferred Offering Costs

Deferred offering costs, which consist of direct incremental legal, consulting, accounting, and other fees related to the anticipated sale of the Company’s common stock in the IPO, were capitalized and recorded in prepaid expenses and other current assets on the condensed balance sheets prior to the IPO. After the IPO, all deferred offering costs were reclassified into additional paid-in capital as a reduction of proceeds, net of underwriting discounts, received from the IPO on the condensed balance sheets.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires enhanced disclosures about significant segment expenses. In addition, the amendments include enhanced interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and provide new segment disclosure requirements for entities with a single reportable segment. The amendments of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. While the application of this guidance will result in additional disclosure concerning the Company’s single reportable segment, it is not expected to have a significant impact on the Company’s condensed financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires enhanced disaggregation within the rate reconciliation table and disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. While the application of this guidance will result in enhanced disclosures, it is not expected to have a significant impact on the Company’s condensed financial statements.

Other than the items noted above, there are no new accounting pronouncements not yet effective or adopted in the current year that the Company believes have a significant impact, or potentially significant impact, to its condensed financial statements.

3. User Redemption Liability Extinguishment

The Company reflects a user redemption liability in the condensed balance sheets associated with the undistributed earnings of consumers on Ibotta’s D2C properties. A portion of these undistributed

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Notes to Condensed Financial Statements

(unaudited)

earnings is never expected to be cashed out by consumers due to inactivity and will therefore be recognized as breakage by the Company.

Consumers’ accounts that have no activity for six months are considered inactive and charged a $3.99 per month maintenance fee until the balance is reduced to zero or new activity ensues. Balances associated with accounts that are deactivated for violation of the Company’s terms of use are also recognized as breakage. The Company estimates breakage at the time of user redemption and reduces the user redemption liability accordingly. Breakage estimates are made based on historical breakage patterns, and the preparation of estimates includes judgments of the applicability of historical patterns to current and future periods. Breakage is recorded in revenue related to funded awards, as an offset to sales and marketing expense related to self-funded awards, and as an offset to cost of revenue related to gift card purchases and sponsored user awards earned from watching an advertising video.

The Company’s breakage is recorded as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenue	$	3,258	$	6,213	$	10,888	$	21,970
Cost of revenue	46		117		161		487
Sales and marketing	394		1,048		1,411		4,340
Total breakage	$	3,698	$	7,378	$	12,460	$	26,797

The user redemption liability was $80.0 million and $84.5 million as of September 30, 2024 and December 31, 2023, respectively.

4. Accrued Expenses

Accrued expenses consist of the following (in thousands):


	September 30, 2024		December 31, 2023
Accrued employee expenses	$	13,440	$	18,156
Other accrued expenses	5,060		6,426
Total accrued expenses	$	18,500	$	24,582

5. Long-Term Debt

Long-term debt consists of the following (in thousands):


	September 30, 2024		December 31, 2023
Convertible notes	$	—	$	75,099
Revolving line of credit	—		—
Total debt	—		75,099
Less: unamortized debt discount	—		(10,440)
Less: unamortized debt issuance costs	—		(211)
Long-term debt, net	$	—	$	64,448

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

The Company recognized interest expense as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Contractual interest expense	$	32	$	1,168	$	2,529	$	3,465
Amortization of debt discount and issuance costs	7		834		1,036		2,475
Total interest expense	$	39	$	2,002	$	3,565	$	5,940

Convertible Notes

On March 24, 2022 (Initial Closing), the Company issued convertible unsecured subordinated promissory notes (notes or convertible notes) to certain investors, including certain related parties and a then officer of the Company (see Note 1 2 – Related Parties), in an aggregate principal amount of $75.0 million with a maturity date of March 24, 2027. Up to but not including the date that is 18 months after the Initial Closing, the convertible notes bear interest at a rate of 6.00% per annum, payable quarterly in cash or as payment-in-kind at the Company’s election. Thereafter, subject to certain exceptions, the convertible notes bear interest at a rate of (A) the greater of (x) the three-month Secured Overnight Financing Rate and (y) 1.00% plus (B) 5.00%, payable quarterly in cash.

The Company determined that certain conversion provisions embedded in the convertible notes represented contingent exchange features that qualified as embedded derivatives under ASC 815, Derivatives and Hedging. The qualifying features were collectively bifurcated from the debt host and recorded as a derivative liability in the condensed balance sheets. The derivative liability was accounted for on a fair market value basis. The initial value of the derivative liability at issuance was $16.1 million with the offset recorded as a discount to the notes. Changes in fair value were recognized in other expense, net, in the condensed statements of operations. The debt discount was amortized to interest expense over the contractual term of the debt using the straight-line method which approximates the effective interest method. Refer to Note 6 – Fair Value Measurements for further discussion of the valuation of the derivative liability.

Concurrently upon the closing of the IPO, the $75.1 million of convertible notes automatically converted into 1,177,087 shares of the Company’s Class A common stock. The conversion was accounted for as a debt extinguishment, resulting in the recognition of a $9.6 million loss on extinguishment calculated as the difference between the fair value of the shares issued and the carrying value of the notes and the embedded derivative liability. Immediately prior to the extinguishment, a $1.4 million loss was recognized from the change in fair value of the embedded derivative liability.

2021 Credit Facility

On November 3, 2021, the Company executed the Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank, which consists of a $50.0 million revolving line of credit (2021 Credit Facility). In March 2023, the Company executed a letter agreement to amend the 2021 Credit Facility to reduce the percentage of funds required to be maintained with Silicon Valley Bank. In December 2023, the Company executed the Second Loan Modification Agreement with Silicon Valley Bank, which, among other things, extended the initial maturity date of the 2021 Credit Facility to November 3, 2025 and amended the financial covenant liquidity ratio calculation. The 2021 Credit Facility, as amended by the subsequent amendment and modification agreements, is referred to herein as the Amended 2021 Credit Facility. As a result of our IPO, the maturity date of the Amended 2021 Credit Facility can be extended to November 3, 2026.

Borrowings under the Amended 2021 Credit Facility bear interest at a floating annual rate equal to the greater of (i) an applicable floor rate that ranges from 2.25% to 3.0% based on the Company’s average liquidity position as defined in the Amended 2021 Credit Facility and (ii) the prime rate less a margin that

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

ranges from 0.25% to 1.0% based on the Company’s average liquidity position as defined in the Amended 2021 Credit Facility. In addition, the Company pays an unused revolving line facility fee of 0.25% per year on the average monthly unused amount of commitments under the Amended 2021 Credit Facility. The Company is subject to a springing financial covenant to maintain a minimum liquidity ratio of 1.50x, depending on the Company’s average liquidity position as defined in the Amended 2021 Credit Facility.

As of September 30, 2024, there was no outstanding balance under the Amended 2021 Credit Facility and $50.0 million available. The Company is in compliance with all financial covenants under the Amended 2021 Credit Facility during all periods presented. All obligations under the Amended 2021 Credit Facility are secured by substantially all of the assets of the Company, including intellectual property.

6. Fair Value Measurements

The following tables present information about financial instruments measured at fair value on a recurring basis (in thousands):


	September 30, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	338,948	$	338,948	$	—	$	—
Total assets	$	338,948	$	338,948	$	—	$	—


	December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	57,890	$	57,890	$	—	$	—
Total assets	$	57,890	$	57,890	$	—	$	—
Liabilities:
Convertible notes derivative liability	$	25,400	$	—	$	—	$	25,400
Total liabilities	$	25,400	$	—	$	—	$	25,400

The Company’s cash equivalents are held in money market funds, which are measured using quoted prices for identical assets in active markets and are therefore classified as Level 1 in the fair value hierarchy.

As of December 31, 2023, the estimated fair value of the Company’s convertible notes was $95.4 million. Long-term debt is recorded at its carrying value in the condensed balance sheets, which may differ from its fair value. The fair value was estimated using Level 3 inputs in a Monte Carlo simulation.

Convertible Notes Derivative Liability

The convertible notes contained certain embedded features that were required to be bifurcated and recorded separately from the debt host as a derivative liability at fair value. Refer to Note 5 – Long -Term Debt for further information.

The fair value of the derivative liability was determined using a Monte Carlo simulation and a “with-and-without” valuation methodology. The inputs used to estimate the fair value of the derivative instrument include the probability of potential settlement scenarios, the expected timing of such settlement, and an expected volatility determined with reference to historical stock volatilities of

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

comparable guideline public companies. The derivative liability is classified as Level 3 in the fair value hierarchy.

The following table summarizes the activity related to the fair value of the convertible notes derivative liability (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Fair value at beginning of period	$	—	$	22,100	$	25,400	$	20,400
Change in fair value	—		1,500		3,085		3,200
Settlement of derivative liability	—		—		(28,485)		—
Fair value at end of period	$	—	$	23,600	$	—	$	23,600

Concurrently upon closing of the IPO, the $75.1 million of convertible notes automatically converted into 1,177,087 shares of the Company’s Class A common stock, and the conversion was accounted for as a debt extinguishment. Immediately prior to the extinguishment, a $1.4 million loss was recognized from the change in fair value of the embedded derivative liability.

Equity Investment

On July 2, 2019, the Company acquired 628,930 shares of the Series A Preferred Stock of a privately held software company in exchange for cash consideration of $0.8 million. The investment represents a minority interest, and the Company has determined that it does not have significant influence over the company. The preferred shares comprising the investment are illiquid, and the fair value is not readily determinable. The Company has elected the measurement alternative to measure this investment at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.

During the three and nine months ended September 30, 2024 and 2023, the Company recorded no adjustments to the equity investment. Since inception, the Company has recorded positive cumulative adjustments in the equity investment of $8.3 million and negative cumulative adjustments of $4.5 million.

7. Redeemable Convertible Preferred Stock and Stockholders’ Equity

On April 22, 2024, the Company closed its IPO, in which we issued and sold 2,500,000 shares of our Class A common stock at the IPO price. The Company 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. The Selling Stockholders offered an additional 4,060,700 shares of the Company’s Class A common stock at the IPO price in a secondary offering, for which the Company received no proceeds. In connection with the secondary offering, on April 25, 2024, the underwriters for the IPO exercised their option to purchase an additional 984,105 shares of the Company’s Class A common stock from the Selling Stockholders at the IPO price less underwriting discounts and commissions, with all proceeds going to the Selling Stockholders.

In connection with the IPO, on April 22, 2024, the Company filed an amended and restated certificate of incorporation (Restated Certificate). Immediately prior to the effectiveness of the Restated Certificate, all 17,245,954 outstanding shares of redeemable convertible preferred stock automatically converted into an equal number of shares of the Company’s common stock, which were then reclassified into an equal number of shares of the Company’s Class A common stock. In connection with the filing of our Restated Certificate, 9,511,741 shares of the Company’s common stock were reclassified into an equal number of shares of the Company’s Class A common stock. Immediately following the effectiveness of the Restated Certificate and common stock reclassification, 3,668,427 shares of the Company’s Class A common stock outstanding and beneficially owned by Bryan Leach, Chief Executive Officer and President, and certain related entities, were exchanged for an equivalent number of shares of the Company’s Class B common

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

stock. Concurrently upon the closing of the IPO, the $75.1 million of convertible notes automatically converted into 1,177,087 shares of the Company’s Class A common stock.

Upon the completion of the IPO and filing of the Restated Certificate, the Company’s authorized capital stock consists of 3,000,000,000 shares of the Company’s Class A common stock, par value $0.00001 per share, 350,000,000 shares of the Company’s Class B common stock, par value $0.00001 per share, and 100,000,000 shares of preferred stock, par value $0.00001 per share.

Redeemable Convertible Preferred Stock

As of September 30, 2024, there were no shares of redeemable convertible preferred stock issued and outstanding.

Preferred Stock

As of September 30, 2024, there were no shares of preferred stock issued or outstanding.

Common Stock

The rights of the holders of the Company’s Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of the Company’s Class A common stock is entitled to one vote per share and is not convertible into any other shares of the Company’s capital stock. Each share of the Company’s Class B common stock is entitled to 20 votes per share and is convertible at any time into one share of the Company’s Class A common stock.

The Company had shares of common stock reserved for issuance as follows:


	September 30, 2024	December 31, 2023
Redeemable convertible preferred stock outstanding	—	17,245,954
Stock options outstanding	3,688,752	4,516,612
Restricted stock units outstanding	1,148,327	—
Restricted stock purchase	37,192	113,846
Common stock warrant	4,121,034	3,528,577
Remaining shares reserved for future issuances under equity incentive plans	4,271,356	569,736
Remaining shares reserved for future issuances under the 2024 Employee Stock Purchase Plan	715,000	—
Total shares	13,981,661	25,974,725

Restricted Stock Purchase

On February 9, 2021, the Company granted an officer of the Company the right to purchase 408,824 shares of restricted common stock, and the officer exercised the purchase option at the grant date fair value of $8.30 per share, for a total exercise price of $3.4 million (restricted stock purchase). As the restricted stock purchase contained a repurchase option for the Company, the exercise price was initially recognized as a deposit liability that is offset to additional paid in capital as the repurchase option is released. One quarter of the shares were released from the Company’s repurchase option on the one-year anniversary of the grant, and one forty-eighth of the shares are released monthly for the 36 months thereafter.

As of September 30, 2024, $3.1 million had been released from the Company’s repurchase option and recorded to additional paid in capital. The portion of shares to be released from the repurchase option in the next 12 months, recorded in other current liabilities, is $0.3 million. As of December 31, 2023, $2.4 million had been released from the repurchase option and recorded to additional paid in

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

capital, $0.8 million was recorded in other current liabilities, and the remainder of $0.2 million was recorded in other long-term liabilities.

Common Stock Warrant

On May 17, 2021, the Company 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. (Commercial Agreement). The Walmart Warrant was issued in exchange for access to Walmart consumers and is accounted for under ASC 718, Compensation–Stock Compensation (ASC 718), as a share-based payment to a nonemployee in exchange for services to be recognized in the same manner as if the Company paid cash for the services.

Pursuant to the terms of the Walmart Warrant, Walmart has the right to purchase up to 3,528,577 shares of the Company’s common stock, subject to a non-discretionary anti-dilution provision, at an exercise price of $70.12, subject to decreases in the event of an initial public offering, a change in control, a direct listing, or a special purpose acquisition company transaction (i.e., liquidity event), if certain pricing thresholds were not met. In accordance with the non-discretionary anti-dilution provision, prior to the consummation of the IPO, the number of shares exercisable increased by an amount equal to 12.4% of the total increase of the Company’s fully diluted capitalization since issuance. The Walmart Warrant shares increased by 592,457 shares to a new total of 4,121,034 shares.

Vesting of the Walmart Warrant is subject to certain conditions, including the achievement of certain milestones and satisfaction of obligations of both parties, or (with respect to 1,648,413 of such shares after the anti-dilution adjustment) the passage of time after the achievement of certain milestones, subject to acceleration if certain operating goals are achieved. Failure to satisfy these conditions or termination of the Commercial Agreement would result in a decrease in the number of shares vesting under the Walmart Warrant. The Walmart Warrant expires, and any vested warrants are no longer exercisable, effective May 17, 2031, or May 17, 2028 in certain cases if the Commercial Agreement is no longer in effect.

The grant date (measurement date) of the Walmart Warrant is May 17, 2021, which is the date of the Commercial Agreement. The aggregate grant date fair value of the Walmart Warrant was $35.3 million. To factor in the various terms and conditions of the Walmart Warrant, including the potential adjustments if certain pricing thresholds were not met upon an initial public offering or other liquidity event (i.e., considered a market condition), the fair value was determined based on probability weighted estimated fair values determined under both a Black-Scholes option pricing valuation model (assuming no liquidity event) and a Monte Carlo simulation valuation model (assuming a potential liquidity event) with the following assumptions:


	Black-Scholes Option Pricing Model		Monte Carlo Simulation
Risk-free interest rate	1.64	%	1.64	%
Expected dividend yield	—		—
Expected volatility	50	%	50% / 65%
Expected term (in years)	10.0		10.0

The adjustment under the anti-dilution provision on April 22, 2024 represents a modification under ASC 718. The aggregate grant date fair value of the 592,457 additional shares granted under the anti-dilution provision is $37.2 million. The fair value was determined based on a Black-Scholes option pricing

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

valuation model with the following assumptions:


	Black-Scholes Option Pricing Model
Risk-free interest rate	4.61	%
Expected dividend yield	—
Expected volatility	65	%
Expected term (in years)	7.1

The fair value of the portion of the Walmart Warrant that vests upon achievement of the performance conditions is recognized as sales and marketing expense when the performance conditions are considered probable of achievement, and the fair value of the remaining portion is recognized as sales and marketing expense over time beginning upon achievement of certain performance conditions through the remainder of the Commercial Agreement term, subject to acceleration if certain operating goals are achieved, and subject to certain forfeiture and repurchase terms.

In September 2023, the performance conditions required for vesting were deemed probable, and the Company began to recognize stock-based compensation expense. During the three and nine months ended September 30, 2023, we recognized stock-based compensation of $9.1 million in sales and marketing expense associated with the Walmart Warrant. During the three and nine months ended September 30, 2024, we recognized stock-based compensation of $2.2 million and $27.1 million, respectively, in sales and marketing expense associated with the Walmart Warrant. Included in the $27.1 million was a $17.5 million incremental expense adjustment for the anti-dilution provision modification upon IPO. All expense for the periods presented is related to the vesting of the service conditions.

Stock-based compensation expense yet to be recognized related to the unvested portion of the Walmart Warrant is $32.3 million as of September 30, 2024. This amount is expected to be recognized over a weighted average period of 4.0 years.

Share Repurchase Program

On August 22, 2024, the Company announced that its board of directors approved a share repurchase program, with authorization to purchase up to an aggregate of $100 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). The Company may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of its Class A common stock under this authorization. The Company is not obligated under the Share Repurchase Program to acquire any particular amount of Class A common stock, and the Company 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 three months ended September 30, 2024, the Company repurchased 274,902 shares of its Class A common stock for an aggregate repurchase amount of $15.7 million, inclusive of immaterial broker commissions and legal costs. Repurchases are reflected in treasury stock on the condensed balance sheets. As of September 30, 2024, $84.4 million remains available and authorized for repurchase under the Share Repurchase Program. Activity under the Share Repurchase Program is recognized in the condensed balance sheets on a trade-date basis.

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

8. Revenue from Contracts with Customers

Disaggregation of Revenue

The Company’s disaggregated revenue by type of service is as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Redemption revenue	$	84,485	$	66,007	$	226,425	$	165,981
Ad & other revenue	14,136		19,280		42,449		54,382
Total revenue	$	98,621	$	85,287	$	268,874	$	220,363

Deferred Revenues

Deferred revenues primarily consist of fees and cash back offers collected from customers that will be applied to future campaigns. Deferred revenues are expected to be recognized as consumers redeem offers over the term of the campaigns, net of the cash back offer, which generally occurs within 12 months. Deferred revenues were $4.8 million and $2.6 million as of September 30, 2024, and December 31, 2023, respectively.

Revenue recognized from deferred revenue at the beginning of the year is as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Revenue recognized	$	27	$	58	$	1,687	$	2,524

9. Stock-Based Compensation

Stock-Based Compensation Expense

The Company’s stock-based compensation expense is recorded as follows (in thousands):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	476	$	151	$	999	$	504
Sales and marketing(1)	4,347		9,627		34,777		10,749
Research and development	2,447		523		7,036		1,560
General and administrative	6,405		474		20,525		1,546
Total stock-based compensation expense	$	13,675	$	10,775	$	63,337	$	14,359

_______________

(1)Sales and marketing includes common stock warrant expense of $2.2 million and $27.1 million recognized during the three and nine months ended September 30, 2024, respectively, and $9.1 million recognized during the three and nine months ended September 30, 2023. See Note 7 – R edeemable Convertible Preferred Stock and Stockholders’ Equity.

The Company capitalized $0.3 million and $0.1 million of stock-based compensation expense to capitalized software development costs during the three and nine months ended September 30, 2024, respectively. The Company capitalized an immaterial amount of stock-based compensation expense to capitalized software development costs during the three and nine months ended September 30, 2023.

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

Unrecognized stock-based compensation expense as of September 30, 2024 was $52.7 million for unvested restricted stock units and $11.7 million for unvested stock options and is expected to be recognized over a weighted average period of 3.2 years and 2.4 years, respectively.

Equity Incentive Plan

In April 2024, the Company’s board of directors approved the 2024 Equity Incentive Plan (2024 Plan), which became effective in connection with the IPO. The 2024 Plan provides for the grant of stock options, restricted stock, RSUs, stock appreciation rights, performance units, and performance shares to eligible employees, directors, and consultants. The 2011 Equity Incentive Plan (2011 Plan), which terminated effective immediately prior to the effectiveness of the 2024 Plan, provided for the grant of various stock awards to employees of the Company, including incentive stock options, nonqualified stock options, and RSUs.

As of September 30, 2024, the maximum number of shares of the Company’s Class A common stock that may be issued under the 2024 Plan is equal to 4,550,353 shares. The number of shares available for issuance will automatically increase on the first day of each fiscal year of the Company, beginning on January 1, 2025, in an amount equal to the least of (i) 5,400,000 shares, (ii) 5% of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Administrator no later than the last day of the immediately preceding fiscal year.

Stock Options

The Company’s option awards typically vest over a three- or four-year period and expire 10 years from the grant date. The exercise price of the option awards is typically equal to the fair value of the Company’s common stock at the date of grant. As defined in the individual option award agreements, certain option awards provide for accelerated vesting if there is a sale of the Company and the outlined employees are terminated in a specific time period thereafter.

A summary of option activity for the nine months ended September 30, 2024, is as follows:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Options outstanding as of December 31, 2023	4,516,612	$	14.34	7.5	$	75,915
Granted	184,148	31.15
Exercised	(678,582)	11.28
Forfeited or expired	(333,426)	16.94
Options outstanding as of September 30, 2024	3,688,752	$	15.51	6.7	$	170,057
Options vested and exercisable as of September 30, 2024	2,513,078	$	14.05	6.1	$	119,523

The total intrinsic value of stock options exercised during the nine months ended September 30, 2024 was $34.3 million.

In July 2021, the Company granted stock option awards to our named executive officers in anticipation of an initial public offering in 2021. The stock options were scheduled to vest in equal monthly installments over the four-year period after the vesting commencement date (or in the case of one of the two awards granted to the CEO, the one-year anniversary of the vesting commencement date). The

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

vesting commencement date for each award was the effectiveness of a registration statement on Form S-1 under the Securities Act. In March 2024, the awards were modified to accelerate the vesting by amending the vesting commencement date to be the grant date. The modification increased the fair value of the options by $3.0 million.

As a result of the IPO, the liquidity event condition associated with these stock options was satisfied as of the effectiveness of the registration statement on Form S-1 under the Securities Act on April 17, 2024. Upon the IPO, we recognized an $11.4 million cumulative stock-based compensation expense adjustment using the accelerated attribution method associated with the stock options for which the portion of the service period had been satisfied and vested through achievement of the liquidity event condition upon the IPO. Prior to the IPO, no stock-based compensation expense was recognized for these stock options as the liquidity event condition was not probable.

Restricted Stock Units

A summary of RSU activity for the nine months ended September 30, 2024, is as follows:


	RSUs	Weighted Average Grant Date Fair Value per Share
Unvested and outstanding as of December 31, 2023	—	$	—
Granted	1,229,226	61.65
Vested	(9,474)	64.58
Forfeited or expired	(71,425)	71.82
Unvested and outstanding as of September 30, 2024	1,148,327	$	60.99

Prior to and in connection with the IPO, the Company granted RSUs to employees and executives that vest upon the satisfaction of both a service condition and a liquidity event condition (double-trigger awards). The service condition for the majority of these awards is satisfied over four years with awards vesting on each quarterly vesting date (defined as the first trading day on or after March 1, June 1, September 1, and December 1). The liquidity event condition is satisfied upon the occurrence of a qualifying event, defined as the earlier to occur of (i) a change of control or (ii) the first quarterly vest date after the expiration of the lock-up period following the completion of an IPO, subject in each instance to continued service to the Company.

As a result of the IPO, the liquidity event condition associated with all double-trigger awards was deemed probable as of the effectiveness of the registration statement on Form S-1 under the Securities Act on April 17, 2024. Upon the IPO, we recognized a $2.6 million cumulative stock-based compensation expense adjustment using the accelerated attribution method associated with the double-trigger awards for which the portion of the service period had been satisfied. The double-trigger awards are expected to begin vesting on December 1, 2024, which is the first quarterly vest date after the expiration of the lock-up period following the completion of the IPO. The vesting of certain double-trigger awards was accelerated prior to December 1, 2024 related to terminations.

RSUs granted after the IPO are subject to a service-based vesting condition only, which is typically a three- or four-year period.

CEO Performance-Based RSU

On April 17, 2024, the Company issued a performance-based RSU award to the CEO (CEO PRSU). The CEO PRSU awards a target number of RSUs to the CEO, totaling 125,216 RSUs, that become eligible to vest based on the Company’s total shareholder return (TSR) relative to the TSRs of the companies in the Russell 2000 Index during the performance period from the grant date through

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

December 31, 2026. A percentage of the target number of RSUs, ranging from zero to 200%, will vest based on the percentile rank of the Company's TSR relative to that of the other companies in the index over the performance period. The award is subject to the CEO’s continued service to the Company, and the TSR condition is a market condition. In addition, the CEO PRSU is subject to acceleration upon a change in control.

The Company estimated the fair value of the CEO PRSU on the April 17, 2024 issuance date using a Monte Carlo simulation that incorporates the probability of achievement of the market condition, resulting in an aggregate grant date fair value of $14.3 million. The key assumptions used include a risk-free rate of 4.76%, an expected volatility of approximately 57%, and an expected term of 2.7 years.

During the three and nine months ended September 30, 2024, we recognized $1.3 million and $2.4 million of stock-based compensation expense related to the CEO PRSU, respectively.

Employee Stock Purchase Plan (ESPP)

In April 2024, the Company’s board of directors approved the 2024 ESPP, which became effective in connection with the IPO. Initially, there are 715,000 shares of the Company’s Class A common stock reserved for issuance under the ESPP. The number of shares available for issuance will automatically increase on the first day of each fiscal year of the Company, beginning on January 1, 2025, in an amount equal to the least of (i) 1,100,000 shares of Class A common stock, (ii) 1% of the outstanding shares of all classes of the Company’s common stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the board of directors.

The ESPP allows eligible employees to purchase shares of the Company’s Class A common stock at a discounted price per share through payroll deductions over consecutive offering periods that are approximately six months in length. Each offering period has a single purchase period of the same duration. The offering periods will generally start on the first trading day on or after May 15 and November 15 each year and end on the first trading day on or after the following November 15 and May 15, respectively. The per share purchase price is equal to 85% of the lesser of the fair market value of a share of the Company’s Class A common stock on (i) the first trading date of the offering period or (ii) the last trading day of the offering period.

During the three and nine months ended September 30, 2024, we recognized stock-based compensation expense related to the ESPP of $0.6 million and $1.1 million, respectively. The Company has not yet issued any shares of its Class A common stock under the ESPP.

10. Income Taxes

Our income tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.

During the three and nine months ended September 30, 2024, the Company recorded an income tax provision of $7.9 million and $14.9 million, respectively, resulting in an effective tax rate of 31.4% and 199.1%, respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the impact of nondeductible items, including certain executive compensation costs, stock based compensation, and the tax expense related to uncertain tax positions; partially offset by the benefit of research and development tax credits. During the three and nine months ended September 30, 2023 the Company recorded an income tax benefit of $0.6 million and an income tax provision of $2.2 million, respectively, resulting in an effective tax rate of (7.8)% and 10.3%, respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of the valuation allowance and state and local taxes.

The Internal Revenue Service (IRS) is currently auditing our consolidated U.S. income tax return for 2021.

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

11. Net Income (Loss) Per Share

Following the IPO, the Company has two series of common stock, Class A common stock and Class B common stock. The rights of the holders of the Company’s Class A common stock and Class B common stock are identical, except with respect to voting and conversion. As the liquidation and dividend rights are identical, basic and diluted net income (loss) per share are the same for Class A common stock and Class B common stock.

Basic and diluted net income (loss) per share is calculated as follows (in thousands, except share and per share amounts):


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Numerator:
Net income (loss)	$	17,239	$	8,413	$	(7,430)	$	19,471
Denominator:
Weighted average shares of common stock outstanding, basic	30,663,263		8,960,311		21,909,949		8,887,966
Plus: dilutive effect of stock options	2,685,989		624,259		—		495,474
Plus: dilutive effect of RSUs	218,237		—		—		—
Plus: dilutive effect of redeemable convertible preferred stock	—		17,245,954		—		17,245,954
Weighted average common shares outstanding, diluted	33,567,489		26,830,524		21,909,949		26,629,394
Net income (loss) per share, basic	$	0.56	$	0.94	$	(0.34)	$	2.19
Net income (loss) per share, diluted	$	0.51	$	0.31	$	(0.34)	$	0.73

As the Company incurred a net loss during the nine months ended September 30, 2024, basic net loss per share is equivalent to diluted net loss per share as the inclusion of all potentially dilutive securities outstanding would have been antidilutive.

The following potentially dilutive common shares, presented based on amounts outstanding, were excluded from the computation of diluted net income (loss) per share because their effect would have been antidilutive for the periods presented, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three months ended September 30,		Nine months ended September 30,
	2024	2023	2024	2023
Stock options	—	3,191,922	3,688,752	3,791,773
RSUs	699,644	—	1,148,327	—
ESPP	56,353	—	56,353	—
Unvested shares of restricted stock purchase	37,192	139,398	37,192	164,949
Common stock warrant	4,121,034	3,851,194	4,121,034	3,847,502
Total shares excluded from diluted net income (loss) per share	4,914,223	7,182,514	9,051,658	7,804,224

Potentially dilutive common shares with respect to the convertible notes are not presented in the table above. The shares are excluded as of September 30, 2023 because no conditions required for conversion had occurred, and as of September 30, 2024 because the shares are included in the

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

calculation of basic net income (loss) per share because the convertible notes converted into shares of the Company’s Class A common stock as part of the IPO.

12. Related Parties

Retention of Wilson Sonsini Goodrich & Rosati, P.C.

Larry W. Sonsini, a member of the Company’s board of directors, is a founding partner of the law firm Wilson Sonsini Goodrich & Rosati, P.C. (Wilson Sonsini), which serves as outside corporate counsel to the Company. During the nine months ended September 30, 2024 and 2023, the Company spent $3.5 million and $0.8 million, respectively, with Wilson Sonsini. During the three months ended September 30, 2024 and 2023, the Company spent $0.7 million and $0.5 million, respectively, with Wilson Sonsini. Amounts payable to Wilson Sonsini were $0.9 million as of September 30, 2024 and $1.0 million as of December 31, 2023.

Convertible Notes

The Company issued convertible notes to certain investors on March 24, 2022 (see Note 5 – Long-Term Debt). Convertible notes in the principal aggregate amount of $69.5 million were issued to Koch Disruptive Technologies, LLC (KDT), which was the sole purchaser of the Company’s Series D convertible preferred stock, the beneficial owner of more than 5% of the Company's outstanding capital stock, and was represented on the Company’s board of directors. Convertible notes in the principal aggregate amount of $0.1 million were also issued to WS Investment Company LLC (2022A), which is affiliated with Wilson Sonsini and is represented on the Company’s board of directors. Convertible notes in the principal aggregate amount of $0.5 million each were also issued to a then officer of the Company, an immediate family member of an officer and principal owner of the Company, and a trust to which an immediate family member of an officer and principal owner of the Company is a trustee.

Concurrently upon the closing of the IPO, the $75.1 million of convertible notes automatically converted into 1,177,087 shares of the Company’s Class A common stock. At the time of the closing of the IPO, KDT was no longer represented on the Company’s board of directors.

13. Commitments and Contingencies

Letter of Credit

The Company has a standby letter of credit with Silicon Valley Bank in the amount of $0.4 million as of September 30, 2024 in conjunction with leased real estate. As of September 30, 2024, no amounts had been drawn, and the Company was in compliance with the covenants under the letter of credit.

Tax Reserves

We conduct operations in many tax jurisdictions. In some of these jurisdictions, non-income-based taxes, such as sales and other indirect taxes, may be assessed on our operations. There is uncertainty and judgment as to the taxability of the Company’s services and what constitutes sufficient presence for a jurisdiction to levy such taxes.

The Company records tax reserves in other current liabilities on the condensed balance sheets when they become probable and the amount can be reasonably estimated. As of September 30, 2024, tax reserves were immaterial. As of December 31, 2023, tax reserves were $0.6 million. Due to the estimates involved in the analysis, the Company expects that the liability will change over time and could exceed the current estimate. The Company may also be subject to examination by the relevant state taxing authorities.

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Ibotta, Inc.

Notes to Condensed Financial Statements

(unaudited)

Third-Party Publisher Commitments

The Company has minimum commitments with certain third-party publishers. These commitments may be structured as a minimum revenue share or guaranteed minimum payments, which are recognized within cost of revenue on our condensed statements of operations. Certain commitments also include variable components subject to performance conditions.

During the three and nine months ended September 30, 2024, we recognized minimum commitments of $1.0 million and $2.0 million, respectively, within cost of revenue. As of September 30, 2024, the fixed portion of the remaining minimum commitments are as follows:


Fiscal Year	In thousands
Remainder of 2024	1,000
2025	26,000
2026	26,000
2027	26,000
2028	23,000
Thereafter	38,500
Total	$	140,500

14. Subsequent Events

The Company evaluated subsequent events through November 13, 2024, the date the accompanying condensed financial statements were available to be issued. There were no significant subsequent events identified.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited annual financial statements and related notes for the year ended December 31, 2023, filed with the Securities and Exchange Commission (SEC) on April 18, 2024, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (Prospectus). The following discussion contains forward-looking statements that reflect our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results may differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included in Part II, Item 1A. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results we expect for the full fiscal year or any other period.

Overview

Ibotta is a technology company that allows consumer packaged goods (CPG) brands to deliver digital promotions to over 200 million consumers through a single, convenient network called the Ibotta Performance Network (IPN). We are pioneers in success-based marketing; we only get paid when our client’s promotion results in a sale, not when a consumer merely views or clicks on the promotion. We have built the largest digital item-level promotions network in the United States by forming strategic relationships with major retailers such as Walmart Inc., a Delaware corporation (Walmart), Dollar General Corporation, a Tennessee corporation (Dollar General), and Family Dollar Stores LLC, a Delaware limited liability company (Family Dollar), which use our digital offers to power their loyalty programs on a white-label basis. Through the IPN, our clients can also reach millions more consumers on our widely used rewards app digital properties, which include the Ibotta-branded cash back mobile app, website, and browser extension (collectively, Ibotta D2C).

Initial Public Offering

On April 22, 2024, we closed our initial public offering (IPO), in which we issued and sold 2,500,000 shares of our Class A common stock at $88.00 per share (IPO price). We 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. Certain selling stockholders (Selling Stockholders) offered an additional 4,060,700 shares of our Class A common stock at the IPO price in a secondary offering, for which we received no proceeds. In connection with the secondary offering, on April 25, 2024, the underwriters for the IPO exercised their option to purchase an additional 984,105 shares of our Class A common stock from the Selling Stockholders at the IPO price less underwriting discounts and commissions, with all proceeds going to the Selling Stockholders.

Impact of Macroeconomic Conditions

Our business and results of operations are subject to global economic conditions. Our revenue depends on the ability of consumers to buy products that are featured on the IPN. Deteriorating macroeconomic conditions, including slower growth or a recession, inflation, bank failures, supply chain disruption, increases in interest rates, increases to fuel and other energy costs or vehicle costs, geopolitical events, including the potential for new or unforeseen conflicts, changes in the labor market, or decreases in consumer spending power or confidence, could result in a decline in client spending which could adversely affect the number of offer redemptions.

Management continues to actively monitor the impact of these macroeconomic factors on our financial condition, liquidity, operations, and workforce. For more information on risks associated with macroeconomic conditions, see the risk factor titled “Macroeconomic conditions, including slower growth

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or a recession and supply chain disruptions, have previously affected and could continue to adversely affect our business, financial condition, results of operations, and prospects.”

Financial and Operational Highlights


	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(in thousands, except percentages, per redeemer, and per redemption figures)
Redemptions(1)	97,366		67,856		249,547		162,330
Redeemers(1)	15,287		9,351		13,825		6,449
Redemptions per redeemer(1)	6.4		7.3		18.0		25.2
Redemption revenue per redemption(1)	$	0.87	$	0.97	$	0.91	$	1.02
Revenue	$	98,621	$	85,287	$	268,874	$	220,363

Form: 10-Q

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