Walmart-backed Ibotta shops US$472.5m IPO

IFR 2529 - 13 Apr 2024 - 19 Apr 2024
3 min read
Anthony Hughes

Ibotta is in the market with its long-mooted up to US$472.5m NYSE IPO that capitalises on its much improved earnings and growth profile as its relationship with retailer Walmart has blossomed in recent years.

Goldman Sachs, Citigroup and Bank of America are leading the sale of 5.625m primary and secondary Class A shares at US$76–$84 each, representing about 16% of the grocery coupon and cash-back promotions company that will price its IPO on Wednesday.

Ibotta's IPO is the latest sign the US tech IPO market is staging a recovery after last month's robust debuts of AI chipmaker Astera Labs and social media firm Reddit.

Tech ECM bankers expect to chalk up another milestone in the coming week with the launch of the US$500m-plus NYSE IPO of Rubrik. The cybersecurity firm's debut would mark the first software IPO this year and only the second since late 2021 as depressed sector valuations have discouraged activity.

Ibotta's pivot to profitability last year has enhanced its appeal to investors and likely driven the timing of its IPO.

Nearly all the company's growth in the first quarter has come not from its direct-to-consumer mobile app that launched in 2012 but from third-party websites such as Walmart's, which uses Ibotta technology for its cash-back rewards programme.

In 2021, Ibotta – its name is based on the words "I bought a" – became Walmart's exclusive provider of digital item-level rebate offers and issued warrants to the retailer in return for access to its customers. Walmart is the biggest retailer in the US by revenue.

The arrangement began with Walmart's paid members before being expanded to all its customers in the third quarter of last year. Ibotta also partners with retailers such as Dollar General, Kroger and Shell.

Revenue from third-party websites generated 33% of Ibotta's sales last year, up from a modest contribution a year earlier, but management expects this to ramp up to 70% in the long term.

Aided substantially by this shift, Ibotta delivered a net profit of US$38.1m last year, up from a US$54.9m loss in 2022.

"The business is completely transformed," an ECM banker said. "There is some concentration risk with Walmart, and I don't know how investors will factor that into their valuations, but Ibotta's financials speak for themselves.

"The shift from pure couponing to white-label solutions seems to have got a lot of investors excited."

The IPO terms give Ibotta a fully diluted market capitalisation of close to US$3bn versus its 2023 revenue of US$320m, up 52% on 2022.

The offering comprises 2.5m primary shares and 3.125m from selling shareholders led by Charles Koch's privately held Koch Industries, which bought the bulk of a US$75m five-year convertible bond Ibotta issued in 2022. Koch is selling 1.1m shares to leave it with a 5.2% voting stake.

Ibotta CEO and founder Bryan Leach, who controls the company through holdings of super-voting Class B shares, is selling 531,000 shares to reduce his voting stake to 71.3% from 78.7%.

Walmart, which holds a notional 10%-plus stake in Ibotta through unexercised warrants, is not selling in the offering.