Ibotta is a Colorado-based consumer rewards platform set to go public Thursday on the New York Stock Exchange. It’s one of several tech companies to launch IPOs after the successful debuts of Reddit and AI startup Astera Labs, following a two year lull in the IPO market.
But unlike Reddit, Astera Labs, and another hot tech IPO in the works — the Microsoft-backed Rubrik — Ibotta is actually profitable, CEO Bryan Leach said in an interview. Much of the company’s growth can be attributed to its expansion from a consumer-focused product to a platform used by some of the biggest U.S. companies.
Walmart, Family Dollar, Shell, Kroger, and other major retail chains use its AI-enabled software to advertise products and rewards to their customers. Such companies pay on what’s called a “performance basis,” meaning Walmart pays Ibotta based on how many ads it takes for customers to buy a product at one of its stores.
Ibotta is looking to raise $577 million in its IPO, which it priced at $88 per share, above the top of its initial range ($76-$84), valuing the company at about $2.6 billion.
Leach spoke to Quartz ahead of the IPO. This conversation has been lightly edited and condensed for clarity.
Quartz: You hired an adviser for Ibotta’s IPO last fall. Why have you waited until now to go forward with it?
Bryan Leach: We had, I think, what Goldman Sachs said was the most investor meetings prior to an IPO that they’ve ever seen in their entire history. We literally had, before the road show began, over 160 investor meetings individually. But we did that because we really wanted to see what the level of interest was out there. We wanted investors to know our company really well so that we would be putting our stock in the hands of people with high conviction who would be long term believers and investors in our vision.
And we also felt like, okay, this climate is still very much climbing out of an IPO dead time…therefore if we could be a profitable, high-growth company, we would stand out. We can get the kind of investors that would normally not invest in a small cap stock. We’ll learn a lot about our business in the process.
If we want to compete with the best companies in the world for AI talent, we have to be able to offer the full benefits, and that includes the total rewards that include public equity.
QZ: How does Ibotta use AI?
BL: We’ve been all about it since before it was cool. Forty-five percent of our employees are actually technology professionals, which is crazy high in our industry. We’ve been doing machine learning personalization using AI techniques for eight, nine years, at least. We’re now focused on a set of client tools [for enterprise customers] that will be even more powerful.
The really cool, unique part is what you can do when you understand what people buy in a way that would have been beyond the contemplation of Adam Smith in 1776, writing The Wealth of Nations. We’re using [AI] in the service of what brand managers care about, which is building market share [by targeting customers based on their purchasing habits to influence what they’ll buy in the future].
QZ: Ibotta has grown from a direct-to-consumer product to targeting enterprise customers. Can you talk about that transformation?
BL: Ibotta started out as a vision for how you could do two things. One, help consumers earn rewards on everyday purchases no matter where they shopped. And two, to help advertisers have a dramatically more effective and efficient way to reach consumers, particularly when they’re trying to get those consumers to drive to buy products in the physical store. So we started out trying to solve that problem by building a free direct to consumer app.
The biggest innovation in our business was actually the creation of a completely new business model for these consumer packaged goods companies. They had always been asked to pay for promotions or media more broadly — you [a company] would buy a certain number of prints of your coupon in the newspaper or a certain number of clicks on your Google ad.
The problem was, it was very difficult to find a system that could allow you to attribute the direct connection between some kind of online interaction and an in-store purchase down to the item level. We think we can solve the longstanding problem of online to offline ad measurement and attribution through rewards. So at the heart of it is basically this re-imagination of the way that ad measurement can happen in the future.
We have the largest [partnership, Walmart,] in as an anchor, but we also have the two major players in the dollar channel [Dollar General and Family Dollar], Kroger. We have AppCard, which represents over 300 different retailers. We are set to announce others in the future.
QZ: What’s next for Ibotta?
BL: Forward leaning CPG brands that understand the opportunity to do performance-based marketing at “Super Bowl” scale are going to gain enormously on their competitors here in the near term [using Ibotta’s platform], and then it’ll become something that is more commonly used by everyone.