IBTA Q1 2025: Instacart-DoorDash Tie-Up Drives Redemption Gains
- Strategic partner integrations: The strong early results from the Instacart and DoorDash integrations are driving attractive redemption rates and category expansion, which could fuel robust growth in online grocery and related segments.
- Expanding CPID capabilities: Early CPID campaigns are showing promising results—with select clients already expanding their program—demonstrating that scalable, machine learning–enhanced performance marketing can deliver incremental sales profitably.
- Strengthening publisher network: Enhancements in the publisher experience—such as simplified redemption processes (e.g., Walmart’s telephone checkout)—combined with significant unused capacity on the platform, indicate a substantial tailwind for redemption revenue growth as the network scales.
- Scalability and CPID Adoption Risks: Executives highlighted that the CPID framework is still in its pilot phase, with variability in client uptake and a heavy reliance on manual analysis before full automation is achieved, which raises concerns about scaling the model broadly.
- Supply Constraints and Execution Uncertainties: Despite strong redeemer growth, management noted that the platform remains supply constrained, dependent on improvements in sales execution and seasonal factors, which could limit future revenue expansion.
- Margin Pressures from Increased Costs: The discussion pointed to gross margin compression—driven by higher public company expenses, R&D, and G&A costs—which may pressure profitability if these cost structures persist.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +2.7% (Q1 2025: $84.57M vs. Q1 2024: $82.33M) | Total Revenue in Q1 2025 increased modestly, benefiting from a momentum built in prior periods where revenue growth was driven by robust redemption performance; even though D2C revenue declined, improvements in third-party publisher revenue helped sustain overall growth. |
Direct-to-Consumer Revenue | -23% (Q1 2025: $36.38M vs. Q1 2024: $47.3M) | The D2C revenue saw a sharp decline, continuing a trend from earlier periods where reduced offer quality and quantity led to lower redemption and ad revenues; this decrease is consistent with prior declines attributed to the loss of one-time benefits and diminished consumer engagement. |
Third-Party Publishers Revenue | +38% (Q1 2025: $48.20M vs. Q1 2024: $35.0M) | Third-Party Publishers Revenue surged due to the ongoing expansion of strategic partnerships with key retailers, which built on the significant gains from FY 2024; these partnerships expanded the network and increased redemption volumes, overcoming the decline in D2C revenue. |
Net Income | -94% (Q1 2025: $555K vs. Q1 2024: $9,297K) | The dramatic drop in Net Income is driven by a combination of rising operating expenses (including a significant increase in stock-based compensation and restructuring charges) and other non-cash and one-off charges that outweighed the modest revenue increase; this steep decline mirrors challenges noted in prior periods where expenses escalated rapidly relative to revenue gains. |
Income from Operations | From +$15,905K to -$2,803K | Income from Operations deteriorated sharply due to substantially higher sales and marketing, R&D, and general administrative expenses, including increased stock-based compensation that eroded operating margins; these cost pressures, which had already begun impacting margins in prior periods, escalated further in Q1 2025. |
Operating Cash Flow | Relatively stable (Q1 2025: $19,860K vs Q1 2024: $19,366K) | Despite significant declines in profitability, Operating Cash Flow remained stable due to robust non-cash adjustments and favorable working capital movements; while net income was heavily pressured, the cash conversion from operations continued at similar levels as observed in the previous period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue (quarterly) | Q1 2025 | "$80M to $84M, flat revenue growth " | no current guidance | no current guidance |
Adjusted EBITDA (quarterly) | Q1 2025 | "$10M to $14M, ~15% margin " | no current guidance | no current guidance |
Ad and Other Revenue | Q1 2025 | "$10M " | no current guidance | no current guidance |
Non-GAAP Cost of Revenue | Q1 2025 | "Increase by $2M sequentially " | no current guidance | no current guidance |
Non-GAAP Operating Expense | Q1 2025 | "Decline by $3M sequentially " | no current guidance | no current guidance |
Adjusted EBITDA Margin | Q1 2025 | "Expected improvement " | no current guidance | no current guidance |
GAAP Income Taxes (quarterly) | Q1 2025 | "De minimis " | no current guidance | no current guidance |
Adjusted Tax Rate (quarterly) | Q1 2025 | "Low teens " | no current guidance | no current guidance |
Free Cash Flow % of Adj. EBITDA | Q1 2025 | "60%–65% " | no current guidance | no current guidance |
Revenue (quarterly) | Q2 2025 | no prior guidance | "$86.5M to $92.5M, 2% revenue growth " | no prior guidance |
Adjusted EBITDA (quarterly) | Q2 2025 | no prior guidance | "$17M to $22M, 22% margin and 4% increase vs Q1 " | no prior guidance |
Adjusted Tax Rate (full-year) | FY 2025 | "Mid-teens " | "Low 20s " | raised |
Cash Tax Expectations (full-year) | FY 2025 | no prior guidance | "Broadly unchanged for the full year " | no prior guidance |
GAAP Income Taxes (full-year) | FY 2025 | "High teens for the full year " | no current guidance | no current guidance |
Stock-Based Compensation (full-year) | FY 2025 | "$50M to $60M " | no current guidance | no current guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q1 2025 | $80M–$84M | $84.57M | Beat |
Ad & Other Revenue | Q1 2025 | ~$10M | $11.18M | Beat |
GAAP Income Taxes | Q1 2025 | Expected to be de minimis | $72K | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
CPID Measurement Framework and Scalability | In Q3 and Q4 2024, the framework was introduced through pilot campaigns, client validation efforts, and discussions around manual processes and initial scalability challenges | In Q1 2025, the framework is further refined with real‑time adjustments, greater automation through machine learning, and a plan to expand across a broader client base | Moving from initial pilots to broader scalability with enhanced automation and improved measurement credibility. |
Strategic Partner Integrations | Q3 2024 highlighted an Instacart testing phase while Q4 2024 expanded the discussion to include early plans for DoorDash along with Instacart, with category expansion in view | Q1 2025 details both Instacart and DoorDash integrations, emphasizing strong redemption rates, growth in redeemers, and expansion into new categories (e.g. alcoholic beverages) | Evolving from a single-partner focus to a more comprehensive, multi-partner integration strategy with expanded category offerings. |
Publisher Network Enhancements and Redemption Revenue Growth | Throughout Q2–Q4 2024, there was an emphasis on expanding the publisher network via new wins (Instacart, Schnucks) and detailed growth in third‑party publisher redemption revenue, though D2C performance lagged | In Q1 2025, enhancements are highlighted via new features (e.g., improved Walmart experience), continued third‑party growth, and recognition of persistent D2C challenges | A shift toward strengthening publisher relationships with new digital features while managing structural declines in D2C revenue. |
Supply Constraints and Offer Supply Challenges | Q2–Q4 2024 discussions focused on supply constraints driven by annual budgeting, limited offer supply, and manual execution limitations that constrained redeemer growth | Q1 2025 continues to face supply constraints but expects sequential improvements driven by better sales execution, CPID adoption, and seasonal factors | Persistent supply challenges with gradual operational improvements anticipated to increase offer availability. |
Margin Pressure and Rising Operating Costs | Q2 2024 showed balanced margins; Q3 2024 highlighted robust non‑GAAP margins despite rising technology and Instacart integration expenses; Q4 2024 revealed significant margin pressure and increased operating costs | Q1 2025 reports further margin pressure with a fall in gross margin and rising operating costs, though management expects margins to remain “flattish” going forward | Continued pressure on margins from integration and public company costs with stabilization expected despite ongoing expense challenges. |
Sales Execution Improvements and New Leadership (CRO Appointment) | No mention in Q2 or Q3 2024; Q4 2024 introduced new CRO Chris Riedy and outlined initial steps to improve account coverage and sales operations | Q1 2025 reinforces improvements in sales execution under the leadership of the new CRO, with reduced seller turnover and streamlined internal processes | The new leadership initiatives are now gaining traction, driving tangible improvements in sales operations and efficiency. |
Client Budget Cycles and Promotional Spending Constraints | Q2–Q4 2024 discussions noted rigid annual promotional budget cycles, delays in reallocating funds, and challenges due to finalized e‑commerce budgets | Q1 2025 reflects a shift as some clients are reallocating mid‑cycle dollars and moving toward an “always‑on” spending approach based on real‑time performance metrics | A gradual shift away from rigid annual cycles toward more dynamic, performance‑based budget allocation. |
Declining D2C and Ad Revenue | Q2–Q4 2024 consistently reported declines in D2C redemption revenue and ad revenue, with lower engagement, fewer redeemers, and reallocations favoring performance‑based promotions | Q1 2025 continues to show similar trends, with D2C down 24% and ad revenue down 22% year‑over‑year, reinforcing the strategic pivot toward third‑party, performance‑driven channels | Continued decline in D2C and ad revenue reinforces a strategic focus on performance and third‑party publisher channels. |
New Product and Offer Innovations (e.g., Alcoholic Beverage Offers) | In Q3 2024, plans were announced to expand alcoholic beverage offers beyond D2C, and Q4 2024 launched initial campaigns with Instacart (with potential for DoorDash and Walmart) | Q1 2025 details further development in alcoholic beverage offers, including current geographic limitations on Instacart and plans to transition from a discount to a reward model to expand state coverage | Building on prior pilots, product innovations continue to expand category coverage and aim for geographic expansion, especially in alcoholic beverages. |
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CPID Scaling
Q: Target CPID and scaling approach?
A: Management explained there’s no single CPID target; their strategy flexibly balances cost efficiency with volume, and they are investing in automation to reduce manual work as incremental sales scale over time. -
Digital Growth
Q: How are Instacart/DoorDash integrations aiding growth?
A: Management highlighted that strong early performance with Instacart—including expansion into alcohol categories—and a promising DoorDash rollout are generating attractive redemption rates and setting the stage for continued growth. -
Publisher Supply
Q: How are publishers improving offer supply?
A: Management noted that established partners like Walmart are enhancing the customer experience with simplified checkout methods, and they expect both CPID initiatives and improved sales execution to boost overall supply independently. -
CPG Budget Outlook
Q: What’s the outlook for overall CPG budgets?
A: Management stated that despite short-term supply constraints and macro uncertainties, robust third-party redemption growth and active client engagement ensure a steady, performance-focused budget outlook. -
CPID Expansion
Q: How will CPID pilots expand to more clients?
A: Management shared that early CPID programs are encouraging top brands to expand participation, and as manual processes become automated, broader adoption will follow, driving incremental sales across the client base. -
Sales & Margin
Q: Are sales forces limiting growth; are margins sustainable?
A: Management acknowledged careful client selection for CPID rollouts to ensure quality engagement, while noting temporary gross margin adjustments are expected to improve as revenue growth benefits the bottom line over time. -
Resource Allocation
Q: Are additional resources committed for CPID rollout?
A: Management affirmed that while they are channeling existing resources toward CPID expansion with selective hiring in analytics, overall spending remains largely flat. -
New Categories
Q: Are there plans for additional market categories?
A: Management confirmed that while they see significant untapped opportunity in adjacent areas, they are keeping details minimal to safeguard competitive strategy. -
Family Dollar Impact
Q: How does Family Dollar influence broader grocery partnerships?
A: Management expressed satisfaction with the Family Dollar deal, viewing it as an encouraging signal for similar channels, though they caution that different consumer demographics at Instacart and DoorDash demand tailored approaches.