Company: IBTA
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001628280-25-008240
Chunk: 157

Company: Ibotta, Inc.
Filing Date: 2025-02-27
Form: 10-K
Item: Item 7
Chunk 157
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 of directors exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each grant, including the following factors:

•contemporaneous valuations performed by third-party valuation firms;

•the nature of the business, including its history;

•the economic outlook in general and of the specific industry at the date of the valuation;

•our book value and financial condition;

•our earnings capacity;

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•the existence or lack of goodwill, or other intangible assets;

•sales of stock and the size of the block to be valued;

•the market prices of stocks of corporations engaged in the same or similar lines of business as the Company and whose stocks are activity traded in a free and open market, either on an exchange or over-the-counter;

•the prices of convertible preferred stock sold by us to third-party investors in arms-length transactions;

•the lack of marketability of our common stock; and

•the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of our business given prevailing market conditions.

In valuing our common stock, the board of directors used the income and market approach valuation methods. The income approach values a company by estimating future cash flows that could potentially be taken out of the business without impairing future operations and profitability. These forecasted annual cash flows plus the terminal value are discounted to their present value to estimate the value. The discount rate is a rate of return which provides potential investors a sufficient return on their investment. The market approach estimates value by comparing the subject company to similar firms whose stocks are publicly-traded. A group of comparable publicly-traded companies are selected and market multiples are developed using each company’s stock price and other financial data. An estimate of value for the subject business is completed by applying selected market multiples to the subject company’s financial results.

After completing the income and market approaches, the enterprise value is allocated to our common stock using the Option Pricing Model, or OPM. Under this method, the common and preferred stock are treated as a series of call options on the enterprise’s value, with the exercise price reflecting a series of “break points” and where the different securities are allocated their respective value based on the specific characteristics and value participation features. The value of the common stock is then based on the allocation of the call options according to the specific facts and circumstances specific to our capital structure. The common stock is modeled as a call option that gives its owner the right, but not the obligation, to buy