Bilt Rewards has raised another $150 million at a $3.25 billion valuation “led by Ontario Teachers’ Pension Plan.”
Vanderbilt University Endowment, the University of Illinois Foundation and existing investors also participated in the extension to a January funding round, lifting Bilt’s valuation to $3.25 billion from $3.1 billion.
In January they raised $200 million and added former American Express CEO Ken Chenault as Chairman and NFL Commissioner Roger Goodell joined their board. In 2022 they became one of the fastest companies ever to attain unicorn status.
This seems notable for two reasons.
- It’s indicative of strong market confidence in the program
- And suggestive that they continue to have plenty of runway (which they don’t necessarily need to be sustainable, just to grow, as they are reportedly profitable on an EBITDA basis)
Bilt is valuable because they have access to valuable customers – young urban professionals, upwardly mobile – that everyone wants to reach and fails at. They have that access where they live and they built a valuable and engaging program to reach them.
In other words, they’ve come up with a novel approach to the distribution problem that everyone is struggling with.
Many of the big programs have topped out. Delta is giving everyone free wifi onboard, with the requirement that the airline gets to market their credit card to them in exchange. They are running out of people to market to, while Bilt has this relatively untapped market.
They are a 3 year old program, valued now at $3.25 billion. How does this compare?
- American Airlines had the AAdvantage program appraised at $18 to $30 billion early in the pandemic, before using it as collateral against federally subsidized CARES Act loans.
- United valued MileagePlus at $21.9 billion based on 12 times 2019 earnings before interest, taxes, debt, and amortization when they raised money against it in 2020.
Bilt has plenty of cash and this new raise suggests investors are happy to supply them with more. They report that they are profitable on an EBITDA basis. They have 5 years to run on their Wells Fargo card agreement (The card may not be currently profitable to Wells but they are also an early investor that has seen the value of their stake rise markedly). Their Chairman is the former CEO of Amex.
They are tweaking their program and will do so more I am sure as they work to make it positive-sum including for their cobrand issuer. But they aren’t going anywhere.
I will miss earning up to 10,000 bonus points on the first of each month for sure. I don’t get out of bed for 1,000 bonus points. As any program adjusts its value proposition I will adjust my own behavior accordingly.
- Personally, if I were looking to shave cost, their report than only a couple percent of cardmembers are earning at a high rate on rent day suggests there’s little value in or reason to drop to 1,000 points.
- Better to let it ride than garner modest savings, because the aspirational and inspirational value of the higher cap may be worth something to those who aren’t spending at this level (it tells them how valuable the program could be to them).
- But if I were capping bonus points I might call it 3,500 points not 1,000 – enough to drive interest and potentially capture greater spending at less than full bonusing. For instance I put my homeowners insurance on Bilt for the bonus and probably still would even getting less than double points on all of it. That’s still profitable to Bilt (Sapphire Preferred is profitable to Chase in the 2x spend category…).
I do think it is strange though the number of people who seem to root for Bilt to fail.
When I saw a 150% transfer bonus to Air France KLM I took advantage of it, I didn’t say ‘I don’t want this bonus because they aren’t going to be able to keep.offering it in the future.’ (I did the 150% bonus to Virgin too, I skipped Air Canada because my balance there was already 7 figures.)
When I booked a Presidential.Oceanfront Villa with pool at the Le Meridien Khao Lak for $33 per night I didn’t say – no, that can’t possibly be sustainable, I don’t want any part of it.
As long as Bilt is offering fantastic value – I have Alaska and Air France status thanks to Bilt and a free helicopter airport transfer to use – I will enjoy the program. It is up to them to make it profitable on more than an EBITDA basis. They have the runway and relationships to do that.
Now, some of you argue that 5 years from now maybe they will be less valuable than today so you don’t want to risk it. And then you go on and earn SkyMiles. But you do you.
Gary: is this still worth it if you dont pay rent?
Dumb money. Enough said.
Agree with DWT. What happens if WF decides to early terminate for say $200M? What then for Bilt. Love how the blogger community, especially one here who is a supposed CFO, that thinks you have to honor a terrible contract for 4+ years without getting out of it.
The market needs “greater fools” to operate. Those investors see the same thing that many people do, due to hype and ethereal growth projections they will IPO/get bought for buku $$, and the investors and founder employees will get paid out too much. Then reality will set in and company/brand will become a middlingly profitable niche in the larger program portfolio.
No, I don’t think that Bilt is going away. They will just have a bunch of suckers/lazy consumers continue to minimize their value because normies will never see the hyped benefits that upper Bilt status members get. Most people are just bad at math/accessing value; but that is a good thing because those “greater fools” that put more than rent and 5X $1 auto transactions on the card allow for the other arbitrage opportunities that we take advantage of.
Let’s face it. If Bilt’s model is so lucrative, why haven’t one of the majors (Amex, Chase, Citi) emulated it and released a competitor.
I never even hear of it before.
It’s just another credit card, right?
Part of the problem with Bilt, in my mind, is the way they constantly go about things in such slimy ways. The downgrade to a max of 1,000 points was buried in small print at the bottom of a long email touting the benefits of Rent Day. Apparently you also can’t earn extra points on tax payments…which we only know about because Kerr (who never owns up to these poor communication tactics) talked about it to TPG. No ownership, ever.
As a datapoint on the impact of the Rent Day points reductions: I paid my $600 semi-annual car insurance bill yesterday, and realized this was the last time I’ll be able to get full Rent Day credit on that kind of purchase, to say nothing of the normal-priced meals I bought and the one Lyft ride I took. Maybe 10,000 points was an amount they could’ve cut down, but capping it at 1,000 points will absolutely disincentivize a lot of spend on my card; that insurance payment will never again be made on the Bilt card, for example.
I find it interesting the number of people who denigrate Bilt and its value proposition. The card has the same reward structure as the Chase Sapphire, a universally loved CC, with the added advantage of earning points on paying rent, without added costs or an annual fee. What is so difficult about understanding that not everybody plays the CC game the same way or at the same level.
Ben, you’re still good to make that insurance payment. You’re capped at 1000 bonus points. Since insurance isn’t a bonus category, you’d earn 600 bonus points from your payment, meaning you still have 400 bonus points you can earn.
I agree that the decrease to 1,000 bonus points is extreme. Kerr says in his interview with TPG that they’re making these cuts because only a small % was benefiting from being able to earn more than 1k bonus points and they want to reinvest that money towards the overall experience, yet at the same time they also recently cut their trivia game which was good for 250 free points for pretty much everyone. Seems contradictory to me.
And the communication (or complete lack thereof) on the tax payment is concerning. There’s nothing in the various T&C’s (I looked) about this so I think everyone is hearing about this for the first time from the TPG interview.
@gary – you should do some investigative work on this because I don’t feel like they ever told any of us that tax payment would no longer qualify for bonus points. It should have been in the rent day terms where they told us bonus points would be capped at 1k going forward or in their overall terms.
This round’s marginal increase in valuation while taking in that much money from investors is not a great sign for the company’s prospects.
@Solucia – how do you not pay rent?
Rent your own house to yourself. Solved it for you.
@ Gary — There are stupid people everywhere. The people on these advisory boards are failing at their fiduciary duty.
“Bilt has more than $400 million in cash and no debt on its balance sheet, he added.”
Nevermind the billions in Bilt points….
I think Bilt is learning the Amex lesson in terms of finding profitable customers. They focus on things like status and exclusivity — this is the innovation of the monthly dining menus for points or cash. This month it was a dance party at Blade with some people getting a 5 mile helicopter ride. Those experiences are things that people value irrationally, especially if they have limits (I.e. few people get in). I’ve noticed that Bilt’s YouTube channel has stopped producing travel-based content entirely. They used to put out tutorials twice a month. Rather than educate people on how to use transferable points (which takes some work) in order to demonstrate value, they can lean into what their target demographic wants: restaurant experiences and free exercise classes. They will still include travel as part of the lifestyle component, but it won’t be the central focus (IMO). They pretty much said in the TPG interview that CC gamers, in their estimation, were taking up too much of the rewards resources (I.e. they are an out-sized budget line) for not being a target market. That motivated both the reductions in Rent Day and in the tax payments.
The Amex Gold refresh has seen a similar reaction. Gamers and value seekers are struggling with the credit fatigue (especially with the credits weighted toward people in the Northeast), but I imagine the average Amex user thinks they get more value from the credits than they do. Unless you track them closely, there’s a lot of breakage, yet you can see every time you get a benefit on your statement (you don’t get a statement for the missed credits). The people that don’t do the math, especially high spenders, don’t get credit fatigue. They get the halo effect of having a Gold card and occasional reminders that the card has perks that they use.
To a certain extent, Citi does the lifestyle thing too, but with gift cards. They really push the 10-15% gift card bonuses in redeeming TYP. It allows people to get perceived value with little work. I don’t want to cash my points out that way, but even I check the list (just in case).
Capping points on rent day, no points on tax payment, hell, they even killed Points Quest. They claim to be extremely profitable yet making cuts in the name of curving a small percentage of gamers.
If there’s only a small percentage of gamers, why create the negative press for little to no savings?
Something doesn’t add up and bloggers who are also investors of Bilt will always try and steer your thoughts in a different direction.
These are the same folks that have invested in Point.me and will try to convince you that the terribly slow award search tool is awesome.
@Gary – Is @2808 Heavy correct about bloggers – including you by implication – having a direct interest in Bilt?
Will junior Jain’s Bilt go the way of his father’s InfoSpace when the DotCom bubble burst? Time will tell.
Fintech players and bank card rewards players (on the business side) are in an uphill battle against time.
Vapor ware product proven out with all the devaluations.
Dumb money is right and now putting teacher pensions at risk with this hype machine trying to leverage FOMO valuations.
At least the truth came out for savvy consumers much as it did for Delta over the last year.
Smart of Bult to raise money before the devaluation was announced. Revenue will suffer dramatically and ROI will be awful for the new investors. Well played by the management team.
When the gravy is coming, don’t question it, take advantage of it. I’m kicking myself for not flying EK J or F while the AS redemptions were very reasonable. All the good things tend to not last.