Revenue of $100K is a lot less interesting if most of it is going towards iTunes gift certificates to convince people to continue using the application. Is this business at least profitable?

I found that user retention only went up marginally when the rewards were added. The main advantages are that is provides a good hook and a near-term business model.

And to answer your question: Yes, very much so. And growing.

Just curious to see, just how profitable are you? Are you saying you launched the app without rewards at first and were making money from day 1? If so that's impressive.