| From: Glenn Petersen | 8/20/2023 6:22:03 AM | | | | | | Instacart Plans for September IPO in Boost for US Listings
-- Largest US grocery delivery company now plans IPO on Nasdaq
-- SoftBank’s Arm, Klaviyo are also aiming to list next month
By Katie Roof and Jackie Davalos
Bloomberg
August 17, 2023 at 11:39 PM UTC
Updated on August 18, 2023 at 5:42 PM UTC
Instacart Inc. is planning an initial public offering as soon as September, according to people familiar with the matter, adding to a potential rebound for US listings.
The largest US online grocery-delivery company could publicly file its plans for an IPO with the US Securities and Exchange Commission as soon as next week, said the people, who asked not to be identified because the information was private. Instacart, which had previously considered a direct listing, is planning a traditional IPO on the Nasdaq, the people said.
A listing by San Francisco-based Instacart would add momentum to an IPO market that has been warming in fits and starts. Chipmaker Arm Ltd., majority owned by SoftBank Group Corp., is planning to go public in September and raise $8 billion to $10 billion in what would be the year’s biggest IPO.
Marketing and data automation provider Klaviyo, also could make its financials public as soon as next week and list its shares in September, according to a person familiar with that matter. A representative for Boston-based Klaviyo declined to comment, as did a spokesperson for Instacart.
So far this year, only $14 billion has been raised in IPOs on US exchanges, down from $241 billion at this point in the record-setting 2021 IPO year, according to data compiled by Bloomberg.
In its upcoming filing, Instacart will disclose new details of its finances and operations. The document will likely include only a placeholder for the terms of its offering, with the company specifying the proposed size and price of the share sale in later filings.
Instacart said last year that it had filed confidentially with the SEC to go public. Bloomberg News reported at the time that the company was working with banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. At the same time, the company was making moves to consolidate and expand its share of the online grocery delivery market.
As the market for new listings soured, Instacart decided to delay its plans. In October, Chief Executive Officer Fidji Simo wrote in a memo to staff that “extremely tumultuous” markets made it “highly unlikely” that an IPO would be possible that year, Bloomberg News reported at the time.
That had followed Instacart slashing its internal valuation to about $13 billion after reducing it earlier in the year to $24 billion.
Instacart has raised $2.74 billion as a startup and was valued in 2021 at $39 billion, according to data provider PitchBook. Its long list of investors includes firms such as Tiger Global Management, Coatue Management and D1 Capital Partners, according to PitchBook.
(Updates with Klaviyo IPO plan in fourth paragraph.)
Instacart Plans for US IPO as Soon as September - Bloomberg (archive.ph) |
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| From: Glenn Petersen | 8/26/2023 5:07:38 AM | | | | | | SEC filing: S-1 (sec.gov)
Instacart files to go public on Nasdaq to try and unfreeze tech IPO market
PUBLISHED FRI, AUG 25 20232:26 PM EDT
UPDATED FRI, AUG 25 20235:37 PM EDT
Hayden Field @HAYDENFIELD
CNBC.com
KEY POINTS
-- Grocery delivery company Instacart said it plans to go public on the Nasdaq.
-- There hasn’t been a notable venture-backed tech IPO in the U.S. since December 2021.
-- Gig economy companies have struggled on the public market as profits have been elusive.
Fidji Simo, chief executive officer of Instacart Inc., speaks during an interview in San Francisco, California, on Thursday, March 3, 2022. / David Paul Morris | Bloomberg | Getty Images
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Instacart, the grocery delivery company that slashed its valuation during last year’s market slide, filed its paperwork to go public on Friday in what’s poised to be the first significant venture-backed tech IPO since December 2021.
The stock will be listed on the Nasdaq under the ticker symbol “CART.” In its prospectus, the company said net income totaled $114 million, while revenue in the latest quarter hit $716 million, a 15% increase from the year-ago period. Instacart has now been profitable for five straight quarters, accorfding to the filing. PepsiCo has agreed to purchase $175 million of the company’s stock in a private placement.
Instacart said it will continue to focus on incorporating artificial intelligence and machine learning features into the platform, and that the company expects to “rely on AIML solutions to help drive future growth in our business.” In May, Instacart said it was leaning into the generative AI boom with Ask Instacart, a search tool that aims to answer customers’ grocery shopping questions.
“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. “Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”
Instacart will try and crack open the IPO market, which has been mostly closed since late 2021. In December of that year, software vendor HashiCorp and Samsara, which develops cloud technology for industrial companies, went public, but there haven’t been any notable venture-backed tech IPOs since. Chip designer Arm, which is owned by Japan’s SoftBank, filed for a Nasdaq listing on Monday.
Founded in 2012 and initially incorporated as Maplebear Inc., Instacart will join a crop of so-called gig economy companies on the public market, following the debut in 2020 of Airbnb and DoorDash and car-sharing companies Uber and Lyft a year earlier. They’ve not been a great bet for investors, as only Airbnb is currently trading above its IPO price.
Instacart shoppers and drivers deliver goods in over 5,500 cities from more than 40,000 grocers and other stores, according to its website. The business took off during the covid pandemic as consumers avoided public places. But profitability has always been a major challenge, as it is across much of the gig economy, because of high costs associated with paying all those contractors.
Headcount peaked in the second quarter of 2022, Instacart said, “and declined over the next two quarters, reducing our fixed operating cost base.” At the end of June, the company had 3,486 full-time employees.
In March of last year, Instacart slashed its valuation to $24 billion from $39 billion as public stocks sank. The valuation reportedly fell by another 50% by late 2022. Instacart listed Amazon, Target, Walmart and DoorDash among its competitors.
The biggest area for cost reductions has been in general and administrative expenses. Those costs shrank to $51 million in the latest quarter from $77 million a year earlier and a peak of $102 million in the final period of 2021. Instacart said the drop was the “result of lower fees related to legal matters and settlements.”
Simo took over as Instacart’s CEO in August 2021 and became chair of the company’s board in July 2022. She was previously head of Facebook’s app at Meta and reported directly to CEO Mark Zuckerberg. Apoorva Mehta, Instacart’s founder and executive chairman, plans to transition off the board after the company’s public market debut, according to a 2022 release.
The company’s board also includes Peloton CEO Barry McCarthy, Snowflake CEO Frank Slootman and Andreessen Horowitz’s Jeff Jordan.
Instacart will be one of the first independent grocery delivery companies to go public. Amazon Fresh, Walmart Grocery and Google Express are all units of large corporations. Shipt was acquired by Target in 2017 and Fresh Direct, another direct-to-consumer grocery delivery company, was bought by global food retailer Ahold Delhaize in 2021.
Sequoia Capital and D1 Capital Partners are the only shareholders owning at least 5% of the stock. Instacart said those two firms, along with Norges Bank Investment Management and entities affiliated with TCV and Valiant Capital Management, have “indicated an interest, severally and not jointly” in purchasing up to $400 million of shares in the IPO at the offering price.
Instacart’s move into AI has come largely through a string of acquisitions in the past two years. Those deals include the purchase of e-commerce startup Rosie, AI-powered pricing firm Eversight, AI shopping cart and checkout solutions provider Caper, and FoodStorm, a software startup specializing in self-serve kiosks for in-store customers.
The company also touted its use of machine learning in predicting grocery availability for retailers and increasing consumer sales. It said its algorithms predict availability every two hours for the “large majority” of its 1.4 billion grocery items, and that more than 70% of customers purchased items through Instacart’s recommendation algorithm in the second quarter of 2023.
Goldman Sachs is leading the offering. That’s the former employer of Instacart finance chief Nick Giovanni, who was previously global head of the tech, media and telecom group at the investment bank.
Instacart files to go public on Nasdaq to unfreeze tech IPO market (cnbc.com) |
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| From: Glenn Petersen | 8/29/2023 5:19:08 AM | | | | | | Instacart IPO Isn’t Offering Empty Calories
Grocery-delivery provider already makes appetizing profit, though competition is picking up
By Dan Gallagher
Heard on the Street
Wall Street Journal
Aug. 28, 2023 6:00 am ET
Instacart still has a strong edge among grocery shoppers looking to stock up.` / PHOTO: MICHAEL LOCCISANO/GETTY IMAGES
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Have investors really shifted their focus from growth to profits? Instacart might prove the truest test of that theory.
The online provider of grocery-delivery services filed papers Friday for an initial public offering. That filing showed a surprisingly decent bottom line—and not one pulled in the nick of time ahead of the listing. Maplebear, which does business as Instacart, first generated an operating profit based on generally accepted accounting principles in the fourth quarter of 2020. It has also shown a profit under those standards for the last five consecutive quarters, leading to an operating margin of 14% for the trailing 12-month period ended in June.
That stands out especially against other so-called gig-economy players. Uber, Lyft and DoorDash are still all losing money annually on that basis, though Uber did just manage its first quarter of GAAP operating profits in the June period. Advertising has likely been a major factor helping Instacart’s bottom line, as national brands pay for prime placement in the company’s virtual grocery aisles. One of those national brands— PepsiCo —is even buying $175 million of Instacart’s shares in a private placement deal ahead of the offering. Advertising now accounts for more than a quarter of Instacart’s annual revenue.
Establishing a strong bottom line has been a wise move for Instacart. Compared with the market’s attitude when its aforementioned peers went public, investors now have become far less forgiving of companies that torch profits and cash to chase market share. That has helped keep a lid on major new issues. Only five other venture-backed IPOs priced at over $1 billion have taken place so far this year, compared with 10 last year and 60 in 2021, according to data from PitchBook. Arm Holdings also filed IPO papers last week, and the British chip designer showed GAAP operating profits for its last three fiscal years.
But Instacart’s filing also shows some less appetizing trends. Gross transaction volume, which represents the total value of orders over the company’s service, has slowed remarkably, rising only 4% in the first six months of this year compared with the same period last year. By comparison, the first half of 2022 saw GTV volume grow 15% year over year. Orders also seem to have flatlined, remaining just above 66 million in each of the past three quarters.
Many factors are likely at work there. Instacart notes in its filing that inflation has pushed up order values but also driven customers to purchase fewer items per order. And competition is coming from all sides. Walmart, the world’s largest grocer, accounted for 62% of U.S. online grocery sales for delivery or pickup during the month of July compared with 54% in the same month last year, according to YipitData. Instacart’s share fell by 5 percentage points in that time.
Grocery giant Kroger, which uses Instacart for rapid delivery options but also offers its own delivery service, accounted for 10% of the U.S. market in July, according to YipitData. And Uber and DoorDash are also now both going after the grocery market, and claiming big growth numbers. DoorDash said in its third-quarter report last year that its third-party grocery business grew its gross order value “by well over 100%” year over year, though that is coming off a very low base. Both Uber and DoorDash currently have less than 1% of the U.S. online grocery market, according to YipitData.
Instacart still has a strong edge among grocery shoppers looking to stock up; its average order value is twice that of Uber and DoorDash, according to YipitData. And like Amazon, it has shown that an e-commerce business with a strong position in its core market can also be a powerful advertising platform.
The rub is that Instacart might be too reliant on ads. In a note to clients before Friday’s filing, Bernstein analyst Nikhil Devnani estimated that advertising likely accounts for all of Instacart’s profits. And that business isn’t fully divorced from trends in the core grocery delivery operations. Advertising-industry analyst Brian Wieser
Write to Dan Gallagher at dan.gallagher@wsj.com
Instacart IPO Isn’t Offering Empty Calories - WSJ (archive.ph) |
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| From: Glenn Petersen | 9/10/2023 4:12:59 PM | | | | | | Instacart to Target Much-Diminished Valuation Range of Under $10 Billion in IPO
Grocery-delivery company aims for $8.6 billion to $9.3 billion, down from $39 billion in 2021; roadshow to start as early as Monday
By Corrie Driebusch and Jaewon Kang
Wall Street Journal
Updated Sept. 10, 2023 2:45 pm ET
Instacart sends couriers to grocery stores to pick out and deliver orders to customers’ homes./ PHOTO: BRITTANY GREESON FOR THE WALL STREET JOURNAL
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Instacart is targeting a valuation of roughly $8.6 billion to $9.3 billion in its imminent IPO, a fraction of what the grocery-delivery company was previously worth, in the latest sign of diminished investor enthusiasm for private growth companies.
Instacart is set to start marketing its long-anticipated initial public offering to investors as early as Monday, and plans to disclose the expected valuation range then, according to people familiar with the matter. The San Francisco company’s plans could still change and it is possible the range could move around as the company receives feedback during the roadshow.
The shares are expected to begin trading the following week on the Nasdaq exchange under the ticker CART.
The expected valuation, on a fully diluted basis, is a far cry from the roughly $39 billion Instacart garnered in a fundraising round in 2021, the year it started laying the groundwork for a public listing. Since then, valuations of high-growth startups have fallen as interest rates rose, making riskier investments less attractive.
The company’s stock-market debut is a bellwether for the IPO market, muted for much of this year and last, and it will be closely watched by investors, bankers, lawyers and traders. It will follow the highly anticipated offering by British chip designer Arm Ltd., whose shares are expected to debut this week in the biggest U.S. IPO of the year. Marketing-automation platform Klaviyo is also set to launch its roadshow this week.
Founded in 2012, Instacart sends couriers to grocery stores to pick out and deliver orders to customers’ homes. The company has raised more than $2 billion in venture-capital funding over the years and has long said it expected to go public.
CEO Fidji Simo has focused on expanding Instacart’s core delivery business. / PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Instacart filed confidentially to do so last year and had planned to list its shares by the end of 2022. It pulled back on those plans last fall, pointing to tumultuous market conditions.
The company revealed its financials last month, saying it generated $242 million in profit for the first six months of the year compared with a $74 million net loss a year earlier.
Instacart’s revenue increased by about 31% to $1.5 billion, though the growth of its core delivery business is slowing, with the number of orders remaining relatively flat over the past year. Revenue from advertising and other businesses rose by about 24% in the period.
Instacart got a boost to its business in 2020 when consumers and retailers turned to the company as the pandemic spread across the country and people skipped in-person shopping. Instacart took advantage of the demand surge, raising multiple rounds of funding.
Fidji Simo, a former Meta Platforms executive, joined the company in 2021 as chief executive and has focused on expanding Instacart’s core delivery business while diversifying into other areas such as advertising and technology services like websites and smart shopping carts.
Instacart doesn’t plan to raise much money for itself in the offering, people familiar with the matter said. Instead, much of the selling will be by employees and other early stakeholders.
—Berber Jin contributed to this article.
Write to Jaewon Kang at jaewon.kang@wsj.com
Instacart to Target Much-Diminished Valuation Range of Under $10 Billion in IPO - WSJ (archive.ph) |
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| To: Glenn Petersen who wrote (903) | 9/15/2023 10:12:28 AM | | From: Glenn Petersen | | | | Instacart raises IPO price range after robust Arm debut
PUBLISHED FRI, SEP 15 20237:02 AM EDT
UPDATED 33 MIN AGO
Reuters via CNBC.com
Grocery delivery app Instacart raised its proposed price range for its initial public offering (IPO) on Friday, revising its terms to target a fully diluted valuation of up to $10 billion following a stellar debut for Arm Holdings.
The price hike signals robust investor demand for the San Francisco-based company, which is looking to list its shares this month after years of waiting in the wings.
September is gearing up to be one of the busiest spells for new listings.
Shares of SoftBank’s chip designer Arm were up 1.4% in volatile premarket trading on Friday, extending gains from their strong close on the first day of trading.
Another portfolio company of the Japanese investment giant, Neumora Therapeutics, is set to start trading, while marketing firm Klaviyo is looking to list in the next few weeks.
Traditional U.S. IPOs have raked in more than $5 billion so far in September, according to data from Dealogic, already the second biggest month for such share offerings this year.
Instacart said it is now seeking to sell 22 million shares at $28 to $30 each compared to its previous price range of $26 to $28 each. At the top end, the IPO will fetch $660 million compared with the earlier target of $616 million.
The company’s raised valuation target, however, would still be just one-fourth of the $39 billion it was worth after its last funding round more than two years ago.
Cornerstone investors have indicated they will buy up to $400 million worth of shares, which would account for around two-thirds of the total proceeds if they were priced at the top end of the range.
Instacart raises IPO price range after robust Arm debut (cnbc.com) |
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| From: Glenn Petersen | 9/20/2023 5:43:22 AM | | | | | | Instacart closes up 12% in Nasdaq debut, after first-day rally sputters
PUBLISHED TUE, SEP 19 202312:50 PM EDT
UPDATED TUE, SEP 19 20234:09 PM EDT
Ari Levy @LEVYNEWS
CNBC.com
KEY POINTS
- Instacart is the first notable venture-backed tech company to hit the U.S. public market since December 2021.
- The grocery delivery company, once valued at $39 billion, has a fully diluted valuation of just over $11 billion at the close of its opening day.
- The stock is trading on the Nasdaq under ticker symbol “CART.”
Instacart shares rose 12% in their Nasdaq debut on Tuesday after the grocery delivery company’s long-awaited IPO.
The stock initially popped 40% to open at $42, but closed at $33.70 as investors locked in their initial gains.
The offering late Monday at $30 a share valued Instacart at about $10 billion on a fully diluted basis, down from a private market valuation of $39 billion at the height of the Covid pandemic in early 2021. At Tuesday’s close, the company is worth just over $11 billion.
Instacart is the first notable venture-backed company in the U.S. to go public since December 2021, and its performance is being closely tracked by venture firms and late-stage startups that have been waiting for investors’ risk appetite to return. The Nasdaq has rebounded this year after a dismal 2022, but companies that went public before the downturn are still trading at a steep discount to their peak prices. Software developer Klaviyo is expected to hit the market soon.
Founded in 2012, Instacart delivers groceries from chains including Kroger, Costco and Wegmans, had to drop its stock price dramatically to make it appealing for public market investors. In early 2021, with consumers stuck at home and loading up on delivery orders, Instacart raised money at $125 a share, from prominent venture firms like Sequoia Capital and Andreessen Horowitz, along with big asset managers Fidelity and T. Rowe Price.
Instacart has sacrificed growth for profitability, a move required to preserve cash and attract investor interest. Revenue increased 15% in the second quarter to $716 million, down from growth of 40% in the year-earlier period and about 600% in the early months of the pandemic. The company reduced headcount in mid-2022 and lowered costs associated with customer and shopper support.
Instacart started generating earnings in the second quarter of 2022, and in the latest quarter reported $114 million in net income, up from $8 million a year prior.
At $11.2 billion, Instacart is valued at about 3.9 times annual revenue. Food delivery provider DoorDash, which Instacart named as a competitor in its prospectus, trades at 4.1 times revenue. DoorDash’s revenue in the latest quarter grew faster, at 33%, but the company is still losing money. Uber’s stock trades for less than three times revenue. The ride-hailing company’s Uber Eats business is also named as an Instacart competitor.
The bulk of Instacart’s competition is coming from Amazonas well as big brick-and-mortar retailers, like Target and Walmart, which have their own delivery services. Target acquired Shipt in 2017 for $550 million.
Only about 8% of Instacart’s outstanding shares were floated in the offering, with 36% of those sold coming from existing shareholders.
“We felt that it was really important to give our employees liquidity,” CEO Fidji Simo told CNBC’s Deirdre Bosa in an interview. “This IPO is not about raising money for us. It’s really about making sure that all employees can have liquidity on stocks that they work very hard for. We weren’t looking for a perfect market window.”
The company said co-founders Brandon Leonardo and Maxwell Mullen are each selling 1.5 million, while Apoorva Mehta, another co-founder, is selling 700,000. Former employees, including those who were in executive roles as well as in product and engineering, are selling a combined 3.2 million shares.
For Instacart, the offering brought in over $420 million in cash, adding to the close to $2 billion in cash and equivalents the company had on its balance sheet as of the end of June.
Instacart opens on Nasdaq at $42 in IPO (cnbc.com) |
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| From: Glenn Petersen | 11/8/2023 6:56:10 AM | | | | | | US Hospitals Turn To Gig Platforms On Nurse Shortage
By Beiyi SEOW
AFB via Barronm's
November 7, 2023
Jessica Martinez, 38, works as a nurse but instead of being employed by a hospital, she picks up individual shifts as a gig workerKENA BETANCUR
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When Jessica Martinez moved away from home in 2020, a temporary contract brought her to New Jersey as a nurse on the frontlines of the pandemic. But her earnings slipped as Covid-19 faded.
Drawn by higher pay and greater flexibility, the 38-year-old is among a growing number of nurses turning to gig work -- picking up individual shifts on an app as an alternative to months-long contracts or direct employment by a hospital.
"I have worked as little as one day a week," Martinez told AFP.
"I've worked seven days a week, eight-hour shifts. It just depends on kind of what's going on in my life."
The availability of gig work comes as US hospitals try new ways to alleviate a staffing crunch, drawing comparisons to convenience associated with apps like Uber.
But critics warn this could impact patient care or fuel tensions within the workforce.
Some 100,000 registered nurses left the workplace due to stresses in the Covid-19 pandemic, found a report this year by the National Council of State Boards of Nursing.
Over 610,000 more intend to leave by 2027 due to stress, burnout or retirement, the study added.
This is a significant dent on the workforce: As of 2022, the country had around 5.2 million active registered nurses.
Some 100,000 registered nurses left the workplace due to Covid-19 stresses, according to an earlier report by the National Council of State Boards of NursingKENA BETANCUR
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There is a "staffing crisis in health care," said Deborah Visconi, chief executive of Bergen New Bridge Medical Center where Martinez works.
"Many people have decided to early-retire or to switch professions," she said.
The hospital has since started working with a platform named CareRev, and about 150 professionals have signed up to work at the center.
"Within a couple hours, we can have somebody pick up a shift right away," she said. This pool of workers fill some 80 percent of its vacancies.
Another provider of gig hiring, Aya Healthcare, told AFP it saw a 54 percent rise in the number of gig shifts filled by nurses in the last year.
Across the country the total number of available shifts on its app climbed by 62 percent, said Sophia Morris, executive vice president at Aya Healthcare.
Jessica Martinez, 38, said working as an independent contractor via a gig platform can bring higher wagesKENA BETANCUR
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Martinez finds gig work more "lucrative" than being a staff nurse at a hospital, estimating that wages can be "at least 30 percent more."
But as an independent contractor, she does not have benefits like health insurance provided by an employer and relies on her husband's insurance.
Others like Chantal Chambers turned to gig work while furthering their studies, picking up shifts as late as the night before.
When the 34-year-old worked gig shifts in San Diego through Aya Healthcare, she no longer had to stress about molding her family's plans around her work calendar.
As a mother-of-two, she said this allowed her to use her time better and choose to work when her children were at school all day.
Visconi of Bergen New Bridge Medical Center expects the use of gig platforms to rise.
Workers view their workplaces differently than before, seeking the flexibility to stay home at certain times or pick up extra work when they need more money, she said.
"We have an aging population that demands more health care services, and we are in the midst of a crisis," said Susan Pasley, chief nursing officer at CareRev. "So (hospitals are) looking for more flexible options."
But some warn that a surge in gig nurses could impact patient care.
"What this will result in is the lack of being prepared, for example, not having enough nurses present on site to respond to emergencies or influxes of patients," said Michelle Mahon of the National Nurses United union.
There could also be a lack of familiarity at work, such as not knowing the location of lifesaving equipment, she added.
Sarah DeWilde, a Missouri-based registered nurse, said some of this is already happening.
She trains gig nurses at her hospital, but said this does not necessarily allow her to assess their skills.
Visconi expects such situations to improve as credentialed gig workers tend to return to the hospital repeatedly to work.
But for now, DeWilde finds herself pulled into others' work.
"What that's doing is pulling me away from my patients to help them take care of their patients," she said.
"I'm already short-staffed, overworked, overwhelmed."
This can create issues, given that gig nurses can be making "twice as much money."
"That can cause a lot of tension," she told AFP.
The Barron's news department was not involved in the creation of the content above. This story was produced by AFP. For more information go to AFP.com.
© Agence France-Presse
US Hospitals Turn To Gig Platforms On Nurse Shortage | Barron's (barrons.com) |
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| From: Glenn Petersen | 11/8/2023 6:32:32 PM | | | | | | Instacart’s First Report Shows Strength in Online Grocery Orders- First results as public company show strong grocery orders
- Growing high-margin ads business also beat analyst estimates
By Natalie Lung
Bloomberg
November 8, 2023 at 9:12 PM UTC
Updated on November 8, 2023 at 10:08 PM UTC
Instacart reported better-than-expected earnings in the third quarter, showing modest growth in online grocery orders and assuaging some investor concerns about the health of its underlying business.
In particular, the largest grocery-delivery company in the US beat analyst expectations on two key metrics: number of orders and gross transaction value — the revenue it gets from those orders. Instacart, which is incorporated as Maplebear Inc., also gave financial guidance for the current quarter and full year slightly ahead of projections, a sign that orders will continue to grow and outpace a decline in inflation.
Shares rose 1.8% to $27.74 at 5:06 p.m. in extended trading in New York. They had declined 9.2% since trading began in September as of Wednesday’s close.
The results, Instacart’s first as a public company, show there is still appetite for the premium that comes with online grocery delivery, which has become a test for consumer budgets as shoppers have returned to stores. They also follow strong earnings from competitors DoorDash Inc. and Uber Technologies Inc. that signaled increased delivery spending in the third quarter.
“We are confident in our position, even as several macroeconomic factors work against the online grocery industry,” Chief Executive Officer Fidji Simo said in a letter to shareholders Wednesday alongside the company’s results, which included the announcement of a $500 million share buyback program.
Instacart posted adjusted earnings, minus some figures, of $163 million for the three months ended Sept. 30, citing fulfillment efficiencies and strong advertising performance. This was far ahead of the consensus view of $119.5 million. The company also anticipates an adjusted earnings of $165 million to $175 million during the fourth quarter, ahead of estimates.
The San Francisco-based company said transaction value from its longer-term users, described as those who have been on the app since before 2021, collectively declined during the quarter compared to a year ago, but that decline was more than offset by “new customer activations.”
Since going public, Instacart has pitched investors on the strength of its growing high-margin ads business, which brought in a better-than-expected $222 million revenue for the quarter. Still, it’ll have to prove that it can sustain a re-acceleration in order growth that does not make it over-reliant on advertising and enterprise offerings. The health of Instacart’s core business of pairing consumers with independent contractors to do their grocery shopping is still key to its success, and the majority of its sales.
“Advertising is going to continue to be a big driver, but it’s not the only one,” Simo said in an interview Wednesday. “You are also seeing strength in transaction revenue. And that’s driven both by order growth that’s re-accelerating but also by fulfillment efficiencies.”
Gross transaction value for the third quarter jumped 5.8% from the previous quarter to $7.49 billion, compared to the average analyst estimate of $7.42 billion. Orders grew 3.4% to 66.2 million. Instacart reported a bigger-than-expected net loss on a GAAP basis of $2 billion, primarily driven by the $2.6 billion of stock-based compensation expense from its initial public offering.
The delivery market has also become more competitive with rivals DoorDash and Uber gaining more share in smaller-ticket purchases. Both have also rolled out ads businesses, pitching themselves as data powerhouses that are able to sell targeted ads based on user behavior data on their app, and are jockeying to get consumer brands and retail stores that list their items on their apps to spend marketing dollars on their platforms.
(Updates with shares in third paragraph, CEO comment in ninth paragraph and additional details throughout)
Instacart’s First Report Shows Strength in Online Grocery Orders - Bloomberg (archive.ph) |
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