Dive Brief:
- Instacart announced Tuesday it will lay off approximately 250 workers, or roughly 7% of its total global workforce, as part of a corporate restructuring plan. Most of the layoffs will be completed by the end of March.
- “This will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long-term,” Instacart CEO Fidji Simo said in a Tuesday letter to shareholders. “I am confident this will enable us to execute with even more focus and efficiency moving forward.”
- Instacart’s chief technology officer, chief operating officer and chief architect are also departing the company, Simo announced. All are leaving for personal reasons, CNBC reported. Only the CTO role will be backfilled, Simo said during an earnings call Tuesday.
Dive Insight:
The layoffs come as Instacart continues to seek its footing with investors following its initial public offering last September. Instacart’s shares have remained below their offering price of $30 since falling below that level on Oct. 2, 2023, putting pressure on executives to search for ways to improve the company’s financial performance.
Instacart posted total revenue of $803 million during its latest quarter, a 6% year-over-year increase, according to its earnings report. Gross transaction value rose 7%, to around $7.9 billion.
But while Simo said in her letter that the company delivered “solid” fourth-quarter results and is positioned for a “strong start” in 2024, she also paid homage to the pressure Instacart faces as a public company to demonstrate a relentless commitment to polishing its bottom line.
“While we’re excited about these long-term growth opportunities, we remain incredibly focused on expanding our lead and accelerating online grocery adoption within our core product,” Simo said, adding that Instacart decided to let some of its employees go in order to position the company “to take on our most ambitious bets while streamlining how we operate.”
Simo concluded her letter by indicating that Instacart has a close eye on its sagging share price and is intent on bringing it up: “I believe that we have a strong and highly defensible leadership position that, when combined with accelerating growth, will generate more shareholder value over time.”.
The C-suite changes Instacart announced Tuesday suggest that the company concluded it needs to do more than improve efficiencies to generate results that will please shareholders. An Instacart spokesperson told Bloomberg the company plans to focus more on higher-margin business opportunities like advertising and enterprise products.
Eliminating the COO role — an executive position that is common across companies globally — is a notable step for Instacart. Asha Sharma, the company’s current COO, gave notice last week and will leave on March 1, according to an SEC filing. She joined Instacart three years ago and was a former vice president of product for Facebook.
Varouj Chitilian, Instacart’s CTO, joined the company in 2018 after more than 12 years working for Google, according to his LinkedIn bio. He took on the CTO role in July 2022 after Mark Schaaf departed the company around the same time.
Chief Architect JJ Zhuang, meanwhile, joined Instacart in 2018 and was named to his current role in July 2022, according to his LinkedIn profile. He helped drive the company’s decision making around technology and engineering, according to Instacart’s website.
Catherine Douglas Moran contributed reporting.
