Dive Brief:
- Instacart’s total revenue, number of orders, gross transaction volume (GTV) and transaction revenue all rose by double digits year over year during its fourth quarter, the company reported Tuesday.
- An 11% increase in orders, driven by monthly user growth and higher order frequency, fueled Instacart’s Q4 results, CFO Emily Reuter told investors on the earnings call.
- While Reuter said Instacart “closed the year strong,” the company’s Q4 revenue fell short of Wall Street estimates, and the company’s stock price dropped more than 8% Tuesday.
Dive Insight:
As Instacart looks to continue its financial growth, the company is focused on continually innovating its solutions to remain “indispensable” to customers, retailers and brands, Instacart CEO Fidji Simo told investors Tuesday.
The company’s Caper Cart smart carts, in particular, seem promising for long-term growth, company executives said on the call. Instacart is piloting location-aware display ads on the smart carts as well as testing online delivery offers on the carts to draw new customers, Simo said in a shareholder letter. Along with bringing Caper Carts to more U.S. grocers such as Heritage Grocers Group and Weis Markets, the carts recently rolled out to a Coles Supermarkets store in Australia.
“We’re seeing double-digit increases in basket size at a lot of the retailers that we’re in pilots with,” Simo said about the carts during Tuesday’s earnings call.
As grocery shoppers remain price sensitive, Instacart is focusing on getting retailers to adopt money-saving tools like online SNAP acceptance, loyalty program integrations and digital flyers, Simo said. The grocery technology company is urging its retail partners to move to price parity with in-store pricing, she said, noting that Kroger recently launched same-as-in-store pricing on items featured in its weekly ad.
“We still believe that [affordability] is an absolutely critical thing for us to continue leaning into in order to continue accelerating online adoption,” Simo said.
Instacart is continuing to build out its base of retail partners and advertisers. In 2024, the company launched 30 net new retailer sites — more than double from the prior year — and continued to diversify its ad base, which has included “seeing extreme strength in emerging brands,” Simo said. Advertising and other revenue was up 10% year over year during Q4 to $267 million, accounting for 3% of GTV.
Instacart grew its overall number of users in the past year, converting quarterly users to monthly ones and also monthly users to weekly ones at faster rates year-over-year, Simo said. Instacart+ membership is also increasing more rapidly than monthly users, she said, noting that members “remain our most loyal and engaged audience.”
“We continue to see deeper penetration of Instacart+ members among our overall user base and the engagement of our members has been strong, especially as we’ve launched new use cases like restaurants and $10 minimum baskets,” Reuter noted.
During fiscal 2024, Instacart saw GTV as well as advertising and other revenue increase 10% year over year. Total revenue and transaction revenue both increased 11% and orders were up 9% year over year. GAAP net income of $457 million marked a 128% increase from the GAAP net loss of $1.6 billion for FY 2023.
For Q1, Instacart is expecting GTV to fall between $9 billion and $9.15 billion, representing year-over-year growth of 8% to 10%, and adjusted EBITDA between $220 million to $230 million. Instacart also predicts a year-over-year decline in its average order value mainly due to restaurant orders and the company’s new $10 minimum basket feature, Reuter said.
Instacart expects to deliver steady annual adjusted EBITDA expansion even as the company continues “an aggressive approach to reinvesting in growth initiatives,” Reuter added.
