Instacart Beats Estimates in First Earnings Report Since IPO

In late trading Wednesday, Instacart shares were 4.3% higher to $28.40. In Wednesday’s regular session, Instacart shares fell 4.3% to $27.24. The stock is off about 9% from the company’s initial public offering price at $30 a share, and down 35% since its opening trade at $42.

Gross transaction value, or GTV, was $7.49 billion, up 6%, and a little above consensus at $7.46 billion. The figure includes the price of goods sold through the platform, along with relevant fees, taxes and tips.

Instacart posted a third-quarter loss of $2 billion, including $2.6 billion in stock-based compensation expense. The loss was slightly narrower than the Street forecast for a loss of $2.2 billion.

Adjusted Ebitda, or earnings before interest, taxes, depreciation, and amortization, was $163 million, up 120%, and above consensus at $120 million. The company said operating cash flow was $111 million in the quarter, down $18 million from a year earlier, “due to the collection timing of accounts receivable.”

Transaction revenue in the quarter was $542 million, up 12%, while advertising and other revenue came to $222 million, a 19% increase. Orders rose 4% to 66.2 million. Average order value was $113, roughly in line with consensus.

Instacart noted that for “mature cohorts”—customers who signed up in 2021 or earlier—GTV was down year-over-year, but added that the rate of decline improved compared with the second quarter.

“We are confident in our position, even as several macroeconomic factors work against the online grocery industry: Covid is no longer a tailwind, consumers are receiving less government aid, interest rates remain high, and inflation persists,” the company said in a letter to shareholders, attributed to CEO Fidji Simo. “While we expect these and other factors to continue to dampen our current and near-term growth, they do not change our long-term view on online grocery adoption or our competitive advantages.”

For the fourth quarter, Instacart sees gross transaction value up 5% to 6% from a year earlier, on the back of order growth and an increase in order size as inflation cools year over year. The company sees adjusted Ebitda for the quarter ranging from $165 million to $175 million, above consensus at $155 million, driven by seasonal growth in advertising revenue.

Instacart sees full-year GTV growth in the mid-single-digits, in percentage terms, with adjusted Ebitda about three times that of 2022.

Write to Eric J. Savitz at [email protected]