Dive Brief:

• Instacart has reported substantial growth in key performance metrics for its fourth quarter, including an increase in total revenue, orders, gross transaction volume (GTV), and transaction revenue, all of which rose by double digits year-over-year. These results were shared by the company on Tuesday through a formal announcement.
• The company experienced an 11% increase in orders, attributed to a rise in monthly user growth and higher order frequency. This insight was provided by CFO Emily Reuter during the earnings call with investors.
• Despite the positive growth indicators, Reuter acknowledged that Instacart’s fourth quarter revenue did not meet Wall Street expectations, leading to a decline of over 8% in the company’s stock price on Tuesday.

Dive Insight:

In its pursuit of continued financial growth, Instacart is committed to ongoing innovation in its offerings to remain indispensable to customers, retailers, and brands. This sentiment was expressed by Instacart CEO Fidji Simo during the investors’ call on Tuesday.

One of the most promising initiatives for long-term growth is the deployment of Caper Cart smart carts. The company is currently piloting location-aware display advertisements on these smart carts and testing online delivery offers to attract new customers. Furthermore, Caper Carts are being introduced into more U.S. grocery chains, including Heritage Grocers Group and Weis Markets, and have recently been launched in a Coles Supermarkets store in Australia.

“We are observing double-digit increases in basket size at many of the retailers we are piloting with,” Simo stated regarding the smart carts during the earnings call.

As grocery shoppers continue to be price-sensitive, Instacart is urging retailers to adopt cost-saving solutions such as online SNAP (Supplemental Nutrition Assistance Program) acceptance, loyalty program integrations, and digital flyers. Simo emphasized the importance of aligning online pricing with in-store prices, citing Kroger’s recent launch of same-as-in-store pricing on items featured in its weekly advertisements.

“We strongly believe that affordability is crucial for us to continue accelerating online adoption,” Simo added.

Instacart is actively expanding its network of retail partners and advertisers. In 2024, the company added 30 net new retailer sites, more than doubling its growth from the previous year, while also diversifying its advertising base. This expansion has included significant engagement with emerging brands. Revenue from advertising and other sources grew by 10% year-over-year during the fourth quarter, amounting to $267 million and representing 3% of GTV.

Over the past year, Instacart has successfully increased its overall user base, converting quarterly users to monthly users and monthly users to weekly users at a faster rate than in previous years. The Instacart+ membership program has also seen accelerated growth, with members proving to be the most loyal and engaged segment of the audience.

“We are continuing to see deeper penetration of Instacart+ members within our overall user base, and member engagement has remained strong, particularly as we have introduced new use cases like restaurant deliveries and $10 minimum baskets,” Reuter remarked.

In fiscal 2024, Instacart reported a 10% year-over-year increase in both GTV and revenue from advertising and other sources. Total revenue and transaction revenue both rose by 11%, while the number of orders increased by 9%. Notably, the company reported a GAAP net income of $457 million, representing a remarkable 128% increase compared to the GAAP net loss of $1.6 billion recorded in fiscal year 2023.

Looking ahead to the first quarter, Instacart anticipates GTV to range between $9 billion and $9.15 billion, reflecting a year-over-year growth of 8% to 10%. The company also projects adjusted EBITDA to fall between $220 million and $230 million. However, Reuter indicated that there is an expected decline in average order value, primarily due to restaurant orders and the introduction of the new $10 minimum basket feature.

Instacart is optimistic about maintaining steady annual adjusted EBITDA growth, even as the company continues to adopt an aggressive strategy focused on reinvesting in growth initiatives.