Instacart: Announces Q3-2024 Shareholder Letter

San Francisco / CA. (cart) Instacart, the leading grocery technology company in North America, announced financial results for Q2-2024. CEO Fidji Simo: «We delivered another strong quarter, with our scale and critical advantages helping us continue to serve our customers, retailers, brands, and shoppers even better. In Q3, we increased GTV 11 percent year-over-year to USD 8,303 million. We also hit our fourth straight quarter of positive GAAP net income, along with solid growth in adjusted Ebitda and operating cash flow compared to last year. As the category leader in both small and big baskets, we see it as our job to further accelerate adoption in a vastly underpenetrated online market. To do so, we’re focused on deepening our integrations with retailers, which strengthens our entire ecosystem.

«One of the most important indicators of growth on our platform is the depth of integration with retailers. I cannot emphasize this point enough. Retailers that launched at least one new service with us in the previous 12 months1 – like EBT SNAP, pickup, alcohol delivery, virtual convenience, loyalty integration, or enterprise solutions like Storefront Pro – have grown their sales, on average, nearly twice as fast so far this year as partners without launches. When it comes to driving growth, depth of integration is so much more important than exclusivity. In fact, the majority of our GTV is not exclusive today and so far this year, across our top 20 retailer partners, non-exclusive retailers grew faster with us than exclusive retailers on average.

«This is because deeper integrations lead to a better product for customers. For example, we can be more affordable because we have EBT SNAP, loyalty, and flyers – our digital circular – integrated with the majority of our top 20 retailers. In the past year, we’ve helped customers save more than USD 1.1 billion on marketplace orders, and the more than USD 5.35 in savings per order we helped generate this quarter increased by 18 percent compared to Q3’23. To build on this momentum, we just launched flyers with Kroger, and every featured item will soon be priced at parity with in-store prices. Instacart customers can now also collect fuel points when they use their Kroger loyalty card on our marketplace.

«We can also offer the best quality service because of the scale and depth of our integrations. Getting exactly what you ordered is critical to driving better customer retention, and it’s even more challenging for large baskets over USD 75, which represent 75 percent of the industry. By integrating with retailers’ inventory systems and combining that with our prediction models based on more than 1 billion orders, we’re able to deliver best-in-class found and fill rates. And we’re extending our lead even further with new innovations like our Carrot Tags software, which integrates with retailers’ electronic shelf labels and helps shoppers find items more easily by flashing an LED light. Schnucks recently rolled out Carrot Tags chainwide and we observed an approximately one percentage point improvement in found rate as a result of our pick-to-light technology.

«The value of deep retailer integrations is even more apparent when you look at our enterprise technology for retailers’ owned and operated websites. As an example, we’ve powered Sprouts.com since 2018, and we recently relaunched their site on our new Storefront Pro solution. As part of this upgrade, we built more than 30 new customizable offer types, which are immediately available to all 1,500+ of our retail banner partners to provide customers with more ways to save and help further accelerate growth. We also created 120 additional features for Sprouts, including a clickable flyer and loyalty hub, which can be leveraged across other white-label storefronts and our marketplace as well.

«Because we have already built integrations with retailers’ core systems – from their point-of-sale to catalog to loyalty programs to couponing – we can much more easily launch new technology offerings for their stores as well, which gives us a right to win in omnichannel. For example, we recently launched FoodStorm – our deli, prepared food, and catering solution – with grocers including Giant Eagle and Lucky Supermarket. We’re also continuing to broaden Caper Cart deployments across more than a dozen grocers, including big names like ALDI, Coles, Kroger, Schnucks, and Wakefern, as well as many regional and local independent grocers. Retailers have seen an increase in basket size and we’ve heard great customer feedback across grocers of many different sizes and markets, giving us confidence that this product can scale to a wide variety of grocers.

«Deeper integrations are also driving our growth on the advertising side because every new retailer site that we power expands our scale and makes advertising through Instacart’s ad network even more attractive for brands. Since the start of 2023, we’ve launched our Carrot Ads technology with approximately 70 new partners and now nearly 220 retailer banners utilize Carrot Ads to power their retail media business and offer ads on their e-commerce sites. This includes expansions with our existing retail partners and net-new partners, like online grocer Thrive Market and B2B food service ordering platform Cut+Dry. Since brands ultimately want to work with ad platforms that can serve them across all channels, the foundation we’re laying – with our data, scale, performance, measurement capabilities, and omnichannel presence with Caper – positions us well to become that go-to, one-stop shop.

«These are just a few ways that our strategy of deeply integrating with our partners sets us apart from the competition and will fuel our future growth. We’re also continuing to grow our selection advantage by welcoming new partners and expanding with existing ones. Recently, we onboarded Empire Foods, the second-largest grocery group in Canada and parent company to Sobeys, which now makes Instacart the only marketplace with all of the top 5 Canadian grocers on our platform. Also in Canada, last week we expanded our partnership with Walmart, adding 40 more stores to our marketplace while also powering fulfillment on orders placed on their owned and operated website for those stores. Beyond the best grocery selection, we’ve also added hundreds of thousands of restaurants to Instacart through our partnership with Uber Eats in the U.S. We’re pleased to see our thesis for bringing restaurants onto our platform playing out with especially high engagement from our Instacart+ members. Early data shows that on average, customers who place restaurant orders are ordering groceries more frequently and spending more on grocery orders than they did prior.

«Overall, our business is strong and we remain hyper-focused on extending our lead as the leading grocery technology company in North America by doubling down on our critical advantages and growing the pie for our stakeholders. With the grocery market still vastly underpenetrated online, we’re taking an aggressive approach to reinvesting in opportunities that we believe can drive long-term growth while steadily expanding profitability. I’m proud of how our team is executing across all aspects of our business and continue to feel highly confident in our ability to generate more shareholder value over time. This is why as of Q3, we cumulatively repurchased USD 1,432 million worth of shares at a weighted average price of USD 30.27. As of September 30, we had USD 68 million of buyback capacity and today announced that we authorized a USD 250 million increase to our buyback program.»