Instacart cuts 250 jobs in push for higher-margin businesses

INSTACART, the United States grocery-delivery giant, is cutting hundreds of jobs and restructuring its leadership team as the company increasingly shifts its focus to higher-margin businesses such as advertising.

The company’s announcement on Tuesday (Feb 13) includes 250 job cuts across the company, according to a spokesperson. That represents about 7 per cent of the workforce. The restructuring will mean fewer incremental product updates so the company can realign its focus on higher-margin areas such as advertising and enterprise products for grocery stores, the spokesperson said.

In addition to the cuts, three company executives are leaving the company, each for personal reasons, the spokesperson said. They are: chief operations officer Asha Sharma, chief technology officer Varouj Chitilian and chief architect JJ Zhuang. Instacart is not planning on backfilling Sharma’s and Zhuang’s roles.

The restructuring is hitting a pivotal moment for Instacart, which has seen its share price slide about 7 per cent since debuting in September and is working to sell investors on a plan to make more money off advertising and selling their e-commerce technology to more grocers. That business now brings in about 30 per cent of its revenue and is growing faster than its core delivery business, which relies on independent contractors to go to supermarkets, drug stores and other outlets to find items to fulfil online orders made by customers.

“Our consumer product is the best it has ever been, enabling us to invest more than we ever have before on marketing and incentives that have the ability to resurrect and attract new users as well as deepen engagement with existing users” chief executive officer Fidji Simo said. The company is incorporated under the name Maplebear.

News of the reorganisation came as Instacart reported revenues of US$803 million for the three months ending Dec 31, a slight miss of analysts’ US$804.7 million estimate. Instacart slightly edged the consensus view on two key metrics, the number of orders and gross transaction value, the revenue it gets from those orders. Adjusted earnings, before interest, tax and amortisation, of US$199 million far outpaced the analysts’ estimates of US$171 million.

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For the first quarter of 2024, the company anticipates adjusted earnings of US$150 million to US$160 million, beating analysts’ estimates of US$150.3 million. The company’s outlook for gross transaction value in the first three months of 2024 was also bullish, between US$8 billion and US$8.2 billion, beating expectations of US$7.9 billion. BLOOMBERG