Instacart gives mixed outlook despite resilient grocery demand
INSTACART posted strong revenue in the third quarter, a sign of resilience in its core grocery delivery business. However, it forecast adjusted earnings in the current period that fell short of analysts’ expectations.
Revenue for the three months ending Sep 30 grew 12 per cent to US$852 million, the San Francisco-based company said on Tuesday (Nov 12) in a shareholder letter. Analysts were expecting US$843.6 million, according to Bloomberg-compiled estimates. Its gross transaction value of US$8.3 billion in the quarter also exceeded the high end of its own guidance range.
Shares of Instacart fell 3.6 per cent in extended trading after the results were announced.
The results mostly show the strong consumption power of its US customers, even as order growth has slowed from pandemic highs. They come on the heels of similarly robust demand reported by US delivery rival DoorDash, which beat Wall Street expectations on virtually every key earnings metric in its third-quarter results late last month.
Instacart said fourth-quarter gross transaction value will be between US$8.5 billion and US$8.65 billion, with the midpoint landing slightly ahead of the average analyst estimate. That would represent a deceleration of growth from the third quarter.
It partly attributed that forecast to a recent web outage reported by one of its retail partners, Royal Ahold Delhaize, which owns grocery chains Stop & Shop, Food Lion, Giant and Hannaford in the US.
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Instacart said it expects fourth-quarter adjusted earnings before interest, taxes, depreciation and amortisation of US$230 million to US$240 million. Wall Street was looking for US$244.4 million.
The company, which publicly trades as Maplebear, has in the past year explored various ways to drive growth, including partnering with Uber Technologies to offer restaurant delivery on Instacart. Those efforts have begun reaping benefits, chief executive officer Fidji Simo said in the letter on Tuesday.
“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,” she said in the letter.
Over the past year, the firm has also reshuffled executives and teams as it ventures further into higher-margin areas such as advertising and e-commerce software for grocery stores. Those businesses now accounts for nearly 30 per cent of its revenue.
Simo said in September that the company’s technical integration with grocery retailers is a “much better predictor of growth and where we are headed in the future” than simply comparing the number of retailers exclusively on Instacart’s platform to those on its competitors’ sites.
Since the company went public last year, its stock has gained roughly 60 per cent. BLOOMBERG
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