Instacart sees upbeat core profit on higher transaction, ad fees

INSTACART on Wednesday (Nov 8) forecast fourth-quarter core profit above Wall Street estimates in its first earnings report since going public in September, powered by higher transaction and advertisement fees, sending its shares up over 2 per cent after the bell.

The grocery delivery firm, whose stock has lost more than a third of its value since its debut, also announced a US$500 million share repurchase programme.

Instacart said it expects current-quarter adjusted Ebitda, a key measure of profitability, to be between US$165 million and US$175 million. Analysts expect US$155.6 million, according to LSEG data.

The company, formally known as Maplebear, also beat third-quarter revenue expectations, on the back of higher delivery and service fees it charges to customers as well as advertisement spaces it sells, especially to packaged goods companies looking to reach a wider customer base.

“We have significant competitive advantages over newer, smaller entrants into our space,” CEO Fidji Simo said.

Instacart’s gross transaction value (GTV) – the value of products sold based on prices shown – rose 6 per cent over the year earlier to US$7.49 billion in the third quarter. Analysts on average estimated US$7.46 billion.

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Advertising and other revenues rose 19 per cent, while transaction revenues were up 12 per cent. Total revenue rose 14 per cent to US$764 million, compared with analysts’ expectations of US$736.9 million.

It posted a 4 per cent rise in total orders to 66.2 million during the quarter.

Instacart posted a net loss of US$2 billion, or US$20.86 per share, in the third quarter, primarily due to the stock-based compensation expense that it incurred during the period of its initial public offering.

For full year 2023, Instacart anticipates GTV to grow in mid-single digits, versus analysts’ estimate of 4.7 per cent growth at US$30.18 billion. It expects three times more adjusted Ebitda for the period than the US$187 million it had posted in 2022.

Last week, rival DoorDash also projected fourth-quarter core profit above estimates, aided by more orders as well as investments it made to improve services. REUTERS