On Wednesday, Instacart projected a fourth-quarter core profit exceeding Wall Street estimates in its first earnings report since going public in September. The 4% surge in its shares after the announcement was fueled by higher transaction and advertisement fees.
The grocery delivery company, which has seen its stock decline by over a third since its debut, also disclosed a $500 million share repurchase initiative.
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Anticipating the adjusted EBITDA for the current quarter—a pivotal profitability metric—to fall within the range of $165 million to $175 million, the company contradicts analysts’ expectations of $155.6 million, as per LSEG data.
Formerly recognized as Maplebear, the company exceeded third-quarter revenue projections. This success was driven by increased delivery and service fees imposed on customers, along with the sale of advertising spaces—particularly sought after by packaged goods companies aiming to expand their reach to a broader customer base.
“We have significant competitive advantages over newer, smaller entrants into our space,” CEO Fidji Simo said in an interview with Reuters.
In the third quarter, Instacart’s gross transaction value (GTV), representing the value of products sold at displayed prices, increased by 6% compared to the previous year, reaching $7.49 billion. This exceeded the average analyst estimate of $7.46 billion.
During the quarter, there was a 4% growth in total orders. The total revenue also saw a 14% increase, reaching $764 million, surpassing the expected $736.9 million.
“The results were better than feared,” said CFRA Research analyst Arun Sundaram. “There were some concerns… that the GTV could be pressured given that grocery commerce adoption is slowing… but GTV grew.”
During the third quarter, Instacart reported a net loss of $2 billion, equivalent to $20.86 per share. This was mainly attributed to the stock-based compensation expenses incurred during its initial public offering.
For the full year 2023, Instacart envisions a mid-single-digit growth in GTV, surpassing analysts’ estimated 4.7% increase at $30.18 billion. Moreover, it anticipates achieving an adjusted EBITDA for the period that is three times higher than the $187 million recorded in 2022.
Just last week, competitor DoorDash also forecasted a positive outlook for fourth-quarter core profit.
