On Friday, Instacart, the grocery delivery app, announced a significant 31% increase in revenue for the initial half of this year. Simultaneously, the company disclosed its submission for an initial public offering (IPO) on the New York Stock Exchange. This move sets the scene for one of the most eagerly awaited stock market debuts in recent times.
The development comes after a span of 15 months since Instacart discreetly lodged its IPO documents, a customary precursor to an imminent listing.
The company headquartered in San Francisco had initially intended to go public in the last quarter of the previous year. However, it postponed its intentions due to a technology stock downturn and the consistent interest rate increases by the U.S. Federal Reserve, which caused a significant decline in the equity market.
Providing a comprehensive insight into its financial performance, Instacart revealed that its revenue experienced a notable 31% upswing, reaching $1.48 billion during the six-month period concluding on June 30th.
The company’s ability to generate profits could also enhance its appeal to discerning IPO investors. Since the previous year, these investors have shown a preference for companies that are profitable, as opposed to ambitious yet unprofitable startups.
In the span of six months, the company recorded a net income of $242 million, a significant turnaround from the $74 million loss reported in the corresponding period of the previous year.
The upcoming initial public offerings of both Instacart and Arm, a chip designer backed by SoftBank Group, are anticipated to inject new life into the U.S. IPO market. This market has shown signs of recovery in the current year following a lackluster performance in 2022. Investors are optimistic that the Federal Reserve’s guidance could steer the economy toward a stable and controlled slowdown, fostering renewed confidence in IPOs.
Data from Dealogic reveals that, excluding special purpose acquisition companies (SPACs), a total of $10.3 billion has been raised through 77 IPOs in the current year. This amount is almost twice the sum raised during the corresponding period in 2022.
“I think we’re going to see more companies kick off their (IPO) process in 2024, which is when a healthy IPO market will return,” said Mike Bellin, IPO services leader at PricewaterhouseCoopers U.S.
Instacart has stated that Goldman Sachs and J.P. Morgan will serve as the primary underwriters for the offering. Additionally, the company mentioned that its shares are set to be listed on the Nasdaq stock exchange, using the symbol “CART.”
Instacart’s challenging journey toward a Nasdaq listing included reports of the company reducing its internal valuation to potentially as low as $10 billion by December 2022. This marked a significant 74% decrease from its previous funding round over two years ago, which had valued the company at $39 billion.
As per a report, the company increased its valuation by 18% in April.
Sources previously informed Reuters that Instacart had contemplated a direct listing. In contrast to an IPO, a direct listing involves no advance sale of shares, enabling investors to directly offer their shares to the public.
In March 2021, the company appointed Frank Slootman, CEO of Snowflake and an experienced figure in the software industry who has been involved in significant IPOs, to its board.
Established in 2012, Instacart is helmed by Fidji Simo, formerly in charge of the Facebook app.
Under the name it was incorporated as, “Maplebear,” the company submitted its IPO filing.