Instacart to cut 250 jobs as slowing ad business counters upbeat Q1 forecast

Shares of Instacart reversed course to be down about 5% after the bell following Instacart’s lower-than-expected fourth-quarter revenue on slowing advertisement business.

As of June 30, Instacart had 3,486 employees, according to a regulatory filing.

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“We are seeing (some weakness among advertisers) in pockets, but it is not widespread,” said CEO Fidji Simo on a post-earnings call.

Ad and other revenues increased 7 percent in the fourth quarter, compared with a 19 percent growth in the previous quarter.

“Advertising business has slowed down,” CFRA Research’s Arun Sundaram said, adding that this would cause a bit of concern because it was historically a very fast-growing and high-margin business for the company.

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Total revenue rose 6 percent to $803 million, falling short of analysts’ expectations of $804.2 million.

Transaction revenue growth slowed sequentially to 6 percent, as Instacart offered more incentives and promotions to attract customers, especially during the holiday season, amid stiff competition from rivals such as DoorDash, UberEats, Amazon.com and Walmart.

Total orders rose 5 percent to 70.1 million in the reported quarter as the grocery-delivery company also saw growth among its newer customer base.

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The company expects current-quarter GTV – a key industry metric that shows the value of products sold based on prices shown on Instacart – to come between $8 billion and $8.2 billion, compared with analysts’ estimates of $7.92 billion.

It sees adjusted EBITDA between $150 million and $160 million, compared with analysts’ estimates of $151.6 million, according to LSEG data.

The firm said it authorized an additional $500 million share repurchase program and expects to generate positive operating cash flow this year.

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This story has been published from a wire agency feed without modifications to the text.

Published: 14 Feb 2024, 06:26 AM IST