Instacart stock pops 14% on revenue beat, rosy guidance

Instacart shares climbed 14% during extended trading on Thursday after the grocery delivery company reported strong fourth-quarter revenue and upbeat guidance.

Here’s how the company did versus LSEG estimates:

Earnings per share: 30 cents vs. 52 cents expected
Revenue: $992 million vs. $974 million expected

Revenue grew 12% from a year ago. Net income totaled $81 million, or 30 cents per share. The company reported adjusted earnings before interest, taxes, depreciation and amortization of $303 million, topping the $292 million expected by StreetAccount.

In a letter to shareholders, CEO Chris Rogers said Instacart’s technology and customer-oriented approach are driving more growth and engagement to the platform.

“Our execution on what matters most to customers is driving strong momentum on our marketplace, as well as our enterprise platform — which is a real, strategic advantage for us,” he said.

Gross transaction value, which tracks the value of goods sold, grew 14% from a year ago to $9.85 billion, surpassing a StreetAccount estimate of $9.54 billion. Instacart said this was its strongest quarter of growth for the metric in three years. Orders totaled 89.5 million orders, beating a StreetAccount estimate of 87.8 million.

For the first quarter, Instacart expects gross transaction value in the range of $10.13 billion and $10.28 billion, which was ahead of StreetAccount’s $9.97 billion estimate. The company expects adjusted EBITDA between $280 million and $290 million, versus $277 million expected by StreetAccount.

Finance chief Emily Reuter told CNBC that strong gains in Instacart’s enterprise platform, where the company added 70 net new retailers last year, helped the company’s robust gross transaction value.

Instacart is also seeing a “small” contribution from future growth drivers such as investments in infrastructure, international markets and artificial intelligence, she said.

Like many competitors, Instacart has toyed with new AI tools to optimize its platform for customers and businesses in an increasingly competitive food delivery market. Recent product launches include new AI tools for grocers and an integration with OpenAI’s ChatGPT.

Some experiments haven’t gone so smoothly.

In December, Instacart drew criticism over AI pricing tests it ran with a small group of retailers, which gave customers different prices on the same items. Instacart later halted the testing, saying it “missed the mark.”

Food delivery apps like Doordash and Uber Eats have also intensified their push into grocery delivery and added more retailers and AI features to their platforms. This week, Uber Eats debuted an AI tool to help customers build a grocery cart from text or images.

Reuter said there are opportunities for multiple players to operate in what’s becoming a “huge” market for consumers.

“We are the leader by far amongst digital first players, and that’s because we have been able to execute across the promise of what most customers want consistently over time,” she said.

Source link