Last Friday, grocery delivery company Instacart filed for an initial public offering. The company hopes to begin trading on the NASDAQ under the ticker symbol “CART” in September, reports Axios. In early 2021, Instacart was estimated to be worth $39 billion. In March 2022, the valuation had dropped to $24 billion, says CNBC, and was cut in half again in late 2022.

In Instacart’s prospectus filed with the Securities & Exchange Commission, they shared the following financial data for the 12 months ended June 30, 2023.

• $29.4 billion gross transaction volume
• 263 million orders
• $2.2 billion gross profit
• Net income of $744 million
• $486 million adjusted EBITDA

In 2022, Instacart had total revenue of $2.55 billion, a 39% increase year-over-year. For the first six months of 2023, the company reported total revenue of $1.475 billion, a 31% increase year-over-year. Net income for 2022 was $428 million compared to a net loss of $(73) million in 2021. The average order value for the year was $110 with an average of $16 in fees for retailers and customers. Average transaction revenue per order was approximately $7, or 6.3% of gross transaction value.

Instacart’s plan with the IPO is to continue focusing on artificial intelligence and machine learning to help drive growth within the company, CNBC reports.

CEO comments

“Thanks to the investments we have made over the last decade, we now deliver the best consumer online grocery experience anywhere,” said. CEO Fidji Simo wrote in the prospectus. “We believe the future of grocery won’t be about choosing between shopping online and in-store. Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”

Simo also wrote about the importance of working with their partners and leveraging technology.

“We are in the business of growing our partners’ businesses, which is reflected in one of our company’s core values: ‘Grow the pie.’ In a world where success too often comes at the expense of someone else, we believe that there is more than enough to go around — and that, by working together with our retail partners, we can create more opportunities for the entire industry,” said Simo.

“At Instacart, we know technology will play a crucial part in transforming the largest retail category in the world. We also know that the future of grocery should belong to the people who make it special today — and we can help them continue to innovate,” he added.

About Instacart

Founded in 2012 under the corporation name Maplebear, Inc., the San Francisco-based Instacart is the world’s largest online grocery service. They do business with 40,000 stores like Walgreens, Target, Staples, Petco and Costco in more than 5,500 cities. They have delivered millions of orders and more than 500 million products. The company grew in popularity during the pandemic as shoppers turned to alternative ways to buy groceries and other goods for the home. The company had 3,468 full-time employees at the end of June.

Business model

Instacart does not require a membership to use the service. It charges fees for deliveries, starting at $3.99. There may also be pick-up and service fees. Instacart also offers an Instacart+ membership for shoppers who want to save on fees. The company is currently offering a promotional price for new members for the first year of membership of $49, 50% off the regular price. The membership includes unlimited free delivery on orders over $35, lower service fees on every order, 5% credit back on eligible pickup orders, and additional savings and special offers.

Insider Take

Instacart has not always been profitable, but it is moving in the right direction. With well known partners and a solid business model, going public could be successful for the online grocery delivery service. The question is whether this is the right time. IPOs have not necessarily gone well over the last two years, and Instacart will be one of the first independent grocery delivery companies to consider an IPO. Others who offer similar services are part of major corporations like Amazon Fresh, Shipt (via Target) and Walmart. Another major risk is going public in a volatile stock market and in an uncertain economy.

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