The fourth quarter of 2024 saw gross merchandise volume (GTV) of $8.645 billion, up 10% year-on-year. Something to smile about? Not entirely. While the number of orders climbed 11% to 77.5 million, the average value per basket eroded slightly, falling 1% to $112. A sign that consumers are tightening the screws, optimizing their purchases in a tighter economic climate.
In terms of sales, Instacart took in $883 million, up 10%, but just short of the $891 million expected by analysts polled by FactSet. Nothing dramatic, but on the markets, a slight misstep is enough to raise eyebrows.
Transactional revenues, which represent the biggest slice of the pie, amounted to $616 million (7.1% of GTV), while advertising and other sources generated $267 million (3.1% of GTV). GAAP gross profit was $664 million, up 9%, with a gross margin of 75%, just short of the 76.2% target.
In terms of profitability, Instacart did not disappoint: net profit came to $148 million, up $13 million year-on-year, while adjusted EBITDA jumped 27% to $252 million. The real satisfaction came from EPS, which soared to $0.53, far exceeding expectations ($0.38). A good point, but not enough to calm the impatient.
In the face of stiff competition, Instacart doesn't have the luxury of standing still. The platform is fine-tuning its offering to attract and retain customers. A helping hand for consumers? The minimum order threshold for free delivery has been lowered from $35 to $10 for Instacart+ members, a strategy that has boosted purchasing frequency and attracted new subscribers.
On the logistics side, the integration of Carrot Tags software boosts buyers' efficiency thanks to intelligent electronic tags. This saves time and improves accuracy, which in turn boosts customer satisfaction.
And on the technological front, Instacart weaves its web. 1,800 partner chains and 30 new retailer sites joined the platform in 2024. Better still, Carrot Ads, its advertising lever, are gaining ground and exceeding expectations, seducing players like Thrive Market and Hy-Vee.
The future is omnichannel: physical and digital in symbiosis
Instacart no longer relies solely on e-commerce: the future is hybrid. The platform aims to position itself as the missing link between online shopping and physical commerce. The idea? To break down the boundaries between the two worlds and streamline the customer experience.
Thanks to Caper Carts (connected shopping carts) and Carrot Tags, the company is taking technological integration one step further. In the future, shopping will no longer be a chore, but a seamless experience where digital technology can even be found on the shelves.
2025: an ambitious course but tight margins
Instacart is targeting GTV of between $9 and $9.15 billion for the first quarter of 2025, slightly above the $8.97 billion expected by consensus. An increase of 8 to 10%, showing that the machine is moving forward, but without any major breakthroughs.
Adjusted EBITDA is expected to come in at between $220 and $230 million, a notch below the consensus forecast of $237.1 million. The seasonality of advertising revenues is a factor, and the monetization dynamic will have to be closely scrutinized.
Another point of vigilance: share-based compensation, a sensitive issue for shareholders. Instacart plans to reduce this expense to below $425 million by 2025. A commendable effort, but still a significant burden on profitability.
Balance sheet: Some potential, but a demanding market:
What's sticking:
- Slightly disappointing sales for Q4 2024
- Adjusted EBITDA forecast for Q1 2025 below expectations
- Compensation in shares is still important, even if the trend is downward
What's reassuring:
- EPS above forecasts, a nice surprise
- GTV expected to be solid for Q1 2025
- Innovation capacity intact and omnichannel vision promising
Instacart is moving forward, but the market is not playing nice. Slight underperformance on sales and EBITDA forecasts explain the share's decline at the opening on Wall Street. And yet, the platform still has a lot going for it. With a well-oiled innovation dynamic and a strategic positioning in line with new uses, Instacart has all the cards to continue growing. All that's left is to make the most of it.
