According to a recent report, the global online grocery market is expected to grow at 25% CAGR from from $285.7 billion in 2021 till 2030. Companies like Instacart are cashing in on this growth by helping deliver these groceries.
Instacart’s Offerings
Last week, San Francisco-based Instacart filed for its IPO. Founded in 2012 by Apoorva Mehta, Brandon Leonardo, and Max Mullen, Instacart is a grocery delivery platform that focuses on home essentials and groceries. Read our earlier coverage here and here.
It integrates technology and fulfillment capabilities to provide retailers with the services necessary to elevate the consumer experience. Features include e-commerce tools custom-built for online grocery shopping such as product discovery, personalization, merchandising, and different payment models, which are available across Instacart Marketplace and Instacart Enterprise Platform. Its full range of fulfillment options that allow consumers to receive orders within a day are enabled by its picking technology and community of dedicated shoppers. Its in-store technologies like AI-powered smart carts, mobile checkout, and electronic shelf stages enhance the shopping experience and help retailers invent the store of the future.
It also provides advertising to help customers find new products and opportunities to save, therefore allowing brands to reach customers at the point of purchase and open up new revenue streams for retailers, as well as data, insights, and analytical tools to help optimize operations, reduce costs, and make the most optimal strategic decisions.
Instacart’s Financials
Instacart earns revenues by charging its customers a delivery fee and through advertising. As per the recently filed S1, its orders grew 18% from 223.4 million in 2021 to 262.6 million in 2022, and 0.45% to 132.9 million for the six Months Ended June 30, 2023. Gross total value (GTV) grew 16% from $24.91 billion in 2021 to $28.83 billion in 2022, and 4% to $14,937 million for the six months ended June 30, 2023.
Revenue grew 39% from $1.83 billion in 2021 to $2.55 billion in 2022. It grew 32% from $1.13 billion for the six months ended June 30, 2022 to $1.48 billion for the six months ended June 30, 2023. Net income (loss) improved from a loss of $(73) million in 2021 to net income of $428 million in 2022. Net loss was $(74) million for the six months ended June 30, 2022 and improved to net income of $242 million for the six months ended June 30, 2023.
By segment, transaction revenue grew from 44% to $1.81 billion in 2022, and 34% to $1.06 billion in the six months period ending June 2023. Advertising and other revenue grew 29% to $740 million in 2022 and 24% to $406 million in the six month period ending June 2023.
Instacart’s Recent Acquisition of Rosie
Recently, Instacart announced its acquisition of New York-based Rosie. Founded in 2013 by Jon Ambrose, Michael Ryzewic, and Nick Nickitas, Rosie partners with independent grocers and wholesalers to provide e-commerce, delivery opportunities, omnichannel marketing, and deep data services.
The acquisition allows Instacart to introduce new e-commerce solutions for local and independent retailers and complement its Instacart Platform e-commerce offerings. Prior to the acquisition, Rosie had raised $11.9 million in five rounds of funding led by Working Lab Capital, Avenue Growth Partners, 645 Ventures, Tuhaye Venture Partners, NXT Ventures, LaunchPad Venture, Sidecar Angels, MassChallenge, and eLab Accelerator.
Instacart’s Rollercoaster Ride in Valuation
Instacart has raised $2.9 billion in 19 rounds of funding led by Manhattan Venture Partners, Sequoia Capital, Fidelity Management and Research Company, D1 Capital Partners, Andreessen Horowitz, T. Rowe Price and Valiant Peregrine Fund.
The company’s valuation has had a rollercoaster ride. Its most recent round was held in November 2021 where it raised $232 million at a valuation of $13 billion. In December 2022, it slashed its internal valuation to as low as $10 billion, 74% off its peak of $39 billion during the pandemic when lockdowns generated a lot of demand for its services. Demand for its core business might be slower, but it is good to see higher-margin online advertising revenue make up nearly 30% of its revenue.
Instacart plans to list its shares on the Nasdaq stock exchange under the symbol CART. PepsiCo has pledged to invest $175 million in preferred convertible stock in a private placement. Details of its offering price and valuation will be disclosed shortly before it goes public.
Instacart counts Amazon, Target, Walmart, and DoorDash as its competitors. DoorDash had a blockbuster IPO in late 2020, but Instacart had to delay its IPO plans due to turbulent market conditions.
After a drought of nearly 18 months, the IPO market is waking up. Chipmaker Arm also filed for an IPO last week. This year, only $14 billion were raised by 109 US companies through IPOs this year, compared to $241 billion from 745 IPOs in 2021. Instacart is expected to go public in September and will be testing the appetite of the market.
Photo Credit: Marta I. Seco from Pixabay
