instacart Shares rose 14% in after-hours trading Thursday after the grocery delivery company reported strong fourth-quarter earnings and predicted an upside outlook.
Here’s how the company performed against LSEG’s estimates:
Earnings per share: 30 cents vs. 52 cents expected Earnings: $992 million vs. $974 million expected
For the first quarter, Instacart expects total transaction value, which measures product sales, to be in the range of $10.13 billion to $10.28 billion. This exceeded street estimates of $9.97 billion. The company expects adjusted earnings before interest, taxes, depreciation and amortization to be in the range of $280 million to $290 million, compared to Street estimates of $277 million.
Revenue increased 12% from $883 million in the year-ago period. Net income totaled $81 million, or 30 cents per share. The company reported adjusted EBITDA of $303 million, beating StreetAccount’s estimate of $292 million.
CEO Chris Rogers said in a letter to shareholders that Instacart’s technology and customer-focused approach are driving further growth and engagement with the platform.
“By doing what matters most to our customers, we are creating strong momentum not only in our market but also in our enterprise platform. This is a real strategic advantage for us,” he said.
Instacart also said operating expenses increased year-over-year “due to higher general and administrative expenses due to non-recurring regulatory issues.” This includes a $60 million refund settlement with the Federal Trade Commission over alleged fraudulent practices.
Total transaction value increased 14% year-over-year to $9.85 billion, exceeding street accounts’ estimates of $9.54 billion. Instacart said it was the strongest quarter for growth in this metric in three years. The total number of orders was 89.5 million, exceeding StreetAccount’s estimate of 87.8 million.
Finance chief Emily Reuter told CNBC that strong growth in Instacart’s enterprise platform, where the company added 70 net new retailers last year, supported the company’s strong total transaction value.
Instacart also expects “modest” contributions from future growth drivers such as investments in infrastructure, international markets and artificial intelligence, he said.
Like many of its competitors, Instacart has been introducing new AI tools to optimize its platform for customers and businesses in the increasingly competitive food delivery market. Recent product launches include new AI tools for grocery stores and integration with OpenAI’s ChatGPT.
Some experiments didn’t go so well.
In December, Instacart came under fire for an AI pricing test it conducted with a group of small retailers that showed customers different prices for the same product. Instacart later canceled the test, saying it “missed the mark.”
Like a food delivery app door dash and Uber Eats We’ve also ramped up our grocery delivery efforts and added more retailers and AI capabilities to our platform. This week, Uber Eats debuted an AI tool that lets customers create grocery carts from text and images.
Reuter said there is an opportunity for multiple companies to operate in what is becoming a “huge” market for consumers.
“We are by far the leader among digital-first players because we have been able to consistently deliver on our promise of what most customers want over time,” she said.
