Instacart: Deepened Retailer Integrations Fuel Strong Q3 Results
Grocery delivery giant Instacart posted strong growth in Q3 as deepened integrations with its partner retailers “strengthened [its] entire ecosystem,” according to the company’s latest shareholder letter released yesterday.
In the quarter ended Sept. 30, the San Francisco-based company saw gross transaction value (GTV) climb 11% year-over-year to $8.3 billion as orders rose to 72.9 million. The order growth was primarily fueled by Instacart’s focus on value, according to the company.
Total revenue in the third quarter increased 12% to $852 million, representing 10.3% of GTV.
The gains signal the effectiveness of Instacart’s efforts to diversify its tech-based services and enhance its partnerships with both new and existing retailers. According to CEO Fidji Simo, retailers that launched at least one new service with the company in the past year – such as EBT SNAP, pickup, virtual convenience, or loyalty integration – have grown their sales, on average, nearly twice as fast as partners without launches.
Additionally, the company added 30 new customizable enterprise technology offer types – available to all 1,500-plus retail banner partners – and created 120 additional features for natural chain Sprouts alone, including a clickable flyer and loyalty hub.
“When it comes to driving growth, depth of integration is much more important than exclusivity. The majority of our GTV is not exclusive today and so far this year, across our top 20 retailer partners, non-exclusive retailers grew faster with us than exclusive retailers on average,” said Simo in a prepared statement.
In the third quarter, Instacart welcomed hundreds of new retailers, including regional grocers like Michigan-based Busch’s Fresh Food Market and Ohio-based Marc’s and expanded loyalty integrations with existing partners, including Albertsons, Food Lion and Kroger. Additionally, the company broadened its Caper Cart deployments across more than a dozen grocers, such as ALDI and Coles.
Beyond its grocery selection, the company has brought on “hundreds of thousands” of restaurants to its platform through a partnership with Uber Eats in the U.S. According to Instacart, onboarding restaurants has driven high engagement from Instacart+ members. Early data shows that on average, customers who place restaurant orders on Instacart are ordering groceries more frequently and spending more on grocery orders than before.
Despite this growth, the company has forecast a potential slowdown in its fourth quarter. The mixed outlook is based, in part, on a “small impact” from a web outage reported by one of its retail partners, Ahold Delhaize, the parent company of Food Lion, Giant Food and Stop & Shop.
In Q4, Instacart expects GTV between $8.5 billion and $8.65 billion and adjusted EBITDA between $230 million and $240 million. Simo told shareholders that, on a sequential basis, the guidance reflects positive seasonality in advertising and other revenue, partially offset by reinvestments in more affordable service options.
“Our technology stack continues to improve, especially across our enterprise platform and our marketplace,” said Emily Reuter, CFO, during a call with shareholders. “What we are working on is continuing to connect all of these technologies […] so that we can create the full omnichannel experience.”
