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
Revenue increased 12% year over year. Net income totaled $81 million, or 30 cents per share. The company reported adjusted earnings before interest, taxes, depreciation and amortization 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.
Total transaction value, which measures the amount of merchandise sold, rose 14% from a year earlier to $9.85 billion, exceeding Street accounts’ expectations 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.
For the first quarter, Instacart expects total transaction value to be in the range of $10.13 billion to $10.28 billion, higher than Street accounts’ expectations of $9.97 billion. The company expects adjusted EBITDA to be between $280 million and $290 million, compared to StreetAccount’s forecast of $277 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 has also ramped up its efforts in grocery delivery, adding more retailers and AI capabilities to its 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.
