Top takeaways from Instacart’s first earnings call

In its first earnings call since going public in September, Instacart reported earnings that beat expectations, as chair and CEO Fidji Simo discussed its advantages in the competitive grocery delivery market and the growth of its advertising business.

The company’s total revenue in the third quarter was up 14% year over year to $764 million, made up by $542 million in transaction revenue and $222 million from advertising and other revenue. Its gross transaction value (GTV) rose 6% YoY to $7.5 billion. The company reported a net loss of $2 billion, but said it currently has $2.2 billion in cash.

Instacart, which partners with 1,400+ retail banners across more than 80,000 store locations, said it completed 265 million orders over the last 12 months, with average consumer spend of more than $100 per order, “which is a key element to unlocking profitable unit economics,” Simo said. She also said Instacart accounts for 5% of its partners’ total sales.

• Because 85% of the grocery market is already represented on Instacart, Simo said it anticipates growth coming from deeper relationships with its partners, through elements like its convenience delivery offering, rather than onboarding additional stores.

Among its competitors in online grocery, Instacart claims more than half of shopping baskets under $75, as well as 70+% of those over $75. Those larger baskets drive more profitable growth, which the company is “relentlessly focused on,” Simo noted, as the company aims to return to profitability next year. Its ability to attract larger basket sizes also gives it a leg up on the competition, she said. (On the same day Instacart announced its earnings, Getir shared it had acquired New York-based grocery delivery company FreshDirect).

Instacart currently has 5,500 advertisers, and said in its earnings report that it saw “stronger than anticipated” ad spend for back-to-school and fall football campaigns, but expects YoY advertising rates to slow down in the near term. To grow its ad business, Simo said the company aims to appeal to more emerging brands, and go deeper in categories like alcohol, pets, and personal care, which have higher investment rates.

Looking ahead…For the fourth quarter, the company anticipates year over year GTV growth of 5% to 6%, driven by an increase in order numbers rather than order value, as it laps last year’s inflated pricing.