Instacart forecast on Tuesday that its first-quarter gross transaction value (GTV) and core profit were above estimates due to an increase in grocery orders, and said it plans to cut 250 jobs, or 7 percent of its workforce, to focus on “promising “. “initiatives.
Shares of Instacart reversed course to drop about 5% after the bell following Instacart’s lower-than-expected fourth-quarter revenue due to a slowdown in advertising business.
As of June 30, Instacart had 3,486 employees, according to a regulatory filing.
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“We’re seeing (some weakness among advertisers) in pockets, but it’s not widespread,” CEO Fidji Simo said on a post-earnings call.
Advertising and other revenue increased 7 percent in the fourth quarter, compared with 19 percent growth in the previous quarter.
“Advertising business has slowed down,” said CFRA Research’s Arun Sundaram, adding that this would cause some concern as it has historically been a very fast-growing and high-margin business for the company.
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Total revenue rose 6 percent to $803 million, short of analysts’ expectations of $804.2 million.
Transaction revenue growth slowed sequentially to 6 percent as Instacart offered more incentives and promotions to attract customers, especially during the holiday season, amid stiff competition from rivals such as DoorDash, UberEats, Amazon.com and Walmart.
Total orders rose 5 percent to 70.1 million in the reported quarter, as the grocery delivery company also saw growth among its newer customer base.
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The company expects current-quarter GTV — a key industry metric that shows the value of products sold based on prices displayed on Instacart — to be between $8 billion and $8.2 billion, compared with analyst estimates of $7.92 billion.
It sees adjusted EBITDA between $150 million and $160 million, compared with analyst estimates of $151.6 million, according to LSEG data.
The company said it has authorized an additional $500 million share repurchase program and expects to generate positive operating cash flow this year.
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This story was published by a wire agency feed without modifications to the text.
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Published: 14 Feb 2024, 06:26 IST