During the pandemic-induced lockdowns, many consumers avoided public places and relied on delivery companies to bridge the gap. One of the primary beneficiaries was grocery delivery start-up Maplebear, doing business as Instacart. The app-based service allows people to order products via its app and employs shoppers to take care of the rest. The company quickly became a staple, becoming the third-most-popular online grocery site behind just Walmart and Amazon.
Instacart originally planned its initial public offering (IPO) in 2022 after a surge in pandemic-era customers initially helped the company scale and turn a profit. However, activity in the IPO market slumped last year in the wake of the worst downturn in more than a decade, and Instacart shelved its plans to go public.
In recent months, however, the stock market rebound, easing inflation, and improving economic conditions have boosted Wall Street's mood. Start-ups have begun to test the water, and Instacart has once again filed to go public. Here's what we know so far.
Image source: Getty Images.
The basics
Instacart filed its S-1 with the Securities and Exchange Commission (SEC) in the first step toward its IPO. The company revealed that it is the leading "technology partner" to more than 1,400 retailers across 80,000 stores and 5,500 brands, representing 85% of the U.S. grocery market.
This includes leading grocery chains Kroger, Costco, Albertsons, and privately held Safeway, among many others. The company processed 263 million orders totaling $29.4 billion in gross transaction value (GTV) in 2022, making it North America's leading grocery technology company.
Between 2018 and 2022, Instacart's GTV grew at a compound annual growth rate (CAGR) of 80%, far outpacing the 50% growth of grocery e-commerce and 1% of the overall grocery industry. Instacart has even attracted the attention of beverage and snack giant PepsiCo, which pledged to invest $175 million of the company's Series A preferred stock in a private placement.
Instacart by the numbers
For the year ended Dec. 31, 2022, Instacart delivered the goods, generating revenue of $2.55 billion, up 39% year over year. At the same time, it delivered net income of $428 million, compared to a loss of $73 million in the prior year.
That positive trend continued during the first six months of 2023, as revenue of $1.48 billion grew 31% year over year. It reported a net income of $242 million, compared to a loss of $74 million in the prior-year period. The filing noted that this year's first and second quarters were its fourth and fifth consecutive quarters of profitability. The company is also generating positive cash flow.
Instacart is consistently looking to improve efficiencies, and those efforts are bearing fruit. Gross profit by cohort and gross profit as a percentage of GTV have continued to improve consistently since 2019, reaching new watermarks in the first half of 2023.
In an unusual move, Instacart will allow non-director employees to cash in during the lockup period, selling up to 35% of their holdings as early as November, so long as the stock is up at least 20% from the as-yet-to-be-disclosed IPO price.
More to come
Since this is the company's initial filing, Instacart didn't reveal how many shares of stock it will offer, how much it hopes to raise, at what valuation, or precisely when it plans to IPO. However, according to a report in The Wall Street Journal, CEO Fidji Simo told staffers the company would list its shares within weeks. Instacart plans to list on the Nasdaq Stock Exchange using the ticker "CART."
Instacart's IPO will be an important test case for the IPO market, which was largely dormant during the downturn. A successful public debut could convince other start-ups that it's time to make the move. Investors should keep an eye out for the next regulatory filing to drop, which will address some of the unanswered questions.
