Grocery-delivery firm Instacart forecasts strong Q1, plans 250 job cuts

By Granth Vanaik

(Reuters) -Instacart forecast its first-quarter gross transaction value and core profit above analysts' estimates on Tuesday, and said it plans to cut 250 jobs, or about 7% of its workforce, to focus on "promising" initiatives.

Shares of the grocery-delivery firm, formally known as Maplebear, reversed course to rise 2% in extended trading, after the company also authorized an additional $500 million share repurchase program.

The shares had fallen about 10% after the company's fourth-quarter revenue missed analyst estimates.

"This (job cuts) will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long term," CEO Fidji Simo said in a letter to shareholders.

As of June 30, 2023, it had a total employee count of 3,486, according to a regulatory filing.

With Instacart's pandemic-driven boom slowing, it has been relying more on selling advertisement spaces on its platform.

However, its ad and other revenues increased only 7% in the fourth quarter, compared to a 19% growth in the previous quarter.

"Advertising business has slowed down," said CFRA Research's Arun Sundaram, adding that this would cause a bit of concern because it was historically a very fast growing and high-margin business for the company.

Fourth-quarter total revenue rose 6% to $803 million, falling short of analysts' expectations of $804.2 million.

The company said it expects current-quarter adjusted EBITDA between $150 million and $160 million, compared with analysts' estimates of $151.6 million, according to LSEG data.

Its gross transaction value (GTV) - a key industry metric that shows the value of products sold based on prices shown on Instacart - is expected between $8 billion and $8.2 billion, compared with analysts' estimates of 6.1% growth to $7.92 billion.

Total orders rose 5% to 70.1 million in the fourth quarter.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shinjini Ganguli)