BENGALURU - Instacart forecast on Feb 13 its first-quarter gross transaction value (GTV) and core profit above estimates due to an uptick in grocery orders.

It also plans to cut 250 jobs, or 7 per cent of its workforce, to focus on “promising” initiatives.

As at June 30, 2023, the American grocery delivery company had 3,486 employees, according to a regulatory filing.

Instacart also reported lower than expected fourth-quarter revenue on slowing advertisement business.

“We are seeing (some weakness among advertisers) in pockets, but it is not widespread,” said chief executive Fidji Simo on a post-earnings call.

Ad and other revenues increased 7 per cent in the fourth quarter, compared with a 19 per cent growth in the previous quarter.

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

Total revenue rose 6 per cent to US$803 million (S$1.09 billion), falling short of analysts’ expectations of US$804.2 million.

Transaction revenue growth slowed sequentially to 6 per cent, 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 per cent to 70.1 million in the reported quarter as the company also saw growth among its newer customer base.

The company expects current-quarter GTV – a key industry metric that shows the value of products sold based on prices shown on Instacart – to come between US$8 billion and US$8.2 billion, compared with analysts’ estimates of US$7.92 billion. REUTERS