Instacart announced it will cut 250 jobs, roughly 7% of its workforce, in a letter to investors announcing its fourth quarter earnings.
The company’s stock proceeded to drop about 5% in after-hours trading.
Instacart also announced that Chief Operating Officer Asha Sharma will leave the company on March 1, and the delivery giant said it doesn’t plan to hire or appoint a replacement.
CEO Fidji Simo said in a letter to investors that they are “positioning Instacart to take on our most ambitious bets while streamlining how we operate.”
“Today, we made the tough decision to part with approximately 250 of our talented team members. This 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. I am confident this will enable us to execute with even more focus and efficiency moving forward,” Simo said.
During the earnings call, Simo said those initiatives could entail growing the company’s AI-powered smart shopping carts, known as caper carts, or further developing its retail media network, among other priorities. “All of these new initiatives that hold a lot of promise are things that we want to be able to fund fully, and that means reshaping the organization and streamlining in certain areas,” she said.
Instacart total revenue was $803 million for the fourth quarter, up 6% year over year. Meanwhile, transaction revenue was up 6% year over year to $560 million.
Orders were also up 5% year over year to 70.1 million in Q4, and gross transaction value (GTV) was up 7% to $7.891 billion.
Advertising and other revenue was up 7% year over year to $243 million for the quarter, driven largely by strength in the company’s shoppable display and video formats, Instacart said.
Adjusted EBITDA of $199 million was a 50% increase compared to the same time last year.
The San Francisco-based delivery service predicted a strong gross transaction value growth of $8 billion to $8.2 billion this year, which would mean a year-over-year growth of 7% to 10%.
The company also addressed the return of Whole Foods to the Instacart Marketplace. Whole Foods ended its relationship with Instacart in 2018. That move came about a year after online retail giant Amazon purchased Whole Foods in 2017.
That schism ended on Feb. 7, when the company announced that Instacart delivery is now available from all 14 Whole Foods locations in Canada, including stores in Vancouver, Victoria, Toronto, and Ottawa.
During the earnings call, Simo said, “We are very excited to bring them back,” but there’s still no word on whether Whole Foods will return to a partnership with Instacart in the U.S. “Nothing to announce about the U.S., but we always take a long-term view of the partnership …” she said.
Instacart touted its technological innovation, noting the edge it gives its retail partners. The company is currently in 85,000 stores across more than 1,500 retail banners “while also providing white label storefronts and fulfillment for over 600 of those banners.”
