Report: Instacart’s profits are soaring

Instacart, which has been mulling going public for nearly a year amid turbulent markets, posted a 50% increase in revenue during the fourth quarter, according to a report in the Wall Street Journal.

Instacart declined to comment on the report, but the WSJ, which viewed an internal memo, said the same-day delivery company’s gross profits jumped more than 80% during the fourth quarter compared to a year ago. Instacart generated more than $100 million in adjusted earnings before interest, taxes, depreciation and amortization during Q4, according to the report.

For the full year, Instacart’s revenue climbed to $2.5 billion, a 39% increase from the prior year. It reported $29 billion in gross transaction volume, a 16% increase over the previous year, the WSJ reported.

Despite those solid numbers, Instacart said it was waiting for Wall Street to stabilize before making the move to go public, according to those familiar with the matter quoted by the Journal.

In May, Instacart confidentially submitted initial public offering paperwork with the Securities and Exchange Commission, the first steps toward its IPO. The company had reportedly planned to go public by the end of 2022, but it shelved those plans.

“The markets still remain closed for new IPOs, which is why there has not been a tech IPO in the last 10 months,” CEO Fidji Simo said in a letter to employees in October, obtained by the WSJ. “We do not need a perfect market, we’re just looking for an open market window.”

Instacart has not withdrawn its IPO paperwork and could go forward with its filing in the next several months, the WSJ said this week.

Demand for Instacart’s grocery delivery service soared in the pandemic’s early days, but it appeared to have slowed as customers return to in-store shopping.

Since then, Instacart has expanded into new revenue streams, most notably a digital media platform. Instacart said its advertising services are creating a more than 15% sales boost for brands on the platform, according to the memo viewed by the WSJ.

Instacart made headlines earlier last year, though, for slashing its valuation by more than 67%. The company, which was founded in 2012, reportedly had a valuation of $40 billion a year ago, which it cut to $24 billion and, later, to $13 million, according to media reports.

Instacart also faces a potential threat to its business model.

Last fall, the U.S. Department of Labor unveiled a proposal that could reclassify many independent contractors, which are relied upon by grocery delivery companies like Instacart, DoorDash and Uber Eats, as employees.

Instacart agreed in October to pay $45.6 million to the city of San Diego to settle a gig worker case that questioned whether the delivery platforms workers are independent contractors or employees under California law.