As growth explodes, Instacart waits for right timing for IPO

Wall Street will have to wait … but maybe not for long.

For a while now the market has been wondering when Instacart would take the stroll down the investor corridor, and while the online grocer’s financials have been out of this solar system as far as growth goes, Instacart does not want to make a premature move into the publicly trading sector. However, it could happen sooner than later.

The Wall Street Journal has reported that Instacart has been blowing the doors off financial reports. The company marked a 50% increase in revenue during the fourth quarter of 2022. The Journal also revealed a gross profit margin increase of more than 80% over the final months of last year and $100 million in adjusted growth earnings before interest, taxes, depreciation and amortization during quarter four. According to the WSJ report, Instacart moved through $29 billion in sales this past year (a 16% spring compared to FY 2021). Full-year revenue was up 39% in FY 2022 compared to FY 2021, amounting to $2.5 billion. Instacart has not gone public with these numbers, as WSJ had to get a hold of an insider memo and noted the company’s investor call on Feb. 28 as the sources for its report.

Instacart wants Wall Street to stabilize a bit before joining. It appeared ready for its IPO last May when it filed initial public offering paperwork to the Securities and Exchange Commission. Instacart wanted to take the plunge by the end of 2022, but those plans have stalled. The paperwork is still there, and the home-delivery retailer could go public in the coming months.

Related:5 things: Instacart pushes into Amazon and Walmart territory

The COVID-19 pandemic launched Instacart’s business, but with consumers returning to stores over the last year a pivot has been observed. New revenue streams have been sought out, including a digital media platform. Advertising services on Instacart have created more than 15% sales bump for brands on the platform, according to the Wall Street Journal report. More stores also were added to the Instacart platform and Instacart membership experienced an increase. On Feb. 28, the grocery delivery and pick-up service announced Instacart Business, which caters to business owners, particularly at the small and local level. Instacart COO Asha Sharma was part of the development of Instacart Business, and she sees it as one that could compete with the likes of Amazon and Walmart, and in the food and supplies marketplace it could one day be the gold standard.

“When I think about small businesses in my neighborhood, I think about the establishments I eat at and shop at, but I also think about the people behind them and I think about their families, and I think that our products play a unique role in both of their lives,” Sharma told Supermarket News.

Related:New Instacart tools speak to both grocers and CPG brands

“I want [Instacart] to be the largest food and supplies marketplace for consumers and small businesses.”

Instacart actually has been serving small businesses with things like office supplies, cleaning products and snacks for quite some time. Many of them started using Instacart as a consumer, and after experiencing the benefits have continued using the service to serve their business needs. This trend has been growing for over a year now, and in a matter of months Sharma and her colleagues were able to develop Instacart Business.

“The traction we have seen has been growing significantly now to the amount of millions of orders per quarter so at the end of last year we said that we wanted to make a more concrete investment and provide business-friendly retailer partnerships that would better serve and reach these businesses as well as new technology.

The WSJ report indicated Instacart’s focus in 2023 is on core business and more investments in services like Instacart Health.