Updated February 14th, 2024 at 08:00 IST

Instacart plans 250 job cuts amid slower ad business, despite upbeat Q1 forecast

As of June 30, Instacart employed 3,486 individuals, as disclosed in regulatory filings.

Reported by: Business Desk
Instacart | Image:Instacart
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Instacart job cut plans: Retail company Instacart announced on Tuesday a positive forecast for its first-quarter gross transaction value (GTV) and core profit, surpassing estimates due to increased grocery orders. 

However, the company revealed plans to reduce its workforce by 250 jobs, constituting 7 per cent of its employees, to concentrate on "promising" initiatives.

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Following Instacart's lower-than-expected fourth-quarter revenue attributed to a slowdown in its advertising business, shares of the company dipped approximately 5 per cent after the closing bell.

As of June 30, Instacart employed 3,486 individuals, as disclosed in regulatory filings.

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CEO Fidji Simo acknowledged some weaknesses among advertisers but noted that they were not widespread during a post-earnings call.

The company observed a 7 per cent increase in ad and other revenues in the fourth quarter, a significant deceleration compared to the 19 per cent growth witnessed in the previous quarter. 

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This slowdown in the advertising segment raised concerns, particularly as it historically constituted a rapidly growing and high-margin business for Instacart.

Total revenue climbed by 6 per cent to $803 million, falling short of analysts' expectations by a marginal amount.

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Transaction revenue growth slowed to 6 per cent sequentially, with Instacart offering more incentives and promotions, especially during the holiday season, to attract customers amidst fierce competition from competitors like DoorDash, UberEats, Amazon.com, and Walmart.

Despite challenges, total orders increased by 5 per cent to 70.1 million in the reported quarter, reflecting growth among Instacart's newer customer base.

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For the current quarter, Instacart anticipates gross transaction value (GTV) to range between $8 billion and $8.2 billion, surpassing analysts' estimates. Adjusted EBITDA is expected to fall between $150 million and $160 million, slightly above analysts' forecasts.

Additionally, the company announced authorisation for an additional $500 million share repurchase program and expressed confidence in generating positive operating cash flow throughout the year.

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(With Reuters Inputs)

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Published February 14th, 2024 at 08:00 IST