Takeaways from Instacart’s IPO Filing

Instacart is a well-known grocery marketplace and delivery company. It’s been a private company since it was founded in 2012 and has raised almost $3 billion in funding since inception. It recently filed its draft S-1 IPO filing to become a public company.

Instacart is a high-profile tech company that’s raised a large amount of venture capital, so I was curious about its S-1. Here are a few things that caught my attention:

  • “Grow the pie” core value focuses on growing their partners’ businesses so entire ecosystem benefits from network effects (pages v and 15)
  • Began as a marketplace but now focuses on “powering the future of grocery through technology” (page 2)
  • Estimates grocery retailers have spent $14.2 billion on enterprise IT—~1% of their revenue (page 5)
  • In addition to being a marketplace, Instacart Enterprise Platform is an end-to-end solution that includes these solutions (page 8):
    -eCommerce allows retailers to have online storefronts
    -Fulfillment API and staffing helps retailers fulfill online orders
    -Connected Stores helps retailers unify online and in-store
    -Ads enable brands to advertise on retailer-owned storefronts and apps
  • 3,486 full-time employees (page 54)
  • Revenue is made up of transaction revenue (retailer fees, customer fees, etc.), advertising revenue, and fees paid to use Instacart’s technology (page 105)
  • Gross transaction volume (page 121)
    -2019: $5.1 billion
    -2020: $20.7 billion
    -2021: $24.9 billion
    -2022: $28.8 billion
    -2023 (through June 30): $14.9 billion
  • 590% revenue growth and 4x gross transaction volume growth year-over-year in 2020 due to COVID-19 (pages 131 and 132)
  • Gets 74% of online grocery orders that exceed $75 and 56% of orders for less than $75 (pages 134 and 135)
  • Cash, cash equivalents, and marketable securities of $1.9 billion (page F-4)
  • Revenue (page F-5)
    -2020: $1.4 billion
    -2021: $1.8 billion
    -2022: $2.5 billion
    -2023 (through June 30): $1.4 billion
  • Net profit/loss before tax provisions (page F-5)
    -2020: $70 million loss
    -2021: $72 million loss
    -2022: $71 million profit
    -2023 (through June 30): $306 million profit
  • Net cash provided by operating activities (page F-12)
    -2020: $91 million consumed
    -2021: $204 million consumed
    -2022: $277 million generated
    -2023 (through June 30): $242 million generated
  • PepsiCo, Inc. is purchasing $175 million of stock via a private placement (pages F-66 and 313)

This is a draft S-1, so some information, such as equity ownership, is missing and will be added before it’s finalized.

Instacart has built a massive business that benefited tremendously from COVID tailwinds. In the last eighteen months, it appears to have focused on profitability. Growth appears to be slowing.

In early 2021, the company raised $265 million at a $39 billion valuation. In late 2022, it reportedly was internally valued at $13 billion. I’m curious to see how Instacart is received by public market investors and how they value the business.