Instacart’s IPO Plans Show Bottom-Line Benefit of Strategy Shift

While that’s a change from the company’s surge of customer orders during the coronavirus pandemic, it is not without benefits: the first of those being profitability.

Already this week, semiconductor designer Arm Holdings Ltd., majority owned by SoftBank Group Corp., had filed for what promises to be the year’s biggest IPO, which is expected in September. Marketing and data automation provider Klaviyo filed Friday for an IPO. Footwear maker Birkenstock is also gearing up for a listing this year, Bloomberg News has reported.

Despite a flattening of orders, gross transaction value increased 4% to $14.9 billion for first half of the year, according to the filing. Instacart is also managing to keep more profits from each order. Net income grew as a percent of gross transaction value from a loss of 0.3% in 2021 to a profit of 1.5% in 2022.

Founded in 2012, Instacart has been preparing to go public for years, hoping to capitalize on its surging popularity during the coronavirus pandemic as online shopping for groceries became the norm and, in some cases, a necessity.Instacart raised $2.74 billion as a startup and was valued at $39 billion in 2021, according to data provider PitchBook.

Instacart sees itself clearly as a grocery technology company and suggested there is plenty of room for growth. The grocery business is the largest retail category and a $1.1 trillion industry in the US, according to the filing. But only 12% of grocery sales are currently made online.

The consumer-facing Marketplace is powered by more than 600,000 independent contractors — known as shoppers — who pick up items for consumers at more than 1,400 retailers including Kroger, Publix and Walmart, across more than 80,000 stores in North America.While Instacart still commands the lion’s share of the market for large orders, over $75, DoorDash Inc. has been making significant market share gains on orders under $75, the filing shows.

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