INSTACART on Tuesday forecast a lower-than-expected first-quarter core profit as the online grocery delivery platform expects sequential declines in advertising revenue.
The company’s shares, which also missed fourth-quarter revenue estimates, were down about 10 per cent in extended trading.
Instacart, which provides an advertising platform to grocery retailers including Kroger and consumer packaged firms such as General Mills, expects lower usage of its offerings during spring and summer months to impact is core profit.
The company, similar to rival DoorDash, sees first-quarter core profit between US$220 million and US$230 million, compared with the average analyst estimate of US$238 million, according to data compiled by LSEG.
Instacart, formally known as Maplebear, said its average order value (AOV) during the fourth quarter dipped 1 per cent after being up in the past four quarters.
“We also expect that AOV value will continue to decline year-over-year, primarily driven by restaurant orders and our new US$0 delivery fee on US$10 minimum basket feature, resulting in orders growth outpacing GTV growth in the first quarter,” Instacart said.
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Its fourth-quarter revenue rose 10 per cent to US$883 million missing estimates of an 11 per cent rise to US$891 million.
“Instacart’s customer-centric focus isn’t a strategy for short-term gains, which may upset investors in the short term,” said Blake Droesch, analyst with eMarketer.
Still, the company expects first-quarter GTV, a key metric that shows value of products sold based on prices shown on Instacart, to grow up to 10 per cent to US$9.15 billion, compared with estimates of 7.6 per cent growth to US$8.95 billion.
Its fourth-quarter GTV rose 10 per cent to US$8.65 billion, beating estimates of a 9 per cent increase to $8.60 billion. REUTERS
