Instacart projects strong Q1 performance, plans 7% workforce reduction

Instacart has revealed optimistic first-quarter estimates, exceeding analysts’ expectations. In a conference call Tuesday, the corporation also unveiled plans to cut 250 jobs, or around seven per cent of its workforce, to streamline operations.

However, Instacart reportedly experienced a setback in extended trading, with shares dipping around 10 per cent after it failed to meet fourth-quarter revenue estimates.

The decision to trim its workforce reflects a broader trend among U.S. and Canadian companies grappling with economic uncertainties, as evidenced by numerous layoffs across various industries, including retail, tech and financial services, in 2024.

“This will allow us to reshape the company and flatten the organization so we can focus on our most promising initiatives that we believe will transform our company and industry over the long term,” Instacart CEO Fidji Simo said in a letter to shareholders.

According to regulatory filings, as of June 30, 2023, Instacart employed 3,486 people.

Speaking of the company’s financial outlook, Instacart anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the current quarter to range between US$150 million and US$160 million, slightly surpassing analysts’ estimates. The company also forecasts a gross transaction value (GTV) between US$8 billion and US$8.2 billion.

Furthermore, Instacart has authorized an additional US$500 million share repurchase program, augmenting the US$500 million announced in the previous quarter.

While Instacart’s fourth-quarter total revenue saw a modest increase of six per cent to US$803 million, it fell short of expectations, hinting at a decline in growth following the pandemic-induced surge in demand.