Business context and reporting period
Maplebear Inc. (doing business as Instacart; Nasdaq: CART) operates a technology platform connecting customers, retailers, advertisers, and shoppers, and provides retailer software services. This unaudited Form 10-Q covers the three months ended March 31, 2024; comparisons are with the three months ended March 31, 2023 unless noted.
Key financial and operating metrics
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Orders | 72.8 million | 66.6 million | +9% |
| GTV | $8.319 billion | $7.465 billion | +11% |
| Revenue | $820 million | $759 million | +8% |
| Gross profit | $614 million | $582 million | +5% |
| Gross margin | 75% | 77% | Down 2 percentage points |
| Income from operations | $144 million | $150 million | Down 4% |
| Net income | $130 million | $128 million | +2% |
| Diluted EPS attributable to common stockholders | $0.43 | Not presented as a comparable common-stock figure | — |
| Adjusted EBITDA (non-GAAP) | $198 million | $169 million | +17% |
| Operating cash flow | $105 million | $70 million | +$35 million |
Q1 2024 revenue comprised $603 million of transaction revenue and $217 million of advertising and other revenue. Adjusted EBITDA margin was 24%, compared with 22%; adjusted EBITDA as a share of GTV was 2.4%, compared with 2.3%. These are non-GAAP measures and should be considered alongside GAAP results.
Financial position and liquidity
At March 31, 2024, cash and cash equivalents were $1.514 billion, short-term marketable securities were $20 million, and restricted cash was $143 million. Current assets were $2.707 billion and current liabilities were $716 million. Total liabilities were $777 million. The filing does not present a debt balance in the balance sheet figures provided. Management said existing cash, cash equivalents, and marketable securities should meet anticipated working-capital and capital-expenditure needs for at least the next 12 months and beyond, while noting that future needs depend on business conditions and spending decisions.
Cash, cash equivalents, and restricted cash totaled $1.657 billion at quarter-end, down $636 million from the beginning of the quarter. Investing activities provided $13 million; financing activities used $750 million, primarily reflecting $715 million of common-stock repurchases and $83 million of taxes paid on net share settlements, partly offset by $49 million of option-exercise proceeds.
Material changes versus the prior comparable period
- Orders and GTV grew 9% and 11%, respectively; management attributed growth primarily to greater engagement from new and existing customers. GTV also benefited from seasonality, inclement weather, and an extra day from leap year.
- Revenue grew 8%. Transaction revenue increased with GTV, partly offset by greater consumer incentives. Advertising and other revenue rose 9%, driven primarily by advertising volume, with brand spending affected by macroeconomic uncertainty.
- Gross margin declined from 77% to 75%. Management cited lower transaction revenue as a share of GTV; the prior-year quarter had benefited from fulfillment efficiencies and lower customer incentives. Cost of revenue rose 16%, including higher payment-processing, delivery-insurance, and customer-success costs.
- Net income was nearly flat and operating income declined, while interest income rose to $22 million from $14 million, primarily because of higher average interest rates.
- Operating cash flow increased to $105 million from $70 million. Q1 2024 cash flows included a $73 million increase in accounts receivable and a $25 million decrease in accounts payable, which management attributed primarily to payment timing.
Outlook, management commentary, risks and unusual items
- Outlook: The filing provides no specific numerical revenue or earnings guidance. Management expects 2024 operating-expense savings from its restructuring, compared with 2023, to be reinvested in the business to support profitable growth. It also cautions that results may fluctuate and interim results are not necessarily indicative of the full year.
- Restructuring: The February 2024 plan reduced approximately 250 employees, about 7% of the workforce. The company recorded $18 million of cash severance and related charges in Q1; $3 million of remaining restructuring liabilities were accrued at quarter-end.
- Stock-based compensation: Q1 expense included a net benefit from reversals of previously recognized compensation for unvested awards following executive departures and the restructuring. The non-GAAP reconciliation identifies an aggregate $95 million benefit from these reversals. This unusual item is important context when assessing GAAP expenses and earnings.
- Capital allocation: The board authorized an additional $500 million of repurchases in February, bringing total authorization to $1 billion. The company repurchased approximately 25.4 million shares for $715 million during Q1; $249 million remained available at March 31. Repurchases reduce cash available for other uses and may not deliver anticipated value.
- Shopper classification: The company faces lawsuits, individual claims, and government audits challenging shoppers’ independent-contractor status. A California Supreme Court hearing on Proposition 22 was scheduled for May 21, 2024. An adverse outcome or added contractor requirements could increase costs, require changes to fulfillment, and affect orders, GTV, revenue, and margins. The filing reports a $58 million accrued legal reserve for misclassification matters and says additional losses cannot be reasonably estimated.
- Other legal matters: A putative securities class action concerning the IPO was filed in January 2024; the company says the matter is preliminary and any reasonably possible loss cannot be estimated. It also maintains a $30 million reserve for potential sales and indirect taxes at March 31.
- Macroeconomic and business risks: Inflation, interest rates, reduced consumer discretionary income, shopper supply and costs, competition, retailer relationships, advertising budgets, and seasonality could affect demand and margins. The company also highlights privacy, cybersecurity, platform availability, and regulatory risks.
- Commitments and management change: Non-cancellable purchase obligations, primarily for technology infrastructure services, totaled $368 million, including $131 million due within 12 months. Subsequent to quarter-end, CFO Nick Giovanni announced his resignation effective after filing; Emily Reuter was appointed CFO effective at that time.
Important facts for investors to verify
- Whether order and GTV growth persists after accounting for seasonality, leap day, and weather effects.
- Whether transaction revenue as a share of GTV and gross margin stabilize, particularly as incentives and fulfillment costs change.
- How much reported earnings and operating-expense trends reflect the $95 million stock-compensation reversal benefit, and whether restructuring savings materialize.
- Cash usage and remaining repurchase authorization, alongside purchase commitments and other working-capital requirements.
- Developments in Proposition 22 and other shopper-classification matters, including potential costs beyond recorded reserves.
- Performance of advertising revenue and brand spending amid macroeconomic uncertainty, and the effect of the CFO transition.