Instacart (CART) - Q2 2025 Earnings Call
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Q2 2025 Earnings Call – August 7, 2025
Management Participants
Fidji Simo – President, CEO & Chairman
Emily Maher – CFO & Treasurer
Rebecca Yoshiyama – VP of Investor Relations
Financial Performance
“We grew GTV by 11% year-over-year, driven by 17% growth in orders”.
Average order value declined 5% YoY, largely from restaurant contribution and the $10 Instacart+ basket minimum.
Transaction revenue grew 11% YoY, maintaining 7.3% of GTV, up from 7.1% QoQ.
Advertising and other revenue grew 12% YoY, representing 2.8% of GTV (flat YoY).
GAAP net income: $116M (+92% YoY); Adjusted EBITDA: $262M (+26% YoY).
Operating cash flow: $203M, down $41M YoY due to working capital swings.
Guidance
Q3 2025 GTV expected: $9.0–9.15B (+8% to 10% YoY).
Adjusted EBITDA: $260–270M, showing operating leverage despite cautious brand spending.
Company reiterated goal of year-over-year EBITDA growth as % of GTV for FY25.
Capital Allocation
Repurchased $111M in Q2, raising buyback authorization by $250M.
Total cumulative repurchases: $1.6B as of Q2 end .
Cash and equivalents: $1.7B.
Stock-based compensation: $105M in Q2 (up $39M QoQ due to equity refresh). Expected to decline in Q3.
Macro & Demand Trends
Large CPG brands are cautious, pulling back on ad spend due to “uncertainty in the environment … tariffs, regulation, consumer shifts”.
Growth is being driven by emerging and midsize brands, filling the gap left by large CPG cutbacks.
Grocery remains “one of the least penetrated online categories in commerce,” with “lots of runway”.
Competition & Partnerships
Instacart’s share of digital grocery sales is 3x larger than the next competitor .
Continued deep integrations with major retailers (Costco, Kroger, Publix) and new onboarding (40 net new retailers in 2025 so far vs. 30 last year).
Uber Eats partnership expanded restaurant use cases, driving frequency.
Retail media scaling: 7,500 brand partners, $1B run-rate .
AI & Technology
“More than 80% of the code we deployed in Q2 is AI-assisted” .
AI boosted productivity: 30% more code merges per engineer YoY .
Sales team “tripled account outreach … with twice as many meetings booked” due to AI automation .
AI also enabling personalization (e.g., substitutions, dietary-based recommendations) and in-store technologies like Carrottags & smart carts.
Expense & Headcount Trends
Efficiency gains from batching: 25% of priority orders now batched while still delivered in <30 mins.
Shopper pay efficiencies redirected into affordability initiatives: lowering basket minimums, free pickup, targeted incentives.
No immediate OpEx reductions from AI adoption, but company highlights discipline in spending.
10 Notable Quotes
“Our share of sales is more than 3x larger than the next player” .
“We grew gross profit per order to over $8 in Q2” .
“GAAP net income was $116M, up 92% year-over-year”.
“More than 80% of the code we deployed in Q2 continues to be AI-assisted” .
“Paid Instacart+ members are growing … engagement as a % of monthly users continues to deepen”.
“We had 40 net new retailers this year alone, compared to 30 last year”.
“Advertising and other revenue grew 12% YoY, modestly outpacing GTV”.
“We completed $111M in buybacks this quarter and increased authorization by $250M”.
“We are seeing new 2025 customer cohorts show better retention than 2024 cohorts”.
“Becoming an AI-first company has fundamentally changed how we operate and we’re just getting started” .
Q&A Highlights
Goldman Sachs (Eric Sheridan): Asked about conversion & LTV.
A: Growth comes from “deepening retailer integrations, new categories like alcohol, Uber Eats restaurants,” leading to stronger retention and Instacart+ engagement.Bernstein (Nikhil Devnani): Asked about grocery vs restaurant order growth.
A: Orders growth largely driven by restaurants and lower basket minimums; moderation expected in Q3 due to lapping restaurant launch.Baird (Colin Sebastian): Asked about enterprise adoption.
A: Storefront Pro and Carrot Ads are gaining traction; 240+ retail partners monetizing media via Instacart.Deutsche Bank (Lee Horowitz): Asked about ad resilience and CPG spending.
A: Large CPG cautious, but Instacart offset via midsize/emerging brands; online penetration stabilizing as inflation cools.Barclays (Ross Sandler): Asked about off-platform retail media.
A: Still early, but partnerships with Trade Desk, Google, Meta, Pinterest now fully integrated.Cantor Fitzgerald (Deepak Mathivanan): Asked about agentic AI world.
A: Instacart’s scale (100K stores, 13 years of data) gives it a strong advantage in AI-driven commerce.KeyBanc (Miles Jakubiak): Asked about Instacart+ and Costco.
A: Instacart+ penetration continues to rise; Costco partnership includes executive member discounts and deep platform integration.
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