Q2 2025 Maplebear Inc Earnings Call
Good day and thank you for standing by. Welcome to instacart second quarter 2025 Financial results conference call at this time, all participants on a listen, only mode
After the speaker's presentation, there'll be a question and answer session.
To ask a question during the session, you will need to press star 1 1 on your telephone.
Please limit yourself to 1 question and 1 follow-up, so that we will have enough time to address everyone's questions. Please be advised that today's conference is being recorded.
I would like to hand the conference over to Rebecca yoshiyama vice president of investor relations Capital, markets and Treasury.
thank you, operator and welcome everyone to instacart's second quarter 2025 earnings call on the call with me today, our Fiji SEMO, our chief executive officer and Emily, reuter our Chief Financial Officer
During today's call, we will make forward-looking statements related to our business plans and strategy.
Uh, impacts from macroeconomic conditions and our future performance and prospects, including our expectations regarding our financial results.
These four looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated.
You can find more information about these risks and insurgencies in our SEC filings including our last forum 10q.
We assume no obligation to update these statements after today's call except as required by law.
In addition, we'll also discuss certain non-gaap Financial measures which have limitations and should not be considered in isolation from or as a substitute for our Gap results.
A reconciliation between these GAAP and non-GAAP financial measures is included in our shareholder letter, which can be found on the Investor Relations website.
Now, I'll turn the call over to Fiji for her opening remarks.
Thanks Rebecca and hello everyone. I hope you had a chance to read my shareholder letter where I highlighted yet another strong quarter for instacart.
Our performance reinforces our Central. We are in helping Samuel save time, money and effort. When it comes to putting food on the table and the vital role we play in building the technology that will power the future of grocery together with our partners. Well, this is my last earnings call, as in the court CEO. I can't imagine a better time to step aside the strength of our business, and the opportunities ahead make me incredibly confident in the future. We've built for these companies.
It's clear that we are firing on all cylinders with extended supply advantage by building innovative technologies that make our service easier to use and more affordable while deepening our retail partnerships and helping retailers grow faster. This includes launching personalized shopping services, family accounts, loyalty integrations, and digital flyers to increase frequency. Offerings like our restaurant partnership with Uber Eats and industry-leading $10 minimum basket size for Instacart Plus members to waive delivery fees.
Together, our efforts are driving strong user growth and higher order frequency, while also delivering better retention, especially among new 2025 customers compared to last year.
members are also growing and that engagement as a percent of monthly users continues to deepen to
We have also for selling orders more quickly and accurately, an exceptionally tough challenge when it comes to Big basket. Grocery shopping. This is what our technology operating scale and data really set us apart, whether it's egg. V, inventory, prediction. New personalized replacement models store, planograms or real-time receipt scanning to catch issues where relentlessly improving every step of the process from helping you place. Your order order to when it arrives on on your doorstep.
In addition, experience, Shoppers will completed a median of over a thousand instacart orders now shop for nearly 2/3 of our orders.
Together over the past 4 years. These advantages have helped us complete orders, approximately 25% faster while achieving all-time highs in found and shell rates.
Percentage that is incredibly hard for competitors to replicate.
Another 1 of our biggest strengths is our in interconnected ecosystem. Improvements we make on our Marketplace, he directly into our Enterprise Solutions and vice versa, creating a virtual cycle. This allows us to offer scalable flexible tools that help retailers, innovate and compete. Especially at the time when the rate of technological change is only increasing.
This is evident in the velocity at which we're on boarding, new storefront partners and our capabilities are also benefiting big B2B players too. Like Costco business centers across North America.
With in store Technologies like keeper carts and Care tags were creating Omni Channel solutions that bridge, digital and physical shopping keeper cards. For example are now deployed in over 15 states and are growing globally with retailers like Aldi and calls. It's still early, but I'm incredibly optimistic about the role instacart will play as the retail enablement partner that will transform Omni Channel retail and accelerate growth across our ecosystem.
because of all our key advantages instacart continues to be the clear share of sales leader, amongst digital first players Based on self-pity data,
To put a finer point on this our share of sales is more than 3 times larger than the next player and we can continue to attract the most new GTV to the online categories.
Our leadership position is driven by our ability to meet customers full grocery needs, which means winning at Big baskets 75 and up because this is worth 75%, of grocery sales and even more of the profits consistently lives.
We can continue to activate big basket, customers at rates, multiple higher than others. And we are also far more effective at converting small basket, customers into big basket. Get customers.
When looking at our top 20 retailers that have gone non-exclusive, we see our growth on other platforms, eventually. Plateaus that grocery basket sizes remain under 75 and we Remain the share of sales leader among digital first players. That is retailers. This indicates to us that these players are fundamentally serving a different use case, and further reinforces the importance of our deep retailer of Integrations and Enterprise advantage.
Sprouts in particular is a retailer, that is more leaned into our services and based on third party data, we can continue to fuel the strong majority of their online sales while helping them grow faster than our overall platform too. Based on what we've seen to date, even if all our retailers were faced on other marketplaces, we remain very confident in our ability to remain the clear category leader amongst digital first players.
Overall, the strength of our operating model, reinforces our ability to deliver value for retailers and customers. In addition to strengthening our instacart's platform over the last 4 years, we scaled advertising, and other Revenue to now over 1 billion dollars in annual run rate while expanding from now over, uh, 4,000 active brand Partners to over, uh, 7,500.
By continuing to deliver leading performance and attracting more brands to our ecosystem, we're making our platform more resilient, driving more value to our partners, and extending our scale advantage as a top 5 retail media network.
Beyond our platform. We're also helping Brands more effectively, attract customers on board our sites like Google meta Pinterest. The trade desk in addition to now monetizing our consumer insights data which we believe will become even more valuable, as AI transforms our business operates.
Oh, strong financial foundation and operational, discipline uh drive all of this. We've grown gross profit per order to over 8 in Q2 we've achieved this for our Relentless focus on scale and efficiency, which includes batching more orders and shaving seconds and pennies off of our delivery cost per order.
At the same time we've made aggressive but discipline reinvestments into our business as well as deliberate Capital allocation decisions. We've made strategic Acquisitions to accelerate the growth and capabilities of our Enterprise offering. And cumulatively as of the end of Q2 with bought back over 1.6 billion dollars worth of shares, clearly demonstrating our confidence in our ability to execute
As a company, improving our customer experiences enabling faster product launches and making our teams more impactful, more than 80% of the code. We deployed in Q2 continues to be AI assisted. And now, we've also seen the volume of code deployed per engineer grow significantly with average, merges per engineer up, 30%, over a year. We're also using AI to automate code reviews and reduce Tech debt while transforming non-technical functions. For example, our sales team has tripled account Outreach to high priority accounts, which resulted in twice as many making booked meetings, booked and our legal team is spending significantly. Less time. Trials, triaging weekly emails becoming an AI first company. As fundamentally change how we operate and work, just getting started.
As we look ahead, I could not be more confident in Chris Rogers. As he steps into the role of CEO, he has played a pivotal role in everything we've accomplished, from scaling ads and enterprise partnerships to developing new growth strategies. Our business would not be what it is today without him. And that's why he is the perfect person to lead us into our next chapter. To further accelerate our lead in the years ahead, I know he's looking forward to stepping into the role and meeting with investors over the coming weeks, and I can't wait to see the impact that he has in this seat.
I want to extend a deep thank you to all of our shareholders for your confidence and support. It's been an immense privilege to serve as CEO over the last four years. Thank you. And now, I'll pass it over to Emily to cover our financials.
Thank you. Fiji. It's been an honor to work with you and on behalf of the team, we're grateful for the incredible Vision strategy and Edge, you've established in instacart. There's so much momentum for us to build on. And I'm confident in all that's ahead for us.
Now let me provide a bit more color on our most recent Financial results and Outlook.
We delivered strong Q2 results across the board. We do GTV by 11% year-over-year driven by 17% growth in orders which came from both order frequency and user growth.
As we anticipated, our average order value decreased by 5% year-over-year, primarily due to the addition of restaurant orders and our lower basket. Minimum of $10 for instacart Plus members. Partially offset by growth in basket size is elsewhere.
Transaction Revenue, grew 11% year-over-year held steady at 7.3% of GTV year-over-year and increase from 7.1% quarter of a quarter.
While this is sequential expansion, was primarily driven by Shopper efficiencies as a reminder, we expect this Flex metric, May fluctuate quarter to quarter as we reinvest in growth opportunities and manage multiple levers across our p&l.
Advertising and other Revenue, grew, 12%, year-over-year modestly outpacing, anticipated, GTV growth as we expected this performance, demonstrates, The increased resiliency of our ads platform as our diversification efforts are working for example, in Q2, 1 of our largest brand Partners pulled back from some of their ad, spend due to macro uncertainty and reasons, specific to their business.
A year ago, this pullback would have decreased our advertising and other Revenue year-over-year growth rate by several percentage points.
But as you saw on our strong results, we were able to more than offset this pressure with growth from emerging and mid-size brand partners.
in Q2 advertising and other Revenue was 2.8% of GTV which remained flat year-over-year even as we've scaled restaurants which contributes to our GTV but is not advertising addressable
Overall profitability remains Strong. Gaap. Net income was 116. Million up, 92% year-over-year and adjusted. Eva was 262 million up 26% year-over-year.
We also generated operating cash flow of 203 million. A decrease of 41 million year-over-year primarily due to fluctuations in working capital.
On a trailing 12-month basis. Operating cash flow was up, 21% year-over-year.
In Q2 stock based compensation was 105 million up 39 million quarter of a quarter, which we expected due to the timing of our annual Equity refresh grants.
We anticipate stock-based compensation to be lower in Q3 versus Q2 primarily due to just over 20 million dollars of reversals associated with previously announced executive departures.
In Q2 we also bought back 111 Million worth of shares and authorize a 250 million dollar increase to our buyback program. We ended the quarter with 30057 million of remaining buyback capacity and approximately 1.7 billion dollars in cash and similar assets on our balance sheet.
Looking ahead to Q3, we anticipate GTV to range between 9 and 9.15 billion reflecting year-over-year growth of 8 to 10%.
Ation compared to Q2 as we lack the First full quarter of restaurant contribution.
We also guiding to Q3 adjusted Eva of 260 to 270 million. This reflects our expectation of advertising and other Revenue, growing year-over-year in line, with anticipated, GTV growth in the period. A solid Outlook given the cautious approach. Some large brand partners are taking in today's macro environment.
This is highlights our continued ability to deliver year-over-year, adjusted operating expense. Leverage. Remain well, on track to achieving year-over-year growth in adjusted. VA both in absolute terms and as a percentage of GTV in 2025,
Our business continues.
To perform strongly and what we are. Well, positioned for long-term success, with a solid foundation of operating a business fundamentals, we are making deliberate Investments to further Drive profitable growth and strengthen our leadership. In the category with that, we will open up the call for live questions, operator. You may begin
As a reminder, to ask a question, you will need to press star 1. 1 on your telephone, please limit yourself to 1 question and 1 follow-up, please. Stand by while we compile the Q&A roster,
Our first question comes from Eric Sheridan with Goldman Sachs, your line is open.
Thanks so much for taking the question in Fiji. Thank you for everything and wishing you the best in uh, the roles ahead. Um, I wanted to come back to some of the comments feed. You you made about the competitive landscape more broadly. When you think about the array of Supply that the companies bringing in to the ecosystem and widening out the experiences that consumers have, can you talk a little bit about Improvement in conversion and frequency of behavior? And some of the things that uh we should be thinking about in terms of um LTV across the landscape, as we look at how the company evolves in the years ahead. Thanks so much.
Thank you so much, Eric. Um, yes. So we think of, um, Supply in many different ways. First is continuing to onboard, uh, more retailers, but also it's all going deeper with existing retailers. And that has been a very, very large source of for growth. Whether that starting to power of the Enterprise sites, expanding with them into new categories, like alcohol, uh enabling more services with them. Like if it is snap um or all of these deepening of Integrations is the way uh to unlock more selection and uh more services with retailers in general uh in fact um this is very much working because with all of the technology uh improvements we've made to our Enterprise platform. We are not able to onboard these retailers much faster and we had you know, 40 net new retailers this year alone.
Compared to 30 last year. So that gives you a sense of the acceleration in bringing that Supply, not just online, but, um, actually powering their own websites as well. Um, this is a part of the market that we have access to that others don't. And that gives us a very, very strong competitive Advantage. Uh, in addition to that, we have continued to add new categories to our supply. Obviously, uh the Uber is partnership is contributing uh a supply of restaurants which is uh increasing the the types of use cases on instacart. We continue to grow in retail and uh in new verticals and all of that combined is contributing to the strong user growth that that we're seeing and higher order frequencies. Um, it's also contributing to better retention, uh, we call that out, but we are seeing that especially, uh, with the new cohort that we are acquiring in 2025, showing better retention than the 2024.
Cohort, uh, at the same time. Last year that's also translating in paid in stock, Plus members are growing and deepening in engagement. Uh, because as we unlock more Supply, obviously, they have, uh, you know, more um, uh, more selection and and more things to do on the site. Uh, we are seeing that in SC plus customers have shops at on average, um, more than 5 different retailers, and that shows you that, you know, selection really matters and of
Selection lead, uh, continues to be a very critical advantage over competitors.
So much.
Our next question comes from Niko devani with Bernstein, your line is open.
Think of it as as 1 EC but it would just be helpful to understand if grocery orders, and GTV also accelerated this quarter. And then I'll follow up with my second 1.
Hi there. Thanks so much for the question. This is Emily. Um yes. So so as, as you mentioned, we really do. Think about um, the overall ecosystem driving, uh, performance, both in orders and GTV, uh, because there is a, uh, reinforcing effect that you get from, uh, product, like restaurants, in terms of consumers, coming to the platform or ordering on restaurants. And when they do that, we see them come back and order more frequently from grocery. Now, that all said, uh, as we talked about, you know, the impact, if you look over the last, you know, several quarters, in terms of order growth, what you've noticed is there has been a meaningful acceleration in orders growth and that has been largely driven by 2 things. Uh, the first is, the addition of restaurants which has a higher order frequency, uh, use or is a higher frequency use case, as well as more recently, the introduction of uh, lower minimum basket size. So, um, just in sort of acknowledging that of course what we're saying here is that those are factors that are definitely driving overall orders growth. We also
Also mentioned earlier on the call that, um, as we move into Q3, we would expect, you know, some moderation and orders growth. And that is, of course, driven by the fact that we are lapping. The First full quarter of restaurants contribution uh from from a year ago. Uh so definitely, you know, playing a role. But again what we're happy to be seeing is the fact that our suite of products is driving more engagement on the platform, more order frequency and then that flywheel back to grocery where we're seeing more engagement on the grocery side as well, and then just on the Q3 guide commentary there. So, uh, the the Uber Eats lapping commentary is clear, um, on the grocery side of things, are you seeing any moderation, or embedding any moderation there as well? Or um, is it predominantly just the the comps in in restaurants that you're flagging here?
That was on the restaurant side. I think, from a, from an underlying Dynamics perspective, we're really pleased with what we're seeing really across the board, right? So, uh, you know, Mao growth, we're seeing, uh, order frequency growth, um, as well as, as CG mentioned, uh, some really great Dynamics around customer retention, uh, with customer retention in 25, uh, stronger than what we saw in, in the same sort of time period in 2024. Uh, so overall, uh, and then maybe 1 1, more thing to add is just on the instacart plus engagement and the penetration of instacart plus as a percentage of overall amount, you know, continuing to grow. So
So, uh, so nothing to add really specific to grocery. Again, we do look at it on a platform basis, um, but uh, but as we think about the guide, the primary impact, I would think about is on the restaurant side.
Thanks Emily. And all the best CG in the new role.
Thank you so much.
Thank you. Our next question comes from. Colin Sebastian, with beard. Your line is open.
Great, uh, good afternoon and and Fiji best wishes good luck and hope to cross cross paths again, as well. Um, I guess I'd like to talk about the instacart platform. We hear a lot about storefront Pro and priority delivery, but maybe you could talk about which parts of the platform are getting the most interest, how much cross sell opportunity you have, and how the Enterprise pipeline looks like, including even outside of grocery. Thank you.
Thank you for the question calling. Um, so you all right, a big part of the focus is, uh, on storefronts because that's really the kind of first product you want to sell when you expand platform. So, that, um, all of these these retailers working with us, can be powered by our Technologies, uh, on their own and operated, uh, website. And that's why we've invested a lot in this platform, and now it's paying off both. In terms of the ability to onboard more new retailers, as well as good deeper and add more functionality for existing retailers, um, and allow them to do more things on their own property. Like, add
Data retail, media business on Devon, but by joining our Network, they are able to create a completely new profit line really overnight and that has resulted in us having over 240. Kat Partners in a really like short amount of time. Then on top of that, um, you know, we see retailers asking us to expand Beyond powering their online properties to powering their their, um, their stores as well. And that's why we have invested in of, in stock technology which keeper and Care tags. And we are seeing a lot of, uh, virtuous circles between um, uh, these 2 Technologies. So, for example, uh, if you are, uh, deploying keeper inside your stores, you can tell customers after they're done, purchasing in a keeper car to reorder all the items, it just sold out in store, you can like ask them to reorder them online on your website. And maybe give them, you know, a coupon to be able to do that. So that
Drives. Um, you know, uh, the acquisition of multi-channel customers which are more valuable than online, only customers or the installer on the customers. Um, career tag is another example where by powering, um, uh, you know, uh, Peak to light on electronic shelf tags inside retailers. Uh, so we are able to improve the, um, uh, the quality of our online orders because it allows our Shoppers to find these items a lot faster.
And now we have, um, you know, carrot tax, powering, 10% of orders, which is, uh, really incredible knowing that, uh, it increases fund rate and shell rate. Uh, meaningfully. So very excited about all of that. Really, really glad for the question, because Enterprise is 1 of the most underappreciated parts of our business and a really critical Advantage, uh, that other competitors are really not able to touch.
Thank you.
Thank you. Our next question comes from Lee Horowitz, with Deutsche Bank, your line is open
Great, thanks for the question. Um, wanted to spend some time on ad Revenue. Um, I appreciate the resilience, you guys highlighted in the breath of customers that are are allowing you to deliver that. Um, I guess, you know, add penetration was stable, I think you guys had pointed to that being up. Um, I just wonder if you give any update on what the cpg environment looks like today versus what you had mentioned before, there's still some concerns and how do you think that maybe May evolve over the back half of the year and into next year? Thanks so much.
Yeah, thank you for the question. Yeah. We all very proud of the resiliency, of our right as revenue and um, the fact that the diversification strategy is working the investment rate, uh, as indeed remains stable when it comes to cpg environment, I would say, it's similar to what we've we've talked about before, which is that there is a lot of uncertainty in the environment. Uh, that's not just
Terrorists. But I would say regulation at large, was that it snap who dies, Etc. And all of these puts additional pressure on companies to deliver on their profitability objectives and that comes on top of other business specific challenges including ongoing changes in consumer preferences. Like for example we're seeing fast growing interest in high protein snacks and breakfast food, the lower sugar and natural soda options, less processed foods. So if you have a large cpg that you know, is not um doesn't have a portfolio. That index is heavily towards that, you are having to make a lot of decisions, kind of reposition, your portfolio and really optimize for profitability and that puts a dampen on your ability to invest. And so that's what we're seeing. Primarily with a large guys, I would say who are taking a little bit more of a wait and see, approach are really trying to figure out how to optimize profitability, uh, during, uh, you know, a time of change. But the good news,
Is that, uh, you know, during this time what we are also seeing is that, uh, when cpgs fall back some spend, uh, it allows, um, emerging Brands and Challenger Brands to really rush in and gain chef. And so, large cpgs are realizing that that's not a good long-term strategy, uh, and that, you know, the right strategies to continue capturing the online customers as these customers Move online, because it's much more expensive to regain them.
And then maybe just 1 follow up on on the online grocery industry at large, you know it it seems to us that over the past several quarters uh sort of digital penetration rates of the industry have have gone up quite nicely after being fairly stagnant for some time despite the fact that inflation has remained fairly sticky. I wonder from your cpg, what you're maybe seeing that's sort of supporting that for the overall industry where you're able to grow well competitors. And the like any shift, you're seeing in demographic, Trends pricing Trends, anything that you would maybe point to that's perhaps driving driving that shift more recently.
Question, which is, uh, you know, kind of like price sort of stabilizing. Uh, that's that's always, uh, something that we look, uh, closely at. And certainly during a time of, uh, inflation. We saw that dampen our ability to, uh, grow online penetration for the industry in general. Now that the stabilized, uh, that certainly, uh, much more encouraging at the same time. The time is like, massive, you know, this remains 1 of the industries. That is the least penetrated online among all of Commerce. Uh, so there's a lot of Runway to go. And what we're seeing in particular with regards to ccpg is that, um, the, the the brands are really seeing the next 5 years, as the biggest opportunity, to gain, share or lose, share of, depending on how they please have called, uh, given that, uh, customers are moving online.
And when you move online, we do certain brands, we stand to, they tend to stick uh to that particular brand online. So it's really critical to capture the the online customer as they move online. That's why it's so critical that uh, we can continue to have the leading, uh, ad performance in the market that really allows Brands to uh, capture that customers with the highest uh efficiency.
Okay. Thanks so much and best of luck moving forward.
Thank you so much.
Thank you. Our next question comes from Ross, Sandler with Barclays. Your line is open.
Great, thanks. And Fiji I know your first job over at the new place is going to be wiring up operator so we can all order our instacart through the uh the so uh no jokes aside. Um just to follow up on the advertising question. Um I think we all understand the the the macro weakness and large cpg but if we look at stronger growth in emerging Brands and then all this new kind of off-site retail, media Network and stuff with with like Pinterest and and TTD, um, how should we think about those 2 areas the emerging Brands and the off-site data deals in terms of contributing to overall ad Revenue growth? Like 1 of those is going to be big enough to to move the needle relative to uh the the big cpg. Thank you.
Yeah, thank you for the question. Uh, so the way I think about it is 1 divers is working. Uh, we've been talking about it for a while and we are seeing the results of that, uh, in what Emily was talking about in, uh, at at, in our intro, uh, we saw 1 of the largest Brands really pull back, some of their spend, and we were able to more than compensate for that, uh, with strength in both emerging Brands and midsize brand. Uh, so really a lot of strength across these segments, uh, whereas a year ago, it would have, you know, taken us down, uh, by several points of growth. Uh, we have built a lot of tools for emerging brand and midsize brands for them, uh, to be able to ramp up on our platform. Uh, a lot of AI tools that are allowing them to, um, operate their campaigns much more, uh, efficiently, whether that's AI generated, um, you know, landing pages, whether that's AI optimization and, um, you know, new goals.
That they can, uh, specify that we can optimize for. So all of these new products. Uh, Innovation is really working in in, um, attracting emerging Brands and allowing them uh, to uh, very high performing campaigns on the self-serve basis on the off platform side. I would say, um, it's slightly earlier in its Journey. Uh everything we've done to date has been more about establishing very strong foundations of former ships. And you've seen that with, you know, Google
Uh, on the trade desk and now really specify, uh, a set of audiences using instacart data and purchase programmatically directly, uh, from the trade desk. So, we feel like we have all of the right capabilities in place. All the right measurements, right? Performance in place with these platforms there to be able to scale. Uh, and that's, um, you know, that's, that's still small now. But we expect it to grow over, uh, over the, the future. Uh, given that, uh, we feel like we have now to fundamentals there.
Thank you. Our next question comes from Andrew bun. With citizens. Your line is open.
Thanks so much for taking questions, um, you highlighted gains in batching on the letter. What I'm trying to understand is whether you guys have now more dollars to put towards promotion or customer acquisition or however you want to frame that today versus a year ago. So can you talk about the game that you're getting from batching and then how you're deploying that and kind of the intensity of that? And then CG in your prepared remarks, you talked about the efficiency of AI, That's, that's coming across. Kind of the, the platform on the back end. Can you connect that either to headcount or Opex, or what should our expectations be as AI? Is just more broadly deployed across instacart from a cost perspective. Thank you.
Thanks so much for the question. Um, so so on the first part, in terms of, uh, gains in batching, so what I'd say is, you know, we have had gains sort of broadly in Chopper, pay batching is, is 1 piece of the equation that we've talked about, but really finding ways to optimize the shopping Journey really from beginning to end. So, uh, so batching is is a piece of the puzzle, but, um, Shopper pay broadly is an area that we've driven. Uh, pretty meaningful leverage over the course of the last few years as we've really squeezed out efficiencies, um, as you pointed out batching has been a key area where we've been able to do a number of things, that's increasing the number of orders per batch, but it's also increasing the types of orders that we can batch. So that we mentioned that 25% of our priority orders are now batched and we're still able to, uh, complete those in a way that um, gets those orders to our customers, uh, on the same time frame, which in many cases is under 30 minutes which is uh pretty incredible to see um, in terms of
What are we doing with those savings? Um, we talked about this in the past, we really are looking for ways to reinvest that across a number of different areas. So you mentioned in incentives. That's definitely something that uh, we look at in an in. And when it's the right opportunity, when we think that we can meet the consumer at the right point, in their customer journey to change a behavior and ultimately create a more retentive consumer. Um but actually, it's broader than that. So a couple other examples of places
Is. Yeah, you will have seen us invest. Um, obviously we've talked earlier this year about reducing the minimum basket size, uh, that is something that, you know, ultimately drives down. Um, uh, you know, is a is a, is a negative to transaction Revenue, but we can fund that because of the tremendous gains we're able to get on Shopper pay. So that's just 1 example. But you can imagine a whole host of things that we've done over the course of last year, making pickup free as an example, as I just mentioned, reducing the minimum basket size, um we are ultimately focused on trying to drive affordability for the end consumer and so if we can drive gains in Shopper pay and you know give that back to the consumer. Informs the cheaper delivery as an example or better targeted incentives. Those are the kinds of areas that we're uh we're looking to Double Down.
Sorry, can you repeat the second question?
uh, AI assistance is and anything to note, in terms of headcount or Opex, that we should be thinking through is, is it's further deployed across the platform
Great thanks. Um, so at this stage, you know, nothing to call out. I think we are certainly very focused on AI adoption across the company. As as PG mentioned earlier, uh definitely uh AI first in terms of how we think with you know, greater than you know, 80% of our code uh that we're generating today, AI assisted. And really it doesn't stop with the engineering team. Uh, we gave a couple of examples earlier but all of our teams are looking for ways to become more efficient now. Uh, we don't have immediate plans to, uh, have that have an impact from an Opex perspective, but what you
Seen us do to date is to be able to continue to grow this business while being incredibly disciplined from an Opex perspective. And so from, you know, a first principle standpoint, I think that's the first way that you'll see it come through, um, over time as we're able to really translate these gains, uh, maybe that's something we could see. But, um, not something we're committing to at this point in time.
Thank you.
Thank you.
Our next question comes from Shredder, Kajura with Wolf Research. Your line is open.
Advertising.
As you develop your app deck stack, um and your advertising business in general, are you thinking about you know, on platform advertising versus perhaps uh some of the Partnerships that you are uh getting and and expanding into um for non-inherited terms of contribution to your business. Thanks a lot.
Yeah, thanks for the question. So the way we think about it is that we really want to become the 1 shop shop for All cpg Brands. And we're well along with doing that. We have a top 5, retail media Network, and what we're hearing from the cpg brands over and over again. Is that 2 things matter, scale and performance and we are able to reach, uh, maximum scale through. 180000 retail is on our Marketplace, more than 240 Care at that spot levels. Um, but also through the of of site policy that, uh, I mentioned earlier and in the future. Um, you know, scaling, uh, in store as well, to add some keeper cards, which are really kind of the Holy Grail of advertising of combining, the advantages of online advertising, but in any install environment. Um, and so our view is that advertisers should come to us because we can actually optimize for their goals across our entire network, and that's why we've really invested.
In what we call Universal campaigns and optimized bidding, which is a way for advertisers to tell us, um, you know what, our budget is and what our goals are and for us to optimize their campaigns across our entire network across, all of the pieces of the network, both on on platform and outside of the platform. So we're not, um, we're really thinking about it as like 1 Network and advertisers are thinking about it as 1 Network. Um, they are telling us that they do not have the bandwidth nor um, desire to spend, uh, you know, a lot of their energy on sub-scale. Uh, retail media Network and this year as as the aggregator for the industry across, you know, all of the different retailers that we already have. Uh and that's a very big part of our value proposition. Um you tell me guys so very new. We feel like we're very well positioned by being uh that aggregator
Okay, thanks CGI. And wish you all the best?
Thank you so much.
Thank you. Our next question comes from Stephen Fox with Fox. Advisors, your line is open.
Hi, I had a few questions too, from a big picture standpoint, you mentioned personalization in your letter and I was just curious if there's any kpis that you're tracking in, in particular that shows success, there or anything you can describe as recent and future success and then Emily. I was just curious just on the cash flows. It looks like what you're describing to us. I can half of the year is sort of seasonal.
From a working capital sampling? I don't know if that's correct or not, but if you could help on that, thanks.
I'll take the first 1. So personalization is 1 of the biggest.
Of doing grocery online versus in store. So that's why we really want to lean into that. And all of the advances in AI are really helping us take the 13 years, we have of proprietary data and nearly 1.5 billion lifetime orders. And really put that data to use uh by uh personalizing the experience. Um, I would say that customers would use it to cut frequently are seeing a ton of personalization across the board. It starts with the basics, like buy it again, which is used by more than 3 quarters of our customers to buy at least 1 item to the much more sophisticated things. We've done more recently like AI pairings. What if you had avocados we can Surface items. You may need for guacamole or Smart Shop, where uh we have uh created you know Health Stacks personalized shopping aisles for like organic products. Gluten-free products all the way to like new recommendation models for substitution that take into account your uh, dietary needs.
It's all working and all driving more engagement across all of these segments. So uh we're really excited about what we're seeing.
I can jump in on the the cash flow question. So what I'd say about, uh, cash flow for us, is a little less about seasonality and more about. There's there's certain elements to our business that can, uh, Drive fluctuations quarter to quarter in terms of flow through to cash flow. Uh, so what I mean by that is, you know, occasionally, those are related to, uh, just delayed retailer payments. So we saw that, uh, you may recall in the back half of of last year where we had a bit of an AR build up that, you know, we unwinded in in q1. So you saw, you know, some impact there. Um, some other areas of the business that just have longer payback periods, include alcohol and EBT SNAP. So, depending on the timing of launches, and and sales around those categories, those can result in some lumpiness to to cash flow. So, the way that I think about it is that, uh, we will likely, uh, expect to have lumpiness over time over sort of multi quarter periods. Uh, we do sort of Trend in line with ibida uh from a flow through perspective. You know, if you think about
2024 flow through. Um, what I just commented on meant that our our overall Eva data to for cash flow rate was slightly depressed because of that our build up in the back half of last year. So I'd say I'd say that is what sort of on the lower end of what we'd expect to see. But again a quarter to quarter, we will see fluctuations.
Great. That's all very helpful. Thank you.
Thank you. Our next question comes from Jason helstein with Oppenheimer. Your line is open.
Uh, thank you for taking the question. I'll just ask 1 busy night. Um, so I guess what will it take for advertising to accelerate? Do you need a healthier cpg spending environment, broadly, or their actions? That that car can take to improve to drive more demand. Thank you.
Thank you for the question. So I think it's a combination of, uh, things first. Um, I think we have plenty all of the right seeds to, uh, you know, make sure that advertising can continue to thrive in the future, uh, and I touched on some of them, but obviously continuing to have leading performance continuing to invest in our measurement, capabilities to demonstrate that performance. Continuing to diversify the business, we're on a great trajectory there and the more we diversify, the more we can lean into emerging and mid-size Brands which are growing faster than than the rest and investing more of their GTV into advertising that allows Brands and then I also touch on gaining more skills through all of the actions. We are taking to expand our Network to carats keep our ads. Um, and, uh, upside down ships. Uh, so we remain highly confident in our ability to uh, reach, you know, the 4 to 5% investment.
Rates that we had talked about, uh, but On Any Given quarter, there's going to be some puts intake. Um, so sometimes as you mentioned, we are seeing, uh, you know, some, uh, large Brands. Pull back. We are able to more than compensate for that with, um, um, the strength in other segments. But obviously, if we were operating under a better macro, uh, we would see more strength. We, in fact, so that in q1, where, uh, in q1, we had, um, higher advertising growth, uh, and that's because we saw strength in both emerging Brands, uh, as well as a lot of Brands, uh, in parallel. So, uh, certainly the macro would make things easier, but at the same time, uh, we really believe that, uh, with all of the initiatives that, uh, We've, uh, put in the work, we have the levels to grow in the future,
Thank you. Our next question comes from Michael Morton with Moffett Nathanson. Your line is open.
Hey there, thank you for the question. I wanted to talk a little bit about affordability initiatives. We've heard a lot about that from the grocery delivery industry. What we've seen this year is some of your direct competition has tried to get more competitive by following you into the fee reductions on small baskets, and it's clearly not impacting the momentum in the business. So, what I would love to learn more about is what you've learned in the...
Take great. Anything would be great. Thank you so much.
Rachel, I'll have a million dollars second all but I'll insult the first. So, on our affordability initiatives. Um, first off, I want to clarify that, um, you know the change we made small baskets is 1 Factor but our affordability strategy is much more broad-based. Uh, we are, um, you know, getting more adoption of Flyers of loyalty linking uh of um, a variety of of affordability initiatives. And we are working with our retailers to continue to dynamically, uh, adjust their markups, and with some, uh, go all the way to price, parity. And we've made some progress with Farmers like snacks with Patterson group in Canada launching at price, price priority, uh, and more and, uh, we think that's incredibly important because, uh, price parity retail is outgoing faster on the platform than nonpf price, parity retailers. So, uh, really what we see is that it takes a multi-prong approach of delivering, a full
Affordability through many different ways to the end customers. Um, and uh, we're very committed to all of these, uh, different levels on the Standalone minimum basket. Change specifically, what we have seen is that it has allowed us to grow, uh, g2v overall and grow frequency without cannibalizing large baskets, which is really important because, uh,
Uh, you know, that's, uh, that's something where we really wanted to address all of the needs and not, uh, you know, uh, shift the mix. And that certainly, what we've seen, it was very incremental and has allowed us to tap into the kind of Top-Up use case, uh, for these customers. So we're really excited about what we're seeing. That's why, uh, you know, we're very committed to this change. Um, but, uh, I would say generally, or affordability changes, go, are not broader than this particular change.
Yeah, on the saw basket unit economics. I think, you know, first and foremost, I would just say, you know, before thinking about the unit economics, really? What we're trying to do is create a platform that is there for our customers, for all of their shopping needs. And, you know, we know that the majority of shopping happens in large baskets, large, weekly shops, but we also know that customers have use cases when they need to do a fill-in shop midweek, or forget something or have a, a sick kid and need something from the pharmacy, and we want to be able to make sure that we're there for them. And so that's really a big part of the focus on lowering the minimum basket size and really lowering the Threshold at which customers think of instacart as a, as a, uh, provider for, for all of their needs. Um, so that's kind of the starting point. I think how is instacart able to, uh, create a price point that is sort of best in classroom minimum, basket size. And that starts with the fact that we have already an existing large network with density of orders that
All of these stores. So when you reduce the minimum basket size, you layer on what are incremental orders to an existing dense network? Uh, that means we're able to serve these orders out of the gate that economics that are already, you know, much better than you would be if you're starting from from scratch. So our starting point, you know, when we did this back in the earlier part of the year was, hey, we can do this out of the gate at economics. We like, that, doesn't mean, uh, that's where we're satisfied with and you've seen that in some of our commentary around um, strategies like batching, right? So we've continued to drive up uh batch rate. We've increased uh orders per batch meaningfully over the last couple years. And you've seen us talk about now batching 25% of priority orders, which we think is again, really incredible? Because we're still getting these orders to customers, uh, you know, in under, you know, media and 50 minutes in in many cases, under 30 minutes. And that is really a key part of our success to driving the unit economics here. Uh, so we're seeing the engagement. We like to see from consumers, uh, we're seeing those incremental orders. We're not seeing trade down to these orders, which I think is
Really, really important when you think about the economics. Because as long as we can do these orders at economically like and we're not hurting our existing base of business, then we think of this, as, you know, truly additive to the overall ecosystem. And we know that if we engage, you, uh, more regularly throughout the week, uh, ultimately, what we hope is that that drives you back to instacart for your weekly shop more regularly. So, uh, really focus on the overall, uh, use case, making sure that we're there for customers regardless, uh, and we're very happy with uh, being able to serve those uh, serve those.
These cases for customers.
Thank you.
Thank you. Our next question comes from Deepak, Mata vannin with Kendra Fitzgerald. Your line is open.
This affects marketplaces like instacart as maybe agents, take a more prominent role in transaction activities directly on the marketplaces. You know, where would you say Chris and team should be focusing. Uh, and putting their actual rated product development efforts, for say the next 6, to 12 months, as they get the tech and plumbing, ready, potentially, for more independent, agentic world.
And then, uh, the second question, another big picture one. I mean, we've now seen delivery growth pretty much accelerate across all three large players in the U.S., including you, Uber, and DoorDash. I know there is a unique aspect for reach, but do you think there is some kind of high-level theme on whether there is a new leg to user growth or consumer behavior for these services that we are finding right now? Thanks so much.
Thank you. So, on your first question.
The main thing that I think is, um, a good principle for instal to follow is that, uh, we should always be. Well, well, users are and as long as you can provide a better experience, uh, you can always find a way to monetize that. So in terms of uh, you know, where to go with agents, I think integrated GP with these agents that uh we can make it easy for agents to uh you know, browse oxides and actually pick. Uh, the right items for the customer or is going to be really critical. I happen to think that in really
Critical advantages in an energetic world. Uh, thanks to the selection that we bring to the table of, you know, 8, uh, 1800 different retailers 100,000 stores, uh, you know, a ton of, uh, different products and, um, and do doing that with, you know, data sets that are incredibly Rich that we've collected over, uh, you know, self self-interest here. So, uh, I think we're really well positioned and it's really a matter of, uh, you know, figuring out the right Integrations, right? Um, you know, user experience, which I think is so very early and embryonic, uh, and then figuring out monetization. Once, uh, you know, the use of experience is nailed. Uh, but very, uh, very optimistic about opposition there. Uh, in terms of, um, the delivering growth accelerating across the market. Um, I would say, you know, it points to the fact once again that uh, grocery is still very end up in a traded, even with this, you know.
Wave of growth, we are still vastly behind other categories of Commerce, with lots of room to go. Uh, and I think you our service is getting, uh, better and better, and that's why you're seeing, you know, uh, this accelerated growth. We think that, uh, we are, uh, improving the experience across all aspects of selection, affordability speed, uh, and quality. Uh, and obviously, you know, continuing to deepen our lead in, uh, in our ability to deliver these orders with, um,
The best customer experience. We have also seeing that retailers are really leaning in and realizing that uh again the next few years are going to be a really big opportunity for them to either gain share or lose share. And we're seeing them, lean into their Enterprise properties, which again, gives us a very big Advantage because we power those. And when we tell us our leaning in so, usually directing their dollars at on an operated properties more than third party Market places. And so we're benefiting from, uh, these retailers really wanting to accelerate their online growth. And as powering that online growth, um, and in general also these retailers leaning into affordability as I mentioned, uh, which is also accelerating market adoption.
Got it. Thank you so much, and I appreciate all the help over the last several years.
Thank you so much.
Thank you. And our last question comes from Justin Patterson with KeyBank. Your line is open.
Great. Thanks for taking the question. This is miles on for Justin. Uh, would like to go back to instacart Plus on your comments of of penetration, increasing their. Um, you know, you guys have added. A lot of value to the membership over the last year. So curious, if you could just provide any more information on how you're seeing adoption Trend or behavior within uh, members, like retention and or order frequency.
Or anything on that. And then one follow-up on the Costco partnership. I thought that was pretty interesting. Should we be expecting more of these unique retailer offerings moving forward, or is that just more of a one-off, with Costco being such a big retailer? Thank you.
Deep Integrations with a lot of our retailers with Costco obviously. Um, it takes a particular forms because they have, uh, a specific business model, and we are very excited to be, um, doing a partnership with them to, uh, offer, uh, discount on for executive members on, um, you know, any orders on Costco Sunday or on instacart. Um, I assume that's the 1, you're referring to, uh, so very excited to be able to get so much exposure, uh, to that tens of millions of executive members. Uh, but if you look back even at the history of our Costco, uh, there has been many times where we have done, you know, this these types of, um, uh, Integrations with them whether that's powering their entire SMD site expanding with, um, you know, Costco Business Center, uh, more recently in Canada, uh, whether that's, you know, powering uh, snap for them, whether that's um, you know, doing all kinds of of integration.
And so I don't think um it's uh we should consider that 1 of these are things that we do with a lot of our retailers. Another example just this quarter is uh with public who are powering their um storefront um app uh for delivery. Uh but now they integrated that directly into their main app. It's a very deep integration, very strategic for those companies uh and allowing us to drive more growth. So these are the kinds of things that you can do. When
You are not just simply a Marketplace, uh, that, you know, retailers could their selection on but you are actually a strategic partner at the table with um, their strategic leader, their it department and really uh driving deep integration into the core business of these retailers uh, instead of, you know, being just a very thin layer of integration.
Only uh, inart plus question, I think it's a couple of comments that I would make their. So first of all, you know, Instagram Plus numbers. You continue to grow the engagement with the platform has always been strong, so it's accounted for the majority of activity for some time and continues to do so. Uh, and and the reason it's critical to us and and a big Focus for of ours is that these are the most loyal and high spending customers that we have. And so for that reason we, you know, find it attractive to continue to invest in the overall program. Um, because we know if you are an eincar plus member that, you know, over time uh you spend significantly more um uh GTV on average than non instacart Plus members. Uh, so so those are a couple factors. Uh, we are seeing now instacart Plus members represent more of our monthly users, uh, over time. And, you know, that's for a number of reasons as you mentioned making instacart plus more valuable. Uh, we now have over the last, uh, roughly a year. Uh, launched our restaurants product for for customers, we've reduced the minimum basket size to 10 dollars. Uh, we have, um, you know, reciprocal memberships things.
Looks like a peacock, a New York Times, cooking, Etc. And then, we've also expanded it so that, you know, family accounts allow, you know, multiple people to participate in a single instacart Plus Membership. Uh, and we know that when you shop with others, first of all, it's more convenient. Uh, you know, you can shop and, and all the adding to the same cart. Uh, but you also end up spending more too. Uh, so we love the instacart Plus Membership. It's an area that will continue to invest in, uh, but overall has been a continued growing part of our portfolio.
Great, thank you both.
Thank you, this.
Today's conference call. Thank you for participating. You may now disconnect.