Instacart forecasts weak fourth-quarter on tepid consumer spend

(Reuters) - Instacart (NASDAQ:CART ) on Tuesday forecast current-quarter gross transaction value (GTV) and core profit below estimates, in signs that spending on online grocery and food deliveries could temper in the holiday season amid sticky inflation.

Shares of the company, which have doubled so far this year, were down 7% in after-hours trading.

Competition has picked up in the online delivery space, building on a pandemic boom that allowed firms such as Instacart, UberEats and DoorDash (NASDAQ:DASH ) to diversify their product offerings and raise transaction fees. However, consumers have tempered spending as household budgets buckle under pressure from higher prices.

Instacart has broadened its retail tie-ups, adding companies such as Party City to its platform, while its partnership with UberEats brought restaurants on board for food delivery.

"With the grocery market still vastly underpenetrated online, we're taking an aggressive approach to reinvesting in opportunities that we believe can drive long-term growth while steadily expanding profitability," said CEO Fidji Simo in a letter to shareholders.

The delivery firm expects fourth-quarter GTV — a key metric that shows the value of products sold — in the range of $8.50 billion to $8.65 billion, below estimates of $10.20 billion, as per data compiled by LSEG. 

The target reflects tougher year-ago comparisons and an impact from a cybersecurity breach at grocery store operator Ahold Delhaize early in November, Instacart said. 

In contrast, rival Doordash forecast fourth-quarter core profit above estimates.

Instacart, also known as Maplebear , expects current-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) between $230 million and $240 million, below estimates of about $243.20 million. 

The company posted third-quarter net income of $118 million, or 42 cents per share, compared with a loss of $2 billion, or $20.86 apiece last year, and authorized a $250 million increase to its share buyback program.



Its third-quarter adjusted EBITDA of $227 million topped estimates of $212.08 million, while GTV rose about 11% to $8.30 billion, beating estimates of $8.19 billion.

Total (EPA:TTEF ) revenue of $852 million also surpassed expectations of $844.1 million.

Source: Investing.com