Maplebear Earnings: Solid Growth Is Underpinned by a Healthy Uptick in Order Volume

Key Morningstar Metrics for Instacart

• Fair Value Estimate: $42
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: High

What We Thought of Instacart’s Earnings

Maplebear (Instacart) CART posted 9% revenue growth in the first quarter, driven by a 10% increase in gross transaction value. Adjusted EBITDA grew 23% to $244 million, as EBITDA margin expanded 300 basis points to 27%.

Why it matters: The grocery delivery landscape is competitive, as third-party intermediaries (such as Instacart, Uber, and DoorDash) jockey for position and retailers (most notably Walmart) expand their internal delivery capabilities. Still, Instacart remains a leading delivery platform in the industry.

• Industry analyst Brick Meets Click estimated that industrywide grocery delivery sales grew more than 30% in the first quarter (likely led by Walmart). We think the robust growth may have been driven by an increase in deals offered to consumers by retailers and competing delivery platforms.
• Instacart’s GTV growth was underpinned by a robust 14% uptick in order volume. The firm’s transaction take rate declined slightly to 7.1% as investments to improve affordability and the reduction of order value minimums were partially offset by improvements in routing efficiency.

The bottom line: We plan to raise our $42 fair value estimate on no-moat Instacart by around a low- to mid-single-digit percentage as results modestly outpaced our expectations and guidance looked positive. We think shares look fairly valued and recommend investors to wait for a better entry point.

• Management provided second-quarter guidance, calling for GTV growth of 8%-10% (versus our 7% estimate) and adjusted EBITDA of $240 million-$250 million (we modeled $226 million).
• We still model average annual GTV growth of about 4.5% over our 10-year explicit forecast and a midcycle EBITDA margin of about 27%. We think EBITDA margin expansion will prove more arduous to come by in the future as Instacart’s growth trajectory slows and competition remains stringent.