Instacart has laid off 250 employees in a move to “reshape” the newly public company, as it looks to “focus on our most promising initiatives and execute more efficiently to a flatter organization,” said CEO Fidji Simo on a call detailing the grocery tech company’s Q4 and full year 2023 results. Simo also shared that three top executives — COO Asha Sharma, CTO Varouj Chitilian and Chief Architect JJ Zhuang — were leaving the company. While the search for a new CTO is underway, Simo said he does not plan to hire a new COO or Chief Architect as he looks to also streamline the company’s management team.
“We had already been very disciplined in terms of headcount and over the last two years, we had slowed down hiring, we slowed down the backfill of attrition and we raised our performance bar,” said Simo on the call with analysts. “So, we had already managed headcount pretty tightly. But for this particular change the thing that we had in mind was really reshaping the company to streamline in certain areas and really refocus and double down in other areas of growth.”
Among the growth areas Simo highlighted were the company’s expanding retail media business as well as its Caper Carts smart shopping cart division. “All of these new initiatives that hold a lot of promise are things that we want to be able to fund fully, and that means reshaping the organization and streamlining in certain areas, so that’s the context by which this layoff should be interpreted,” Simo added.
The restructuring is expected to cost Instacart $19 to $24 million in one-time expenses, shared CFO Nick Giovanni on the same call. Total revenue in 2023 was up 19% from 2022, totaling a little over $3 billion for the year, but the company ended the year with a net loss of $1.6 billion, due in part to an increase in stock-based compensation tied to its September 2023 IPO. In Q4 2023 the company posted revenues of $803 million (up 6% YoY) and profit of $135 million, a 71% decrease from the same quarter last year when the company saw gains from a tax allowance.
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In Q4 alone, advertising and other non-transaction related revenue brought in approximately $243 million, an increase of 7% from the same quarter last year, highlighting the company’s growing retail media business. In a letter to shareholders, Simo touted the fact that the company is “able to command upwards of $3 per order in on-platform advertising and other revenue, and on average we deliver a more than 15% sales lift for brands” that advertise because of the platform’s high-intent customer base.
Simo also highlighted the fact that Instacart has continued to increase its share of sales among other digital-first delivery platforms, even as competitors such as DoorDash and Uber Eats grow their own grocery delivery businesses. According to Simo, Instacart currently commands a more than 50% share of small-basket orders ($75 and below) and a more than 70% share of large-basket orders ($75 and above).
“Our service is the best it has ever been,” said Simo in the letter. “This showed up in our solid Q4 results, which demonstrated ongoing momentum in order and GTV [gross transaction value] growth, expanding profitability and increasing share of sales in both small and large baskets compared to other digital-first platforms, based on third-party data.”
