Instacart (Maplebear Inc.) Price & Performance (CART)

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 GAAP results. A reconciliation between these GAAP and non GAAP financial measures is included in our shareholder letter, which can be found on our Investor Relations website. Now, I'll turn over the call to Fiji for her opening remarks. Thanks, Rebecca, and hello, everyone. I hope you're on chance to read my shareholder letter, where I highlighted our strong finish to 2024 and the positive momentum we're carrying into 2025. As a category leader in a massive and under penetrated market, we're not just focused on leading in terms of share of sales, but also by setting the pace for innovation and growth. And for us, these things go hand in hand.

So more we innovate, the more indispensable our platform becomes for customers, retailers and brands. Let me share a few recent examples of how we're delivering on this promise. First, for our customers. We're laser focused on becoming an even bigger part of their everyday lives. The past year, we launched new service options like Super Sabre and Free Pickup, expanded family accounts to all users and continuously up Additionally, our continued momentum with restaurants and the rollout of our industry leading $10 minimum basket has given customers more reasons to choose Instacart whether that's for delivery from hundreds of thousands of restaurants nationwide of incremental top up grocery orders. Our efforts have paid off. We've grown the overall number of people who use in the past year and drove quarterly users to on order monthly and monthly users to order weekly at faster rates year over year. In addition to growing order frequency, we also offer more value to our Instacart Plus members who are growing faster than monthly users and remain our most loyal and engaged audience.

Now for our retail partners. We're committed to helping them better meet their customers' needs, no matter where or how they choose to shop. With grocery prices increasing over 25% since 2019, the need to innovate and enable savings for customers has never been greater. That's why we've built industry leading solutions such as EBT SNAP Acceptance loyalty program integrations and digital flyers each of which now covers over 80% of our GTVs. We also continue to encourage grocers to move to price parity with our falls as we've seen that the ones that do have grown much faster on our platform. Recently, Kroger introduced same as in store pricing on items featured in their weekly ad and Snacks and Heritage Grocers Group both moved to price parity chain wide and across all items too.

The solution we build don't just benefit the more than 1,800 retail banners on our marketplace, but also the approximately 600 enterprise storefronts that we power. Thanks to our investments in our enterprise solutions, we've driven double digit percentage point increases in growth for the majority of retailers following their upgrades to our latest storefront technologies. And we are onboarding more new retailers to our enterprise solutions than in the past.

In fact, in 2024, we launched 30 net new retailer sites, more than double the year before. By empowering retailers to grow their businesses, we're expanding our scale and making our technology and service even stronger and more efficient. And finally, for brands, we're helping brands tackle their biggest challenge while positioning ourselves as a one stop shop for seamless multi channel advertising. At the heart of this is performance, By leveraging our suite of innovative products powerful ML models, advanced targeting and measurement tools, our performance remains best in class across a number of key metrics like ROAS, click through rates and sales lift. This is exactly what brands are looking for when deciding where to allocate active brand partners on our platform who collectively spent north of $1,000,000,000 annual run rate on our platform in Q4. This leading technology and performance plus the breadth and depth of our R and D demand is why we get to attract more and more retailers who want us to power ads on their own properties which allows us to gain even more scale. We now have over two twenty carat ad partners who contribute more inventory to our network and therefore allow us to deliver even greater performance for advertisers.

This results in a virtuous cycle of growth performance and scale. And while this was always our strategy, it's really great to see it start to build momentum. Pulling all of this together, our innovation is driving growth across the board. What's particularly exciting is that this momentum is fueled by our solid unit economics and critical advantages giving us a unique ability to capitalize on the massive opportunity in front of us in ways that our competitors simply can't.

Years after restaurant delivery platforms followed us into the space, we're still the clear category leader.

Among digital first platforms, we're leading in shared sales by far in small basket and even more so in large baskets, with greater than 70% share in baskets of $75 and up.

We continue to activate the most new customers to online grocery in particular with large baskets, where we're multiples higher than the next biggest All of these results in Instacart capturing the most GTV from new customers placing their first grocery convenience and alcohol order on a digital first platform. And after customers start using Instacart, we're about five times better at converting small bath customers to large basket customers than other marketplaces too. So overall, we are continuing to find new opportunities to make our business even more efficient, which allows us to maintain a disciplined but aggressive approach reinvesting in growth. By executing on this strategy, we're confident in our ability to extend our category leadership position, deliver short and long term profitable growth for MINISTERCARTER and our stakeholders and transform the industry at large. I couldn't be more excited about what's ahead. And with that, I'll turn it over to Annalie to talk about our financials. Thank you, Fiji. 2024 was a great year for Instacart. The investments we're making have us well positioned to deliver more profitable growth Now let me provide a bit more color on our most recent financial results and outlook. In Q4, we closed the year strong.

We delivered GTV at the high end of our guidance range, growing 10% year over year. This performance consisted of an 11% increase in orders, driven by growth in both users and order frequency. Partially offset by a 1% decline in average order value Transaction revenue grew 10% year over year as we continue to drive shopper efficiencies and reinvested in affordability initiatives. Advertising and other revenue also increased by 10% year over year. Driven by strong performances from emerging brands and many large brand partners. This combined with operating expense leverage resulted in solid profitability across key metrics. GAAP net income of $148,000,000 increased by $13,000,000 year over year even after lapping a sizable tax benefit in the prior year quarter. Adjusted EBITDA of $252,000,000 exceeded the high end of our guidance range, was up 27% year over year. Operating cash flow of $153,000,000 decreased year over year due to fluctuations in working capital. We twinish 2024 with cash and similar assets of $1,500,000,000 compared to $2,300,000,000 the year prior. In Q4, we also bought back $5,000,000 worth of shares bringing our cumulative repurchases in 2024 to 46,000,000 shares for approximately $1,400,000,000 and had $312,000,000 of buyback capacity remaining to opportunistically repurchase shares in 2025 and beyond.

We Overall, our Q4 results were underpinned by our strong operating fundamentals. Order growth is being fueled by monthly user growth and higher order frequency. We continue to see deeper penetration of Instacart Plus members among our overall user base, and the engagement of our members has been strong. Especially as we've launched new use cases like restaurants and $10 minimum basket. From a cohort perspective, we continue to bring in more new users and GTV in 2024 than we did pre pandemic. In fact, our 2024 cohort delivered the strongest engagement we've seen in recent years. At the same time, our existing cohorts are stable and existing users continue to increase their order frequency and spend per user over time. Including in the last year. All of this is incredibly encouraging and gives us even more confidence to reinvest the efficiency we continue to drive across our business into many of the growth initiatives CG discussed earlier on the call, and more. We have an incredible opportunity to leverage our critical advantages to innovate in ways that will accelerate online grocery adoption. Unlock more growth for our partners, extend our category leadership and generate more value for Instacart and our shareholders.

Now for our Q1 outlook. Expect Q1 GTV to be between $9,000,000,000 and $9,150,000,000 representing year over year growth of 8% to 10%. And reflecting our strong start to the year. It also includes just over one percentage point headwind from lapping Leap Day in the prior year period. We also expect average order value to decline year over year primarily driven by restaurant orders and our new $10 minimum basket feature. Resulting in orders growth outpacing GTV growth in the period.

We're also guiding to Q1 adjusted EBITDA of $220,000,000 to $230,000,000 We expect our year over year growth in adjusted EBITDA to be primarily driven by ongoing adjusted operating expense leverage, as well as advertising and other revenue growth outpacing our anticipated GTV growth in the period. We also expect adjusted EBITDA to decline quarter over quarter primarily due to typical seasonality in advertising and other revenue. We remain committed to delivering steady annual adjusted EBITDA expansion even as we maintain an aggressive approach to reinvesting in growth initiatives. We also take a disciplined approach to stock based compensation. Based on a stock price in line with recent trading levels, we are targeting 2025 stock based compensation to be less than $425,000,000 with Q1 being the lowest quarter of SBC followed by an anticipated step up in Q2, due to the timing of our annual refresh grants. With that, we will open up the call for live questions. Operator, you may begin.

Our first question comes from Doug Anmuth with JPMorgan.

Your line is open. Great.

So much for taking the questions. Phejie, can you talk more about some of the key investment areas that you're thinking about 'twenty five, especially some of the in store solutions, you called out Capricarts, And then curious, you highlighted restaurants as well. So you could talk about those? And then Emily, perhaps just when you're thinking about steady annual adjusted EBITDA margin expansion, can you help us understand how you'd frame that? And does that mean carrying through like incremental margins that you're seeing in 1Q through the year or something different than that?

Thanks, Doug. On our key investment areas, it's important to remember that we certain primarily invest in our core. And you have seen that through our 24 where we have made our core stronger across selection affordability, convenience, speed and continue to do that. So when you look at 2025, again, this remains the core area that we want to continue investing in. In the selection on the selection side, restaurants is obviously a part of that, that has a whole testing increase selection on our platform, but we are doing that in grocery as well. So it's really both. I've talked a lot about affordability. We still believe that this is an absolutely critical thing for us to continue leaning into in order to continue accelerating online adoption. And we like what we're seeing with all of the solution that we've developed from Ebixapp in the earlier years to digital flyers more recently you can expect to see us continue to develop more and more of such solutions in the future. Another thing that is a top priority as I've talked about is our enterprise solutions as a whole.

K POP is certainly one of them and we're very in terms of sales lift that K perp is generating at retailers where it's rolled out. We're seeing double digit increases in basket size. At a lot of the retailers that we're having pilots with, which is really strengthening the business case for broader rollout So we're very excited about that. But our enterprise solution, our bigger than KPO that includes our storefront technologies our fulfillment technologies. And as I said in my intro, we have seen a lot of strength there, thanks to past investments in making these technologies even more performance, which has driven accelerated growth for retailers that have upgraded to these new technologies. As well as growth from new retailers onboarding on these technologies even faster than in the past with 13 new retailers coming on to these technologies more than double what we've done in the past. So we're really excited by the momentum in enterprise. You can expect us to continue to invest in these technologies at a time where growth of needs them more than ever. And then finally, it's less on the top line, but let's not forget innovation in advertising.

As you've probably seen in the letter, we have innovative mass [indiscernible] incorporating AI into our products, and that remains a big area of investment for us. That is paying off with as revenue projected to grow faster our DTV guide in Q1. So very excited about that.

I'll turn it over to Emilio on the second part of the question. Thanks Doug for the question. So as it relates to adjusted EBITDA, what we're committing to is to continue to expand EBITDA on an absolute and margin basis. On an annual basis. So there will be some noise potentially quarter to quarter. Obviously, we talked about Q1, the impact from advertising seasonality, which is normal cyclical seasonality that you see in the overall ads business. And also to allow us the flexibility to reinvest when we see opportunity to drive long term profitable growth. But as you saw, obviously, in the last in 2024, we were able to expand EBITDA meaningfully on both of those metrics and we expect to continue to do that although on a somewhat more moderate pace going forward. [indiscernible] Thank you. Our next question comes from Eric Sheridan with Goldman Sachs.

Thank you so much. Maybe I could just ask one question. Looking back to the progress you made in 2024, how do you see the platform set up for a mixture of grocery driven and non grocery driven growth with respect to the contribution to GTV as you see what you're seeing in terms of how users might be using the platform differently or changing behavior or the acceptability of a wider array of supply on the platform from a commerce standpoint? Thank you.

Thanks, Eric, for the question. So what what we're seeing is strength across really both sides of that equation, grocery and non grocery side. Thing that I really want to call out is the reason we added restaurants on the platform is not just to create an additional restaurant use case, but because we had a thesis that it would also increase our grocery business by creating more stickiness of the overall product, higher value of Instacart Plus, and that's exactly what we're seeing. And in fact, we are seeing this halo effect on grocery strengthening over time which is really, really exciting. And so we're not breaking these things out because in fact, when people engage more with the platform, whether that's adopting a new use case like restaurants or some of our verticals, or whether it's spending more on grocery, it usually has a halo effect on all of their other behaviors. And as a result, that's increases the case for continuing to lean into deepening the adoption of these new use cases. We are very pleased with what we're seeing in restaurants, but it's still very early in terms of penetration of our user base and adoption.

We are excited about all the potential ahead and so we expect continued growth from both of those segments. And more importantly for the combination of them?

Thank you.

Thank you. Our next question comes from Nikhil Devnani with Bernstein. Your line is open.

Hi.

Thank you for taking my question. I wanted to ask two please.

First, around the reduction in free delivery thresholds for Instacart [indiscernible] how do we think about the economics of these incremental orders Do you expect the smaller baskets to be loss leaders to better retain customers and drive LTV or do the economics work on a standalone basis as someone is placing a $10 or $20 order with free delivery And then my second question, the Coles Australia partnership is quite interesting. While it might be expensive to build do you see an opportunity opportunity to be a global enterprise solution for more grocery stores in more countries. Even if you're not operating a consumer facing marketplace in those regions? Thanks for the questions, Nikhil. On I'll start with the second one.

On call, so we're really excited to have started to deploy PayPal with Kohl's in Australia. As a reminder, we also deployed KBO cards in Austria with ALDI where we're very pleased with the results. And to your broader question, we very much agree with the stake, which is that we have a set of enterprise solutions that have really proven to drive great results for retailers in The U. S. And there's absolutely no reason why these enterprise solutions wouldn't also benefit international retailers. We are starting to see some traction internationally as you're calling out with retailers really reaching out to us to pilot caper and as part of that Discover the rest of our solutions. I want to call out that it's still very early, they'll very early in the process and we're still very focused on The U. S. Where there's still a lot of opportunity to go tap into and we don't want to get distracted. But [indiscernible] for enterprise solution given how performance is being in The U. S?

On your second question on the reduction in minimum basket, What we're seeing so far is an increase in order frequency, an increase in total GTG and higher Instacart Plus adoption without seeing any impact on bigger basket orders. So for that reason, we are very excited about what we're seeing with this change and that's why we're leaning into it. We're able to do this at economics that we like because we have been able to batch some of these orders given that we have high order density of orders within those stores. And again, like this minimum basket size is industry leading because we are the ones that have the scale to do that at economic that can be competitive with more runway to go to continue optimizing as we continue to get order growth. Thank you, Fiji.

Thank you. Our next question comes from Ron Josey with Citi.

Your line is open.

Great. Thanks for taking the question. I had a question for Fiji and then one for Emily on cost. So on affordability, Fiji, I just wanted to understand or hear your thoughts on the investments that Instacart has made to improve overall affordability. Obviously, we just talked about lower delivery fees.

But then the Kroger partnership on same pricing, there's couponing now on the site.

Would love to hear how these aspects are perhaps core drivers of order growth So one is on affordability progress. And then Emily, just on guidance here. We all saw the Super Bowl ad that was fun, congrats. I wanted to hear about the impact of marketing spend and if you've seen any benefits from the ad thus far?

Great. I'll take the first question. So on the affordability front, we continue to make a lot of progress. In the past year alone, we have helped customers save about $1,200,000,000 in savings through all of the initiatives that we've put together. And we are continuing to see more and more adoption of these initiatives. As I mentioned in my introduction, whether activity staff, loyalty or digital flyer, each of them are now at more than 80% of GTV coverage. Which is really exciting. And the more we do that, the more we see all of the ex positive externalities that Emile has talked about in terms of improvement in order frequency, the 2024 cohort being the strongest we've seen in recent years. We think that there's very much a link between all of affordability efforts and the strength in our underlying fundamental, this especially as we enter 2025. So it's still a lot more to do though. We all know that the more retailers we can move to same prices online as the store, the better. And we are pleased with the progress here. We are pleased to see Snacks moving to in store prices, same thing with the heritage grocers.

Pleased to see Kroger do that on their weekly flyer. And we have more and more tools that we're making at their disposal like our Eversight pricing optimization to show them the business case of moving to price parity and help them figure out how to do that while preserving their margin. And so we're excited about what we're seeing, but still continuing to lean into these solutions and developing more like the $10 basket that you heard about. Yes. Thanks Ron for the question. So in terms of overall marketing spend, the way that we think about our frankly our marketing portfolio, but even more broadly than that is when we decide to invest in something, we're really looking at how are we funding that from the existing portfolio. So I would think about Super Bowl in that same light where we decided to invest in a Super Bowl opportunity that means that we think there is better opportunity there than elsewhere in our portfolio. So I don't think about it as incremental spend in that sense.

Super Bowl ads are kind of designed more for brand awareness, driving brand favorability. And of course, we're in the early days of looking at the impact. But But so far, very pleased with what we've seen. [indiscernible] Thank you. Our next question comes from Ross Sam with Barclays. Your line is open.

Great.

One on advertising.

And then the obligatory AI question. So first on advertising, So the environment for CPG looks a little bit mixed.

Here in 2025. How would you guys characterize your pipeline between large and large CPG and emerging brands Do you think this new category share of digital shelf space metric is going to help with future budget allocations to Instacart And Emily, I think you said ads would grow faster than GTV for was that for the full year or for 1Q?

And then I'll follow-up with the AI second.

Thanks a lot.

Great. So on the as a growing fast sales and our GTV guide, this is for Q1. On your broader point, so as you know, we have talked for the last year about our efforts to diversify our advertising base and attract more of them to our platform And these diversification efforts are absolutely working. We now have 7,000 active brands on the platform. We are seeing extreme strength in emerging brands. And so we're very pleased with how that's gone. We are it's worth calling out since you mentioned large brands that we also have many large brands leaning in and actually capturing share by leaning into our product. In terms of what is going to generate more budget, It's really a mix of things. The metric you called out, which we released this quarter, which is like share of digital shelf space, is a very helpful metrics for our brands to really understand if they're spending enough to show up when customers are looking for these types of products. And that's making them realize that if you pull back on spend, then naturally you're not going to be there when customers are looking for this category of products and that explains why when brands pull back, they tend to lose share, when they lean in, they tend to gain share.

And so that's a helpful metric to kind of contextualize [indiscernible] But it's part of a broader suite of things that are getting them to lean in.

We have sales lift measurement, which shows 15% increase in sales. We have integration with Sorkana, which are showing across several brands increase in in stock sales, so really proving the incrementality of our ads. And that's incredibly important. And then also continuing to innovate with more formats, more reasons for brands to spend whether that's our sponsored recipes products, whether that's free gifts, whether that's our occasions pilot, all of these are new format innovations that are giving brands more opportunities to show up in maybe searches they wouldn't have shown up in the past. And giving them more reasons to lean into Instacart. So we're pleased with what we're seeing. The strategy is clearly working. The diversification is happening and we shall as a result in a much stronger position than we were in the past. [indiscernible] And if I can squeeze one more in on AI. You guys mentioned you're using AI to track store inventory and substitutions and ultimately reduce the error rates of ordering. So could you just elaborate on that? And then how meaningful of an impact of that kind of thing have on overall customer retention and ultimately, I guess profitability for the business.

Yes. So first off, we use AI in everything that we do across the business. This is just one of the many examples, but we did call out in the letter in part replacements by training on 10 times more beta. Just to give you a sense of scale, in 2024, we have made 300,000,000 replacements with 95% satisfaction rate.

That is kind of mind blowing scale and that's why we are able to have such accuracy on finding a replacement that you like and getting to that level of satisfaction. So it's a combination of great AI, but that great AI needs to be powered by a lot of data points and that's where our scale and our leading market position really helps in delivering these results. And that applies to repeat on managing inventory in general, where we not only integrate with retailers on their inventory management systems, but also take into account all of the shopper data that we get from shoppers telling us what's on the shelf and not on the shelf which is much more real time than what we get from retailers. And we're going to augment that in the future with what I mentioned in the letter which is a technology for shoppers to scan the aisles of the grocery store and through computer vision having the ability to extract even more data, even more often on what's currently on the shelves. You asked whether that drives customer retention, I can tell you it's absolutely, absolutely does. Quality is critical. To moving the grocery industry online.

And every point of sound rates and feel rate matters enormously to drive retention. And I'm proud that we've been able to increase both found rate and CL rate for ten consecutive quarters. We are now at very high levels and despite that, we continue to release new technologies, whether that be the thing I just talked about or integrating with retailers electronic shelf tags for pick to light. To continue getting these numbers up because we sweat the basis points on these metrics. Thank you. Thanks. Just one question. Fiji. So GTV and order growth for the fourth quarter and first quarter outlook is solid. But we're struggling to understand why the company can't grow advertising faster I think most people would look at these numbers and think you're losing share to the larger retail media platforms. So I guess the question is like what is the unlock to get advertising growth 15% to 20% over some kind of medium term Or is this like an unrealistic expectation or Thank you.

Thank you. So first off, we do expect ads and other revenue to grow faster than our GTV guide in Q1. So that's a strong signal of going in the direction that you're mentioning. I think fundamentally when you compare us to other retail media platforms, it's worth remembering that many of these retail media platforms have many other source on demand than just food and beverage. And as we discussed in the prior question, the macroeconomic environment on food and beverage is still challenged. So So we feel very good about our position within that because we have leading performance and therefore we attract a very good share of these budgets, but it's worth remembering that we are in a macro environment where specific food and beverage budgets are still challenged. Now I don't think that stays like that. And I think the way to continue to drive accelerated growth in the future is to continue leaning into our performance, which is why you're seeing us release more and more ways to measure and demonstrate that performance to advertisers continue to lean into innovation, which is why you're seeing us release new formats and give more reasons to advertisers to spend with us.

Continue to lean into diversification because we see emerging brands growing much, much, much faster than the large guys. And that's what makes us continue to be very confident in our long term target range of ads being between 4% to 5% of GTV. So for between all of these things, we feel very good about our ad business, but also worth remembering that we are still operating under a challenged macro.

Thank you.

Thank you. Our next question comes from James Lee with Mizuho Securities. Your line is open.

Great. Thanks for taking my questions. My question is regarding shopper supply trends. Can you maybe talk about the supply and demand dynamic there? Any impact on tighter immigration controls here? [indiscernible] very healthy. In fact, we still continue to have a wait list in most cities. And so that makes a us feel very good about that. We continue to have a extremely good retention of shoppers. And in fact, now the majority of our orders are delivered by almost ten year shoppers. Which has a direct impact on the quality of these orders. So that's why we kept so much about tenure because with the more tenure you have, usually the higher quality of orders you can deliver. And so we feel very good about our retention. It's also worth remembering that our demographic [indiscernible] of, let's say, ride sharing or restaurant delivery because the job is [indiscernible] about two third of our shoppers being females, more than 50% of them being parents and so forth. All of these reasons, we feel very good about our supply dynamics and the ability to continue ramping up of supply to serve additional demand? Thank you. Our next question comes from Michael Morton with MoffettNathanson.

Your line is open. [indiscernible] You so much for the question. I was wondering if we could maybe talk a little bit about take rate quarter over quarter and just also thinking about the seasonality compared to last year. Could you talk about some of the drivers behind it, where you're investing, some of the impacts of the fee structure, contra revenue and you have restaurants flowing through the business. And then there's a lot of moving parts with inflation and grocery and you were talking about the macro environment. Could you maybe talk about the performance for AOVs of the core grocery business [indiscernible] Sure. So I believe when you're mentioning take rate, you're referring to revenue. So I'll speak to that, but let me know if that's not okay, great. So So when we're thinking about transaction revenue, we've been operating as a percentage of DTV in the upper half of our long term target range. And really consistently over the last year and even before then, we've talked about being very happy where we are and actually talked about the fact that we expect this to fluctuate over time. Now, why does it fluctuate? There's a number of different factors within transaction revenue, everything from retailer revenue that's the revenue we get from our retail partners, customer revenue, payment revenue, and then that's offset on the negative side by how much it costs us to deliver each order, so a shopper pay.

It's offset by coupons, incentives, things like that. And it's also offset by appeasements and refunds. So there's a lot going on within transaction revenue, specifically why we said in the past, we're not intending to drive transaction revenue up into the right, because a lot of the decisions when we talked about earlier in the call actively managing our business, a lot of the decisions that we're making involve choices that we're making regarding reinvesting in the business and reinvesting specifically in transact revenue. So within transact revenue, we've continued to drive efficiencies with Shopper Pay and that's allowed us to reinvest in initiatives like affordability. So that's things like we talked about offering customers the best pricing, lowering delivery cost options for people who maybe need lower price point options. Those are things like No Rush and Super Saver and Pickup that we talked about earlier. It also involves ramping new use cases, so restaurants impact of restaurants would be captured there. And then it also factors in the impact of additional IC plus benefits. So we've talked a lot today about the $10 minimum basket. Now as I said, these will fluctuate within quarter depending on where we're reinvesting.

It also depends on where we're investing across the P and L. So in the past, I've talked about trade offs we make between investment we make in sales and marketing as an example. So we may choose to spend more in incentives in one quarter and more in regular way sort of paid marketing that hit sales and marketing in a different quarter. Overall, as I talked about, our goal is to drive steady annual adjusted EBITDA progression and we want to maintain that flexibility to operate the business where we see the best return on every dollar spent.

Sorry, there was a second question on the macro environment in terms of AOV in core grocery. So as I talked about as I talked about earlier, in Q4, a broader AOV was down on a year over year basis due to restaurants. The other thing that I would note and we talked about this a year ago is that on a quarter over quarter basis, we do have some impact of smaller orders in the lead ups to holidays. So think about this as in the day or two leading up to things Thanksgiving or Christmas when people are doing smaller fill in orders. So there is a small seasonality impact as well. From a Q1 perspective, we'll continue to see that impact from restaurants where of course, restaurant orders are smaller AOV in general, even though our restaurant [indiscernible] the impact of the $10 minimum basket. As a result of all of that, we do expect that orders will grow faster than GTV in Q1.

Thank you.

Thank you.

Our next question comes from Brian Nowak with Morgan Stanley.

Your line is open. Thanks for taking my questions. I have two.

First one actually goes back, Emily, to your last point about sort of the trade offs you make the investments that you're making. You just sort of talk to us a little bit about the 2025 budgeting process and how you think about constraints to faster top line growth? Are there areas where you could lean in more at lower incremental margins to drive more growth? Are there areas where you're pulling back so we can kind of understand the growth versus profitability framework for 2025? And then the second one, just on the pressure from the restaurant AODs Can you just help us how large is restaurant as a percentage of GTV in the fourth quarter, just so we can kind of get your understanding for the core versus the restaurant impact? Thanks.

Sure. So starting with the 2025 budgeting process, as we talked about earlier, one of the somewhat constraining factors is that we've committed to and are committed to continuing to show and prove out the economic of our business. We've obviously done a great job of that in the past having expanded adjusted EBITDA very meaningfully in 2024 on both an absolute and percentage basis. And so we want to continue to do that. Above and beyond that, we are continuing to grind down cost in our business, become very efficient across every line in the business and you've seen that. Obviously adjusted OpEx meaningfully expanding on a year over year sorry meaningfully the margins getting much better on a year over year basis. And so we'll continue to look at ways to sort of grind down costs and that allows us to free up incremental dollar to reinvest in the business. Now above and beyond that, we're really looking at our full portfolio of options. Now that includes investing in things like marketing and paid marketing. We're looking very actively week to week, month to month at what are the returns of those dollars do we like those returns and we do that within the context of a five year NTV.

Obviously looking for faster returns than that, but giving ourselves the flexibility to invest in things that will return over the long term. We then look at opportunities as I mentioned, within transaction revenue and that can be how do we think about our fee structures. So we talked about $10 minimum basket as something we're adding to Instacart Plus membership. So there's really sort of a holistic view of everything that we can be doing how do they line up to the priorities of driving selection affordability, speed, quality that we're trying to drive in the business. And those are not static. So of course, we have a 2025 plan, but as things are working better in some cases, we'll lean in. Other things that maybe aren't working as well, we'll certainly pull back. And so I think of it as a very active management process that we have throughout the year. The last thing I'll say on that is there are also longer term bets as you know, that we're making in the business. So something like Capre as an example, a part of the business that we've already been investing in for some time. So that's not new incremental cost necessarily, but something that obviously factors into our overall 2025 budgeting process.

From a restaurant percent of GTV perspective, we really don't break out restaurants because as Viji mentioned earlier, there is this real flywheel effect that comes back to grocery. It was really the thesis of the deal, which we saw play out from the beginning and we're seeing it strengthen over time. And so we really think about this as a set of offerings, a platform that we have for our users where we want them to come, use restaurants and then have that create a situation where they're then purchasing more grocery orders and more grocery GTP. What I would say is that restaurant adoption is still very early. So we do see much more runway to continue to go throughout 2025 and beyond. Thank you. Our next question comes from Justin Patterson with KeyBanc.

Your line is open.

Great. Thanks for taking the question. This is Miles Drabhiac on for Justin. First, just one on Capricarts. It seems like early learnings there have been really positive. So curious how quickly you guys think that you can wrap the implementation of Capricorn to a meaningful amount and what are the main sticking points sticking points to getting that meaningfully wrapped? And then just one on the the 1Q guide. It seems like guidance implies some some pretty strong order volume growth especially comping Philippe extra day within there.

Wondering if you could just provide some more context on what's driving that and if there's anything with the few changes or restaurant business that we should keep in mind there. Thank you.

Thanks, Myles. I'll take the first question on Keeper. We are seeing very good results from the pilot across a variety of aspects. One, that is obviously the most important one is do customers love the products? And we are seeing extremely strong product market shifts there. Customers are telling us that it makes their shopping experience more fun. That it allows them to discover more products and engage with coupons and discounts or gamification capabilities or increasing engagement with that. So we're really excited about what we're seeing on the consumer side. On the retailer side, that translates into an increase in basket size and therefore sales as a result of that customer excitement and that means that retailers are definitely leaning into the results of these pilots and being excited by what they're seeing. It's also worth noting that as part of rolling out of CAPER, we also share ads revenue with retailers on those costs. And that creates an additional revenue stream for retailers So on top of an increase in sales that is in the double digit range with many grocers, you also have an addition additional new revenue stream that's an increase in advertising. And on that advertising business line, we rolled out K Pop Ads this quarter and what we're seeing is an engagement with Kaper Ads that's in line with online engagement, which is very for for advertising for all brands, but also as a result for creating a revenue stream for retailers and for ourselves.

In terms of ramp, we have thousands of cost commitments in the works right now with retailers. That's across retailers big and small. So we are very excited about what we're seeing. That being said, it's worth remembering that these are physical products that you need to deploy across thousands of stores, make sure that operationally it lands very well, make sure that the stores are ready and trained to receive that. The good news is that this is our bread and butter. This is what we know how to do very well. We've done very similar things when we rolled out the pickup business across The U. S. So we know how to do that, but it does take a little bit of time because it's very operational. But then once you've done that, and you are showing the double digit increase in sales, you are integrated with retailers' operations and you are showing them an additional revenue stream, it's a product that has the potential to be a exceptionally sticky and allowing us to address the 87% of grocery sales that haven't moved online yet. The last thing I'll add, which I think is exciting, is that we also started testing the ability to tell users about reordering their cast online from the cost And when you think about moving people from offline to online and making them multi channel customers, PayPal cards are going to be a fundamental touchpoint in our ability to do that and make it very easy for someone with an in store customer to reorder their baskets online and vice versa.

So excited about what we're seeing still [indiscernible] From a guidance and order volume growth perspective, what I'd say is if you go back a couple of quarters, a majority of growth was being driven a majority of our orders growth was being driven by by MAU growth. And so what we started to see in Q3 and Q4 was that order frequency was starting to grow and that does align with around the time that we launched our restaurants integration. And so that is a factor that's at play. Now Q4 was the first quarter where orders growth out paced GTV growth and that's something we expect to see going into Q1. So I I think the way that I would describe it is that part of that is a continuation of the trend that we saw from restaurants in the back half of twenty twenty four and then we're layering on the impact of small baskets order frequency that we're starting to see in the first part of this year. Now the other thing I would just mention is that where we see the most adoption of both restaurants and also small baskets is going to be with our InterCart Plus members, because these are benefits where specifically they get outsized benefit.

And these are our most engaged users. So you see that again show up in that order frequency metric.

Thanks for the help.

Thank you. Our next question comes from Shweta Kajuria with Wolfe Research. Your line is open.

Thanks a lot for taking my question. I guess a my question is on advertising development through the year. So if you were to point to perhaps two to three key investments that you are excited about and focused on to drive that ad revenue growth What would you point to? Is it the technology, the ad tech stack, partnerships with brands keeping macro aside? Thanks a lot. Yes. Thanks for the questions, Shweta.

I would say it's four big things. One is performance. Second is scale. Third is diversification and forces innovation. So I'll go through them one by one. On performance, I've touched on it, but I will continue hammering that because that is fundamentally always the most important thing. And so we're very proud of having the leading ROAS, leading CTG of multireseller platforms that's continuing to demonstrate capabilities remains the number one way in which you attract advertising budget. Second one is scale. And by that, I mean not just scale on our market place, but scale also through carat ads. And that's a big area of investment for us. We now have two twenty retailers whose ads we power on their own proper That's a number that's growing. And we also beyond that wants to have a business offline with K pop ads, as I just mentioned, as well as many partnership with Meta, Google, Roku, The Trade Desk, NBC that allow us to also power ads on these and ad platforms with our data. And that gives us massive scale and really makes us the one stop shop for brands. And what we're hearing from brands is that they love the performance and measurability of retail media.

They do not like the fragmentation of retail media and the fact that there was proliferation of them it doesn't make sense for brands to go to hundreds of different retail media platforms and they want to turn to us as the aggregator for these platforms that can really be the hub for all of that. And we've had a lot of success doing that, again, because we have leading performance leading demand, leading technology that gives us a perfect rationale for more retailers to come and join our platform. We have seen that with Swipe, for example, which we launched in Q3 and the results have exceeded our expectations. We just signed Hy Vee as an additional partner. We expanded with Snacks where our retail media revenue together increased by 7x. And so again, scale is absolutely critical and Carrotaz is a huge area of opportunity and investment for us. The third axis I talked about was diversification. Again, that's because attracting more new advertisers is obviously a level of growth, but that's also because we're seeing high investment rates among these advertisers and we think there's a big opportunity to continue to diversify our advertiser base. And then lastly, innovation.

I won't repeat all of them, but you see us innovating in new formats especially formats that allow advertisers to advertise in aisles that are not usually surfaced in So for example, through sponsored recipes, you are able to advertise your salsa when someone is looking for chips and that's an opportunity for advertisers to cap more demand that they wouldn't have gotten with existing formats. And we're really industry leading on these new formats. With sponsor recipes, for example, we're seeing 35% new to brands sales, which is really important for brands to attract new customers. And 70% of impression coming from aisles that are not the typical aisle of that advertiser. So very strong results there, very strong results with our new AI landing pages, which are generating a 20% increase in sales for the campaign with Celsius, for example, great results with our new measurement capability like share of digital shelf. And so it's really a combination of all of these innovations that not only set us up immediately better, but also lays the groundwork for more growth in the future as we give advertisers more reasons to spend with us. Okay. Thanks, Vijay.

Thank you.

Our next question comes from Justin Post with Bank of America. Your line is open.

I was wondering if you can give us an update on your subscriber growth or percentage of GTV from subscribers And then any update on the Walmart relationship testing in The U. S?

Yes. So So majority of our GTV is still coming from Plus member. And as I said at the beginning, while we don't update on specific subscriber numbers, the growth of Instacart Plus members has out paced the growth of our monthly active orders. And that means we're seeing deeper penetration of Instacart Plus as well as very strong engagement from members. So we really like what we're seeing. And that's a direct result of having created a lot more value inside Instacart Plus over the last year. Obviously, through the addition of hundreds of thousands of restaurants, through the addition of the $10 minimum basket, partnership with New York Times and Peacock, the ability to add more members of your family to your Instacart plus account, all of these things have contributed to the strength we're seeing in InstaCart Plus. So we feel very good about that. As for Walmart, as you know, we have rolled out in several hundred stores with Walmart in The U. S. In addition to a full rollout with Sam's Club as well as a full rollout with Walmart in Canada. We continue to see that we are highly incremental to own business. And for that reason, we think the results are highly positive.

However, when it comes to an expansion, of course, we would love to expand with Walmart, but that's our decision, not ours and nothing to report on that side.

Thank you.

Thank you.

Thank you. Our next question comes from Stephen Fox with Fox Advisors LLC.

Your line is open.

Hi. Thanks for taking my question. I just had one big picture question and apologize if this underappreciates the complexity of your business. But you've highlighted a ton of different initiatives that seem to generally be having success. And I know they're in different stages, but it seems like as you move on, there's an opportunity to accelerate the business further from as some of these mature. I guess I was wondering how you would sort of maybe calm that idea or maybe support that idea if we were thinking out maybe over the next twelve to twenty four months for some even better top line growth?

Thanks, Steven. So as you know, we don't guide beyond Q1, but what I can tell you is that I personally look at the leading indicators of our business and the leading indicators are typically are we increasing the number of users we're attracting to the platform? The answer is strong resounding yes. In fact, the 2024 courts was larger than the 2019 cohort.

And was also the strongest engagement that we've seen in recent years. So in terms of new user acquisition and retention, I feel very good about that. I feel very good about our existing users, also increasing order frequency over time, thanks to all the new use cases that we've created as well as our affordability initiatives. I feel very good about Instacart Plus penetration continuing to deepen as we've just talked about and share data around. I feel very good about the where we continue to have category leadership and continue to see that we are far ahead of competition on the core fundamentals of the business Obviously, selection, but also quality, which is very, very hard to get to the level we're at and we continue to get even better. And so we feel like these advantages are incredibly defensible and should continue to contribute to our success in the long run. And because we are these strong operating fundamentals, so that gives us even greater confidence in our ability to reinvest in growth and lean into our role as category leader. Which is to accelerate the move of the industry from offline to online. We know it's an industry that has moved slower than certainly anyone wished.

And we see that as our role to accelerate that adoption We feel that we have all of the ingredients in place to do that. That and to continue leading into our role as category leader in ways that competitors just can't match. So for all of these reasons, I feel very good about our future.

Great. That's very helpful. Thank you.

Thank you.

Thank you. That's all the time we have for questions.

This concludes today's conference call. Thank you for participating. You may now disconnect.