Maplebear Inc
For the period ended Dec 31, 2024. Filed Feb 28, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 28, 2025
CART$58.12+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-05.
0001579091-24-000027
Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0001579091-25-000015
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 233 previous paragraphs and 202 current paragraphs.
97 unchanged; 69 reworded; 35 added; 66 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 22 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
In addition, this section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 are not included in this Annual Report on Form 10-K and can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on March 5, 2024.
Current report
On February 9, 2024, we announced a restructuring plan, including a reduction of approximately 250 employees, most of which was completed during the first quarter of 2024. As a result of our restructuring plan, we have generated cost savings within operating expenses during fiscal year 2024, compared to fiscal year 2023, which we are reinvesting into the business to drive profitable growth. See further information in Note 16 — Restructuring included in Part II, Item 8 of this Annual Report on Form 10-K.
Current report
Shopper Classification Developments
Current report
The state of the law regarding independent contractor status of Instacart shoppers varies from jurisdiction to jurisdiction and among governmental agencies and is subject to change based on court decisions, administrative or agency determinations, new or changing regulations, and other legal and regulatory proceedings.
Current report
Some jurisdictions have adopted, and may adopt in the future, regulations that impact whether we can or should classify shoppers as independent contractors. For example, in California, the state ballot initiative, Proposition 22, which became effective on December 16, 2020, provides a framework that offers legal certainty regarding the status of independent workers offering delivery services and protects worker flexibility, the quality of on-demand work, and access to benefits for those who qualify. Although the constitutionality of Proposition 22 was subsequently challenged, on July 25, 2024, the California Supreme Court upheld Proposition 22 as constitutional. As a result, we expect Proposition 22 to provide more legal certainty over the status of independent workers offering delivery services in California. However, there may continue to be legal challenges, or legislative or other attempts to amend or otherwise invalidate the benefits, protections or the independent worker status provided by Proposition 22.
Current report
In addition to California, we expect continuing challenges to the independent contractor classification of shoppers who use Instacart in other jurisdictions in which we operate, as well as the possibility of additional requirements on the use of contractors. Any successful challenges, changes in law, or other legal uncertainty with respect to independent contractor classification may adversely impact our financial condition, business, and results of operations. For additional information about the risks to our business related to independent contractor classification, see the section titled “Risk Factors—Risks Related to Our Legal and Regulatory Environment—If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences.”
Current report
In 2024, gross profit increased to$2,542 million, or 12% growth compared to 2023, primarily driven by increases in transaction revenue. Gross marginin 2024 compared to 2023 remained flat at 75%.
Current report
We primarily generate advertising and other revenue from:
Current report
Advertising revenue is recognized upon delivery of clicks, upon delivery of impressions, over the contract term on a fixed fee basis, or upon redemptions of coupons. For advertising arrangements that involve third parties, we record advertising revenue on a gross or net basis based on whether we act as a principal or agent in the transaction, which is assessed on a contract by contract basis. When we act as the principal and control the services provided to the brand partner, we record revenue on a gross basis, recognizing fees from the brand partner as revenue and related payments to the publisher as cost of revenue. When we act as an agent and do not control the services, we record revenue on a net basis, representing only the net amount received from the brand partner after payments to the publisher.
Current report
In April 2023 and 2024, certain employees elected to receive cash in lieu of a portion of certain future equity awards to be granted by our board of directors, and as a result, cash compensation expense and stock-based compensation expense within operations and support, research and development, sales and marketing, and general and administrative expenses have fluctuated and are expected to continue to fluctuate over the near term.
Current report
Other Expense, Net
Current report
The provision for (benefit from) income taxes consists primarily of income taxes in certain federal, state, local, and foreign jurisdictions in which we conduct business. Our provision for (benefit from) income taxes differs from the U.S. federal statutory income tax rate primarily due to the tax effects of stock-based compensation recognized, U.S. research and development credits generated, and the income taxes generated in U.S. states and foreign jurisdictions. Our future effective income tax rate depends on various factors, such as changes in tax laws, regulations, accounting principles, or interpretations thereof, and the geographic composition of our pre-tax income. We carefully monitor these factors and adjust our effective income tax rate accordingly.
Current report
The decrease in operations and support expense during fiscal year 2024, compared to fiscal year 2023, was primarily due to a decrease of $82 million in compensation costs, partially offset by an increase of $10 million in subscription and software costs. The net decrease in total compensation costs was primarily driven by a decrease in stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO in fiscal year 2023.
Current report
The decrease in research and development expense during fiscal year 2024, compared to fiscal year 2023, was primarily due to a net decrease of $1,734 million in total compensation costs partially offset by a decrease of $18 million in capitalized software development costs. The net decrease in total compensation cost was primarily driven by a decrease in stock-based compensation expense and related payroll taxes resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO in fiscal year 2023, a decrease in cash compensation expense related to changes in the mix of our employee cash and equity compensation, reduced headcount following our restructuring plan in the first quarter of 2024, and a $79 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures and for terminated employees in connection with the restructuring plan.
Current report
The net decrease in total compensation costs was primarily driven by a decrease in stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO in fiscal year 2023.
Current report
•excludes restructuring charges;
Current report
(1)The year ended December 31, 2024 includes an aggregate $95 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024 and for terminated employees in connection with the restructuring plan.
Current report
(4)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Current report
(5)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1) Stock-based compensation expense for the year ended December 31, 2024 was offset by a $4 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Current report
(3)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1) The year ended December 31, 2024 includes a $79 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024, and for terminated employees in connection with the restructuring plan.
Current report
(3)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1) The year ended December 31, 2024 includes an $8 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Current report
(3)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1) The year ended December 31, 2024 includes a $4 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Current report
(4)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Current report
(5)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
(1)The year ended December 31, 2024 includes an aggregate $95 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024 and for terminated employees in connection with the restructuring plan.
Current report
(4)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Current report
(5)Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan. Refer to Note 16 — Restructuring to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information.
Current report
For the year ended December 31, 2024, net cash provided by operating activities was $687 million, which consisted ofnet income of $457 million, adjusted by non-cash items of $449 million, primarily from stock-based compensation expense of $300 million, and by net cash outflows from changes in operating assets and liabilities of $219 million. The year over year increase in net income from a net loss of$1,622 million to net income of$457 million was driven by a year over year decrease in stock-based compensation expense due to the vesting of RSUs and restricted stock as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with our initial public offering in the prior year, in addition to the growth of our business and further optimization of expenses. The year over year decrease in net changes in operating assets and liabilities, which impacted cash provided by operating activities, from a net cash outflow of$165 million to$219 millionwas primarily driven by general business impacts such as the timing of customer collections impacted by the mix of transaction types, such as those involving EBT SNAP and alcohol sales, which result in longer and uneven collection cycles, lower release of sales tax reserves due toresolutions of certain state examinations in the prior year, the overall growth of our business, and the timing of customer, vendor, and other third party payments.
Current report
For the year ended December 31, 2023, net cash provided by operating activities was $586 million, which consisted of net loss of $1,622 million, which had a positive contribution to cash for the year as it was impacted by significant non-cash items of $2,373 million, primarily from stock-based compensation expense of $2,756 million, further adjusted by net cash outflows from changes in operating assets and liabilities of $165 million. The year over year decrease in net income from $428 million to a net loss of $1,622 million was driven by non-cash items primarily relating to an increase in stock-based compensation expense due to the vesting of RSUs and restricted stock as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with our initial public offering in the third quarter of 2023, partially offset by growth of our business and optimization of expenses. The year over year decrease in net changes in operating assets and liabilities, which impacted cash provided by operating activities, from a net cash inflow of $124 million to a net cash outflow of $165 million was primarily driven by (i) the payment of certain worker classification settlements accrued in prior reporting periods and (ii) the release of sales tax reserves primarily due to the resolution of state examinations and expiration of statute of limitations, as well as general business impacts such as the timing of customer, vendor, and other third party payments, the timing of customer collections impacted by the mix of transaction types, such as those involving EBT SNAP and alcohol sales, which result in longer and uneven collection cycles, and the overall growth of our business. Further discussion on items (i) and (ii) can be found in Note 9 — Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Current report
For the year ended December 31, 2024, net cash used in financing activities was $1,413 million, comprised primarily of repurchases of common stock of $1,402 million and taxes paid related to net share settlement of equity awards of $101 million, partially offset by proceeds from exercise of stock options of$80 million.
Current report
Advertising services: For certain advertising arrangements that involve third parties, we record advertising revenue on a gross or net basis based on whether we act as a principal or agent in the transaction, which is assessed on a contract by contract basis. When we act as the principal and control the services provided to the brand partner, we record revenue on a gross basis, recognizing fees from the brand partner as revenue and related payments to the publisher as cost of revenue. When we act as an agent and do not control the services, we record revenue on a net basis, representing only the net amount received from the brand partner after payments to the publisher.
Removed paragraphs (66)
Previous report
In addition, brands can use Instacart Ads as a new way to reach customers at the point of purchase and within minutes of delivery and consumption. Instacart Ads offers brands a highly measurable ads offering that leverages first-party transaction data to move products off store shelves more efficiently.
Previous report
We recognized $2.6 billion of stock-based compensation expense associated with the vested RSUs and certain shares of vested restricted stock, as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of the registration statement on Form S-1 filed under the Securities Act in connection with our IPO. To meet the related tax withholding requirements for the net settlement, net exercise, and cancellation and repurchase, as applicable, of the vested RSUs, for certain vested stock options, and shares of vested restricted stock, we withheld or cancelled, as applicable, 20,810,882 of the 43,052,572 shares underlying such equity awards, resulting in the net issuance of 22,241,690 shares of common stock. Based on our IPO price of $30.00 per share, our tax withholding obligation was $570 million, which we paid in the third quarter of 2023.
Previous report
On February 9, 2024, we announced restructuring actions with respect to our workforce (the “Restructuring Plan”) to improve operational efficiencies and better align our organizational structure with current business needs, top strategic priorities, and key growth opportunities. The Restructuring Plan includes a reduction of approximately 250 employees, representing approximately 7% of our global workforce as of January 31, 2024, with most of these reductions expected to occur by March 31, 2024.
Previous report
We estimate we will incur approximately $19 million to $24 million in non-recurring charges in connection with the Restructuring Plan, predominantly related to cash expenditures for employee transition and severance payments and employee benefits. Of the total restructuring expenses, $17 million to $22 million is expected to result in future cash outlays. We expect the majority of the charges to be recognized in the first quarter of 2024.
Previous report
In 2023, gross profit increased to $2,278 million, or 24% growth compared to 2022, and gross margin increased by 4% compared to 2022 primarily due to an increase in transaction revenue, various cost efficiencies, and growth in our advertising and other investment rate.
Previous report
We generate advertising and other revenue primarily from:
Previous report
Estimates—Stock-Based Compensation,” and expect to recognize additional stock-based compensation expense in future periods and additional amortization expense related to capitalized internal-use software.
Previous report
In addition, in April 2023, certain employees elected to receive cash in lieu of a portion of certain future equity awards to be granted by our board of directors. As a result, for employee elections to receive cash, we will recognize additional cash compensation primarily within operating expenses associated with such cash elections through the second quarter of 2024.
Previous report
Other Income (Expense), Net
Previous report
The provision for (benefit from) income taxes consists primarily of income taxes in certain federal, state, local, and foreign jurisdictions in which we conduct business with the exception of the fourth quarter of 2022 when we released our valuation allowance on our deferred tax assets in the United States, and the third quarter of 2023 when we recognized a tax benefit related to the recognition of stock-based compensation expense associated with the vested RSUs and certain shares of vested restricted stock, as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO. Foreign jurisdictions have different statutory tax rates from those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, generation of tax credits, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.
Previous report
On January 31, 2024, the 2024 Tax Extenders Bill (“the Extenders”) legislation was passed by the U.S. House of Representatives and advanced to the U.S. Senate. The Extenders could retroactively reinstate Section 174 expensing for certain research and experimental expenditures, and extend 100% bonus depreciation, among other changes. We are monitoring these developments and evaluating the potential impact on our results of operations.
Previous report
The combination of these factors contributed to transaction revenue increasing at a faster rate than GTV in fiscal year 2023 compared to fiscal year 2022. However, the growth of transaction revenue has begun to align more closely with GTV growth as we lapped prior fulfillment efficiencies and customer fee optimizations and increased investments in consumer incentives.
Previous report
The increase in transaction revenue during fiscal year 2022, compared to fiscal year 2021, was driven primarily by an 18% increase in number of orders and a related 16% increase in overall GTV as we attracted and engaged more customers. The increase in transaction revenue was also driven by customer fee optimizations and efficiencies in shopper earnings due to healthy shopper supply and improvements to our routing, matching, and batching systems, which also helped cause transaction revenue to increase at a faster rate than orders and GTV.
Previous report
The increase in advertising and other revenue during fiscal year 2022, compared to fiscal year 2021, was primarily driven by interrelated factors including an increase in advertising volume from 2021 to 2022, increased adoption of our new advertising features and products, such as shoppable display ads and shoppable video in 2022, the 18% increase in number of orders, and the related 16% increase in overall GTV. Advertising and other revenue increased at a faster rate than GTV due in part to increased engagement of brand partners, as demonstrated by growth in advertising and other investment rate of 27 basis points and continued utilization of our Sponsored Product ads offering. Macroeconomic uncertainty has adversely affected the demand for advertising and caused brands to reduce their spending, which had a negative impact on our advertising and other revenue in 2022.
Previous report
The increase in cost of revenue during fiscal year 2022, compared to fiscal year 2021, was driven by the growth of activity on Instacart, including an increase in credit card processing fees of $55 million; an increase in chargeback, cancellation, and redelivery costs of $34 million due to increased GTV and order volume; an increase of $16 million due to delivery-related insurance; and an increase of $10 million due to the amortization of developed technology from acquired companies. The increase was partially offset by a decrease of $21 million in headcount costs as a result of a decrease in in-store shoppers.
Previous report
The increase in gross profit and gross margin during fiscal year 2022, compared to fiscal year 2021, was driven by the increase in revenue due to customer fee optimization and fulfillment efficiencies and the effects of increased efficiencies in our cost of revenue as we benefited from economies of scale.
Previous report
The increase in operations and support expense during fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase of $95 million in compensation costs, primarily driven by an increase in stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO.
Previous report
The decrease in operations and support expense during fiscal year 2022, compared to fiscal year 2021, was driven by a decrease of $34 million in referral costs and background checks related to shopper acquisition and a decrease of $8 million in staging supplies primarily due to a decreased need for personal protective equipment for shoppers, partially offset by a $20 million increase in compensation costs, and a $10 million increase in costs related to outsourced customer experience agents who provide phone, email, and chat support to customers and shoppers.
Previous report
The increase in research and development expense during fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase of $1,894 million in compensation costs, primarily driven by stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, employee elections to receive cash in lieu of a portion of their equity awards, and bonus expense. This increase was partially offset by an increase of $96 million in capitalized software development costs.
Previous report
The increase in research and development expense during fiscal year 2022, compared to fiscal year 2021, was primarily due to an increase of $109 million in compensation costs as a result of additional headcount to support our growth, and a $29 million increase in fees for engineering tools, subscriptions, and hosting to support continued innovation in product development and technology infrastructure.
Previous report
The increase in sales and marketing expense during fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase of $346 million in compensation costs, primarily driven by stock-based compensation expense resulting from
Previous report
RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, employee elections to receive cash in lieu of a portion of their equity awards, and bonus expense, partially offset by a decrease of $36 million related to consumer marketing, including campaigns targeted towards increased customer engagement and brand development and a decrease of $19 million in consulting costs.
Previous report
The increase in sales and marketing expense during fiscal year 2022, compared to fiscal year 2021, was primarily due to increases of $164 million in costs related to marketing programs intended to drive revenue growth, which was magnified by a reduction in our marketing spend in the first three quarters of 2021 as we re-assessed our investment goals, $60 million in compensation costs as a result of additional headcount in our sales and marketing organization to support our growth, and $33 million in consulting costs related to marketing projects and campaigns.
Previous report
Other Income (Expense), Net
Previous report
The increase in other income (expense), net during fiscal year 2023 compared to fiscal year 2022 was primarily due to a decrease in unrealized currency losses.
Previous report
The decrease in other income (expense), net during fiscal year 2022, compared to fiscal year 2021, was primarily due to other income in 2021 related to legal settlements of $11 million that did not reoccur in 2022 and a foreign exchange loss during 2022 due to the strengthening of the U.S. dollar against the Canadian dollar and Australian dollar.
Previous report
“NM” - not meaningful
Previous report
The increase in the provision for (benefit from) income taxes during fiscal year 2022, compared to fiscal year 2021, was primarily driven by a $358 million release of our valuation allowance recorded against our deferred tax assets in the United States.
Previous report
(3)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Previous report
(4) Represents the cost of all personal protective equipment distributed to shoppers during the COVID-19 pandemic. We ceased excluding this cost following the first quarter of 2022 as the impact of the COVID-19 pandemic and its variant outbreaks on our business subsided.
Previous report
(5) Represents non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Previous report
(2) Represents the cost of personal protective equipment distributed to shoppers during the COVID-19 pandemic. We ceased excluding this cost following the first quarter of 2022 as the impact of the COVID-19 pandemic and its variant outbreaks on our business subsided.
Previous report
(3)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Previous report
(4) Represents non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Previous report
(3)Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers. We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
Previous report
(4) Represents the cost of personal protective equipment distributed to shoppers during the COVID-19 pandemic. We ceased excluding this cost following the first quarter of 2022 as the impact of the COVID-19 pandemic and its variant outbreaks on our business subsided.
Previous report
(5) Represents non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Previous report
For the year ended December 31, 2023, net cash provided by operating activities was $586 million, which consisted ofnet loss of $1,622 million, adjusted for certain non-cash items of $2,373 million, and net cash outflows from changes in operating assets and liabilities of $165 million. The non-cash items primarily consisted of stock-based compensation expense of $2,756 million, deferred income taxes of $459 million, depreciation and amortization expense of $43 million, bad debt expense of $23 million, and amortization of operating lease right-of-use assets of $14 million. The net cash outflows from changes in our operating assets and liabilities were primarily due to an $62 million decrease in accrued and other current liabilities, a $35 million decrease in other long-term liabilities, a $33 million increase in accounts receivable, a $22 million increase in prepaid expenses and other assets, a $16 million decrease in accounts payable, and a $15 million decrease in operating lease liabilities, partially offset by an $18 million increase in deferred revenue. These cash outflows were primarily due to timing of customer and vendor payments.
Previous report
For the year ended December 31, 2022, net cash provided by operating activities was $277 million, which consisted ofnet income of $428 million, adjusted for certain non-cash items of $275 million, and net cash inflows from changes in operating assets and liabilities of $124 million. The non-cash items primarily consisted of deferred income taxes of $373 million, depreciation and amortization expense of $34 million, stock-based compensation expense of $33 million, amortization of operating lease right-of-use assets of $13 million, and bad debt expense of $10 million. The net cash inflows from changes in our operating assets and liabilities were primarily due to a $141 million increase in accrued and other current liabilities, a $25 million increase in accounts payable, and a $24 million increase in deferred revenue, partially offset by a $31 million increase in prepaid expenses and other assets, a $21 million increase in accounts receivable, and a $13 million decrease in operating lease liabilities. These cash inflows were primarily due to timing of collection of accounts receivable.
Previous report
For the year ended December 31, 2021, net cash used in operating activities was$204 million, which consisted of net loss of$73 million, adjusted by non-cash charges of$61 million, and net cash outflows from changes in operating assets and liabilities of$192 million. The non-cash charges primarily consisted of stock-based compensation expense of$22 million, depreciation and amortization of$16 million, amortization of operating lease right-of-use assets of$11 million, and bad debt expense of$7 million. The net cash outflows from changes in our operating assets and liabilities were primarily comprised of a$318 million increase in accounts receivable, a$60 million increase in prepaid expenses and other assets, and a$13 million decrease in operating lease liabilities, partially offset by a$138 million increase in accounts payable and accrued and other current liabilities, a$47 million increase in deferred revenue, and a$14 million increase in long-term liabilities. These cash outflows were primarily due to increased operating expenses and vendor spend in connection with the growth of our business, partially offset by an increase in sales and indirect tax reserves.
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Reworded paragraphs (69)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following discussion contains forward looking statements that are based on current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward looking statements as a result of various factors, including, but not limited to, those identified below and those discussed in the section titled “Risk Factors” and other sections, including the “Special Note Regarding Forward-Looking Statements,” of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Current wording
Form 10-K. The following discussion contains forward looking statements that are based on current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward looking statements as a result of various factors, including, but not limited to, those identified below and those discussed in the section titled “Risk Factors” and other sections, including the “Special Note Regarding Forward-Looking Statements,” of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Previous wording
Instacart was founded in 2012 to bring the grocery industry online and help make grocery shopping effortless. We started by understanding what consumers want and then built enterprise-grade technologies that allow retailers to meet those needs. Instacart invented a new model for online grocery shopping by offering consumers on-demand delivery from the stores they know and trust. Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing eCommerce, fulfillment, Connected Stores, ads and marketing, and insights.
Current wording
Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing e-commerce, fulfillment, Connected Stores, ads and marketing, and insights. As consumers and retailers move online, brands can use Instacart Ads as an effective way to reach customers at the point of purchase and within minutes of delivery and consumption.
Previous wording
Instacart started as a way for households to conveniently manage their weekly grocery shopping, a recurring and high order value consumer use case. Today, customers can place orders for delivery or pickup across a variety of use cases including the weekly shop, bulk stock-up, convenience, and special occasions. Customers can select the fulfillment option and speed that best serve their needs. Each order can be shopped for and delivered with care by one of the hundreds of thousands of shoppers who value the flexible earnings opportunities that Instacart provides.
Current wording
Instacart started as a way for households to conveniently manage their weekly grocery shopping, a recurring and high order value consumer use case. Today, customers can place orders for delivery or pickup across a variety of use cases including the weekly shop, bulk stock-up, convenience, special occasions, from restaurants, and using our in-store technologies. Customers can select the fulfillment option and speed that best serve their needs. Each order can be shopped for and delivered with care by one of the hundreds of thousands of shoppers who value the flexible earnings opportunities that Instacart provides.
Previous wording
On September 21, 2023, we completed our IPO in which we issued and sold 14,100,000 shares of our common stock at an IPO price of $30.00 per share. We received net proceeds from the IPO of $392 million after deducting underwriting discounts and offering costs. Immediately subsequent to the closing of the IPO, we issued and sold 5,833,333 shares of our Series A Preferred Stock in a private placement at $30.00 per share and received $175 million in proceeds.
Current wording
On September 21, 2023, we completed our IPO in which we issued and sold 14,100,000 shares of our common stock at an IPO price of $30.00 per share. We received net proceeds from the IPO of $392 million after deducting underwriting discounts and offering costs. Immediately subsequent to the closing of the IPO, we issued and sold 5,833,333 shares of our Series A Preferred Stock in a private placement at $30.00 per share and received $175 million in proceeds. For additional information, see Note 1 — Business included in Part II, Item 8 of this Annual Report on Form 10-K.
Previous wording
Our business and financial condition have been, and are expected to continue to be impacted by recent macroeconomic trends affecting our markets and industry such as higher inflation, rising interest rates, the effects of supply chain challenges, cessation of government aid programs, geopolitical conflicts, and uncertainty regarding an economic recession and associated decreases in consumer discretionary income. For example, decreases in consumer discretionary income due to inflationary or recessionary economic pressures and rising interest rates, as well as cessation of government aid, have adversely impacted and continue to adversely impact order volumes, customer acquisition and retention, changing consumer preferences, and demand for premium or discretionary grocery purchases. These macroeconomic trends have caused advertisers, including our brand partners, to decrease spending and reduce their budgets and have heightened our brand partners’ focus on profitability. As a result, we expect the growth of our advertising and other revenue to be negatively impacted over the near term. In addition, inflationary pressures in 2022 and 2023 have resulted in higher GTV and average order values. However, customers have also been purchasing fewer items on average per order on Instacart, partially offsetting the effects of inflation on average order values. These factors and the magnitude of their effects are expected to cause our average order value to continue fluctuating. As inflation wanes, we expect growth in average order value to be a less significant driver of GTV growth.
Current wording
Our business, financial condition, and key business metrics may be impacted by macroeconomic trends affecting our markets and industry such as inflation or interest rate fluctuations, the effects of supply chain challenges, the impact of tariffs or other trade restrictions, geopolitical conflicts, uncertainty regarding an economic recession and associated decreases in consumer discretionary income, changing consumer preferences, and the effects of severe weather patterns. For example, decreases in consumer discretionary income due to inflationary or recessionary economic pressures and interest rate fluctuations, may adversely impact order volumes, customer acquisition and retention, and demand for premium or discretionary grocery purchases.
Previous wording
(1) Net loss for the year ended December, 31 2023, includes $2.6 billion of stock-based compensation associated with the cumulative vesting of certain equity awards in connection with our IPO in the third quarter of 2023.
Current wording
(1) Net loss for the year ended December 31, 2023 includes $2.6 billion of stock-based compensation expense associated with the cumulative vesting of certain equity awards in connection with our IPO in the third quarter of 2023.
Previous wording
We define an order as a completed customer transaction to purchase goods for delivery or pickup from a single retailer on Instacart during the period indicated, including those completed through Instacart Marketplace or retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform. We believe that orders are an indicator of the scale and growth of our business as well as the value we bring to our constituents.
Current wording
We define an order as a completed customer transaction to purchase goods for delivery or pickup primarily from a single retailer through Instacart during the period indicated, including those completed through Instacart Marketplace or services that are part of the Instacart Enterprise Platform. We believe that orders are an indicator of the scale and growth of our business as well as the value we bring to our constituents.
Previous wording
In 2023, orders increased to 269.2 million, or 3% growth compared to 2022. The increase in orders was driven primarily by increased engagement from new and existing customers.
Current wording
In 2024, orders increased to 294.0 million, or 9% growth compared to 2023. The increase in orders was driven primarily by increased engagement from new and existing customers.
Previous wording
We define GTV as the value of the products sold based on prices shown on Instacart, in addition to applicable taxes, deposits and other local fees, customer tips, which go directly to shoppers, customer fees, which include flat subscription fees related to Instacart+ that are charged monthly or annually, and other fees. GTV consists of orders completed through Instacart Marketplace or services that are part of the Instacart Enterprise Platform. We believe that GTV indicates the health of our business, including our ability to drive revenue and profits, and the value we provide to our constituents.
Current wording
We define GTV as the value of the products sold through Instacart, including applicable taxes, deposits and other local fees, customer tips, which go directly to shoppers, customer fees, which include flat subscription fees related to Instacart+ that are charged monthly or annually, and other fees. GTV consists of orders including those completed through Instacart Marketplace or services that are part of the Instacart Enterprise Platform. We believe that GTV indicates the health of our business, including our ability to drive revenue and profits, and the value we provide to our constituents. We have experienced and expect to continue to experience fluctuations in GTV growth, including due to the macroeconomic conditions described above, changes in customer and retailer engagement, and the effects of our strategic initiatives.
Previous wording
In 2023, GTV increased to $30,322 million, or 5% growth compared to 2022, driven primarily by the increase in orders and, to a lesser extent, higher average order value. During 2023, the rate of year-over-year declines in GTV from customers acquired prior to 2022 continued to improve. These declines were more than offset by GTV generated by newly acquired customers in 2022 and 2023. As inflation wanes, we expect GTV growth to continue to be driven more by growth in orders than growth in average order value. We experienced slower GTV growth in 2023 when compared to prior periods, and we expect to continue to experience fluctuations in GTV growth over the near term, primarily due to the macroeconomic trends described above, the subsiding effects of the COVID-19 pandemic on demand for online grocery, the declining effectiveness of historical growth initiatives as we continue to scale, and the effects of our initiatives to drive profitable growth.
Current wording
In 2024, GTV increased to $33,461 million, or 10% growth compared to 2023, driven primarily by the increase in orders and, to a lesser extent, higher average order value.
Previous wording
Gross profit is defined as revenue less cost of revenue, and gross margin is defined as gross profit as a percent of revenue. We believe that gross profit, gross margin, gross profit as a percent of GTV are important indicators of the growth and efficiencies of our business.
Current wording
Gross profit is defined as revenue less cost of revenue, and gross margin is defined as gross profit as a percent of revenue. We believe that gross profit, gross margin, and gross profit as a percent of GTV are important indicators of the growth and efficiencies of our business.
Previous wording
We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other income (expense), net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes related to stock-based compensation expense, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) COVID-19 response initiatives, (x) acquisition-related expenses, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock. We define Adjusted EBITDA margin as Adjusted EBITDA as a percent of revenue. For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled “—Non-GAAP Financial Measures.”
Current wording
We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other expense, net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes related to stock-based compensation expense, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) acquisition-related expenses, (x) restructuring charges, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock. We define Adjusted EBITDA margin as Adjusted EBITDA as a percent of revenue. For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled “—Non-GAAP Financial Measures.”
Previous wording
In 2023, Adjusted EBITDA increased to $641 million, or 243% growth compared to 2022, primarily driven by revenue growth and efficiencies within adjusted total operating expenses and adjusted cost of revenue which grew slower than GTV. Our Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin can vary significantly as we continue to make substantial investments to fuel our growth and scale our business.
Current wording
In 2024, Adjusted EBITDA increased to $885 million, or 38% growth compared to 2023, primarily driven by revenue growth and efficiencies within adjusted total operating expenses. Our Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin can vary significantly as we continue to make substantial investments to fuel our growth and scale our business.
Previous wording
•end users, whom we refer to as customers, (i) through service and delivery fees paid for arranging fulfillment services from shoppers and (ii) for monthly or annual Instacart+ memberships, our membership program, which offers unlimited free delivery on orders over a certain size, a reduced service fee, credit back on eligible pickup orders, and exclusive benefits;
Current wording
•end users, whom we refer to as customers, (i) through service and delivery fees paid for arranging fulfillment services from shoppers and (ii) for monthly or annual Instacart+ memberships, our membership program, which offers unlimited $0 delivery fees on orders over a certain size, and other exclusive benefits;
Previous wording
•a revenue share agreement with a third party that supplies payment cards to Instacart shoppers for in-store use.
Current wording
•revenue share agreements with third parties that supply payment cards to Instacart shoppers for in-store use.
Previous wording
Transaction revenue is recognized upon transfer of control of services, net of the purchase value of the goods remitted to retailers and payments to shoppers for their services (including any shopper incentives), coupons, consumer incentives, and refunds. We expect transaction revenue from customer and retailer fees to fluctuate from time to time as a result of customer and retailer fee optimizations and changes in the mix of customer use cases and fulfillment options. Over time, we expect year-over-year growth in transaction revenue to align more closely with growth in GTV relative to prior periods. We also expect the amounts of payments to shoppers, coupons, customer and shopper incentives, and refunds to fluctuate over time depending on a number of factors. For example, implementation of additional fulfillment options or shifts in our ability to use full-service shoppers, as well as fulfillment efficiencies, such as changes in our batch rate, average time spent per order, shopper tenure, and shopper pay optimization, could result in fluctuations in our transaction revenue. In addition, periods of elevated customer demand have resulted in and can in the future result in increased shopper incentives and degradation of order quality due to higher rates of out of stock items and other delays, which in turn generally lead to more appeasement credits and refunds. Furthermore, our overall marketing strategy will impact the spend mix between promotions and consumer incentives, as well as referrer credits, which are recorded as reductions of revenue and sales and marketing expense, respectively. In certain cases, these reductions of revenue can be more than fees received from retailers and customers.
Current wording
Transaction revenue is recognized upon transfer of control of services, net of the purchase value of the goods remitted to retailers and payments to shoppers for their services (including any shopper incentives), coupons, consumer incentives, and refunds. We expect transaction revenue from customer and retailer fees to fluctuate from time to time as a result of customer and retailer fee optimizations and changes in the mix of customer use cases and fulfillment options. We also expect the amounts of payments to shoppers, coupons, consumer and shopper incentives, and refunds to fluctuate over time depending on a number of factors. For example, implementation of additional fulfillment options or shifts in our ability to use full-service shoppers, as well as fulfillment efficiencies, such as changes in our batch rate, average time spent per order, shopper tenure, and shopper pay optimization, could result in fluctuations in our transaction revenue. In addition, periods of elevated customer demand have resulted in and can in the future result in increased shopper incentives and degradation of order quality due to higher rates of out of stock items and other delays, which in turn generally lead to more appeasement credits and refunds. Furthermore, our overall marketing strategy will impact the spend mix between activities that are recorded as reductions of revenue, such as promotions and consumer incentives, and activities that are recorded as sales and marketing expense, such as paid marketing and referrer credits. In certain cases, reductions of revenue can be more than fees received from retailers and customers. As a result of these factors, transaction revenue as a percent of GTV may fluctuate over time.
Previous wording
•the sale of advertising services to brands that are interested in reaching customers on Instacart; and
Current wording
•the sale of advertising services to brands that are interested in reaching customers; and
Previous wording
•certain retailers for use of our software-as-a-service solution through Instacart Enterprise Platform that enhances the online shopping experience, with revenue recognized ratably over the subscription period.
Current wording
•certain retailers for use of our software-as-a-service solution through Instacart Enterprise Platform that enhances the omnichannel shopping experience, with revenue recognized ratably over the subscription period.
Previous wording
Advertising revenue is recognized upon delivery of clicks for Sponsored Product ads, upon delivery of impressions or over the contract term on a fixed fee basis for display ads, or upon redemptions of coupons. Advertising and other revenue has historically been, and is expected to continue to be, seasonally high in the fourth quarter and seasonally low in the first quarter in a given year as a result of how advertisers deploy their budgets. In addition, our advertising and other investment rate may fluctuate, particularly during periods of acceleration or decreases in our GTV growth as well as periods in which we generate more GTV growth from sources where we historically do not provide advertising, such as retailers’ owned and operated online storefronts utilizing Instacart API that do not partner with Carrot Ads. We expect our advertising and other revenue growth to fluctuate in the near term due to the macroeconomic factors described above, changes in brand partner spend in response to our GTV growth trends, and as we lap the full ramp up of shoppable display and shoppable video launches in 2022, which helped drive advertising and other revenue growth in subsequent quarters.
Current wording
Advertising and other revenue has historically been, and is expected to continue to be, seasonally high in the fourth quarter and seasonally low in the first quarter in a given year as a result of how advertisers deploy their budgets. In addition, we expect our advertising and other revenue growth rate and advertising and other investment rate(which we define as advertising and other revenue in a given period divided by GTV in such period) to continue to fluctuate, particularly during periods of acceleration or decreases in our GTV growth. We also expect advertising and other investment rate to fluctuate during periods in which we generate more GTV from sources where we do not provide advertising or where we have recently enabled advertising, such as from certain new offerings or use cases and from retailers’ owned and operated online storefronts including those utilizing Instacart API that do not partner with Carrot Ads. We also expect our advertising and other revenue growth to fluctuate in the near term due to changes in brand partner spend, including as a result of the macroeconomic factors described above and in response to our GTV growth trends, which may occur on a delayed basis, as well as changes in the mix of revenue contribution from advertising contracts in effect in a particular period and related recognition of advertising revenue on a gross or net basis.
Previous wording
Cost of revenue primarily consists of third-party payment processing fees, expenses related to payment chargebacks, compensation costs of our employees primarily involved in fulfillment, hosting fees, insurance costs attributed to fulfillment, depreciation expense, and amortization expense of technology-related intangible assets and capitalized internal-use software. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense. We recognized additional cost of revenue during the third quarter of 2023, the period in which we completed our IPO, due to the stock-based compensation expense associated with the vesting of RSUs, as a result of the satisfaction of the liquidity event-based performance vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO, as described in the section titled “—Critical Accounting Policies and
Current wording
Cost of revenue primarily consists of third-party payment processing fees, expenses related to payment chargebacks, hosting fees, insurance costs attributed to fulfillment, compensation costs of our employees primarily involved in fulfillment, depreciation expense, and amortization expense of technology-related intangible assets and capitalized internal-use software. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Previous wording
Excluding the impact from stock-based compensation expense incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” we expect cost of revenue will increase on an absolute dollar basis for the foreseeable future as we continue to grow our operations and vary from period to period as a percent of revenue.
Current wording
We expect cost of revenue, exclusive of stock-based compensation expense, will increase on an absolute dollar basis and vary from period to period as a percent of revenue as we continue to grow our operations.
Previous wording
Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percent of total revenue. Our gross margin has varied and will continue to vary from period to period based on a number of factors, including (1) changes in revenue mix, changes in the mix of order type due to changes in mix of use cases and fulfillment options, consumer shopping behaviors (including from external drivers such as public health concerns), average order values, customer fee optimization, and levels of consumer incentives, (2) operational efficiencies, (3) negotiations with our retail partners, third-party payment processors, and hosting providers, and (4) macroeconomic factors, such as supply chain issues, rising interest rates, cessation of government aid and inflation, which have impacted and may continue to negatively impact growth in GTV and orders as well as spending by our brand partners. As we continue to expand across fulfillment options and consumer use cases, we also expect to incur additional types of costs, such as certain labor costs, that can impact both our cost of revenue and profitability trends in the future. Additionally, we expect the pace of gross margin expansion to slow relative to prior periods due to transaction revenue growth beginning to align more closely with GTV growth and fluctuations in transaction revenue and advertising and other revenue as described above.
Current wording
Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percent of total revenue. Our gross margin has varied and will continue to vary from period to period based on a number of factors, including (1) changes in revenue mix, changes in the mix of order type due to changes in mix of use cases and fulfillment options, consumer shopping behaviors, average order values, customer fee optimization, and levels of consumer incentives, (2) operational efficiencies, (3) negotiations with our retail partners, third-party payment processors, and hosting providers, and (4) macroeconomic factors as discussed above. As we continue to expand across fulfillment options and consumer use cases, we also expect to incur additional types of costs, such as certain labor costs, that can impact both our cost of revenue and profitability trends in the future. Additionally, we expect fluctuations in transaction revenue and advertising and other revenue as described above.
Previous wording
Operations and support expense primarily consists of compensation costs for employees who support our operations, costs of customer and shopper support, costs to attract and onboard new shoppers, allocations of various overhead and occupancy costs, and depreciation and amortization expense. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense. We recognized additional operations and support expense during the third quarter of 2023, the period in which we completed our IPO, due to the stock-based compensation expense associated with the vesting of RSUs, as a result of the satisfaction of the liquidity event-based performance vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO, as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” and expect to recognize additional stock-based compensation expense in future periods.
Current wording
Operations and support expense primarily consists of compensation costs for employees who support our operations, costs of customer and shopper support, costs to attract and onboard new shoppers, allocations of various overhead and occupancy costs, and depreciation and amortization expense. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Previous wording
While we intend to invest in our operations and hire additional employees, third-party consultants, and contractors to support our operations, our investments in operations and support headcount may fluctuate from time to time as we focus on driving more efficiencies across our teams. Excluding the impact from stock-based compensation expense incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” operations and support expense may increase on an absolute dollar basis for the foreseeable future and vary from period to period as a percent of revenue and as a percent of GTV.
Current wording
Operations and support expense, exclusive of stock-based compensation expense, may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV as we continue to invest in our operations and may hire additional employees, third-party consultants, and contractors to support our operations.
Previous wording
Research and development expense primarily consists of compensation costs for our engineering employees, third-party consulting fees, allocations of various overhead and occupancy costs, and depreciation and amortization expense. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense. We recognized additional research and development expense during the third quarter of 2023, the period in which we completed our IPO, due to the stock-based compensation expense associated with the vesting of RSUs, as a result of the satisfaction of the liquidity event-based performance vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO, as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” and expect to recognize additional stock-based compensation expense in future periods.
Current wording
Research and development expense primarily consists of compensation costs for our engineering employees, third-party consulting fees, allocations of various overhead and occupancy costs, and depreciation and amortization expense. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Previous wording
Excluding the impact of stock-based compensation incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” research and development expense may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV for the foreseeable future as we continue to invest in research and development activities relating to ongoing improvements to, and maintenance of, our offerings, including the hiring of engineering, product development, and design employees to support these efforts. While we intend to hire additional employees, our investments in research and development headcount may fluctuate from time to time as we focus on driving more efficiencies across our teams.
Current wording
Research and development expense, exclusive of stock-based compensation expense, may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV as we continue to invest in research and development activities relating to ongoing improvements to, and maintenance of, our offerings, including the hiring of engineering, product development, and design employees to support these efforts.
Previous wording
Sales and marketing expense primarily consists of advertising expenses, compensation costs for sales and marketing employees, third-party consulting fees, allocations of various overhead and occupancy costs, depreciation expense, and amortization expense of customer relationship intangible assets. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense. We recognized additional sales and marketing expense during the third quarter of 2023, the period in which we completed our IPO, due to the stock-based compensation expense associated with the vesting of RSUs, as a result of the satisfaction of the liquidity event-based performance vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO, as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” and expect to recognize additional stock-based compensation expense in future periods.
Current wording
Sales and marketing expense primarily consists of advertising expenses, such as paid marketing, compensation costs for sales and marketing employees, third-party consulting fees, allocations of various overhead and occupancy costs, depreciation expense, and amortization expense of customer relationship intangible assets. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Previous wording
We plan to continue to invest in sales and marketing to attract and increase the engagement of constituents on Instacart and increase our brand awareness. Excluding the impact from stock-based compensation expense incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” sales and marketing expense may increase on an absolute dollar basis and vary as a percent of revenue, and as a percent of GTV for the foreseeable future. While we expect sales and marketing expense to be one of our largest operating expenses for the foreseeable future, the trend and timing of our sales and marketing expense will depend in large part on the timing and magnitude of our marketing campaigns. While we intend to increase our headcount from time to time, particularly over the near term as we pursue attractive growth opportunities, our investments in sales and marketing headcount may also fluctuate from time to time as we focus on driving more efficiencies across our teams.
Current wording
Sales and marketing expense, exclusive of stock-based compensation expense, may increase on an absolute dollar basis and vary as a percent of revenue, and as a percent of GTV as we continue to invest in sales and marketing to attract and increase the engagement of constituents on Instacart and increase our brand awareness. While we expect sales and marketing expense to be one of our largest operating expenses for the foreseeable future, the trend and timing of our sales and marketing expense will depend in large part on the timing and magnitude of our marketing campaigns.
Previous wording
General and administrative expense primarily consists of compensation costs for administrative employees, including finance and accounting, human resources, policy, and legal; third-party consulting fees; allocations of various overhead and occupancy costs; depreciation expense; and amortization expense of patents and trademarks. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense. We recognized additional general and administrative expense during the third quarter of 2023, the period in which we completed our IPO, due to the stock-based compensation expense associated with the vesting of RSUs and restricted stock, as a result of the satisfaction of the liquidity event-based performance vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO, as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” and expect to recognize additional stock-based compensation expense in future periods.
Current wording
General and administrative expense primarily consists of compensation costs for administrative employees, including finance and accounting, human resources, policy, and legal; third-party consulting fees; allocations of various overhead and occupancy costs; depreciation expense; amortization expense of patents and trademarks; and taxes. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Previous wording
Excluding the impact from stock-based compensation expense incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” general and administrative expense may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV for the foreseeable future as we continue to invest in processes, systems, and controls to enable our internal support functions to scale with the growth of our business and to operate as a public company. While we intend to increase our headcount from time to time, our investments in general and administrative headcount may fluctuate from time to time as we focus on driving more efficiencies across our teams.
Current wording
General and administrative expense, exclusive of stock-based compensation expense, may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV as we continue to invest in processes, systems, and controls to enable our internal support functions to scale with the growth of our business.
Previous wording
Other income (expense), net primarily consists of income related to legal settlements and gains and losses from transactions denominated in a currency other than the functional currency.
Current wording
Other expense, net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency.
Previous wording
The following table summarizes the components of our consolidated statements of operations data, for each of the periods presented, as a percent of revenue.
Current wording
The following table summarizes the components of ourconsolidated statements of operations data, for each of the periods presented, as a percent of revenue:
Previous wording
The increase in transaction revenue during fiscal year 2023 compared to fiscal year 2022 was primarily driven by growth in GTV, which grew 5%, and orders, which grew 3%. In addition, the increase was driven by fulfillment efficiencies and reduced appeasements and refunds, partially offset by an increase in incentives and promotions and lower payment revenue.
Current wording
The increase in transaction revenue during fiscal year 2024, compared to fiscal year 2023, was primarily driven by growth in GTV, which grew 10%, and increased fulfillment efficiencies, partially offset by increased investments in affordability initiatives and consumer incentives in fiscal year 2024.
Previous wording
The increase in advertising and other revenue during fiscal year 2023 compared to fiscal year 2022 was primarily driven by interrelated factors, including an increase in GTV and advertising volume and increased adoption of our new advertising features and products, such as shoppable display ads and shoppable video, which we launched in the second half of 2022. This increase was impacted by changes in spend by certain of our brand partners in fiscal year 2023 compared to fiscal year 2022 in response to macroeconomic uncertainty and changes in our brand partners’ businesses and performance.
Current wording
The increase in advertising and other revenue during fiscal year 2024, compared to fiscal year 2023, was primarily driven by interrelated factors including an increase in advertising volume and activity on our platform. Strength in emerging brand spend was also partially offset by a decrease in spend by certain of our large brand partners in response to macroeconomic uncertainty and changes in our brand partners’ businesses and performance. Advertising and other investment rate of 2.9% during 2024 remained flat compared to 2023.
Previous wording
The increase in cost of revenue during fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase of $28 million in customer success and professional services compensation costs, primarily driven by an increase in stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, an increase of $14 million in credit card processing fees, and an increase of $12 million in other cost of revenue, partially offset by a decrease of $16 million in compensation costs for in-store shoppers.
Current wording
The increase in cost of revenue during fiscal year 2024, compared to fiscal year 2023, was primarily due to an increase of $35 million in credit card processing fees, an increase of $14 million in payments to publishers, an increase of $13 million in delivery-related insurance, an increase of $11 million in depreciation and amortization expense primarily related to capitalized internal-use software, and an increase of $10 million in consulting costs, partially offset by a decrease of $19 million in compensation costs primarily for in-store shoppers and a decrease of $12 million in payment chargebacks.
Previous wording
The increase in gross profit and gross margin during fiscal year 2023 compared to fiscal year 2022 was primarily driven by the increase in transaction revenue and advertising and other revenue, partially offset by the increase in cost of revenue, due to the factors described above.
Current wording
The increase in gross profit during fiscal year 2024, compared to fiscal year 2023, was primarily driven by the increase in transaction revenue due to the factors described above. Gross margin during fiscal year 2024, compared to fiscal year 2023, remained flat.
Previous wording
The increase in general and administrative expense during fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase of $538 million in compensation costs, primarily driven by stock-based compensation expense resulting from RSUs and restricted stock with a liquidity event-based vesting condition that was satisfied in connection with our IPO, employee elections to receive cash in lieu of a portion of their equity awards, and bonus expense, an increase of $13 million in bad debt expense, and an increase of $13 million in business taxes and insurance costs, partially offset by a decrease of $81 million in our accruals for sales and indirect taxes and legal matters and settlements.
Current wording
The decrease in sales and marketing expense during fiscal year 2024, compared to fiscal year 2023, was primarily due to a decrease of $249 million in compensation costs, partially offset by an increase of $75 million in paid marketing costs and an increase of $13 million in consulting costs. The net decrease in total compensation costs was primarily driven by a decrease in stock-based compensation expense resulting from RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO in fiscal year 2023.
Previous wording
The increase in general and administrative expense during fiscal year 2022, compared to fiscal year 2021, was primarily due to increases of $33 million in compensation costs as a result of additional headcount, $17 million in business taxes and insurance costs related to the overall increase in business volume, $9 million in policy spend, $7 million in consulting fees, as well as $6 million in software costs and other expenses related to the overall growth in our business. These expenditures were partially offset by decreases of $23 million in our accruals for sales and indirect taxes, and legal matters and settlements.
Current wording
The decrease in general and administrative expense during fiscal year 2024, compared to fiscal year 2023, was primarily due to a net decrease of $478 million in total compensation costs, partially offset by an increase of $19 million in accruals for sales and indirect taxes and legal matters and settlements and an increase of $14 million in professional fees.
Previous wording
The increase in interest income during fiscal year 2022 compared to fiscal year 2021 was primarily due to higher average interest rates earned on our cash and cash equivalents and short-term investments in 2022 as compared to 2021.
Current wording
The decrease in interest income during fiscal year 2024, compared to fiscal year 2023, was primarily due to a decrease in cash and cash equivalents and short-term marketable securities and lower average interest rates during fiscal year 2024.
Previous wording
The increase in the benefit from income taxes during fiscal year 2023 compared to fiscal year 2022 was primarily driven by the tax benefit related to the recognition of stock-based compensation expense, including certain restructurings, associated with the vested RSUs as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO in the third quarter of 2023, as well as the generation of an increased amount of research and development tax credits. The benefit from income taxes in 2022 was primarily related to the release of a valuation allowance in the United States.
Current wording
The increase in the provision for income taxes during fiscal year 2024, compared to fiscal year 2023, was primarily driven by the tax benefit related to the recognition of stock-based compensation expense, including certain restructurings associated with the vested RSUs as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO in the third quarter of 2023.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The increase in interest income during fiscal year 2023 compared to fiscal year 2022 was primarily due to higher average interest rates earned on our cash and cash equivalents, restricted cash and cash equivalents, and short-term investments.