In an effort to revive the stagnant technology IPO market, Instacart has filed to do so on the Nasdaq

Instacart, the supermarket delivery firm that cut its valuation amid last year’s market collapse, submitted its IPO paperwork on Friday, marking the first major venture-backed tech IPO since December 2021. The stock will trade on Nasdaq as “CART. The company’s prospectus reported $114 million in net income and $716 million in revenue in the latest quarter, up 15% over the year-ago period. The report shows Instacart has been profitable for five quarters. PepsiCo will buy $175 million of the company’s stock privately. The platform will continue to incorporate artificial intelligence and machine learning, and Instacart plans to “rely on AIML solutions to help drive future growth in our business. In May, Instacart launched Ask Instacart, a search tool that answers grocery shopping questions using generative AI.

“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. Most of us will do both. So we want to develop a true omni-channel experience that brings the best of online purchasing to physical locations and vice versa.” Instacart will strive to enter the IPO market, which has been primarily closed since late 2021. HashiCorp and Samsara, a software provider and cloud technology developer for industrial enterprises, went public in December, but no other venture-backed tech IPOs have occurred since. On Monday, SoftBank-owned chipmaker Arm filed for a Nasdaq listing. Founded in 2012 as Maplebear Inc., Instacart joins other gig economy startups like Airbnb, DoorDash, Uber, and Lyft in going public in 2020. Only Airbnb is trading above its IPO price, so investors haven’t been lucky.

According to its website, Instacart shoppers and drivers deliver to over 5,500 cities from over 40,000 supermarkets and other retailers. The COVID-19 pandemic caused consumers to avoid public places, boosting business. Due to the enormous costs of paying all those contractors, profitability has always been a problem in the gig economy. Instacart stated headcount peaked in Q2 2022 “and declined over the next two quarters, reducing our fixed operating cost base.” At the end of June, the company had 3,486 full-time workers. Last March, Instacart cut its valuation to $24 billion from $39 billion when public equities fell. Late 2022 saw another 50% valuation drop. Instacart claimed Amazon, Target, Walmart, and DoorDash as competitors. The biggest cost reductions have been in general and administrative expenses. Costs dropped to $51 million in the latest quarter from $77 million a year earlier and will reach $102 million in 2021. Instacart attributed the decline to “lower legal fees and settlements.”

Simo became CEO and board chair of Instacart in August 2021 and July 2022, respectively. As the head of Facebook’s app at Meta, she reported directly to CEO Mark Zuckerberg. According to a 2022 release, Instacart founder and executive chairman Apoorva Mehta will leave the board after the business goes public. The board comprises Peloton CEO Barry McCarthy, Snowflake CEO Frank Slootman, and Andreessen Horowitz’s Jeff Jordan. One of the first independent grocery delivery startups to go public was Instacart. Amazon Fresh, Walmart Grocery, and Google Express are all subsidiaries of huge organizations. In 2017 and 2021, Target acquired Shipt and Ahold Delhaize acquired Fresh Direct, both direct-to-consumer grocery delivery companies.

Sequoia Capital and D1 Capital Partners are the sole owners with 5% or more. Instacart said those two businesses, Norges Bank Investment Management, TCV, and Valiant Capital Management, had “indicated an interest, severally and not jointly,” in buying up to $400 million of IPO shares at the offering price. Instacart’s AI push has come from acquisitions in the past two years. They bought e-commerce startup Rosie, AI-powered pricing firm Eversight, AI shopping cart and checkout solutions provider Caper, and FoodStorm, a software startup that makes self-serve kiosks for in-store customers.

The company also claimed machine learning increased retailer grocery availability and consumer sales. It said its algorithms forecast availability every two hours for the “large majority” of its 1.4 billion supermarket goods, and more than 70% of clients bought items through Instacart’s suggestion algorithm in Q2 2023.Goldman Sachs leads the offering. Nick Giovanni, Instacart’s finance leader, was global head of the tech, media, and telecom groups at the investment bank.

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