Instacart (CART), the leading grocery technology company in North America, delivered a notable financial turnaround in fiscal year 2024, swinging from a substantial net loss to significant profitability. This fundamental shift in financial performance provides a crucial backdrop for evaluating the company's recent strategic maneuvers, particularly its deepened partnerships with major retailers like Costco and its expanded footprint in the burgeoning retail media landscape.
The stark contrast between the $1.62 billion net loss reported in 2023 and the $457 million net income achieved in 2024 underscores a pivotal moment in CART's operational history. This dramatic improvement, representing a +128.18% increase in net income year-over-year, suggests that underlying business model adjustments and cost efficiencies implemented by management are beginning to yield tangible bottom-line results, moving beyond top-line growth alone.
Fiscal Year 2024 Financial Performance Analysis#
Analyzing the full-year results for 2024 reveals the extent of the financial improvement. Revenue continued its upward trajectory, reaching $3.38 billion, an +11.05% increase from the $3.04 billion reported in 2023, according to data from Monexa AI. This growth rate, while solid, is slower than the company's three-year historical revenue CAGR of +22.58%, suggesting a maturing business or a shift in focus towards profitability over hyper-growth.
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The most striking improvements were seen below the revenue line. Gross profit rose to $2.54 billion in 2024 from $2.28 billion in 2023, resulting in a gross profit margin of 75.25%, a slight increase from 74.88% the previous year. This indicates the company maintained or slightly improved its efficiency in managing the direct costs associated with its services. However, the transformation in operating expenses was the primary driver of the profitability swing.
Operating expenses decreased dramatically from $4.42 billion in 2023 to $1.77 billion in 2024. This reduction was particularly pronounced in research and development expenses, which fell from $2.31 billion in 2023 to $604 million in 2024, and selling, general, and administrative expenses, which decreased from $2.10 billion to $1.17 billion over the same period. These figures, sourced from Monexa AI financial statements, highlight a significant recalibration of investment and spending, likely involving a reduction in high-cost growth initiatives or a more disciplined allocation of resources.
The impact of these expense reductions is clearly visible in the operating income, which swung from a loss of $2.14 billion in 2023 to a positive $489 million in 2024. Consequently, the operating margin improved from a staggering -70.41% to a healthy 14.48%. Similarly, the net margin improved from -53.32% to 13.53%, and the EBITDA margin improved from -68.54% to 16.46% (Monexa AI). This return to positive operating and net profitability marks a critical milestone for CART, validating management's efforts to build a sustainable business model.
| Metric | FY 2024 | FY 2023 | FY 2022 | FY 2021 |
|---|---|---|---|---|
| Revenue | $3.38B | $3.04B | $2.55B | $1.83B |
| Gross Profit | $2.54B | $2.28B | $1.83B | $1.23B |
| Operating Income | $489MM | -$2.14B | $62MM | -$86MM |
| Net Income | $457MM | -$1.62B | $428MM | -$73MM |
| Gross Margin | 75.25% | 74.88% | 71.78% | 66.85% |
| Operating Margin | 14.48% | -70.41% | 2.43% | -4.69% |
| Net Margin | 13.53% | -53.32% | 16.78% | -3.98% |
| EBITDA Margin | 16.46% | -68.54% | 4.27% | -3.27% |
Financial data sourced from Monexa AI historical income statements.
Balance Sheet Health and Cash Flow Generation#
Beyond the income statement, CART's balance sheet appears robust. As of December 31, 2024, the company held $1.43 billion in cash and cash equivalents and $1.52 billion in cash and short-term investments, contributing to total current assets of $2.7 billion (Monexa AI). Total current liabilities stood at $798 million, resulting in a strong TTM current ratio of 3.24x, indicating ample liquidity to cover short-term obligations. The company's total debt was minimal at $26 million, leading to a TTM debt-to-equity ratio of just 0.01x and a net debt position of -$1.4 billion (Monexa AI). This low leverage provides significant financial flexibility.
Cash flow generation also turned positive and grew substantially. Net cash provided by operating activities reached $687 million in 2024, a +17.24% increase from $586 million in 2023. Free cash flow followed suit, increasing by +17.55% to $623 million in 2024 from $530 million in 2023 (Monexa AI). This consistent positive free cash flow generation is a crucial indicator of the business's health and its ability to self-fund operations and strategic investments.
It is worth noting that while cash flow from operations was strong, the company's cash balance decreased by $844 million in 2024. This was primarily driven by a significant $1.4 billion in common stock repurchases (Monexa AI). This capital allocation decision reflects management's confidence in the company's intrinsic value and its commitment to returning value to shareholders, particularly following the return to profitability.
| Metric | FY 2024 | FY 2023 | FY 2022 | FY 2021 |
|---|---|---|---|---|
| Cash & Equivalents | $1.43B | $2.14B | $1.5B | $1.15B |
| Total Current Assets | $2.7B | $3.31B | $2.74B | $2.4B |
| Total Assets | $4.12B | $4.73B | $3.67B | $2.96B |
| Total Liabilities | $1.02B | $800MM | $3.73B | $3.53B |
| Total Equity | $3.09B | $3.93B | -$64MM | -$573MM |
| Operating Cash Flow | $687MM | $586MM | $277MM | -$204MM |
| Free Cash Flow | $623MM | $530MM | $251MM | -$226MM |
| Common Stock Repurchased | -$1.4B | -$36MM | $0 | $0 |
Financial data sourced from Monexa AI historical balance sheets and cash flow statements.
Strategic Initiatives: Deepening Retail Partnerships#
Amidst this financial backdrop, CART continues to focus on strengthening its core business through strategic retailer partnerships. A key development announced on June 11, 2025, is the expanded partnership with Costco (COST), one of Instacart's largest partners. This initiative introduces a significant benefit for Costco Executive Members in the U.S. and Canada: a $10 monthly credit towards same-day delivery orders of $150 or more, starting June 30, 2025 (PR Newswire).
This program targets Costco's most valuable members, who already pay a premium for their membership tier. By offering a direct financial incentive for using Instacart for larger orders, the partnership aims to increase order frequency and deepen loyalty among a desirable customer segment. This move is strategically aligned with increasing Gross Transaction Value (GTV) and solidifying the relationship with a critical retail partner. For Costco, it enhances the value proposition of its Executive Membership and expands its e-commerce reach.
This type of partnership is crucial for CART as it navigates the competitive online grocery landscape. While the credit program might introduce some marginal pressure on transaction profitability in the short term, the long-term benefits of increased order volume from high-value customers and reinforced retailer relationships are expected to outweigh this. It reflects a strategic choice to invest in customer engagement and partner success, leveraging incentives to drive behavior.
Strategic Initiatives: Expanding Retail Media and Advertising#
Another significant strategic focus area for CART is the expansion of its retail media and advertising business. Recognizing the value of its first-party data on consumer purchase behavior, Instacart has been building out its advertising platform. A recent key development, announced around June 10, 2025, is a strategic alliance with The Trade Desk (TTD) (Zacks).
This partnership is designed to enhance Instacart's retail media capabilities by allowing advertisers to build real-time, first-party audiences based on actual retail signals from Instacart's platform. Crucially, it enables advertisers to measure the effectiveness (Return on Ad Spend - ROAS) of their campaigns not just within the Instacart ecosystem but also across the open internet (Zacks). This integration with a major programmatic advertising platform like The Trade Desk significantly increases the reach and sophistication of Instacart's advertising offerings.
The retail media market is a high-margin business and a key growth driver for e-commerce platforms. By providing more robust targeting and measurement tools, CART can attract more advertising spend from brands looking to reach consumers near the point of purchase. This segment contributes significantly to the company's overall profitability and represents a strategic diversification of revenue streams beyond transaction fees and delivery services. The alliance with The Trade Desk positions Instacart to capture a larger share of this growing market.
Competitive Landscape and Market Positioning#
Instacart operates in a highly competitive environment, facing rivals ranging from established e-commerce giants and traditional grocers with their own delivery services to other third-party delivery platforms. The strategic moves outlined above, particularly the focus on retailer partnerships and retail media, highlight CART's approach to differentiate itself and strengthen its market position.
The expanded Costco partnership solidifies its relationship with a major player, potentially making it the preferred or exclusive third-party delivery partner for a significant segment of Costco's customer base. This creates a competitive moat by locking in a key retailer and leveraging their loyal customer program. Similarly, the enhanced retail media platform, powered by the Trade Desk alliance, provides a compelling offering for consumer brands, giving Instacart an edge in attracting advertising revenue compared to platforms with less sophisticated data and measurement capabilities.
Furthermore, Instacart's stated strategy includes expanding beyond traditional grocery into other retail verticals and restaurants, supported by AI and data-driven personalization (Seeking Alpha). This diversification aims to broaden the company's addressable market and reduce reliance on a single category. The company's strong balance sheet and positive cash flow provide the financial foundation necessary to invest in these expansion areas and fend off competitive pressures.
Profitability, Growth Outlook, and Valuation#
The dramatic shift to profitability in 2024 is a critical factor in assessing CART's investment profile. The company's TTM EPS stands at $1.52, resulting in a TTM PE ratio of 29.06, based on the current stock price of $44.17 (Monexa AI). The TTM Price-to-Sales ratio is 3.33x, and the TTM EV-to-EBITDA is 18.24x (Monexa AI). These valuation metrics provide a snapshot of how the market currently values the company relative to its recent performance.
Looking ahead, analyst estimates suggest continued growth, albeit at a more moderate pace than historical levels. Revenue is projected to grow at an 8.4% CAGR through 2027, reaching an estimated $4.37 billion by the end of that year. EPS is expected to grow at a faster pace, with a projected 12.88% CAGR through 2027, reaching an estimated $2.53 per share by the end of 2027 (Seeking Alpha, Monexa AI earnings estimates). This indicates analysts anticipate continued margin expansion and operational efficiency gains to drive bottom-line growth faster than top-line expansion.
Based on these projections, the forward PE ratio stands at 22.96x for 2025, 19.5x for 2026, and 17.61x for 2027 (Monexa AI). These declining forward PE multiples suggest that, based on current earnings estimates, the stock is trading at a lower valuation relative to expected future earnings compared to its current TTM multiple.
Historical Context and Management Execution#
CART's journey to profitability has involved navigating significant operational shifts. The substantial losses incurred in 2023 were partly a result of high investment levels and potentially less disciplined spending characteristic of rapid growth phases. The turnaround in 2024, marked by the dramatic reduction in operating expenses and the swing to positive net income, demonstrates management's ability to pivot towards efficiency and profitability.
This shift can be viewed as an inflection point, moving from a phase of market penetration at significant cost to a phase focused on sustainable, profitable growth. Management's stated priorities, including expanding retailer partnerships and growing the high-margin advertising business, align with the financial outcomes observed in 2024 and the strategic initiatives announced in June 2025. The significant share repurchase program in 2024 also signals management's confidence in the company's financial health and future prospects.
Compared to historical performance, the current period shows a greater emphasis on balancing growth with profitability. Previous strategic phases might have prioritized user acquisition or geographic expansion more heavily, leading to higher operating costs. The current approach appears to leverage existing scale and data to drive higher-margin revenue streams like advertising and deepen engagement with existing high-value users through partnerships like the one with Costco.
What This Means For Investors#
Instacart's recent performance and strategic announcements provide several key takeaways for investors:
- Proven Profitability: The $457 million net income and 13.53% net margin in 2024 demonstrate the company's ability to operate profitably after years of losses. This de-risks the business model significantly.
- Strong Financial Health: A robust balance sheet with $1.43 billion in cash, low debt (0.01x debt-to-equity), and consistent positive free cash flow ($623 million in 2024) provides operational flexibility and supports capital allocation decisions like share repurchases.
- Strategic Growth Levers: Partnerships like the expanded Costco program aim to secure high-value customers and drive order frequency, while the Trade Desk alliance positions Instacart to capture significant, high-margin revenue from the growing retail media market.
- Execution on Stated Goals: The financial results and recent strategic moves align with management's focus on balancing growth with profitability and expanding into higher-margin areas.
- Moderate Future Growth: While growth is projected to continue (Revenue CAGR 8.4%, EPS CAGR 12.88% through 2027), investors should expect a slower top-line expansion rate compared to the company's earlier history.
- Valuation Context: The TTM PE of 29.06x and forward PE estimates (e.g., 22.96x for 2025) provide a basis for comparing the current valuation against expected earnings growth.
Potential risks include intense competition in both the delivery and retail media sectors, the potential for margin pressure from consumer incentives offered through partnerships, and macroeconomic factors impacting consumer spending on groceries and discretionary items. However, the company's strong financial position and strategic focus on high-margin areas and customer loyalty provide a foundation to navigate these challenges.
Conclusion#
Instacart (CART) has successfully navigated a critical phase, achieving significant profitability in fiscal year 2024 after incurring substantial losses the previous year. This financial turnaround, evidenced by a dramatic improvement in net income and margins, is supported by a healthy balance sheet and robust free cash flow generation. The company's recent strategic announcements, particularly the expanded partnership with Costco and the alliance with The Trade Desk, underscore a clear focus on deepening relationships with key retailers, enhancing customer loyalty among valuable segments, and aggressively pursuing growth in the high-margin retail media business.
These strategic initiatives are crucial for CART's competitive positioning and future growth trajectory. While revenue growth is projected to moderate compared to historical rates, analysts anticipate faster EPS growth driven by continued operational efficiencies and the expansion of higher-margin revenue streams. The successful execution of these strategies will be key to sustaining profitability and driving long-term value, building upon the significant financial progress made in the past year.