Instacart (NASDAQ:CART) traded modestly lower in early trading Thursday after reporting its first quarterly results since its IPO in September, which showed better-than-expected revenue and EBITDA.
The grocery delivery service reported that Gross Transaction Value (GTV) grew 6% in the third quarter to $7.494 billion, while orders rose 4% to 66.2 million. Revenue rose 14% to $764 million, above the Wall Street consensus of $736.9 million.
Still, the company had a GAAP net loss of $2 billion in the quarter, primarily related to the $2.6 billion in stock-based compensation which was elevated due to the IPO. However, adjusted EBITDA rose 120% from last year to $163 million and beat the consensus of $120 million.
The company ended the quarter with $2.2 billion in cash and established a $500 million stock buyback plan.
In the fourth quarter, the company sees GTV growth of 5-6% and adjusted EBITDA of $165-$175 million.
Analysts at JP Morgan highlighted that orders and GTV were mostly in line, with advertising revenue upside, and profitability "well ahead of expectations."
"Notably, 2020 & 2021 cohort rates of decline continued to improve in 3Q (2Q declines also better than 1Q), and these cohorts no longer represent the majority of GTV, w/declines offset by new customer activation," the analysts also noted.
The analysts noted that Q4 GTV guidance was slightly better than expected, while the EBITDA guidance was ~16% above the firm's prior expectation at the mid-point.
"We recognize the risks around competition & growth, but we remain constructive on the secular growth oppy in online grocery, CART’s marketplace leadership position, and strong margin profile," the analysts added. JP Morgan maintained their Overweight rating and $33 price target.
Analysts at BofA Securities also noted the "solid" EBITDA beat and improved 2024 set-up. Still, the analysts remain on the sidelines with a Neutral rating and a $31 price target (up from $30).