Prominent grocery delivery app Instacart has revealed a remarkable 31% surge in revenue during the first half of 2023, inching closer to its eagerly awaited initial public offering (IPO). The news coincides with chip designer Arm Holdings’ IPO filing, backed by SoftBank Group, setting the stage for a litmus test of investor appetite for IPOs.
This duo of offerings could potentially inspire other startups to consider public listings. Market dynamics, looming large IPOs in September, and a summer slowdown are factors influencing companies’ Fall IPO decisions, according to Mark Schwartz, EY’s IPO and SPAC advisory leader.
Instacart’s revenue surge, coupled with Arm Holdings and Klaviyo’s potential IPO listings, could inject vigor into the US IPO market. In 2023, excluding special purpose acquisition companies (SPACs), $10.3 billion has been raised through 77 IPOs, nearly double the amount in the same period last year, as per Dealogic data.
Mike Bellin, IPO services leader at PricewaterhouseCoopers US, predicts a robust IPO market resurgence in 2024. Instacart’s IPO journey began 15 months ago with confidential paperwork submission, preceding its imminent listing. Initial plans for a fourth-quarter 2022 listing were deferred due to tech stock sell-offs and the Federal Reserve’s interest rate hikes.
A New Era for the Grocery Delivery Giant
In H1 2023, Instacart’s revenue soared to $1.48 billion from $1.13 billion last year. Notably profitable, the company appeals to IPO investors favoring profit-making firms over loss-making startups. Instacart reported $242 million net income in the first half, in contrast to a $74 million loss a year earlier.
Instacart’s IPO, guided by lead underwriters Goldman Sachs and J.P. Morgan, is poised to list its shares on Nasdaq under the symbol “CART.” Founded in 2012 by Fidji Simo, a former head of Facebook app, Instacart operates in the US and Canada. Customers can order through the app, with delivery facilitated within 30 minutes by designated “shoppers.”
Diversifying beyond groceries, Instacart delivers items from retailers like Sephora, 7-Eleven, and CVS Health. Euromonitor projects online grocery as a substantial driver for US food and beverage sales, potentially adding nearly $100 billion in sales by 2027. Instacart’s IPO journey saw valuation fluctuations. Its value dipped to $10 billion in late 2022 but surged by 18% in April 2023.
Contemplation of a direct listing marked Instacart’s path to IPO, differing from traditional IPOs by allowing shares to be sold directly to the public. Instacart’s IPO signifies a transformative financial trajectory, encapsulating the dynamism of technology startups on their course toward public listings.
Source: Yahoo finance