There we go. Okay. With the music turning down, we're going to start our next fireside chat with Instacart, Chris Rogers, CEO. Chris, first of all, thanks for coming back.
Thank you.
You came here for the first time a year ago.
Yeah.
It didn't go horribly wrong. You came back a second time, and I appreciate that.
Still here. Fantastic.
Excellent to see you again in this format. We love when you come to the conference. I am going to start by reading the safe harbor. Some of the statements made today by Instacart may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Instacart undertakes no obligation to update them. Please refer to Instacart's most recent Form 10-Q or Form 10-K for a discussion of the risk factors that may impact actual results. The company may also reference certain non-GAAP financial metrics, and reconciliations are available on Instacart's investor relations website. Okay. Let's start with my intro.
All right.
It has been a year. You were a new CEO when you were here a year ago. It is a year later. Before we take a step forward, let us take a step back.
Yeah
and talk about the transition of what
Yeah
the company and the platform's been going through
Awesome
the last year.
Awesome. Well, so great to be back with you a year later. I've actually been at Instacart for seven years, but this last year as CEO has really reinforced my confidence in the foundation that we've built. You'll recall last year when I stepped into the role, I said, "I'm deliberately not going to change our strategy because our strategy is fundamentally sound. Our chosen lane of being a grocery technology company is the right way, right one." Just to reiterate, our strategy is to build the very best end-to-end experience on our consumer marketplace and then take all of that technology and offer it to retailers in the form of an enterprise product, as well as building one of the leading and largest grocery or retail media businesses out there. So that's our strategy. A year in, I would say our strategy is working.
But the other thing that I said last year was, I didn't just want this to be a continuation. I wanted to accelerate us into the next chapter, and there was a few things that I highlighted specifically that we were going to focus on. One was affordability. This has been a long-term effort for us, but that included having the very difficult conversation with retailers about their pricing strategies on Instacart, because we know that retailers that don't mark up perform a lot better. I said we were going to accelerate enterprise. So enterprise is where we pull all of our capabilities into one connected platform that spans e-commerce. We do fulfillment, both technology fulfillment, and we do physical fulfillment. We do retail media. We have in-store technology. We're now expanding with AI. I said we were going to go international for the first time.
Then we're going to continue to accelerate ads and data by continuing to extend our ads ecosystem, diversify our supply and demand, and monetize our data for the first time. So fast-forward to today, and I would say that our results validate that our strategy is working, and it's validating our acceleration areas. We have meaningfully accelerated our growth over the last three quarters, including +14% in Q2. We guided to +14% in Q3 at the midpoint. We are activating net new customers at our fastest growth rates since 2022. On affordability, we have more retailers with no markups on Instacart's marketplace versus any other third-party marketplace in North America. We're continuing to extend that advantage. We just announced Grocery Outlet has gone to price parity nationwide. Bashas' told us last week, Strack & Van Til. So there's been many retailers that have eliminated their markups.
On enterprise, we are now powering 380 retailers with our technology, including now Aldi, which was something that we launched in the spring. Aldi has 2,700 stores, roughly. We power their e-commerce and their fulfillment and their picking tech. We expanded internationally. We went to Spain and France with Costco, with Storefront Pro. Then on ads, our ads ecosystem, it's working. We're diversifying supply and demand. Our results have been strong. Our ads and other revenue grew +16% in Q1 and Q2. It outpaced GTV. So I'd say general synopsis, year one in, I would say we're executing well against our strategy of being a grocery technology company. We're more of a grocery technology company today than we were when we sat down a year ago, and our growth engines across marketplace and enterprise and ads are working.
So when measured against that set of strategic priorities and that update, maybe a two-parter, what are you most excited about for this business on a multi-year view, and what do you think investors still least appreciate about those strategic priorities and how it translates into the company's performance?
Yeah. This time last year, I talked a lot about the fact that I think the biggest misperception is that we are just a consumer marketplace versus a grocery technology company. I still think it's underappreciated that we're playing a fundamentally different game here, but I do think that we're making progress on that front. Increasingly, we are viewed as the grocery technology partner for the industry. We're helping retailers come online. We're helping retailers modernize their infrastructure using our technology stack. But what I do think is still underappreciated is the depth of the retail integrations that we have across the entire grocery landscape, including with e-commerce solutions, fulfillment solutions, in-store ads, and of course, with our marketplace, we have the leading marketplace.
I think that's misunderstood, and it's taken us years to build these deep integrations, and this is a key differentiator for us that's very difficult for anybody else to replicate. It's a big reason why we're able to do something as difficult as deliver large basket grocery across all of the categories that matter to customers, produce and meat and seafood, pantry items. That's why we're able to do that. Really, the way that we're thinking about this is that we're the operating system for grocery. To the other part of your question around what's exciting me the most is with this operating system for grocery in mind, it's really what is going to be possible with AI for us specifically. AI, we believe is going to accelerate everything that we've built over the last 14 years.
I want to be clear, and this is probably evident to everybody in the room, everybody is going to have access to great AI. What they're not going to have is our data, these retail integrations that we've built, and all of the millions of signals that we're getting from stores in real-time. That is something that's a complete differentiator. It really gives me confidence in our ability to use AI to accelerate all of our growth engines. On the consumer side, grocery shopping is about to become far more personalized. We're going to know about your purchase history, we're going to know about your preferences. We're going to know what your kids like. We're going to know what's actually on the physical shelf. So when you come to Instacart, it's really going to feel like we know you.
On the enterprise side, with AI, retailers are going to have to move a lot faster when it comes to technology. That includes with AI, but not a lot of the grocery retailers are going to want to build that on their own. So we can build these AI capabilities and then put them in the hands of our retail partners, and we think that's going to further us with this grocery technology play that we're doing overall. On the advertising side, we've been using AI and machine learning for years to advance our personalization and our recommendations and all of the tools within Ads Manager. So what excites me the most about the future is our unique position here with AI.
Everyone's going to have access to AI, but we know that grocery needs the data and the integrations and the real signals from in-store, and we have all of that.
Okay. You referenced earlier about how you've seen an acceleration in the business over the last couple of quarters. Probably a question we get a fair bit from investors is how to think about the durability of those levels of growth, and more importantly, how you see yourself fitting into the competitive landscape for grocery delivery.
Yeah. Look, it's important to point out that we have accelerated our growth meaningfully despite all of the competition, despite all the competitive headlines in the last year and the years before. Remember, 80% of the GTV on our platform is with retailers who are working with multiple platforms. We actually have already. We think about the growth in the context of the competition in that way, and when it comes to the durability of that growth, look, there's a lot of things that, again, are really hard to replicate. For example, our years of experience and our data. We've done 1.6 billion orders to date. We have a 2 billion-product catalog. We get millions of signals every day in the store.
We have all of the data and the experience in order to understand the consumer, understand the product, understand what's actually on the shelf, and that's critical to be able to deliver the grocery experience. It also has to do with the enterprise, what I've been talking about with the enterprise integrations. This allows us to solve difficult grocery problems once on either side of the fence, either marketplace or enterprise, and then scale that solution across our entire network. Finally, the thing that really makes us durable, it comes down to the use case that we're built to serve. We are very strong in large baskets. Our AOVs are around $115, which is much higher than most. The reason is because customers trust us to, again, with their whole weekly shop, to deliver their entire basket with meat and seafood and produce.
What we know is that is very difficult to do at scale. We know that better than most. It requires depth of selection, it requires quality and fulfillment accuracy across multiple items. It requires affordability, and it requires you to be able to deliver fast and predictably. It is very easy for others in the industry to do one or two of those well. It is very difficult to do all four of those well, and again, that is where we excel. We believe strongly in our path forward and the durability of our growth and our position.
Maybe just double-clicking on this and giving a way for you to frame it for investors. Where you have seen competition come into a market, where you have seen some of this competitive force, what have you seen in the actual end market demand? Because I feel like there is a lot less of that. There is the fear of the competition.
Yeah
Not necessarily as much focus on how does it actually manifest itself.
Look, I think, first of all, none of the competition that we are seeing is surprising us at all. When it comes to other players and market entrants that are making a lot of noise, for example restaurant delivery players or rideshare deliveries, I think it is important to remember that restaurant delivery and rideshare is fundamentally different than doing a full weekly shop. Picking up a package or picking up a person and delivering that from A to B is just fundamentally different. We are purpose-built for grocery, and we have the expertise. Nearly two-thirds of all of the orders completed on Instacart are completed by our shoppers that have done a median of over 1,000 shops. That matters a lot. What we see is kind of this expansion of availability. So a retailer might decide that they want more delivery options.
We don't see that manifest in large baskets in what I've already talked about, and the depth of relationships which really matter the most. Let me just, I'll give you an example, one example. Let's use Costco as an example. We launched with Costco in 2017 on our marketplace, and since then, our relationship with Costco has just gotten deeper and deeper. We now power sameday.costco.com. If you go to costco.com, you'll see the tab that we power. We do the fulfillment for Costco. Since then, we have expanded with an executive membership benefit. We have expanded with EBT SNAP and alcohol and loyalty. We just launched FoodStorm. FoodStorm is our catering software. Now you can order custom cakes and party platters from Costco using our software for both order and delivery.
What we've seen is, Costco has been partnering with other marketplaces in certain markets for years. What we see in those markets is we continue to be the vast majority of share, we continue to grow nicely in those markets, and we continue to have much higher baskets. Nothing that we're seeing from a competitive standpoint concerns us, and nothing that we're seeing is slowing our momentum.
Okay. One of the biggest topics so far at the conference as we get towards the second half of the second day here has been the interplay between agentic commerce and partnering with LLM agents as opposed to developing AI customer-forward solutions on your own platforms.
Yeah.
Can you talk to us a little bit about the balance that's trying to be struck in the industry between making sure you're not losing share of traffic that can come for you from new avenues, but also continuing to curate an AI experience on platform?
Yeah. You will recall last year when I was up on stage, I talked about how we are going to build the gold standard of agentic experiences directly on Instacart, because we have all of the data, and we have all the retailer integrations, and we have all of the real-world signals. I am really pleased to announce, actually, that just today we announced Clementine, which is our AI assistant for grocery, which is going to be available for everyone across North America. We are extremely excited about this. It is extremely differentiated versus all of the other grocery chatbots that are out there. This is not an assistant that just recommends generic pairings and generic recipes. It really understands your purchase history, your preferences. It understands, again, what is on the shelf. It understands all of the promotions that are in market, and it can create a basket that is shoppable within an hour.
We are extremely excited about this. We are getting very positive signals from consumers because we have been in market with this for some time. What we are seeing is that they are engaging with it in ways where they are obviously using it to rebuild their weekly cart. They are using it to discover products, learn more about products, and increasingly, they are using it to build their weekly meal plans and plan their meals. For example, you can go to Clementine and say, "I need a week's worth of kid lunches that are budget friendly." Or you can just say, "Reorder my usual," and it will go ahead and build a basket for you in seconds, and you will be able to check out.
The fine line between what you are asking around different agentic experiences, we view other third-party marketplaces as a place that we want to participate in because we view them as lead generation opportunities for us. We have already integrated with OpenAI and Gemini, and we have integrated with Claude so that you can experience Instacart there. We view that as a lead gen opportunity for us to bring in new traffic. Those surfaces so far are really quite small relative to obviously what we are seeing with agentic experiences directly on Instacart. On the broader opportunity here, what I do believe is that grocery shopping has the opportunity to become far more personalized across the board. Remember, the penetration of grocery shopping specifically online is low, really low, lower than most categories, and it is an extremely uniquely complex grocery experience. It is time-consuming and it is deeply personal.
We think agents like Clementine are going to be able to remove the friction and create a far more personalized and intuitive grocery shopping experience, which I think is going to accelerate online adoption. We believe it is going to drive conversion, retention. We are already seeing larger basket sizes. This is one of the unique things that we are seeing with orders that have originated with Clementine. What we are seeing is that there is more items in the basket and the AOV is higher, which is notable because we already have an AOV that is industry-leading at around $115. I also think it is going to increase order frequency. I am very optimistic around what our agent is going to be able to do and our ability to use our data advantage to build the best grocery agent in the industry.
You highlighted it earlier, but on the last earnings call, the level of growth you saw in net new customer additions was something that clearly broke through from an earnings standpoint on that night. Fastest growth since 2022.
2022, yeah.
Can you talk a little bit about the building blocks that have put in place that have now produced that type of
Yeah
new buyer growth, just so we can better understand
Yeah
some of the dynamics that have led to that outcome?
Yeah. At the highest level, I've said this already, but worth repeating, online grocery is so under-penetrated, that just means that there's a massive opportunity to activate new category buyers over time. For us, we are the category leader in online grocery, and we have technology on both the marketplace side and the enterprise side, so we are in a fantastic position to do that. What we're seeing, the way that we think about this is, are we driving strength across both customer growth and engagement? And we are. To your point on customer growth, we are activating net new customers at our fastest year-on-year growth rates since 2022. We saw that in Q2, in the past three quarters. That's driving strong monthly customer growth. The other part of the algorithm is what happens after you acquire those customers.
That's very important because what we see is customers that stay with us, they spend more of their grocery wallet with us over time, and they order more frequently. For us, the way that we think about that is delivering the absolute best experience and most engaging experience directly on Instacart and on our partners. The types of things that we focus on are order quality, as an example. So we had 16 consecutive quarters of year-on-year gains for found rate and perfect order fill rates from a quality perspective. We're investing in personalization, obviously, with Clementine, but we're also just improving our AI-driven recommendations and replacements. We're constantly making our experience more personalized. We're investing in affordability, as I spoke about earlier. Look, I think this is showing up in the metrics.
Again, our AOV is industry leading at $115 last quarter. What we're seeing is order frequency is increasing, so we are really happy. The algorithm is very simple for us. We acquire new customers, we bring them online, we give them the absolute best first experience, and then we fight to earn more of their grocery wallet over time. What we're seeing is strength at every stage there, and we're confident in our ability to continue to leverage our advantage to win there.
Maybe just one quick follow-up. Have you seen any different trends between users that are coming into this cohort that are new to the platform as opposed to existing or reactivating users when you try to compare behavior?
You are saying specific cohort?
Yeah. Against the customer additions you are seeing, is there any difference in behavior patterns between customers that are new to the platform as opposed to existing or reengaged customers?
We have not released any 2026 customer cohort data yet, but I will tell you we have had a long history, and when we have looked back at other cohorts of driving retention across post-COVID cohorts pretty consistently.
Okay. You talked about affordability. Can you refresh where you guys are now as a company in terms of the broader industry conversation around price parity and how that continues
Yeah
to sort of evolve?
Sure. So affordability has been a key initiative, as I spoke about earlier, since I became CEO, and I'll just talk to you about how it works. So retailers set item price on Instacart, full stop. It's their decision. So the decision to eliminate markups is on the retailers. That said, the fact that consumers are gravitating towards retailers that don't mark up, that forms the basis for the business case, and the data is very clear. So retailers that don't mark up grow 10 percentage points faster and they retain better on the platform. And that's pretty critical for our retail partners. You can think about it's important for retailers that they don't lose points of share to the largest digital players or the largest retailers over time, and it might be more costly for them to mark up than it is to shed that share over time.
We've been out there talking to retailers and telling that story, and we've seen it's really resonating with retail partners. As I mentioned upfront, Grocery Outlet just went to eliminate their markups. Bashas' just told us last week they're eliminating their markups. Strack & Van Til. There's been a bunch of them. Also, retailers that are activating on Instacart for the first time, new retailers are increasingly launching without markups. So Ace Hardware, Tractor Supply, World Market, Calgary Co-op, they launched without markups on the platform. This is an ongoing effort. We're going retailer by retailer to have this conversation. It's an important conversation. It is resonating with them. Probably important to point out that moving to eliminate markups isn't our only affordability initiative, as you would expect. We give retailers a host of capabilities on the platform.
They can integrate with our loyalty programs and with weekly flyers. We give them the capabilities to just do some categories to eliminate the markups. We are also investing in affordability initiatives. We moved to a $10 minimum basket for Instacart+ subscribers, so there is $0 delivery. We offer lower-cost fulfillment options like No-Rush Delivery and Next Day and pickup on the platform. We are investing in a variety of ways to make sure that affordability is front and center with consumers.
Okay. One of the areas where you have been on a bit of a journey, I would argue, to educate investors is about the enterprise opportunity since you came into the role and were here a year ago. Talk a little about where the enterprise strategy sits today and what you want to leave investors with about how the enterprise strategy feeds back into what you are trying to build
Yeah
from a broader landscape for the company.
Yeah. We get a lot of questions on enterprise and how to think about the enterprise side of the platform. What I will say is enterprise is obviously a major growth engine for us, but it is also highly strategic because it is central to how our entire platform reinforces itself. We think about marketplace and enterprise as one integrated platform. We make an investment on marketplace and we extend that investment over to enterprise. Same thing. If we work with a retailer and we enhance the experience over on enterprise, we extend those advantages back onto marketplace. It is really quite an integrated system that we have built. The way that we have built the model helps us drive massive efficiencies as a company, right?
As an example, we have obviously operating leverage because we can invest $1 on one side of the fence and we can unlock that across our entire network. There are also huge supply and fulfillment efficiencies for us because if you take one of our retailers where we are powering fulfillment for us and their white label, obviously we are back at that store more frequently and we can drive order density, we can drive all sorts of fulfillment efficiencies as a result of that. Ads is another one. Right now we are giving brands an opportunity to advertise with Instacart on our marketplace and on hundreds of retailers from an enterprise perspective because we are powering the tech stack. All of this helps us drive our profitability progression, which we are so committed to and which we have talked about at length.
We are committed to annual EBITDA progression, both on an absolute dollar perspective and as a basis of GTV. This is what is helping us do that. We have a model that allows us to optimize across the entire network. We can optimize our ROIs, we can reinvest efficiencies, and that is what drives our profitability progression. It is highly strategic and it is a growth engine.
The one aspect of it that I think generally gets a little bit lost in when I have conversations with investors is it is also an element of your international strategy as well. Then you have done this acquisition with Instaleap. Talk broadly about how you are attacking the international market opportunity and what some of the tenets of that strategy are.
You are exactly right. We are using an enterprise-led strategy internationally. I am extremely excited about this as a future growth factor for us. I think I introduced it as a concept this time last year when we were together. Look, what we are seeing and what we are learning from our time in international markets is that retailers in other markets are trying to solve the same problems that retailers in North America are trying to solve. They are trying to figure out e-commerce at scale and fulfillment at scale, and then the trickier parts of the tech. They are trying to figure out search and cart and checkout and order orchestration, all of these different pieces. That aligns perfectly with how we are going to market with an enterprise-led solution because we have built these solutions for retailers in North America, and we can extend them to those partners abroad.
I'm seeing demand for end-to-end solutions like Storefront Pro. That's what we launched with Costco in Spain and France. That's kind of an all-encompassing solution. I'm also seeing demand for point solutions like what we got from Instaleap when we acquired Instaleap. Our early signals are very encouraging. I'll say that Costco in Spain and France has exceeded our expectations with that initial launch, and this acquisition with Instaleap has been extremely strategic. It's helping us with our goal of extending our global technology footprint. They have relationships in many markets that we're looking to enter, and they've solved a lot of problems that are unique to international markets, like what we've done with Morrisons in the U.K.
We recently signed a deal with Morrisons on Instaleap for their picking technology that's a little bit more unique to the European market, where it aggregates order orchestration for multiple marketplaces at once. Overall, I would say very optimistic about what we're going to be able to do internationally. I do think that this is going to be a future growth factor for us. It's obviously early days, but excited about what we're going to do.
Okay. Well, we've gotten this far in the conversation, and we haven't yet talked about advertising. In the last few minutes we have left, maybe we can turn to the advertising opportunity that continues to grow and scale. Talk to us a little bit about what the product set looks like for advertising today and what you're most excited about, either on the partnership front or the product front in terms of where the advertising opportunity is going
Yeah
in the medium term.
Very pleased about how we've been operating and executing our ads ecosystem strategy. Our ads results have been very strong. We grew in Q1 and Q2 up +16% for ads and other revenue. The momentum that we're seeing is really driven by our strategy, which is, one, innovate across the entire ads ecosystem. We want to extend our reach. Finally, we want to bring in obviously more ad dollars and more advertisers to the platform. Just to break that down a little bit, on innovation, we're just continuing to give brands more ways to win on Instacart. We launched new formats like immersive feeds. We have AI recommendations built directly into our Ads Manager. Now we have built objective-based optimization, so a brand can come to Instacart, and they can optimize their campaign to grow their business or acquire new customers.
We've been working with brand advertisers on those experiences. From a reach perspective, we obviously continue to grow our marketplace. Again, thinking about our business on both sides of the equation here. We're growing marketplace. We're continuing to power more retailers with our retail media tech stack, what we call Carrot Ads. We're at 310 retailers where we power their tech stack. That includes retailers, that includes some not traditional retailers from our marketplace, like Uber as an example, Uber Eats for retail and Thrive Market as an example. We're giving brands really high, valuable inventory across the grocery landscape. We're doing it at a time where brands do not want to manage hundreds of retail players from a bespoke perspective.
They like to come to us and have us extend our advertising performance and our measurement and our capabilities across that entire surface area. That is all working extremely well. I would say, the formula there is working because we're innovating, we're improving performance and measurement. We're extending that performance and measurement onto more surface areas. That, in turn, is bringing larger budgets from existing brands, and it's bringing in more advertisers. What we're seeing is, as an example with large brands, large brands started very strong out of the gate, and a lot of that strength continued into Q2. These would be some of our most established relationships with some of the largest CPG companies that you would all be familiar with.
Emerging and mid-market brands, they're benefiting from all of the tools that we've built, all of the automation tools. You can now come to Ads Manager, and you can create landing pages in seconds. You can, with one click, optimize your campaign to drive performance. What we've done for all of these smaller brands is we've removed the barrier to entry for them to run very complex and highly performant ad campaigns across a vast surface area, and that's attracting lots of brands to the platform. What I would say is our ads ecosystem, the strategy is working. It's been very effective. We're very pleased with our results. We're pleased with what we're seeing. We're going to continue to innovate, including with AI going forward. We're excited about what we're seeing there.
Maybe just one quick follow-up as we wrap up. When you take the comments you made about large versus mid-market versus emerging brands, how does what you see out of the activities of those advertisers inform some of your product strategy for the long term and thinking about where to tap into pockets of underappreciated growth?
Yeah. So really, the biggest thing that we've learned is the largest CPGs have entire teams working on their campaign to optimize their campaign performance. The smaller companies obviously don't have that level of resources, not even close. But we wanted to level the playing field so that they, regardless of whether or not you have a giant team behind you back at your shop, if you're a small brand and you want to drive performance and results and you want to come to Instacart, we want to make sure that you have the tools to do that. We quickly realized that the best way to do that is to create automated tools using AI directly in our Ads Manager to level the playing field and make sure that brands are able to compete on our platform.
Okay. Well, look, Chris, I always appreciate the opportunity to talk. Thanks so much for being part of the conference. Please join me in thanking Instacart for being part of the conference.