Instacart (CART, Financial) delivered strong Q1 results with an 11% increase in Gross Transaction Value (GTV), up from 7% in the previous quarter. Despite the positive performance, the stock did not see gains due to one-time boosts from severe winter weather and an extra day in February, which are not expected to recur in Q2. Consequently, the Q2 GTV guidance of $8.0-$8.15 billion is slightly disappointing compared to Q1's GTV of $8.30 billion.
During the earnings call, Instacart introduced Emily Reuter as the new CFO, succeeding the retiring Nick Giovanni. Reuter, formerly CFO of Uber's (UBER, Financial) Mobility segment, had been serving as Vice President of Finance at Instacart for six months prior to her new role. Her primary challenge will be to sustain top-line growth and enhance profitability, especially as the pandemic-driven surge wanes.
Instacart is exploring new growth avenues such as advertising, which saw a 9% increase in revenue to $217 million in Q1. The company anticipates consistent growth in this segment. Additionally, a notable partnership with Uber, integrating Uber Eats with the Instacart app, was announced. Although this collaboration boosted the stock, it is not expected to significantly impact Q2 financials.
The company's financial health is improving, as evidenced by a 17% year-over-year increase in adjusted EBITDA to $198 million, surpassing the expected $150-$160 million. For Q2, adjusted EBITDA is projected to be between $180-$190 million, also above forecasts. Despite some disappointing aspects, Instacart's profitability metrics like adjusted EBITDA show promising growth.
