CART Q2 Earnings Miss, Revenues Beat on GTV and Ad Growth

Revenues of $1,043 million jumped 14% year over year and surpassed the Zacks Consensus Estimate of $1,025 million by 1.77%. GTV increased 14% year over year to $10,351 million, while orders rose 9% to 90.3 million. Average order value (AOV) advanced 4% to $115, reflecting deeper customer engagement and strength at club retailers, which typically generate larger baskets.

Instacart’s Ad Growth Outruns Core GTV

Transaction revenues increased 13% year over year to $746 million and represented 7.2% of GTV compared with 7.3% a year ago. The slight decline as a percentage of GTV reflected lower payment revenues, partly offset by improved fulfillment efficiencies. 

Advertising and other revenues climbed 16% year over year to $297 million, once again growing faster than GTV. Advertising and other revenues represented 2.9% of GTV compared with 2.8% in the prior-year quarter. The performance reflected broad-based strength among large, mid-market and emerging brands, with particular strength toward the end of the quarter alongside the World Cup. Instacart also expanded AI-powered ad recommendations, testing its Grow objective and Pinterest self-service offering.

CART's Margin Discussion

GAAP gross profit increased 11% year over year to $751 million. Gross profit represented 7.3% of GTV compared with 7.5% in the year-ago period, while GAAP gross margin contracted to 72% from 74%. The decline in gross profit as a percentage of GTV was primarily attributable to higher cost of revenues as publisher payments scaled alongside the expansion of certain Carrot Ads and off-platform partnerships. Management expects year-over-year growth in publisher payments to moderate in 2026 compared with 2025.

GAAP operating expenses were $608 million, representing 5.9% of GTV versus 6.1% a year earlier. Adjusted operating expenses were $468 million, or 4.5% of GTV, compared with 4.8% in the prior-year quarter, highlighting operating efficiencies despite continued investments in growth. 

Adjusted EBITDA increased 19% year over year to $313 million. Adjusted EBITDA margin expanded to 30% from 29%, while adjusted EBITDA as a percentage of GTV rose to 3% from 2.9%.

AI, Arpalus & Enterprise Expansion Drive CART's Strategy

Instacart acquired Arpalus in July. The computer-vision company's technology converts video scans of store shelves into real-time inventory information. Instacart plans to combine this technology with its network of roughly 600,000 shoppers to improve fulfillment efficiency, inventory intelligence and AI-powered shopping experiences. Arpalus can identify individual shelf items with more than 95% accuracy on average.

Instacart's AI Assistant pilot is also gaining traction and is slated to launch across its North American marketplace. The assistant uses purchase history, customer preferences, nearby-store inventory and promotions to construct shoppable orders. Orders placed through the AI Assistant have been larger on average than Instacart's already-high $115 typical basket.

Instacart also became Google's first grocery partner for Gemini integration, enabling users to create shoppable carts through natural-language conversations and shop through AI Mode in Google Search. Management described Gemini and similar integrations with AI platforms as potential incremental demand channels.

Enterprise momentum remained robust. Storefront, Instacart's e-commerce solution, powers more than 380 grocery sites. Recent Storefront Pro launches included Calgary Co-op and Dierbergs, while ALDI’s U.S. launch was performing ahead of management’s expectations. The company also added retailers for Agentic Analytics and its white-label AI assistant.

Internationally, Storefront Pro deployments with Costco in France and Spain continue to perform well. Instaleap, acquired during the second quarter, has expanded Instacart's international capabilities and recently signed a picking-technology partnership with Morrisons.

CART’s Cash Generation Fuels Buybacks

Operating cash flow surged 143% year over year to $493 million, while free cash flow jumped 156% to $480 million. The increase primarily reflected the collection of a large accounts receivable balance during the quarter and higher receivables outstanding in the prior-year period.

CART repurchased $325 million of shares and ended the quarter with $998 million of remaining buyback capacity. As of June 30, cash and cash equivalents totaled $757 million, while short- and long-term marketable securities amounted to $128 million.

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CART Issues Strong Q3 Outlook

For the third quarter of 2026, Instacart expects GTV between $10,300 million and $10,550 million. The $10,425-million midpoint implies 14% year-over-year growth. Management continues to expect GTV growth to outpace order growth. 

Adjusted EBITDA is projected between $320 million and $340 million. The midpoint of $330 million represents approximately 19% year-over-year growth. Advertising and other revenues are expected to increase 15-18% year over year in the third quarter, again exceeding expected GTV growth. 

Beginning with the third-quarter outlook, Instacart widened its GTV and adjusted EBITDA guidance ranges to account for the company's increased operating scale.

For 2026, Instacart continues to expect adjusted EBITDA growth to outpace GTV growth. However, the rate of adjusted EBITDA expansion is expected to moderate as the company reinvests across its growth initiatives and laps substantial operating-expense efficiencies achieved in 2024 and 2025.

Final Words on Instacart

Instacart's second-quarter performance reflected solid underlying operating momentum despite the earnings miss. Revenue growth, double-digit GTV gains, accelerating advertising monetization, strong cash generation and expanding adjusted EBITDA underscore the strength of the operating model. At the same time, continued investments in AI, enterprise technology, inventory intelligence and international expansion, coupled with management's GTV growth outlook for the third quarter, indicate that the company remains focused on balancing growth investments with profitability and shareholder returns.

CART’s Share Price Performance & Zacks Rank

Instacart operates in a highly competitive on-demand delivery market alongside DoorDash, Inc. DASH and Uber Technologies, Inc. UBER. Shares of Instacart have risen 11.6% over the past three months compared with the industry’s growth of 0.6%. While shares of DoorDash have rallied 30.1%, those of Uber Technologies have fallen 6.6%.

Maplebear carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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