Q1 2026 Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the Instacart First Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rebecca Yoshiyama, Vice President, Head of Investor Relations. Please go ahead.

Thank you, operator, and welcome, everyone, to Instacart's First Quarter 2026 Earnings Call. On the call with me today are Chris Rogers, our Chief Executive Officer; and Emily Reuter, our Chief Financial Officer. During today's call, we will make forward-looking statements related to our business plans and strategy, developments in the grocery industry and our future performance and prospects, including our expectations regarding our financial results and share repurchases. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated.

You can find more information about these risks and uncertainties in our SEC filings, including our last Form 10-K. We assume no obligation to update these statements after today's call, except as required by law. In addition, we will also discuss certain non-GAAP financial measures, which have limitations and should not be considered in isolation from or as a substitute for our GAAP results. A reconciliation between these GAAP and non-GAAP financial measures is included in our press release, which can be found on our Investor Relations website.

Now I'll turn the call over to Chris for his opening remarks.

Thanks, Rebecca. Good morning, everybody, and thanks for joining us. Q1 was a strong start to the year. We grew GTV 13% and total revenue 14% year-over-year, surpassing $10 billion in GTV and over $1 billion in total revenue for the first time.

We also expanded profitability and repurchased $349 million in shares, reflecting our continued confidence in the business. Stepping back, the headline is simple. Our strategy is working. We're the leading grocery technology platform, delivering a best-in-class consumer experience, powering retailers through our marketplace and enterprise capabilities and operating a scaled advertising ecosystem for brands.

Each part of our strategy is getting stronger on its own. And more importantly, they're compounding together. When we improve the consumer experience and scale our marketplace, we drive growth for our retail partners. We extend those capabilities into retailers owned and operated channels, which deepens our integrations and allows us to create better, more differentiated experiences for consumers.

And as our platform grows, it creates more opportunities for us to expand our ads and data capabilities while also unlocking efficiencies that we can reinvest back into the business. That combination is what's driving our results and gives us confidence in our runway ahead. Now let me walk you through what we're seeing across each of our key growth engines. Starting with marketplace.

Our fundamentals are strong, and we remain laser-focused on delivering the best end-to-end grocery experience. We center on what matters most to customers: selection, quality, affordability and convenience, and we're increasingly using AI to make our experience more personalized and intuitive. You can see this in all the product improvements we've made, which may sound simple individually, but at our scale, they compound quickly. For example, we continue to enhance our search functionality, making it faster and more relevant while also guiding more new users toward search earlier in the journey.

That matters because customers who use search are about 5x more likely to place their first order. We're also improving how consumers discover and access savings, making promotions more visible and easier to understand, including offers like free pasta sauce when you buy $10 more of meat. That's helping customers save while also driving larger baskets. And as we continue to raise the bar on quality, we've upgraded our AI-powered replacement flow to better reflect consumer preferences in real time, a strong example of how data and technology have come together to improve outcomes for both shoppers and customers.

On top of this strong foundation, we're introducing new AI-powered capabilities. With over 1.6 billion lifetime orders, we have a unique and deep understanding of the grocery journey, and we're using that to build the gold standard of agentic grocery AI. We recently began testing Cart Assistant, our AI-powered conversational shopping experience, now available to about 25% of U.S. customers. Early feedback is encouraging with customers using it to discover recipes, build meal plans, quickly assemble baskets and research products.

These are some of the most time-consuming parts of grocery shopping, which highlights the meaningful role generative AI can play in enhancing the online grocery experience. These advancements are also why we've decided to integrate Instacart with AI platforms like ChatGPT and most recently with Claude. We want customers to experience conversational grocery shopping combined with the power of Instacart selection, data and fulfillment wherever and however they choose to shop. In addition to all of these product improvements, affordability remains a key growth lever.

Consumers are very focused on value, and we're continuing to give retailers better tools to deliver that. For example, over the past several quarters, we partnered closely with Sprouts to launch Sprouts Rewards across their online properties, in addition to enabling native sign-up, account linking and digital coupons directly on our marketplace at the same time they rolled out the program in stores. We're also seeing club retailers continue to outperform on the platform, driven in part by programs we helped launch like Costco's executive member benefit. We're also making progress on price parity.

Retailers who offer price parity, meaning no markup on item prices, continue to grow faster on our platform. We saw that with both Hy-Vee and Raley's after they moved to price parity in Q1, and we're building on that momentum with more recent launches of Fareway as well as several other local independent grocers. Our next growth engine is our enterprise platform. Retailers choose Instacart because of our purpose-built grocery technology across e-commerce, retail media, in-store and AI solutions.

The breadth and depth of our platform is difficult to replicate and it delivers clear results. At the center of our enterprise platform is our storefront technology, which powers over 380 grocery e-comm sites. Our flagship offering, Storefront Pro, supports partners like Costco, Publix and Sprouts, and continues to gain traction because it drives meaningful outcomes. On average, grocers who upgrade to Storefront Pro see an over 10 percentage point lift in online sales and a more than 5 percentage point lift in 90-day new user retention.

A strong example of this is ALDI. In Q1, they launched a redesigned U.S. website and mobile app nationwide powered by Storefront Pro, another clear signal of how valuable our technology can be to large established retailers. We partnered with ALDI for a long time, starting with our marketplace and expanding into services like alcohol, EBT SNAP, flyers and the custom integration to bring their weekly finds online. Since 2019, we've also powered their online grocery delivery and their pickup experience through our fulfillment technology.

So their decision to double down on Storefront Pro and launch Carrot Ads is a clear example of our enterprise strategy in action. We're now extending that approach with our newest enterprise offering, AI solutions. As we build leading AI capabilities on our marketplace, we're bringing those same tools to retailers' owned and operated channels. We're already seeing strong engagement here, particularly with Cart Assistant, where we're working with partners like Kroger and Sprouts to bring these capabilities to life.

And we've also recently signed additional partners, including Food Bazaar, Heritage Grocers, Restaurant Depot, Save Mart and Woodman's. All of this growth across marketplace and enterprise strengthens our advertising and data capabilities. In Q1, we grew advertising and other revenue 16% year-over-year, our fastest growth rate since Q3 2023, driven by continued expansion and diversification across both sides of our ecosystem, where we're accelerating both supply and demand. On the supply side, we're expanding inventory and providing our best-in-class ads capabilities across more surfaces.

This is driven by our healthy growing marketplace and our expanded network of over 310 Carrot Ads partners, where we recently launched new partners like ALDI, Dierbergs, Fareway and Jerry's Foods. On the demand side, we're seeing broad-based strength across over 9,000 brands advertising on our platform. This is supported by our focus on making it easier for brands to get started and scale. New brands to our ecosystem can now launch high-performance campaigns in minutes with fully automated tools and our AI-powered recommendation engine in our self-service platform, Ads Manager, continues to gain traction.

We're also using AI to enhance performance across our platform. For example, we recently launched a new generative recommendation system that can use real-time context to better understand the consumer's intent. Previously, adding milk to your cart might result in a recommendation to add cookies or cereal or sliced cheese. Now based on additional items in your cart like flour and eggs, we can better predict that you're actually shopping for baking essentials.

This leads to more valuable suggestions like vanilla extract and cinnamon and early data shows that this is driving higher engagement and better results for advertisers. Beyond advertising, we're also making progress on data monetization. Our off-platform partnerships where we allow brands to leverage our first-party data to make their campaigns more effective on platforms like Meta, The Trade Desk, TikTok and more, we're continuing to scale as we attract incremental budgets from ad partners. And our consumer insights portal, which aggregates real-time high-quality insights into consumer behavior, continues to attract new subscribers like Kraft Heinz, and drive deeper engagement with existing partners like Advantage Solutions.

So when you step back, our growth engines are working the way we want them to, and we're carrying that momentum into Q2. We're also continuing to invest in longer-term growth opportunities. International is off to a strong start. As you'll recall, we're taking an enterprise-led approach, partnering with retailers and scaling technologies that have already proven to solve retailers' needs. In Q1, we launched Storefront Pro with Costco in Spain and France.

And while it's still early, consumer demand is encouraging and tracking ahead of our initial expectations. A few weeks ago, we acquired Instaleap, a strategic acquisition that aligns perfectly with our goal of bringing our grocery technology to a global audience. Instaleap has built a versatile fulfillment platform that can adapt to different market dynamics across regions. And just as importantly, they've built strong relationships with grocery retailers around the world, particularly in Europe and Latin America.

This is exactly how we want to expand internationally, focused, partner-led and grounded in existing capabilities that we know work. We're also seeing strong progress with our in-store technologies. Caper, our AI-powered smart cart, is now live in more than 100 cities, including recent expansions with Wakefern and Allegiance retailers. Customers are continuing to enjoy their Caper experience, which is driving higher baskets, new loyalty and omnichannel activations and early traction with our real-time inventory and aisle-aware advertising experiences.

Alongside Caper, solutions like FoodStorm and Carrot Tags are helping retailers modernize in-store operations and improve both efficiency and customer experience. When you put this all together with signals from our shopper network and deep retail integrations, we're developing a truly complete view of the omnichannel grocery experience. That's already starting to unlock new capabilities. For example, we've begun piloting Store View with partners like McKeevers, Sprouts and more, who are leveraging real-time computer vision to improve shelf availability and accuracy.

Over time, we expect this to translate into additional benefits across our ecosystem, including better availability, better recommendations, more efficient fulfillment and more valuable advertising for retailers and brands. Okay. Before I hand it to Emily, let me close where I started. Our strategy is working.

Our marketplace, enterprise platform and advertising ecosystem are each getting stronger, and we're gaining momentum on longer-term growth initiatives that are built on our critical advantages. Together, this creates an increasingly powerful platform that positions us very well for durable, profitable growth. We're operating from a position of strength in a large underpenetrated category, and we're focused on extending our lead by continuing to drive value for our partners while growing the pie across the ecosystem. With that, I'll turn it over to Emily to walk through the financials.

Thank you, Chris, and hello, everyone. We entered 2026 with strong momentum, and our Q1 results clearly demonstrate that our focus and investments across our key growth engines and new initiatives are working. Our performance continues to be supported by strong operating fundamentals with multiple levers in our P&L that allow us to balance growth and profitability in a disciplined way. Now let me provide more color on our Q1 results.

In Q1, GTV was $10.29 billion, up 13% year-over-year, primarily driven by orders of $91.2 million, up 10% year-over-year. As we expected, GTV growth outpaced order growth as we lapped the launch of our $10 minimum basket feature for Instacart+ members in Q1 2025. Average order value of $113 was up 3% year-over-year, reflecting the ongoing deepening of customer engagement across our platform and strong performance from club retailers, which tend to have larger AOVs. Transaction revenue was $733 million, up 13% year-over-year, representing 7.1% of GTV. Transaction revenue as a percent of GTV was flat on a year-over-year basis, driven by increased fulfillment efficiencies, largely offset by lower payment revenue.

As a reminder, because we manage multiple levers across our P&L, we expect transaction revenue as a percent of GTV may fluctuate from quarter-to-quarter. Advertising and other revenue was $286 million, up 16% year-over-year. As Chris noted, this was our strongest growth rate since Q3 2023, and helped drive our advertising and other investment rate to 2.8%, up from 2.7% in Q1 2025. This outperformance in Q1 was driven by broad-based strength. Large brands performed well, while mid-market and emerging brands leaned in particularly strongly to start the year.

Total revenue was $1.02 billion, up 14% year-over-year, primarily driven by GTV growth. GAAP gross profit was $738 million, up 10% year-over-year, representing 7.2% of GTV compared to 7.4% in Q1 2025. The year-over-year decrease in GAAP gross profit as a percent of GTV was primarily driven by an increase in cost of revenue as payments to publishers scale with the expansion of Carrot Ads and off-platform partnerships. As a reminder, we expect year-over-year growth in payments to publishers to moderate in 2026 compared to 2025. GAAP total operating expenses were $556 million, representing 5.4% of GTV, compared to 6.1% of GTV in Q1 2025. Adjusted total operating expenses, which exclude the impact of stock-based compensation expense and certain other expenses were $463 million and represented 4.5% of GTV compared to 4.9% of GTV in Q1 2025. The year-over-year improvement in both GAAP and adjusted total operating expenses were primarily driven by increased operating leverage across all line items.

In particular, G&A benefited in Q1 from the repeal of Canada DST late in the quarter, which is not a benefit we expect moving forward now that this matter is resolved. As a reminder, we continue to expect Q1 to be our lowest quarter of stock-based comp in a calendar year, followed by a sizable step-up in stock-based comp in Q2 due to the timing of our annual refresh grants. GAAP net income was $144 million, up 36% year-over-year. Adjusted EBITDA was $300 million, up 23% year-over-year.

We also generated operating cash flow of $268 million and free cash flow of $253 million, both down 10% year-over-year, primarily due to the collection of a large accounts receivable balance from a retailer that benefited cash flow in Q1 2025 and the payment of $60 million in regulatory settlements made in Q1 2026. In Q1, we repurchased $349 million of shares and ended the quarter with $323 million of remaining buyback capacity. We closed Q1 with approximately $880 million in cash and similar assets. While our balance sheet remains strong, and we expect to generate meaningful cash flow in 2026, we recently established a $500 million unsecured revolving credit facility to provide additional operating liquidity.

Separately, today, we announced a $1 billion increase to our buyback authorization. We are well on track to return the majority of free cash flow via repurchases this year, and this increase will enable us to remain opportunistic in our buyback approach in 2026 and beyond. Now on to our Q2 outlook. We anticipate GTV to range between $10.1 billion to $10.25 billion.

This represents year-over-year growth between 11% to 13% with GTV expected to continue to outpace orders growth. We expect advertising and other revenues to grow 11% to 14% year-over-year, reflecting the ongoing benefits of diversification across both supply and demand on our platform, even as brands continue to navigate a dynamic macro environment. We are also guiding to Q2 adjusted EBITDA of $290 million to $300 million, representing year-over-year growth of 11% to 15%. For the full year, we continue to expect adjusted EBITDA to grow faster than GTV while moderating in the rate of expansion as we reinvest to accelerate across our multiple growth engines and lap some of the more significant operating expense efficiencies realized in 2024 and 2025. Overall, we delivered strong Q1 results and are building on the momentum as we enter Q2. Our operating fundamentals are strong, and we're well positioned to continue driving long-term profitable growth and shareholder value.

With that, we'll open up the call for live questions. Operator, you may begin.

[Operator Instructions] Our first question comes from the line of Colin Sebastian of Baird.

Maybe just following up on the Q1 performance and the acceleration in overall revenue growth. If you look across the platform at the core products and the newer initiatives where you're making investments, maybe it would be helpful to break out -- break down that growth a bit in terms of what's driving the most incremental improvement in marketplace, enterprise and advertising, and how you see those factors playing out as we look ahead to Q2 and the balance of the year, particularly given some of the shifts in the macro and competitive environments?

Yes. Thanks, Colin, for the question. So look, we are happy with our growth results. As you heard, Q1 was another strong quarter of 13%.

It was our ninth consecutive quarter of double-digit growth, and we surpassed $10 billion in quarterly GTV, which that was a milestone for us. And we do think that the consistency of our growth is an important indicator, and that's why I said our overall strategy is working. We're continuing to attract and engage more monthly customers because we're relentlessly focused on making our service better every quarter with constant improvements across the entire customer journey from when a customer opens the app to when they're building their basket to when they check out right through to when they get the delivery, the exact thing that they ordered.

So that might sound simple, but again, at our scale, these improvements compound quickly. And then at the same time, we're extending that experience and all of our technology across more surfaces with our strong enterprise momentum. We're now at over 380 storefront clients and our recent launches like Restaurant Depot as an example, and Cub from Q4, they're performing well. And in Q1, we're very proud that ALDI returned to Storefront Pro.

And then across all of it, AI continues to meaningfully accelerate our progress. It's allowing us to onboard retailers faster. It's allowing us to customize for retailers faster. It's allowing us to improve personalization for customers while also unlocking entirely new experiences, for example, with Cart Assistant, which, as I mentioned upfront, we're now testing with 25% of customers.

Early feedback is encouraging, and that's only going to get better over time. So when you put it together, there's multiple engines driving our growth across the company. Our strategy is working. We're strengthening our core experiences.

We're expanding our technology across more surfaces. And then AI is further accelerating our growth. So we feel really good about the fundamentals and how we're executing and our trajectory overall.

Our next question comes from the line of Eric Sheridan of Goldman Sachs.

Maybe 2, if I can. One, on the advertising side, what do you see as some of the most interesting growth opportunities that present in new mediums or new formats for advertising as you think over the next 12 to 18 months? And building on the answer on the enterprise side, would love to go a little bit deeper in the Instaleap acquisition and what you think that means for an international opportunity around enterprise in the years ahead?

Thanks for the question, Eric. I mean there's no question in our mind that the innovation around ads is going to come from AI and everything related to how AI can advance advertising mediums and platforms. For us, AI is completely core to our advertising efforts at this point, and we're using it in a few major ways. One is we're using it behind the scenes with ranking and relevance and personalization.

We're making all of our sponsored ads more relevant with AI. We're driving stronger engagement and more items added to the cart. With advertising tools and efficiencies, we're making it easier for advertisers to manage and drive performance of campaigns, especially when it comes to emerging brands. There have been multiple examples over the last few months, including our AI-powered recommendations for advertisers alongside a suite of bid and budget and category imagery recommendations.

This is all fueled by AI. We also launched AI-powered landing pages for display campaigns. And then the third pillar here, and I think this is going to become increasingly relevant is AI with conversational commerce and agentic experiences. We're innovating here alongside the team that's building our agentic consumer experiences, and our ads are going to be informed by how consumers engage in agentic shopping.

So our strategy is going to be to build trust and utility with consumers and leverage all of the learning across everything we know from online, but also in-store and our learnings from Caper Cart to incorporate that into the overall shopping experience there. On Instaleap specifically, so look, we view Instaleap as an extremely strategic acquisition for us despite the relatively small size. It's fantastic tech. It's a really special team.

This is a great example of our M&A philosophy in action. We look for technologies and capabilities that complement our existing platform and accelerate our growth in a disciplined way. And Instaleap is just a great combination of that. Their grocery technology is resonating with retailers around the world, and they have deep retailer relationships in markets that we want to pursue.

And so that put them squarely in a sweet spot for us as a grocery tech company with global ambitions and a land-and-expand strategy on the enterprise side, where we can offer all of their current customers many more products with our existing services from our enterprise suite of products. So we're thrilled to have them as part of our team.

Our next question comes from the line of John Colantuoni of Jefferies.

Chris, last quarter, you mentioned aspiring to faster growth. As you look back at what you've accomplished in the first 4 months of the year, what needs to happen for you to realize that goal? And second, could you just talk a little bit about what drove the broad-based strength in the advertising business? I'm curious if this was more of an industry dynamic or more of a unique dynamic to Instacart?

Yes. Thanks for the question. You're right. We did say our ambition was to accelerate and we have been accelerating our growth.

We're very happy to provide another double-digit guide of 11% to 13% for Q2. And although we don't guide beyond our current quarter, I can talk a little bit about why I'm confident in our ability to drive long-term durable growth. Our strategy is unique and differentiated. No one else is doing what we're doing. And we've built a model with multiple paths for growth that all reinforce each other.

So our core experience, so that's across marketplace and enterprise, that continues to improve. And there's more runway to go because we're the category leader in a very large underpenetrated category. And then our enterprise platform, in particular, which leverages all of our marketplace innovations, that continues to be a real strategic advantage with retailers. And the model is simple.

We help enable retailers to grow and we grow with them. And we're now operating at considerable scale. As mentioned, 380 storefronts, and we believe that there's even more upside to land more retailers in North America and abroad, big and small and to expand with more products and services with our existing partners. And as we look forward to get to your question about the -- some of the newer initiatives, our foundation is allowing us to invest in many of these new initiatives.

We're taking our enterprise products to new international markets. That unlocks a much larger market opportunity for us. We're extending beyond e-commerce into omnichannel with in-store technologies like Caper Carts, like FoodStorm, Carrot Tags. And because we're already deeply embedded with retailers because of our enterprise platform, we're in a unique position to help power that shift.

And then once again, AI is a real accelerant for us, helping us move faster across everything and power entirely new customer experiences, including AI solutions for retailers, which is just starting to get off the ground. So look, when I step back and I look at the total picture here, we have strong execution in the core business, and we're layering in new growth drivers that are going to expand our platform over time. And that's what gives me a very high degree of confidence in our ability to drive sustained long-term durable growth. On your second part on ads, look, we're also really happy with the momentum on the ad side.

As mentioned, Q1 was our strongest ads and other revenue growth since Q3 of 2023, and we feel great about the underlying fundamentals that are driving the business. So first of all, the fact that we're driving overall platform growth year-on-year does drive more advertising participation. But we're also seeing strength in our core on-platform offering, where we're continuing to innovate, that includes the sponsored products, which continues to be the main growth driver from a format perspective. And again, this quarter, strength came from all brand cohorts, so large accounts, mid-market accounts and emerging brands.

But maybe backing up, what you're seeing here is also a reflection of our plan in action. So our ambition is to build one of the largest and most effective ads ecosystem where brands come to us to drive performance across Instacart and multiple other surfaces. And our strategy to get there is working. We're laser-focused on building diversification across supply, meaning more surfaces where we place ads and demand, meaning more brands investing and current brands investing more.

And to break that down, on the supply side, we're continuing to grow our Carrot Ads network where this is where we extend our reach and our tech and our demand on to retailer websites. We're now at 310 partners. We have a healthy pipeline. And remember that as we expand with Storefront Pro, those clients almost always enabled Carrot Ads.

So our enterprise expansion also helps build our ads ecosystem. We recently signed partners, as I mentioned upfront, like ALDI and Dierbergs and Fareway and Jerry's. On the demand side, we're seeing broad-based strength from over 9,000 brands that are advertising with us. Large brands performed well in Q1, but also, in particular, we saw strong engagement from mid-market and emerging brands.

We've also been expanding our platform through partnerships with Meta and Google and TikTok and Pinterest and The Trade Desk. So this is where CPGs use their first-party data to target our high-intent audiences and then we provide them with measurements and performance on Instacart. And importantly, with this initiative, we believe we're gathering incremental budgets for these campaigns because we're tapping into existing digital ad spend. So at the highest level, on the ad side, our stated strategy of building one of the most powerful ads ecosystems is working, and you're seeing that show up in our results.

Our next question comes from the line of Ron Josey of Citi.

Chris, I wanted to ask just a little bit more on price parity here, just given it drives greater adoption and sales. And specifically, in your conversations with retailers and how they think about price parity, just talk to us about how they are approaching this as Instacart becomes more of a weekly and habit as opposed to just convenience overall. And then as you think about enterprise and Storefront Pro and the 10-point lift in online sales after launching Storefront, just talk to us about what's driving specifically adoption here? Is it just greater penetration of these retailers on the platform or greater sales?

Any insights there would be helpful. So price parity and adoption of Storefront Pro.

Yes. Thanks for the question. So on price parity, just to be very clear, so retailers set item level prices on our marketplace and on our owned and operated sites, obviously. So some choose to mark up prices to help offset the fees that we charge the retailer, but many do offer price parity.

That said, if I come at this from a bit of a consumer lens, customers are seeking value and the retailers on our platform who are delivering it are -- they're growing faster and they're retaining customers better over time on our platform. And so that -- the data is clear. Price parity retailers grow faster. They grow 10 percentage points faster.

And so this gives the retailers an ability to drive incremental sales on Instacart, especially as they're competing with each other for share. So that can be very critical to them in the long run. We're a very large platform now, and retailers are motivated to win share on Instacart. But it's also important because they don't want to lose share to other large digital players who are increasingly trying to win share of the grocery market.

So that's where the conversation with retailers centers with us. It's -- if it's an incremental sales and share opportunity for them, the results in the -- that we're seeing over time are very clear. And so we work with them. We work with them on this, and we work with them, obviously, on a bulk of other affordability strategies to allow them to perform well with consumers who are looking for value on the platform.

Your second question was around enterprise and the adoption of enterprise. And what I'd say here is like, look, why do retailers use us? It's because we're able to extend all of the scale from our marketplace where we're doing hundreds of millions of orders, and we're able to offer that to them in a way that allows them to compete with some of the largest digital players with a very high-quality experience. And so if you look at what -- the fact that we're offering end-to-end technology right through from e-commerce, including search and all the relevancy and the personalization that we're continuing to offer, combined with our efficient cart and checkout and order orchestration right through to when it gets delivered to the customer's home, that's a very complex experience.

It's difficult to get right. And that's why when retailers are evaluating their options on how they want to perform and compete in the e-commerce sphere, they look to Instacart because we're able to give them that scale and leverage those learnings. We are seeing a 10% lift in performance, and that's because, again, because of the experience that we're driving on marketplace that we're able to extend onto their sites. And so what I'll say is we think that there's quite a bit of runway here.

There's -- again, we're at 380 retailers overall. We're seeing performance on this side of the business for them and for us, and we're going to continue to lean into this as a strategic growth driver.

Our next question comes from the line of Shweta Khajuria of Wolfe Research.

Can you hear me?

Yes.

Okay. Can you please talk to the opportunity and/or risk with agentic? I mean you addressed that a little bit. I guess one of the questions we get is around the development of AI platforms where a consumer can order for delivery, a basket of items and then the AI platform chooses whether it is Instacart or DoorDash or Uber Eats, which platform is the best use case, potentially risking organic traffic.

So could you please talk to how you view this and what your pushback is? And the second question is, could you please talk to the order growth versus AOV? Anything in particular beyond the $10 minimum that we should think about?

Yes. Thank you for the question. As it relates to third-party platforms and AI platforms and how we think about that, our strategy here is pretty simple. We want to be wherever customers are while also maintaining control of the experience and maintaining control of our data.

So -- and at the same time, I should mention that we're building the gold standard of agentic experiences using all of our proprietary data directly on Instacart and on our retailer partner side. So we want our direct agentic experiences to be the gold standard. In terms of traction with some of these other platforms that we've chosen to integrate on like OpenAI and now Anthropic, it's still very early in engagement, but we are viewing this as an incremental demand channel in a very large, again, underpenetrated category. If we co-create the experience with these partners, these integrations will allow us to engage -- allow customers to engage with Instacart in new ways, and we believe it's going to help accelerate online grocery adoption over time.

And if that happens as the leader in the online grocery category, we think we're going to win. And then again, we're very disciplined when it comes to things like data. We're staying disciplined when it comes to how we're surfacing that. And so we're doing that in a very controlled way to minimize any disintermediation risk and continue to have our proprietary data to be a strength of ours as we build the experience on our first party.

For the second part, I will turn it to Emily to talk about the orders growth.

Sure. Let me first speak to orders growth, and then I'll jump into AOV. So orders growth of 10%, as you noted, was a little bit of a step down from prior quarters. And this was largely in line with what we expected and communicated.

And so in specifics, in Q1, the main dynamic, as you pointed out, was that we were lapping the full rollout on a year-over-year basis of the $10 minimum basket benefit that we had applied for Instacart+ members. So through the year in 2025, the $10 minimum really drove smaller incremental orders, and that was a meaningful driver of order frequency throughout 2025, in addition, obviously, to ongoing order growth. And so as a result of that, you're seeing GTV at this point grow faster than orders. As we look ahead, we expect that to continue.

We expect user growth to be the primary driver of order growth. And while frequency will continue to play a role, we do expect, as I said, user growth to be the primary driver. On AOV, similarly, this was, again, largely in line with what we had expected and communicated in prior quarters. If you look back at 2025, we consistently said that AOV, if you excluded the impact of restaurants, which launched in '24 and the $10 minimum basket benefit was actually continuing to increase year-over-year.

And so what you're now seeing is that underlying strength coming through a bit more clearly as we lap the impact of $10 minimum and now 2 years into restaurants. And so what I'd say on AOV is that there's a couple of things driving that underlying strength. One is the ongoing deepening of customer engagement across the platform. And that's because, of course, retained customers typically go on to shop more and spend more over time.

We have continued strength in the weekly grocery shops. We have strong performance from club retailers who tend to have a bit higher AOVs. And we're also seeing high-value business customers shopping at some of our recent launches like Restaurant Depot. So really seeing some great trends in AOV across the board.

Our next question comes from the line of Josh Beck of Raymond James.

I wanted to go back to the Cart Assistant. It sounds like 25% of your customers are starting to see the functionality. What have been some of the early learnings? Has anything stood out with respect to conversion or basket size, ad monetization?

We've heard some comments from others in the industry. So just kind of curious what you are seeing there. And then also on the search functionality, it sounds like there's an enhancement underway. Is it kind of moving from a more of a keyword index framework to maybe something a little more nuanced with LLM?

Just kind of curious what's going on under the covers there.

Yes. Thanks for the question, Josh. So first of all, on Cart Assistant, again, we've been investing in this. It's still early.

We're at 25% of our U.S. consumers who are being exposed. And the learnings were really what I described upfront, which was consumers are using it to save time and get additional value and get inspiration and drive discovery with things like recipes and meal planning. We're seeing consumers do product research through our Cart Assistant. And remember, when we're building these types of experiences, we're really trying to understand how consumers are going to engage with this longer term.

So of course, you can come to Instacart and you can engage with Cart Assistant as a digital agent to help you build a basket faster from the onset. But we're also looking at experiences throughout the customer journey where customers can interact with Cart Assistant a little bit more behind the scenes to help them with things like understanding if there's any gluten in their cart as an example. And so we're still studying a lot of the engagement data, and we're still learning. But from an impact perspective, what I will say is that, I mean, we do think AI overall is going to be a meaningful growth driver for the category over time.

And at a high level, it's because what it does is it makes grocery shopping simpler and more intuitive. And that should accelerate online adoption by driving better conversion and higher retention and larger baskets and more frequent ordering. And we think we are in a very unique position to bring all of that to life because of our proprietary data from our 1.6 billion lifetime orders and because we're operating an at-scale fulfillment network with shoppers in physical stores and because of our deep retailer integrations, for example, with inventory systems. No one else has this combination, and that's what's allowing us to move from more of a front-end AI experience to actually -- experience that will actually help you complete your order, and that's going to be very difficult to replicate.

On your second word around -- your second question around search. So search, in particular, helps customers find what they want faster and customers that search are 5x more likely to place their first order. Key to search is having rich data as well, right? We need to be able to access the catalog.

It's not easy to do in grocery, and that's another reason why we see so much traction on the enterprise side of the business because search is a very nuanced example of something that takes years of data and millions of orders to get right? And that's really what we're seeing there. So we're going to continue to innovate. We want search to be as relevant as possible for consumers.

We do think search helps consumers complete their basket faster, and we know that it drives that likelihood to place a first order. So we're going to continue to invest there.

Our next question comes from the line of Justin Patterson of KeyBanc.

Great. Could you talk about some of the guardrails you have around AI costs? We've seen a lot of companies taking different approaches to managing increased token consumption. So I'd love to hear about how you're thinking about that.

And then separately, I'd also love to hear about how you're thinking about just advances in recommendation and ranking models benefiting both conversion rates over time and having applications to the ad side.

Sure. In terms of guardrails around AI costs, look, I think this is something that's evolving real time. So I think about 2025 as a point in time where we were more experimenting and seeing where we were seeing adoption and allowing people to try to adopt AI across their workflows and then, of course, across the consumer experience as well. So I think we're definitely monitoring this real time.

And to the extent we're seeing either efficiencies in workflows, finding ways to offset those costs in other ways. As it relates to consumer experience, I'd say it's still early, but we are looking for metrics around ways to, again, offset those costs through things like better customer engagement, better conversion, et cetera. So I think it's still early, something we're monitoring and adapting to really quarter-by-quarter.

And to your second question about recommendations, as I mentioned upfront, we're using data and demand signals to invest to make recommendations as relevant as possible. And the major innovation here has again been around AI. And this is why I've talked about this both as a consumer experience element, but also a brand and advertising element because now you're able to do it across your content with semantic intelligence. So our view is that as we make recommendations more relevant, we're just going to help consumers to find what they're looking for and complete perfect orders.

And we think that, that's going to help us on both the advertising side and just with overall consumer experience.

Our next question comes from the line of Nikhil Devnani of Bernstein.

I wanted to ask about enterprise. So you have several products now available to retailers. I guess when you step back at the aggregate level, how should we be thinking about the size of this business now in terms of contribution to revenue or GTV? And then also the economics of these orders as this product continues to grow and become a bigger portion of the mix of the business for Instacart, how do the economics stack up relative to your marketplace business?

Yes. Thanks, Nikhil, for the question. Why don't I take a step back and talk about how we think about the enterprise business and then Emily can dive a little bit deeper into the margin side of the question. So look, we do believe that enterprise is playing an overall highly strategic role with us with retailers and our ability to deliver for them, but also deliver the best customer experience across both enterprise and marketplace.

To really emphasize why that is. First of all, enterprise enables these much deeper retailer relationships, and it gets us on the same side of the table where we're innovating with them. We're now doing -- we do short- and long-term planning. And these relationships often lead to these technical integrations that really only exist to make the experience better, which they do across their owned and operated sites and our marketplace.

And enterprise, of course, drives overall efficiency for us. We make very good use of our marketplace innovation by extending it to enterprise clients. And as a result, it lowers our cost to serve through shared infrastructure. It also allows us to reinvest even more in shared technology and capabilities that benefit everyone.

And it also increases order volume and density, which also helps us on the cost side. As we've stated in the past, both enterprise and marketplace are growing, but the way that we think about enterprise is less as a stand-alone line item and more of a core part of how the overall platform compounds over time. So Emily, do you want to expand on that?

Yes, sure. From an economic standpoint, I mean, first of all, we don't break out the specifics of economics in part because, as Chris spoke to, really all parts of our ecosystem work together. So for example, the fact that we have marketplace and enterprise benefits our fulfillment cost as just one example of how we think about scaling the 2 sides of our ecosystem. We -- what I would say is that both marketplace and enterprise generate profit positive dollars.

I'd say both are contributing to overall growth. And when we think about the specific economics, I'd also say that each retailer is really different. Our contracts retailer by retailer are bespoke. And that is because when we go to a retailer, we're working with them to figure out the right construct or constellation of different products and services and how they work together.

And we're really looking holistically at that partnership to say, does this make sense from an economic standpoint for us, for them. And so it makes it difficult to disentangle any one part of our ecosystem.

And if I could just add a quick follow-up. So to what extent do you want to scale white label logistics for these partners internationally as you offer enterprise? And if that is a big part of the road map, I guess, how do you think about the investment required to do that in a new country with less of an existing infrastructure already?

Yes, I can take that. Thanks, Nikhil. Like look, we're very excited about our plan to take our tech and our enterprise tech to new markets for the first time. And we believe that, that is a very promising future growth lever for us.

We, of course, have ambitious plans. But as that said, we're being very disciplined on how we approach it. That's why our strategy is an enterprise-led strategy. We're taking proven products like Storefront Pro and Caper Carts and FoodStorm to retailers who are facing the same challenges that we've already solved in North America.

And that's what also gives us confidence in product market fit. In other markets, retailers are telling us that there's a fit. And we're seeing encouraging signs. As I mentioned upfront, Costco Storefront Pro expansion in France and Spain is performing ahead of our initial expectations.

So we're very excited about this. We're excited about our Instaleap acquisition as an accelerant for what we're trying to do internationally. But again, we're going to be very disciplined. We're taking our current products to new markets, which again gives us cost leverage.

And yes, anything to add, Emily?

Yes. I think the only thing I'd add is that our focus really is on the technology layer. So if you think about Instaleap, it's about fulfillment tech, the orchestration layer, the great retailer relationships they bring to bear. As Chris mentioned, enterprise-led really focused on existing tech like SFP, FoodStorm and Caper.

So the question was asked really, I think, with a focus on logistics. I think that is something that we can do internationally. I wouldn't say it's our priority. So we will obviously consider that on a case-by-case basis.

Our next question comes from the line of Jason Helfstein of Oppenheimer.

Maybe 2 quick ones. Can you give us your thoughts on the advertising outlook for the rest of the year? Obviously, this quarter was quite strong. And then just -- I don't think we've heard anything on Instacart+. Just any thoughts you want to share, increased -- is this an increased focus this year? And then any just concerns with lapping any of the credit card promotions around Instacart+?

Yes. Thanks for the question, Jason. I'll start on the ads side. So look, looking ahead on ads, we just provided another strong guide for Q2, 11% to 14% growth for ads and other.

And although we don't provide specific quarterly guidance beyond that, we are confident in our ability to deliver our long-term targets on ads of 4% to 5% of GTV. And that's because at the highest level, we believe that we have the right strategy, we're executing against it, and we're successfully expanding our scale and reach towards our goal of being a leading ad ecosystem. And when we break that down into some of our core building blocks and components, we do see headroom across the ecosystem. So starting in our core, we're continuing to innovate on platform.

As mentioned in an earlier question, we're using AI innovation more than ever to provide tooling like our new AI-powered recommendations. We're using AI to drive more personalization and relevancy, which all translates to better performance for brands. And then we're taking that innovation and we're extending it on to our Carrot Ads networks, where we're at 310 partners and growing, and we have a healthy pipeline. And we're extending our ads innovation in-store with Caper Carts, which is still very early, but I firmly believe is going to be one of the most interesting advertising opportunities for brands in-store.

And then we're monetizing our data in a couple of ways. Off-platform, which we touched on, but again, we've built a strong foundation with all of the right partners. We're excited to scale that further and tap into incremental budgets and with our new data solutions like our consumer insights portal, where brands can access unique real-time data insights. So again, we're confident in our ability to scale ads and other over time.

Of course, there's lots of puts and takes in the advertising business on a quarterly basis, but we firmly believe in our ability to hit our long-term targets.

On IC+, I wouldn't say it's an increased focus specifically. I think it's a continued focus for us. It has always been a key part of our overall strategy. And we are seeing paid IC+ members continue to grow.

They are continuing to represent the majority of GTV and orders on the platform, and they also continue to be more engaged and retain better than nonmembers. And effectively, how we think about this is that it is -- that strength is really reflected in our overall fundamentals. So you remember last year, we talked about the fact that our MAU, we're seeing the best retention in a few years, right? So you're seeing that in MAU growth and just in overall user engagement.

So we're focused on continuing to drive overall value for the program, right? It's anchored in the $0 delivery minimum, which we lowered to $10 for grocery and $25 for restaurants. Obviously, things like Access New York Times Cooking and Peacock, and we're always evaluating new ways to drive value for members. In terms of lapping the benefits, I wouldn't say there's anything I would call out as it relates to lapping the IC+, but we, of course, continue to look for ways to drive increased value for our members.

Our next question comes from the line of Ken Gawrelski of Wells Fargo.

Could you talk about the factors impacting incremental margins in the 2Q guide? Obviously, some strong GTV growth guided to at the high end, but maybe a bit softer incremental margins. If you could talk about the factors. That's question one.

Question two, please, maybe could you talk about the success you're having with partners working towards price parity? What are the continued challenges? What are the successes maybe you've had there? And how would you evaluate your progress?

Perfect. Okay. Thank you for the question. On the first one, look, I'll let Emily speak to some of the shorter-term kind of puts and takes between quarters.

But at the highest level, as it relates to profitability, nothing's changed about our strategy. We're confident in our ability to hit our long-term targets of 4% to 5% of GTV. But let me share how we're thinking about investing in our business overall. So as a reminder, we are the category leader in a very early market with tons of upside.

So yes, we're investing and we should be investing. We're investing in our core where our fundamentals are strong. Our product keeps getting better, which means that we can acquire and retain customers more efficiently. And in many ways, we're still early in our journey when you think about some of our mid- to long-term growth areas like in-store technology, where the bulk of grocery transactions still happen, international markets where we're just getting started, although again, being very disciplined there and building leading-edge AI solutions.

And on all of these, we have high conviction that these investments are going to pay off over time because they're proven models like land and expand with enterprise, which is our international play. We have a right to win in these areas. We are investing in a very intentional way and in a very disciplined way so that we can continue to deliver profitable growth. And again, we feel good about our ability to hit our long-term targets of 4% to 5%.

But in the meantime, we're going to continue to invest because we see so much opportunity in front of us, and we see attractive investment opportunities to drive growth.

Yes. Just to add a little bit of color specifically on Q1 and Q2. I don't think there's anything fundamental that's changed in the business from Q1 to Q2. And I think we've also been consistent with saying that we do expect the pace of margin expansion in 2026 to moderate versus 2025. So again, nothing new or different that we're seeing in terms of what's happening away or deeper inside the business. A couple of things I might call out as it relates to Q1 and Q2. So I did mention on the call earlier that Q1 benefited from the repeal of Canada's digital services tax. What happened there was it happened very late in the quarter.

So typically, we manage through surprises that come whether they're positive or negative, meaning we reinvest things that come to the upside or we manage around things to the downside. But what happened here is it was something we expected in Q2 and it ended up happening in the last couple of days of the quarter. And so we just didn't have time to reinvest at levels that we found attractive. And so that is something that doesn't recur in Q2. In fact, as I mentioned earlier, something we expected to happen in Q2 and got pulled forward into Q1. The other thing I might call out is that Q2 of '25, we did see a step-up in transaction revenue as a percentage of GTV from 7.1% to 7.3%.

And so again, when you're thinking about the year-over-year comparison, there's just going to be some differences in terms of how you look at Q1 versus Q2. And so generally speaking, that's why we really focus on overall annual improvement in EBITDA and EBITDA margin because in terms of operating the business, you may have just quarterly fluctuations. So I wouldn't think about anything truly different in Q2 that we're seeing relative to the last couple of quarters.

And to your question on price parity, look, the success that we've seen is a steady drumbeat of retailers moving towards price parity since we've really outlined this as a priority and an opportunity for retailers last year. So we saw Schnucks move to price parity last year, Heritage Grocers so far this year, Hy-Vee, Raley's, Fareway, several independent retailers. We're seeing that play out in their performance. Again, the data is very clear that retailers that market price parity see a 10 percentage point acceleration.

They retain better. The challenge, of course, being here that ultimately, retailers set pricing on the platform, it's up to them to make that investment and to kind of evaluate the short- and long-term return and the strategic nature of wanting to capture digital sales and share versus some of the retailers on our platform, but also some of the largest digital players that they're ultimately competing with. And so the challenge is really it's a retailer's decision whether or not to go to eliminate the markup and price parity to stores.

Our last question comes from the line of Andrew Boone of Citizens.

I just wanted to ask about Caper Carts. Chris, you mentioned the opportunity with in-store. Can you just flesh that out, talk about where you guys are in terms of scaling that and then expectations we should have going forward?

Sure. Thanks for the question. So first of all, at the highest level, we very much believe in the in-store opportunity for technology. E-commerce is at low double digits.

So the vast majority of transactions will still happen in-store for the foreseeable future. And there is a massive opportunity to modernize and digitize that experience with seamless operations, advanced personalization, way finding, advertising to help customers in-store discover products, save money while they shop. On Caper, specifically, we're seeing great momentum with Caper. We're now live in more than 100 cities with over a dozen retail banners.

From a scale perspective, we're continuing to expand with Wakefern, where we're now live at about 20% of stores. We launched new pilots recently with Sprouts and Wegmans and Coles in Australia, where we've announced an upcoming pilot with Morrisons in the U.K. So I'm confident that Caper has runway ahead, strong product market fit with consumers and retailers. This is one of my main learnings.

Customers love the experience of using the cart and retailers love it for the operational benefits and the potential to turn their in-store customers into omnichannel customers. And it's also driving higher basket sizes for retailers. So we're making traction on Caper. We're making traction with ads on Caper, and we think that it's a great mid- to long-term growth lever for us.

Thank you. This concludes the question-and-answer session. We'd like to thank you for your participation in today's conference. This does conclude the program. You may now disconnect.