The grocery delivery giant Instacart recently made a significant announcement, revealing plans to lay off roughly 250 of its employees. This constitutes approximately 7% of the company’s total workforce and is part of a restructuring effort within the company. The announcement was made on the same day Instacart released its fourth-quarter earnings, which almost perfectly matched the revenue estimates projected by industry analysts.
Instacart’s shares took a hit following this news, falling by about 5% in extended trading. According to the comments made by Instacart, the looming layoffs will primarily target the middle management tier within the organisation. This move aims to create a more streamlined, flatter organisational structure. The company is also shifting its focus towards larger, ambitious projects which include advertising initiatives on various platforms like Roku and Google Ads.
Instacart also revealed that three of its senior executives will be leaving the company. This includes the Chief Operating Officer Asha Sharma, Chief Technology Officer Varouj Chitilian, and Chief Architect JJ Zhuang. The company has confirmed that it plans to fill only the vacant CTO position.
Instacart’s recently released fourth-quarter earnings report showed a revenue stream of $803 million, almost meeting the Wall Street’s projected estimate of $804 million, as per analyst data from LSEG, previously known as Refinitiv.
In September, Instacart made a memorable entrance into the stock market, becoming one of the first major venture-backed tech companies to launch an Initial Public Offering (IPO) since December 2021. As part of its growth strategy outlined in its prospectus, the company shared plans on integrating artificial intelligence and machine learning features into its platform. The company anticipates that these features will significantly contribute to its business expansion in the future.
Instacart employs a large number of shoppers and drivers who deliver goods from a network of over 85,000 grocers and stores to customers in more than 5,500 cities. The company saw a substantial increase in its business operations during the Covid-19 pandemic when consumers began to avoid visiting public places, resulting in heightened demand for home delivery services. However, achieving profitability has always been a daunting challenge for Instacart, as is the case for many companies in the gig economy, given the high costs associated with contractor payouts.
