Instacart Pulls Back on Fourth-Quarter IPO Plans

“The markets still remain closed for new IPOs, which is why there has not been a tech IPO in the last 10 months,” Ms. Simo wrote, adding that it has been the longest drought in the tech IPO market in the past 25 years. “We do not need a perfect market, we’re just looking for an open market window.”

The New York Times

earlier reported that Instacart was pulling its plans to go public in 2022.

Instacart’s decision marks a reversal from earlier this summer, when the company targeted a listing by the fourth quarter, The Wall Street Journal previously reported. Ms. Simo wrote in the memo that the company made it a priority to go public this year, and that it is still prepared to do so.

Delivery companies like Instacart, based in San Francisco, got a boost to their business as the pandemic began spreading in the U.S. in early 2020, leading more people to skip supermarket shopping trips and prepare meals at home. That rapid growth eased as consumers resumed in-store shopping, while rival food-delivery providers like

Uber Technologies Inc.

and

DoorDash Inc.

have also pushed into groceries and other household goods, challenging Instacart.

Instacart earlier this year confidentially filed for an initial public offering with the Securities and Exchange Commission, at a turbulent time for U.S. stocks. The company told potential IPO investors earlier this fall that it would focus a public listing on selling employee shares rather than raising much new capital, as is traditionally the case.

In the latest quarter, Instacart’s revenue grew more than 40% from a year ago and gross profit increased more than 45% year-over-year, according to the memo. Net income more than doubled from the prior quarter, Ms. Simo wrote, adding that the numbers exceeded what the board planned to achieve at the start of 2022.

Instacart’s revenue rose earlier in the year, driven by an increase in the number of orders placed on the app, The Wall Street Journal previously reported. The growth of new consumer price plans, including lower-cost scheduled delivery and more expensive fast delivery options, have helped the company’s business as well.

The company has slashed its valuation, previously pegged at $39 billion in March 2021, and has gone through a string of executive changes and departures over the past year. Co-founder

Apoorva Mehta

said earlier this year that he would step down as executive chairman and leave the board of directors when the company goes public, with Ms. Simo taking over as chairwoman of the board. Ms. Simo joined Instacart in July 2021 after about a decade at

Facebook.

Ms. Simo and Nick Giovanni, chief financial officer of Instacart, have met with more than 50 potential investors over the past six months, and the feedback has been positive, she wrote, adding that the company has achieved its goal of becoming a public-markets-ready business that is profitable and growing.

“These investors believe in us and want to invest in us, but also believe the market will not support new tech IPOs for now,” she wrote.

The company is announcing a cash bonus to reward employees, as providing equity liquidity is unlikely before the end of 2022, according to the memo. Employees who started in 2021 or before and are meeting or exceeding expectations will be eligible for two cash bonus payments.

—Berber Jin contributed to this article.

Write to Jaewon Kang at [email protected]