Instacart (CART) Q3 2025: Ads Revenue Growth Slows to 6–9% as Macro Headwinds Hit Large Brands
Instacart’s Q3 call revealed a business balancing robust enterprise momentum and platform innovation against a softening ad revenue trajectory, as large CPG brands pull back spend amid macro uncertainty. Management’s confidence in long-term ad and enterprise growth is clear, but near-term guidance embeds caution. Investors should watch Instacart’s ability to drive price parity adoption and international expansion while defending its core grocery leadership against intensifying competition and regulatory risk.
Summary
- Ad Revenue Deceleration: Large brand pullbacks and macro caution slowed ad revenue growth to single digits for Q4.
- Enterprise Platform Expansion: New retailer launches and cross-sell capabilities are deepening partner relationships and driving order density.
- Affordability and Price Parity Push: Management is prioritizing price parity with retailers to improve retention and growth.
Performance Analysis
Instacart reported continued top-line growth with strong operational leverage, as enterprise partnerships and core marketplace both contributed meaningfully. Q3 adjusted EBITDA rose sharply, reflecting disciplined expense management and increased order density, even as stock-based compensation fell due to executive departures. The company ended the quarter with a robust $1.9 billion in cash, supporting a $1.5 billion share repurchase authorization and an immediate $250 million accelerated buyback, signaling confidence in long-term value creation.
Advertising and other revenue growth slowed to 6–9% YoY for Q4 guidance, with management attributing the deceleration to large partner spend moderation and lingering macro uncertainty, despite ongoing strength from emerging and mid-sized brands. Order growth is now expected to outpace GTV growth, reflecting both improved customer frequency and an expanding use-case mix, including small baskets. The company’s ability to maintain profitability while investing in international expansion and AI-driven innovation remains a key differentiator.
- Share Repurchase Acceleration: A $1.5 billion program increase and $250 million ASR demonstrate capital return discipline.
- Order Density and Batching: Double-digit increases in batch size and fulfillment speed improvements have supported margin expansion.
- Unit Economics Convergence: Profitability is now achieved across both large and small basket orders due to operational efficiencies.
Overall, Instacart is navigating a complex environment by doubling down on platform innovation, disciplined investment, and partner-centric growth, but near-term ad revenue softness and regulatory risk will test management’s ability to sustain momentum.
Executive Commentary
"We have momentum. We've been driving consistent growth, seven quarters of double-digit growth with consistent EBITDA expansion. So considering the strength of the core business, I'm not coming in and rewriting our entire playbook or making dramatic changes to our underlying vision and strategy. It's going to be fairly consistent. That said, I have started to outline various focus areas that I strongly believe can help us accelerate into the next chapter. There's three of them. One of them is affordability... The second area you're going to see us continue to invest in is to accelerate enterprise even more... And the final area that I want to highlight is ads and data."
Chris, Chief Executive Officer
"We anticipate GTV to range between $9.45 to $9.6 billion. This represents year-over-year growth between 9% to 11% with orders growth expected to outpace GTV growth. It also reflects strong customer demand in October, continued momentum from landing and expanding enterprise partnerships, and is partially offset by the impact of a variety of EBT SNAP funding scenarios. We expect advertising and other revenue to grow 6% to 9% year over year."
Emily, Chief Financial Officer
Strategic Positioning
1. Affordability and Price Parity Initiatives
Affordability remains the top customer friction point, and management is actively working with retailers to reduce markups and drive price parity (same online and in-store pricing). Retailers moving to price parity are growing 10 percentage points faster, and retention is measurably higher. The company is using a consultative approach, sharing data on sales lift and retention benefits, but ultimate pricing decisions reside with retailers. The trend toward price parity is expected to continue, with pilots underway in major cities and several banners already transitioned.
2. Enterprise Platform and International Expansion
Enterprise partnerships now span over 350 e-commerce storefronts, with 40 new launches in H1 and recent wins like Restaurant Depot and Cub. Cross-sell opportunities with products like Caper Carts (AI-powered smart carts) and FoodStorm (order management) are expanding wallet share per retailer. International expansion is being approached with discipline, leveraging existing products (Storefront Pro, Caper, FoodStorm) rather than building new tech stacks. Management is prioritizing profitability and measured investment as it explores major markets in Europe, focusing on e-commerce and in-store digital solutions.
3. Ads Ecosystem Diversification
Instacart’s ad business is evolving into a multi-surface, omnichannel ecosystem, now powering 240 Carat Ad partners and integrating with platforms like Google, Meta, Pinterest, and TikTok. New ad formats (shoppable recipes, bundles, AI landing pages) and in-store ad placements (Caper Carts) are expanding inventory, while off-platform partnerships extend reach. Management remains confident in achieving its long-term goal of 4%–5% of GTV from ads, but acknowledges near-term macro headwinds and large partner spend moderation.
4. AI-Driven Innovation and Personalization
AI is central to Instacart’s technology roadmap, powering personalized shopping experiences (Smart Shop), product recommendations, and operational efficiencies. The new Cart Assistant conversational AI will be offered to both Instacart users and retail partners, enabling agentic shopping experiences and real-time support. Management sees AI as a lever for both consumer engagement and retailer monetization, with early adoption signals positive across all partner sizes.
5. Membership and Use-Case Expansion
Instacart Plus membership continues to deepen engagement and retention, representing a majority of platform activity. New features (NYT Cooking, restaurant delivery, extended family accounts) are driving incremental value. Small basket orders are now profitable, broadening addressable use cases and enabling Instacart to capture a wider share of customer grocery needs.
Key Considerations
Instacart’s Q3 performance highlights a business at scale, balancing disciplined execution and innovation amid a shifting competitive and macro landscape. Strategic context is shaped by:
Key Considerations:
- Macro-Driven Ad Headwinds: Large CPG partners are moderating spend, creating near-term pressure on ad growth even as mid-market brands remain resilient.
- Enterprise Platform as Growth Engine: New retailer launches and cross-sell opportunities (Caper Carts, FoodStorm) are driving deeper integration and higher order density.
- AI and Personalization as Differentiators: AI-powered features are enhancing both consumer experience and retailer value proposition, positioning Instacart as a tech leader in grocery.
- Operational Efficiency Unlocks Margin: Improvements in batching, fulfillment speed, and order density have enabled profitability across all basket sizes.
- International Expansion with Discipline: Management is pursuing measured international growth, focusing on leveraging existing products and maintaining EBITDA progression.
Risks
Instacart faces several material risks: Macro-driven ad spend volatility could persist if large CPG brands continue to retrench. Regulatory headwinds, such as New York’s delivery minimum wage law, threaten cost structure and could dampen order growth in key markets. Intensifying competition from Amazon and others in both large and small basket segments may pressure market share and pricing power. International expansion introduces execution risk and potential dilution of management focus, even as investment is disciplined.
Forward Outlook
For Q4, Instacart guided to:
- GTV of $9.45 to $9.6 billion (9% to 11% YoY growth)
- Advertising and other revenue growth of 6% to 9% YoY
- Adjusted EBITDA of $285–$295 million
For full-year 2025, management maintained guidance, citing:
- Confidence in achieving targets across a range of EBT SNAP funding scenarios
- Momentum from enterprise partnerships and strong October demand
Management also flagged ongoing investments in AI, international expansion, and continued share repurchases as key drivers for long-term shareholder value.
Takeaways
Instacart’s Q3 2025 results reinforce its position as the digital grocery category leader, but also highlight the complexity of balancing growth, innovation, and profitability in a shifting landscape.
- Ad Revenue Softness is a Key Watchpoint: Large brand caution and macro headwinds are weighing on near-term ad growth, but management remains confident in long-term trajectory.
- Enterprise and AI Initiatives Are Driving Differentiation: New product launches, cross-sell, and AI-powered features are deepening retailer relationships and expanding use cases.
- Future Focus on International and Price Parity: Investors should monitor the pace of international expansion and adoption of price parity, as both have potential to unlock new growth vectors and retention.
Conclusion
Instacart delivered a quarter of operational strength and strategic clarity, but faces real challenges in ads revenue and regulatory risk. The company’s ability to execute on price parity, enterprise expansion, and AI-driven innovation will determine whether it can sustain its leadership and unlock the next phase of growth.
Industry Read-Through
Instacart’s results signal a mixed environment for digital grocery and retail media platforms. Macro caution is hitting large brand ad budgets, a trend likely to ripple across other retail media networks. The push toward price parity reflects a broader industry shift as consumers become more price sensitive and compare across channels. AI-driven personalization and operational efficiency are becoming table stakes, with leaders investing aggressively to differentiate. Regulatory scrutiny of gig economy models remains a persistent risk, especially in major urban markets. Other e-commerce and delivery platforms should watch for increasing pressure to deliver both affordability and innovation, as the line between digital and in-store experiences continues to blur.