Maplebear Inc. Q1 FY2026 Earnings Call

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 Maher, 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-commerce 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's digital services tax 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 compensation in a calendar year, followed by a sizable step-up in stock-based compensation 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 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?

Thanks, Colin, for the question. We are happy with our growth results. 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 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. Those improvements compound quickly at scale. 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 and Cub from Q4 are performing well. In Q1, we're very proud that ALDI returned to Storefront Pro. 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, 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 are 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 AI is further accelerating our growth. So we feel really good about the fundamentals and how we're executing and our trajectory overall.

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

Maybe two, 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. 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. On Instaleap specifically, 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. Instaleap's grocery technology is resonating with retailers around the world, and they have deep retailer relationships in markets that we want to pursue. 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.

Operator instructions. 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 four 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?

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. 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. We've built a model with multiple paths for growth that all reinforce each other. Our core experience across marketplace and enterprise continues to improve, and there's more runway to go because we're the category leader in a very large underpenetrated category. Our enterprise platform, which leverages marketplace innovations, continues to be a real strategic advantage with retailers. The model is simple: we help enable retailers to grow and we grow with them. We're operating at considerable scale—380 storefronts—and we believe there is 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. Regarding newer initiatives, our foundation is allowing us to invest in many of these. We're taking enterprise products to new international markets, extending beyond e-commerce into omnichannel with in-store technologies like Caper Carts, FoodStorm and Carrot Tags. Because we're already deeply embedded with retailers because of our enterprise platform, we're in a unique position to help power that shift. 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. When I step back, we have strong execution in the core business, and we're layering in new growth drivers that will expand our platform over time. That's what gives me a high degree of confidence in our ability to drive sustained long-term durable growth. On ads, we're really happy with the momentum. Q1 was our strongest ads and other revenue growth since Q3 of 2023, and we feel great about the underlying fundamentals. Platform growth drives more advertising participation, but we're also seeing strength in our core on-platform offering, which includes sponsored products as the main growth driver from a format perspective. Strength came from all brand cohorts—large accounts, mid-market accounts and emerging brands. This reflects our plan in action. Our ambition is to build one of the largest and most effective ads ecosystems where brands come to us to drive performance across Instacart and multiple other surfaces. We're laser-focused on building diversification across supply—more surfaces where we place ads—and demand—more brands investing and current brands investing more. On the supply side, we're continuing to grow our Carrot Ads network where we extend our reach, tech and demand onto retailer websites. We're at 310 partners and have a healthy pipeline. As retailers upgrade to Storefront Pro, they almost always enable Carrot Ads, so our enterprise expansion also helps build our ads ecosystem. 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 mid-market and emerging brands were very active. We've also expanded our platform through partnerships with Meta, Google, TikTok, Pinterest and The Trade Desk, enabling CPGs to use their first-party data to target our high-intent audiences and measure performance. With these initiatives, we believe we're gathering incremental budgets because we're tapping into existing digital ad spend. At the highest level, our strategy of building a powerful ads ecosystem is working, and that's showing up in our results.

Operator instructions. Our next question comes from the line of Ronald 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. 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 habitual use 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.

On price parity, to be clear, retailers set item-level prices on our marketplace and on their owned and operated sites. Some choose to mark up prices to help offset fees, but many offer price parity. From a consumer perspective, customers are seeking value and the retailers on our platform who deliver it grow faster and retain customers better over time. The data is clear: price parity retailers grow faster, about 10 percentage points faster, which gives retailers an ability to drive incremental sales on Instacart, especially as they compete for share. We're a very large platform now, and retailers are motivated to win share on Instacart. They also don't want to lose share to other large digital players. Our conversations with retailers center on the strategic return of price parity and other affordability strategies to perform well with value-seeking consumers. On enterprise and Storefront Pro, retailers use us because we extend the scale from our marketplace—hundreds of millions of orders—and offer that in a way that allows them to compete with the largest digital players with a high-quality experience. We offer end-to-end technology from e-commerce, including search, relevancy and personalization, to efficient cart and checkout and order orchestration through delivery. That's a complex experience and difficult to get right, which is why retailers evaluate Instacart. We can extend marketplace experience onto their sites, which drives a 10% lift in performance on average. We see runway here: we're at 380 retailers overall, we're seeing performance for them and for us, and we'll continue to lean into this as a strategic growth driver.

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

Can you hear me? 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?

As it relates to third-party AI platforms and how we think about them, our strategy is simple. We want to be wherever customers are while also maintaining control of the experience and our data. At the same time, we're building the gold standard of agentic experiences using all of our proprietary data directly on Instacart and on our retailer partner side. We want our direct agentic experiences to be the gold standard. Integrations with platforms like OpenAI and Anthropic are still early, but we view them as incremental demand channels in a very large underpenetrated category. If we co-create experiences with these partners, these integrations will allow customers to engage with Instacart in new ways, and we believe this will accelerate online grocery adoption over time. As the leader in online grocery, we think we're well positioned to win. We're disciplined about data and how we surface it to minimize disintermediation risk and preserve the strength of our proprietary data as we build first-party experiences.

On orders growth, orders growth of 10% was a step down from prior quarters and largely in line with our expectations. The main dynamic in Q1 was lapping the full rollout in 2025 of the $10 minimum basket benefit for Instacart+ members. Throughout 2025, the $10 minimum drove smaller incremental orders and was a meaningful driver of order frequency in addition to ongoing order growth. As a result, GTV now grows faster than orders. Looking ahead, we expect that to continue and expect user growth to be the primary driver of order growth, with frequency still playing a role. On AOV, this was also largely in line with expectations. If you exclude the impact of restaurants, which launched in 2024 and the $10 minimum benefit, AOV has been increasing year-over-year. Now that we are lapping the $10 minimum and two years into restaurants, the underlying strength is clearer. Drivers include deepening customer engagement—retained customers tend to shop more and spend more—continued strength in weekly grocery shops, strong performance from club retailers with higher AOVs, and high-value business customers shopping at recent launches like Restaurant Depot.

Operator instructions. 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 more of a keyword index framework to something a little more nuanced with large language models? Just kind of curious what's going on under the covers there.

On Cart Assistant, we're at 25% of U.S. consumers exposed and it's still early. Early learnings align with what I described: consumers use it to save time, get inspiration and drive discovery—recipes, meal planning, product research. We're studying engagement data closely because we want to understand long-term behavior. Customers can use Cart Assistant to build baskets faster and also behind the scenes to help with things like dietary checks—for example, identifying gluten in a cart. We believe AI overall will be a meaningful growth driver for the category because it makes grocery shopping simpler and more intuitive, which should accelerate online adoption via better conversion, higher retention, larger baskets and more frequent ordering. We have a unique position given our 1.6 billion lifetime orders, at-scale fulfillment network with shoppers in physical stores, and deep retailer integrations, such as inventory systems—no one else has this combination. That allows us to move from front-end AI experiences to experiences that actually help complete orders, which will be difficult to replicate. On search, search helps customers find what they want faster and customers that search are 5x more likely to place a first order. Key to search is having rich data and access to catalogs, which is challenging in grocery. That's another reason why enterprise traction matters—search is nuanced and takes years of data and millions of orders to get right. We're going to continue to invest in search to make it as relevant as possible to help customers complete baskets faster and increase first-order likelihood.

Operator instructions. 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 advances in recommendation and ranking models benefiting both conversion rates over time and having applications to the ad side.

Guardrails around AI costs are evolving in real time. In 2025, we experimented and observed adoption across workflows and the consumer experience. We're monitoring usage closely and, where we see efficiencies, we'll find ways to offset costs in other ways. For consumer experience, it's still early, but we look for metrics that offset costs through better customer engagement and conversion. We're monitoring and adapting quarter-by-quarter.

On recommendations, we're using data and demand signals to make recommendations as relevant as possible, and the major innovation is AI. This has both consumer experience and advertising implications. With semantic intelligence, we can make recommendations more relevant across content, helping consumers find what they're looking for and complete more perfect orders. That will help both advertising performance and overall consumer experience.

Operator instructions. 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. 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?

I'll step back and talk about enterprise and then Emily can expand on margin dynamics. Enterprise plays a highly strategic role with retailers and our ability to deliver the best customer experience across both enterprise and marketplace. Enterprise enables deeper retailer relationships and technical integrations that improve experience across owned sites and our marketplace. We extend marketplace innovations to enterprise clients, lowering our cost to serve through shared infrastructure and reinvesting in shared technology and capabilities that benefit everyone. It also increases order volume and density, helping costs. We view enterprise less as a stand-alone line item and more as a core part of how the overall platform compounds over time.

From an economic standpoint, we do not break out specifics because all parts of our ecosystem work together. For example, marketplace and enterprise together benefit our fulfillment cost. Both marketplace and enterprise generate profit-positive dollars and contribute to overall growth. Each retailer is different and contracts are bespoke because we work with retailers to determine the right constellation of products and services. We look holistically at whether a partnership makes sense economically for both parties, which makes it difficult to disentangle any one part of our ecosystem.

If I could just add a quick follow-up. 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 roadmap, how do you think about the investment required to do that in a new country with less of an existing infrastructure already?

We're excited about taking our enterprise tech to new markets. We believe this is a promising growth lever. We're being disciplined: our strategy is enterprise-led, taking proven products like Storefront Pro and Caper to retailers who face similar challenges to those we've solved in North America. That gives us confidence in product-market fit. We're seeing encouraging signs, like Costco Storefront Pro expansion in France and Spain performing ahead of initial expectations. Instaleap accelerates our international capabilities. We'll be disciplined and take current products to new markets for cost leverage.

Our focus is on the technology layer. Instaleap brings fulfillment orchestration tech and retailer relationships. Enterprise-led expansion focuses on existing tech like Storefront Pro, FoodStorm and Caper. Logistics is something we can do internationally but it's not our priority; we'll consider it case-by-case.

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

Maybe two 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+. Any thoughts you want to share? Increased focus this year? And any concerns with lapping any of the credit card promotions around Instacart+?

Looking ahead on ads, we provided a strong guide for Q2—11% to 14% growth for advertising and other—and we're confident in our ability to deliver our long-term targets of 4% to 5% of GTV. We have the right strategy and are executing: continuing platform innovation, AI-powered tooling like recommendation systems, expanding Carrot Ads (310 partners and growing) and a healthy pipeline. We're extending ads innovation in-store with Caper Carts, which is early but promising. We're also monetizing data off-platform, scaling partnerships and new data solutions like our consumer insights portal. While there are quarterly puts and takes, we believe we can scale ads and other over time.

On Instacart+, I wouldn't say it's an increased focus this year specifically; it's a continued focus. It has always been a key part of our strategy. Paid Instacart+ members continue to grow, represent the majority of GTV and orders on the platform, and remain more engaged with better retention than nonmembers. That strength is reflected in our overall fundamentals. We continue to drive value for the program—anchored in $0 delivery minimum changes, partner benefits like New York Times Cooking and Peacock, and we evaluate new ways to drive member value. I wouldn't call out any specific lapping concerns related to Instacart+ credit card promotions today, but we continually evaluate program dynamics.

Operator instructions. Our next question comes from the line of Kenneth Gawrelski of Wells Fargo.

Could you talk about the factors impacting incremental margins in the Q2 guide? Obviously, some strong GTV growth is guided at the high end, but maybe a bit softer incremental margins. If you could talk about the factors. That's question one. Question two, could you talk about the success you're having with partners working towards price parity? What are the continued challenges and successes? How would you evaluate progress?

On profitability, nothing has changed about our long-term strategy. We're confident in our ability to hit long-term targets of 4% to 5% of GTV, but we are investing in the business. We're the category leader in an early market with significant upside, so we should invest. We're investing in our core, where fundamentals are strong, and in mid- to long-term growth areas like in-store technology, international markets, and building leading AI solutions. These are attractive investments that we expect to pay off. We invest in a disciplined way to continue delivering profitable growth and believe we can hit our long-term targets while making these investments.

Specifically on Q1 and Q2, nothing fundamental changed in the business. We expect the pace of margin expansion in 2026 to moderate versus 2025. A couple of items to call out: Q1 benefited from the repeal of Canada's digital services tax, which happened late in the quarter. Typically, we reinvest surprises, but the timing meant we didn't have time to reinvest at attractive levels, so this benefit doesn't recur in Q2. Also, Q2 2025 saw a step-up in transaction revenue as a percent of GTV, so year-over-year comparisons will show differences quarter-to-quarter. We focus on overall annual improvement in EBITDA and EBITDA margin because quarterly fluctuations are normal when operating the business.

On price parity, we've seen a steady drumbeat of retailers moving toward price parity since we highlighted it as a priority. Examples include Schnucks, Heritage Grocers, Hy-Vee, Raley's, Fareway, and several independents. Retailers that mark price parity show about a 10 percentage point acceleration in growth and better retention. The challenge is it is the retailer's decision to eliminate a markup; they evaluate short- and long-term returns and strategic reasons to capture digital share. We work with retailers on this and on other affordability strategies to help them perform with value-seeking consumers.

Operator instructions. 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?

We believe in the in-store opportunity for technology. E-commerce is in the low double digits, so the vast majority of transactions will still happen in-store for the foreseeable future. There is a massive opportunity to modernize and digitize that experience with seamless operations, advanced personalization, wayfinding, advertising to help customers discover products and save money while they shop. On Caper specifically, we're seeing great momentum. We're 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, and we've announced an upcoming pilot with Morrisons in the U.K. Customers enjoy the cart experience, retailers appreciate the operational benefits and the potential to turn in-store customers into omnichannel customers. It's also driving higher basket sizes for retailers. We're making traction on Caper and on ads on Caper, and we think it's a strong mid- to long-term growth lever.

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.