Good afternoon, everyone. We hope everyone's had a productive day one of the Morgan Stanley NASDAQ TMT Conference. Welcome again to a 2025 version. We're thrilled to have Emily with us from Instacart, the CFO, previously at Uber and now at Instacart for a couple years.

Yeah, two years this January.

Two years this January, so happy, happy, close to anniversary. Before we get to all of that, let's do the disclosures. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com forward slash research disclosures. They are also available at the registration desk. Some of the statements made today by Instacart may be considered forward-looking. These statements involve a number of risks and uncertainties that may cause actual results of different materially. Any forward-looking statements made today by the company are based on assumptions. As of today, Instacart undertakes no obligation to update them. Please refer to Instacart's most recent Form 10-Q for a discussion of the risk factors that may impact actual results. Emily may also reference certain non-GAAP financial metrics and reconciliations are included in Instacart's shareholder letters, which are available on Instacart's Investor Relations website. Thank you. Check. We're all good. Okay, so a lot of things to talk about in the grocery space. It's heavily evolving from competitive discussions, agentic discussions. So maybe let's sort of start with a big picture of you. It's almost been two years with the company. You've done a lot of meetings with different types of investors, analysts like myself, consumer investors, tech investors. What do you think are sort of one or two of the most misunderstood aspects of the company even today after like two years of talking it through with people?

Yeah, it's a great question and something we try to address day in and day out. And in my view, I think the single biggest misunderstanding is the value proposition that we bring to bear in the market. We obviously get it with competitive announcements and worry about how are we going to continue to compete. And I think what we've seen is sort of twofold. One is that competition is truly not new to our sector. We get the question posed a lot around with increasing competition, what are you going to do? And our perspective would be that, you know, people have long understood that online grocery is an attractive market. It's underpenetrated. Many of them, if not all, have been at it for upwards of five-plus years and trying a lot of different things. Now, what I think that those competitors are not able to do that Instacart brings to the table is the combination of things that customers really care about. Now, we've talked about this in the past in terms of selection, in terms of quality, affordability, and convenience. And I think maybe the thing that gets lost is that you need all four. And when you talk about individual competitors, where people can be successful to a point is maybe they excel on one individual vector. And that can address some subset of the population. And, again, the industry is huge, so that's okay. You know, there's more than enough to go around. But what we do uniquely is provide that 1,800 retailers of selection, and of course, we are also white-labeled across over 350 of our retail partner sites. The quality is really unmatched in terms of getting you what you want because of our understanding of both inventory as well as the quality of our shoppers. Affordability, of course, has been a big initiative. but then we do that all at the convenience that people want, which we translate really into speed. And I think that also is misunderstood. I think there's this desire to believe that people will order their groceries in advance and they're going to get it on a four-hour time window. And consistently, that's not what we see behaviorally. We see that 75% of our orders are ordered on demand, which is really the next available delivery window. And for us, the median delivery time of those orders is under 90 minutes. We also have a sizable priority delivery window, which is 25% of which are delivered in under 30 minutes. So we're seeing customers want it all. They want the full selection, the 50-plus thousand SKUs from their local retailer that they know and love, or the club retailer, the specialty retailer, and they want it now. And they want what they want, meaning we actually get 100% of the items that you ordered. And so I think that unique competitive advantage is what's allowed us to continue to grow double digits for the last seven quarters. and continue to show these results in spite of some of the concerns that we get from yourself and investors.

Let me unpack a couple of those key factors you talked about. Let me start with affordability. Maybe give us some examples of investments you've made in affordability that have driven more user growth and more frequency growth. And how do you think about the key drivers going forward to sort of keep the user growth going perhaps down middle to lower income cohorts?

Sure. First and foremost, I'd say, just as it relates to different income level cohorts, one thing that I think is surprising to many people about Instacart is that we do truly serve the full spectrum of income brackets, including those that are actually on government assistance. So in the U.S., the EBT SNAP, which is, you know, single digits percentage of our business. Now, that said, in terms of affordability, to get to your question, I think there's a number of different ways that we can get to affordability, some of which are things that we control and we invest in and other of which are more at the discretion of the retailer themselves. So maybe I'll start with that and then work backwards. What I mean by that is that retailers set the item-level prices on Instacart for the most part. And what that means is that if they want to, they can set those prices at the same as what you would get at the in-store location that you're shopping at, or they can increase the prices at a markup, and they do that because they're offsetting some of the fees associated with being online. Now, that's really dependent. It's a strategy-level question for the retailer. about how do they view online grocery as it relates to their regular business, what's their competitive dynamics in their own individual markets. So really is a management level decision around their views on the market. Now, we obviously have conversations with retailers about the benefits of going to lower markup or to price parity. We've talked about price parity retailers growing at double digits percentage higher rates than non-price parity retailers. So these are conversations we're having with retailers day in and day out, showing them the data, in many cases doing tests with them in markets to prove out the value of if you, retailers, invest here, what it can drive for the business. And so it's a dialogue. But at the end of the day, that decision lives with the retailer. So we're seeing movement in the right direction. It's definitely shades of gray. If you reduce markup, that's great. If you provide price parity on flyer items, that's also great. But that's something that will be an ongoing conversation. In terms of what we're doing that's sort of more in our ball control, I would say you've seen us just as one example. We lowered our minimum basket size for IC+, Instacart+, members on our platform, really starting end of last year but into January of this year. And that would be an example of investing in price, right? It's specific to a category of baskets, but, you know, we've done things like that over time. And we're able to do that because we're driving efficiencies elsewhere in the P&L. such as through shopper pay efficiencies and that's about how quickly we can get the shopper through the store or how many batches we can batch together as part of a delivery that drives down cost per order we can then reinvest in things like consumer pricing.

Got it. Okay. That's helpful. I want to get into some more of those efficiencies later on in the discussion but maybe just to talk about exclusives. I know this is, I know you get asked this question a lot. I know I get asked this question a lot. We've seen some of your partners sort of come off exclusives now. What can you tell us about the impact you've seen on volumes from your retail partners and any changes you see as they move off exclusivity to also be offering other platforms?

Yeah, it's a great question and it's, you know, similarly, you know, misconception I think that we've had over time. You know, first and foremost, you know, over 80% of our GTV is already non-exclusive. So we're not starting from a place where this is a big hill ahead of us that we have yet to have any visibility into what happens in fact the majority of it you know really has occurred and interestingly of the remaining GTV that is exclusive today the majority of those are with retailers with whom we also have an enterprise relationship and the reason I bring that up is that what we found is that retailers where there's an enterprise relationship even after they go non-exclusive those continue to grow in the double digits in terms of GTV growth rate and so that's the type of data that gives us confidence that regardless of outcome and you know exclusivity isn't our strategy hasn't been our strategy this is has been known to be the direction of travel we're able to continue to really execute another sort of backdrop would be just our ability to execute over the last couple of years we've had many retailers roll off of exclusivity and we've been able to deliver seven quarters of double-digit growth. So overall, I think we're seeing a picture where retailers may choose to be non-exclusive on the marketplace, and we're able to execute. What I think is also a key component of our strategy that we've started to talk about a little bit more specifically recently is the enterprise part of our business. That's not a new strategy, as you know. We talked about at the time of our IPO that enterprise was 20% of our business. But, you know, it seemed that it was maybe misunderstood or underappreciated. And so we wanted to be a little more clear that enterprise is really unique because while someone can sit on multiple marketplaces, by someone I mean an individual retailer, when it comes to enterprise solutions and who is your white label retailer.com provider, who's providing your ads technology, who's doing your fulfillment services, typically, you know, you're really talking about one partner. and you're also integrating deeply with that part of it, which makes it much stickier. So we think that the enterprise side of the house also gives us access to a unique part of the market that really no one else, that you would traditionally think of as our core competitors has access to.

No, I think you're right that the enterprise piece was one of these things that we knew about at the time of the listing, but kind of forgot about it. And now as you sort of, we look ahead and there's maybe a growing focus on enterprise a bit. So are there investments needed to sort of like grow that enterprise business further? Is it more just sort of a source of leverage across the P&L on the base?

So what's really interesting about the way that we've built enterprise or really rebuilt it because we did sort of replatform a couple years ago. And what that enabled us to do is that it's a single tech stack across marketplace and enterprise. And that actually is a really important fact because it's one of the things that actually adds value back to the marketplace. Because if we do integrations with a retailer because we are providing white-label solutions for them that maybe the retailer might otherwise not do because their tech resources are scarce and, you know, are they going to contribute that to Instacart versus another priority, we can immediately take any benefit that we've built for enterprise and it's available immediately on Marketplace and vice versa. So any, you know, features that we're doing, specific things that we're building for enterprise customers, we have that capability. And so we think that brings us a really unique advantage. In terms of incremental investment in enterprise, I would say the main, no, not specifically outside of, we just launched about a month ago what we're calling kind of AI solutions, which is an umbrella term for a number of different things that we're developing, but it's a good example of, because we have these enterprise-level relationships with retailers, we truly are their trusted technology partner. They're coming to us for help with some of the sophisticated technology that maybe as an individual retailer, depending on scale, you're not going to be able to build in-house. And so we're able to provide those services to them. And it's not just subscale retailers. You saw in our announcement that we're working with Kroger on enabling AI assistant in their experience. And so it's a wide range of retailers. So we are investing in some areas, but we think there's a lot of opportunity there and not just for our existing set of services but for an expanding set of services.

Let's talk about agentic. We've done a decent amount in how we think about agentic opportunities and in our view, we think grocery and CPG may be the biggest bucket of consumer spend to be unlocked through agentic. I still have my utopian dream of Saturday morning when an Instacart agent says to me, good morning, Brian. and here are the 25 things you and your family order every week. I found some dip that goes well with your favorite chips. Your almond milk is on sale. Anything else you want me to add, I will say Topo Chico. And then you'll say Monday morning delivery, and I will say sweet. How far away are we from that type of product with an Instacart agent like that being able to service your subscribers?

So I think we're making very quick progress towards that future. And I think the thing that you painted is exactly how we think about it, where grocery shopping can become really integrated into your day-to-day life in a way that is seamless, personalized, which I think we'll get back to this, I think, when we talk about ads, but also just accessible to folks. And so I can see that in the things that we're experimenting with internally. And what you're seeing is the ability to do two things. Take external context, things like weather, which maybe impact what you're willing to buy. Maybe if it's hot out, you're not buying soup. And maybe if it's cold out, you're not buying ice cream. And so I'm adjusting to the fact of, is there holidays around the corner? What might be top of mind for Brian and family? With all of your personal information around your shopping behavior, the things that matter to you. And that may be your preferences, your taste, but also that your child has an allergy, that your other child has some other nutrition consideration. And those are part of what makes grocery particularly unique. If you're talking about certain other areas where things are more commoditized, it may be just fine to say to the agent, hey, buy me, you know, X, Y, Z, and whatever arrives is just fine. You don't really care. I think we can all agree that people care deeply about the products that come to their house when it comes to food and nutrition. They care about the brands. They care about ingredients. They care certainly about the nutrition components, particularly around allergies and other food restrictions. And so you have to have that personalization layer, and we can bring that to the table because of the data that we have, both on you, but also on just behavior broadly from a billion and a half orders over time. So I think we're moving in that direction.

Yeah, I think generic white socks are very different than a type of yogurt you're going to eat, right? What's the biggest gating factor to that? Is it inventory? Is it make sure the matching? Is it building the algorithms? As you're sort of thinking through the challenges of getting to that grocery agent, what are sort of some of the actual blocking and tackling hurdles that are particularly challenging?

It really comes back to personal preference. So the yogurt example is a great one. You know, you walk down the yogurt aisle, there's 30 different varieties. And so even something as simple as saying, hey, you're dairy-free, I'm going to choose you a soy yogurt. Well, there's like coconut yogurt, there's something else. All the flavors, not flavors. Are you a sugar, you know, low sugar versus... There's truly opportunities are endless for decision-making in grocery, and so that repetitive behavior in terms of what you're purchasing or the fact that school's out on Monday, you actually need more for this weekend because you've got a long weekend and maybe an 18-pack instead of a 12-pack of eggs. And so it's the combination of context plus individual that you have to sort of ingest that information to be able to be responsive. The other thing is, I like this example because it's sort of one that, you know, you make so much. It's like it's in your brain, which is you had guests over this weekend. So, yes, normally on Monday morning you order X, but it turns out if the assistant can know that you had a party, well, all of a sudden I'm going to have a different view of what's in your pantry, which you probably used all your ketchup and you probably used all your tobochico, and so maybe I'm going to double the order this week. And those are the kinds of things that, like, just have never been possible before. But if you're consistently ordering an Instacart, and I know that you ordered for a party, well, now I know that probably you depleted your pantry in a way that I can now predict better what, you know, you need to restock.

Can never have enough Topo Chico. And maybe this past week, I think it was yesterday, you announced a partnership with GPT. Sort of an integration into GPT. So this is sort of the other question around agentic. I do sort of always like to talk to the retail partners and the marketplace partners like yourself, how you're thinking philosophically about the disintermediation risk. How do you sort of philosophically ensure that it's not going to be a GPT grocery agent that's going to be reaching out to people on Saturday morning as opposed to an Instacart agent where you have subscription revenue and advertising revenue and all those other opportunities? So what are some of the key safeguards you have in place?

Yeah, sure. I mean, I think broadly when it comes to AI, our philosophy is to be wherever the customer is and to make the experience easy, adaptable, and personalized wherever you're going to shop. So we already talked about things we're going to do within the context of the Instacart app or Instacart.com. You'll see some of that also through our enterprise integrations and our ability to do that on behalf of our retail partners. But we also believe that customers will, to some extent, engage on exploratory grocery conversations through whether it's ChatGPT or other players that we'll also speak with. We want to, first and foremost, focus on customer engagement, customer behavior. Now, I do think that over time, you still have an advantage as the vertical player that has the billion and a half orders of historical data that has all of Brian's order history, all of the things we already talked about that make the very specific things that you need you. But when you're talking about the fact that the industry is 12% penetrated, the idea that you can address this much broader swath of customers that are maybe new to grocery, that are driving incremental orders, we certainly want to be there. So I think you'll see us be very adaptive to any sort of changes in consumer behavior and be right there for them. But we think we have a pretty special experience within Instacart because of that personalization.

Is there an overemphasis externally when you meet with investors or you meet with analysts like myself around basket size? I feel like we've gone through these iterations of one player is large basket, one player is small basket. Now they're sort of colliding. How do you think about the large versus small basket potential at Instacart? What are you seeing now, and does it even matter?

Yeah, it's a great question. so the reason basket sizes matter are just a question of we want to serve customers for their full set of grocery needs how do you assess whether we're we're doing that it might be basket size it might not but typically what we find is that in larger basket sizes and in two thirds of our orders we're seeing you purchase things like meat and produce which to us signal that this is actually your weekly shop if your order size is you know very low and it's more convenience-oriented orders, that suggests to us that we're capturing a sliver of your grocery spend and not actually the full basket. So what we look at is over time, and this has been consistent, that for the online grocery industry, 75% of the market has been and continues to be in large baskets. So if you're not addressing large basket, it suggests to me that you're not truly addressing the full TAM of what is possible with online grocery. Now, that said, our goal is to serve the full set of grocery needs of the customer, which means, based on that data point, I've got to be able to serve large baskets, but I also need to be there for you on Wednesday when you realize you're missing something and you need a fill-in order, or maybe you're traveling this week and you just need a smaller set of items for yourself. So we think about it really holistically about the customer, not about small versus large independently, but we have found that that trend of large baskets being a key component of the overall industry really hasn't changed.

Got it. What about partnerships? You have other customer acquisition and volume acquisition partnerships you've signed over the course of the years. Can you walk us through sort of where you've had success with those, and how do you think about further contributions from those third-party partnerships, traffic partnerships to come?

Sure. We have a variety of different types of partnerships, and I think they all have slightly different objectives. I think when it comes to, maybe I'll start with we did a partnership about a year and a half ago with Uber to bring restaurants to our ecosystem. That was an example of saying, hey, are there other things that we can bring for consumers that drive incremental engagement that ultimately bring you back to spend more on grocery? And I think that's important framing for people to understand that we are a grocery technology company. Grocery is our core business. It's what we do. It's what we focus on. It's also why we're very, very good at it. So when we think about a partnership like restaurants, it's not about building our own restaurants business. It's truly about how do I supplement and drive engagement back towards the core, which is grocery for us. Conversely, the partnership we recently did with Grubhub does the opposite of that, which is we are now available as the grocery provider on Grubhub. So Grubhub can do that for their customers, but that's a great channel for us to drive what otherwise might have been a Grubhub grocery. We can shift that and actually execute that on our behalf. And so those are two types of partnerships. I'd say maybe the third would be on, which is more sort of order-based, the third would be more around user acquisition. And you see us do that, and we'll continue to experiment with what types of partnerships drive, you know, first-time trying of Instacart, trying Instacart Plus. So those might be, you know, credit card-type partnerships that you've seen us do, and more to come. So, you know, partnerships, we found, we're actually quite good at them, so you'll see us continue to lean into it. But they're also hard to find exactly the right thing, so, you know, we'll continue to iterate.

I imagine the answer to this question is there's a lot of pieces that go into it, but maybe I can keep you away from that answer. Can you walk us through sort of how you think about the key drivers to user growth the next couple of years? What are going to be the key things that will bring on the next 3, 5, 10 million Instacart users and hopefully Instacart subscribers?

Yeah. Look, I think broadly there is a continuing trend in the environment outside of grocery, but just generally around convenience. And we've seen that even when customers are pinched in their wallet, they seem like they're continuing to spend on convenience-oriented items. So I think that's generally a positive for our industry and for Instacart. The second thing is around, you talked about user acquisition. I think for us, look, it's not that complicated, right? Acquiring a user is not that complicated, but you have to do it at the right price and you have to have a really great experience. A lot of our investment is around continuing to make that experience better. We talked about the four things that matter, selection, quality, affordability, convenience. I think quality is one I would talk about, whereas if you had tried Instacart three years ago or during the pandemic when the company was quadrupling and there were barely groceries on the shelves, maybe you didn't have the best experience. As we've invested in that and our fill rate has gone up by 15 percentage points over the last couple of years, these are meaningful strides. So if we can get you back into the ecosystem to try the experience again, the likelihood that you then stick with it and grow your spend over time is a lot higher. So we spend obviously on various forms of marketing. We spend to make that experience better to keep you there when you come back. and then as you said there's other various but no single partnership is really going to be the thing that drives the needle for us.

There's a lot of areas you're investing to improve the platform improve the courier experience the restaurant the eater experience talk to us about sort of the sources of efficiency you still have in the model maybe areas in which you still can improve productivity, new products you're rolling out with Gen.AI so what are sort of some of the levers they have on the other side to offset some of the investments?

Sure. I think there's probably two areas in terms of how I might think about this. There's the efficiency of the actual shopping experience, which is really important in terms of unit economics on a per order basis. And that is something that we've made a lot of progress in over the last couple of years, but I view as a place that we can continue to drive. Now, specifically what I mean by that is everything that makes it more efficient for the shopper to complete your order that could be the fact that order density actually drives this in the sense that 50% of over 50% of our orders the shopper is already at the store or within a mile of the store because of the density that we have that means when you think about the time it takes them to get there or stop stop start shopping is is really condensed there is many things we do in terms of quite literally getting them through the store whether that's integrating with the retailers plan a gram so we know where absolutely everything is. We have integrations with electronic shelf tags that light up the item in about 10% of our stores that we shop from, which means that rather than be searching for the shelves, you can really go grab that item right away. The replacements that we have to make sure that you can make a quick decision and you're not texting back and forth with the shopper really getting through the store. Now you layer on top of that batching of orders and that really accelerates this even more meaningfully. We've continued to improve our batch rate to the point where even our priority orders in 25% of cases are batched, which is something we couldn't have imagined a couple of years ago because we've gotten so good at it. So that's really within, you know, we're still at the top of the P&L and the transaction revenue line, but these are really important things that we can do because it frees up dollars to reinvest in things like pricing and other ways to engage the customer. So more to come on that, but that's been an important source of leverage for us. And then there's sort of everything else, where I think we've just been very cost conscious as we've been growing the business. We've been very disciplined about things like head count growth around all of our cost items. And you see us invest in areas, we will continue to invest in places where we see growth, like R&D, of course, AI solutions, things like that, we think are really, really exciting things that can drive incredible growth for us in the future. There are some places, though, where we're not looking to drive leverage. Sales and marketing has been one of those areas. That's a decision. But we are seeing great returns on the spend that we're driving in the market. And so not something I'm looking at this stage of the game, at this level of penetration, given where we are to pull back on. That all said, we've seen great leverage across non-GAAP OPEX over the last while. And I think that will continue. Obviously, we've talked about the pace of improvement moderating as we move forward because we're not in a rush, given the penetration of the market, to get to our long-term margin targets. I think we've made quite a lot of progress, and so we'll continue to improve profitability over time and march towards those targets, but we're not in a rush together.

Let me wrap up on capital allocation. That three key earnings, you authorized a billion and a half dollar repurchase program and I think a $250 million ASR accelerator program. It's a pretty meaningful percentage of the enterprise value or the market cap. So just sort of remind us, philosophically, how are you thinking about the timing of the repurchases, the focus on a share shrink and sort of a dilution? What is sort of the philosophy there?

Sure. It's truly opportunistic in nature. So if you think about just the history of our repurchase program, that's also been the case. I mean, if you look back at 24, we were very, very aggressive, in part because we had these moments of unlock around the post-IPO lockup period. We did some large private transactions. We had a chance to do another large private transaction in about August of 2024. And so we had these very unique opportunities to take advantage of what we viewed as a very dislocated price, and I think that's been proven out. And then we're continuing to be opportunistic in nature, which is why you see fluctuations quarter to quarter. I think what you saw us sort of say effectively through the relatively upsized authorization relative to what we've done in the past is we think that opportunity exists in spades today. And so I would expect us to continue to be opportunistic, but potentially more aggressive than we've been through the course of this year.

All right. Well, Emma, thank you so much. I can't wait to see the Cicard agent coming. I appreciate it.

Thank you.

Thank you so much.