Instacart, the grocery delivery giant based in San Francisco, is chopping its workforce by laying off 250 employees, the company confirmed Tuesday. This move comes as the company tries to navigate a disappointing performance post-IPO, with shares lingering below their initial price since early October last year. According to Retail Dive, Instacart's CEO Fidji Simo said the company needs to streamline operations to "take on our most ambitious bets."
Despite a 6% rise in revenue to $803 million and a 7% bump in gross transaction value reaching around $7.9 billion, the company's trimming of its workforce reflects an adjustment in its quest for financial performance. This adjustment was detailed in a filing with the Securities and Exchange Commission, where it was indicated that most of the workers affected by the layoff would be out by the end of March. As per a SFGATE interview, Instacart plans to shift focus from minor product improvements to more lucrative areas like advertising collaborations and their "Connected Stores" initiative.
Adding another layer to its restructuring, Instacart announced alongside its job cuts the authorization of a $500 million share buyback. Simo highlighted in a letter to shareholders, quoted by SFGATE, that the buyback is a strong indicator of the company's strength and its belief in the "transformation of our company and industry over the long-term." The layoffs and company reshaping leaves Instacart with a slimmer management team and a more robust corps of individual contributors.
On top of the job cuts, Tuesday brought news of an executive shake-up at Instacart. The company is parting ways with three high-level executives including the role of the Chief Operating Officer, which is being eliminated. Asha Sharma, Instacart's COO, will make her exit on March 1, according to an SEC filing cited by Retail Dive. Also en route out are Varouj Chitilian, the CTO, and Chief Architect JJ Zhuang, both of whom were integral to the company's technology and engineering decisions. By cutting these roles, Instacart signals a significant shift in its approach to battling a tough market.
Instacart's headquarters will remain fixed in San Francisco's SoMa district, with no immediate plans to reduce its office space. This comes even as the tech sector has witnessed a spate of layoffs at the start of 2024, with big names like Snap and Paypal among those pruning their employee numbers. Instacart's moves reflect a broader trend of belt-tightening across the industry as companies recalibrate strategies amid fluctuating investor expectations.
