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From The Information:

"Instacart has become an advertising powerhouse.

"The grocery-delivery firm’s ad revenue totaled about $740 million last year, up 30% from 2021, according to a person familiar with the matter. That’s a striking increase, given that the digital ad market was largely stagnant last year. Nearly 30% of Instacart’s 2022 revenue came from selling advertising rather than actually delivering groceries.

"Instacart’s ad revenue and its contribution to the top line haven’t previously been reported. The company’s success in building the ad business, which launched in 2019, should bolster its pitch to prospective investors as the company awaits an improvement in market conditions that would allow it to go public. Not only does advertising generate higher profits than grocery delivery, but the ad growth is offsetting a slowdown in Instacart’s core business."

KC's View:

It is remarkable that almost a third of Instacart's revenue is coming from something other than delivering groceries, which has been, after all, its core business.

The Information points out that there is a question about whether this business can continue to grow, but I tend to think that it will - not necessarily at the same rate, but steadily and organically, especially as Instacart cements retailer relationships over the long term.  The larger question is if it is possible that advertising could actually become its core business - dependent, of course, on the e-commerce sector but actually generating higher numbers and stronger margins.

It doesn't seem like such a stretch to me, especially if the e-commerce sector continues to grow.  Keep in mind that Walmart's e-commerce business was up 27 percent in Q1, which I think reflects continuing strength in that side of the business.  All of which is good for Instacart.