By Niket Nishant
(Reuters) -Grocery delivery app Instacart on Friday revealed a 31% jump in revenue for the first half of 2023, inching closer to a much-anticipated initial public offering in what is shaping up to be a busy spell for new listings.
The development comes days after SoftBank Group-backed chip designer Arm Holdings made public its IPO filing. Both the companies are expected to be a litmus test of investors' appetite for IPOs, and could encourage other startups to list their shares.
"We are in a bit of a holding pattern right now given the recent pullback in the broader markets, the traditional end-of-summer deal hiatus, and the considerable attention being paid to the large IPOs expected in September," said Mark Schwartz, IPO and SPAC (special purpose acquisition company) advisory leader at EY.
"Issuers that are considering the Fall IPO on-ramp will be monitoring the reception of these larger deals, as well as the general market tone and emerging economic data, to make their go/no-go decisions."
If successful, listings by Arm, Instacart and Klaviyo, which also disclosed its IPO paperwork on Friday, could revitalize the U.S. IPO market, which has already seen some green shoots this year on bets that the Fed could guide the economy to a "soft landing."
Excluding special purpose acquisition companies (SPACs), $10.3 billion has been raised via 77 IPOs so far this year, nearly double the amount in the same period in 2022, according to data from Dealogic.
"I think we're going to see more companies kick off their (IPO) process in 2024, which is when a healthy IPO market will return," said Mike Bellin, IPO services leader at PricewaterhouseCoopers U.S.
Instacart's public filing comes 15 months after the San Francisco-based company submitted its IPO paperwork confidentially, a move that is typically a precursor to an imminent listing.
It had earlier aimed to list in the fourth quarter of last year, but deferred its plans as a sell-off in technology stocks and the Fed's relentless rate hikes led to a rout in equities.
Instacart said its revenue had surged to $1.48 billion in the six months ended June 30, compared with $1.13 billion in the same period last year.
The fact that the company is churning a profit could also help it find favor among picky IPO investors, who since last year have been preferring profitable firms over ambitious but loss-making startups.
Net income was $242 million during the six-month period, compared to a $74 million loss a year earlier, Instacart said.
Goldman Sachs and J.P.Morgan are the lead underwriters for the offering, Instacart said, adding that its shares would be listed on the Nasdaq under the symbol "CART."
Founded in 2012, Instacart is led by Fidji Simo, who was previously head of the Facebook app. The company operates in the United States and Canada.
Customers can order through the Instacart app, and an Instacart "shopper" delivers the product in as little as 30 minutes.
The company has also expanded its delivery business to non-grocery goods such as those from beauty product retailer Sephora, convenience store 7-Eleven and pharmacy chain CVS Health.
According to data by Euromonitor, online grocery was set to be the largest source of growth for food and beverages in the United States in the coming years, adding nearly $100 billion in sales by 2027.
LONG ROAD TO IPO
Instacart's tortuous path to a Nasdaq listing saw the company reportedly cut its internal valuation to as low as $10 billion in December 2022, 74% lesser than the $39 billion price tag it fetched in its last funding round more than two years ago.
Later, the company in April hiked its valuation by 18%, according to a report.
Instacart had considered a direct listing, sources told Reuters earlier. Unlike in an IPO, no shares are sold in advance in a direct listing and investors can sell their shares directly to the public.
In March 2021, the company brought on Snowflake CEO Frank Slootman, a software industry veteran behind some big IPOs, on its board.
The company filed for the IPO as "Maplebear," the name under which it was incorporated.
(Reporting by Niket Nishant in Bengaluru; Additional reporting by Savyata Mishra; Editing by Shilpi Majumdar, Shinjini Ganguli and Maju Samuel)
