Maplebear Inc. (CART) Q2 2026 Earnings Call Transcript

Good day, and thank you for standing by. Welcome to the Instacart Second Quarter 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rebecca Yoshiyama, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and welcome, everyone, to Instacart's second quarter 2026 earnings call. On the call with me today are Chris Rogers, our Chief Executive Officer, and Emily Reuter, 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 most recently filed Form 10-K and Form 10-Q. 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. They 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 will turn the call over to Chris for his opening remarks.

Thanks, Rebecca. Good afternoon, everyone, and thanks for joining us. Our business is performing incredibly well. We have meaningfully accelerated our growth over the past three quarters, including a strong Q2 performance. We grew GTV 14% year-over-year. We also increased total revenue by 14%, driven by a stronger-than-expected advertising and other revenue performance, which grew 16% and again outpaced GTV growth. At the same time, we expanded Adjusted EBITDA and operating cash flow year-over-year, reflecting our continued focus on driving profitability while reinvesting for growth. These results reflect broad-based momentum across our business. We are continuing to improve the customer experience on our leading online grocery marketplace, accelerate adoption of our enterprise technologies with retailers, and expand the breadth and depth of our advertising ecosystem. That momentum is showing up in our customer base. Over the past three quarters, we have activated net new customers at our fastest year-over-year growth rates since 2022, helping drive strong monthly customer growth while we have continued to deepen customer engagement. With that, let me walk you through how we are executing across our growth engines, starting with our marketplace. Our fundamentals remain strong because we are relentlessly focused on delivering the best end-to-end grocery experience. One of our biggest advantages is our data. We completed more than 1.6 billion lifetime orders, built a catalog of over two billion products, and operate at a scale where our shopper network visits large-format stores an average of more than 15 times a day. Every day, we generate more than 10 million inventory signals that help us understand what is actually available on store shelves in real time. Every order placed, item picked, and substitution completed makes that understanding even stronger. That gives us a structural advantage that is incredibly difficult to replicate, and it allows us to build better grocery experiences with every order. We are using that advantage to continuously improve order quality, which we know is one of the most important drivers of repeat customer behavior. In Q2, we improved both our found rate and perfect order fill rate year-over-year for the 16th consecutive quarter, building on that momentum with new capabilities that make shopping more personalized and orders even more accurate. This quarter, we began testing personalized health tags and nutrition scores, which help customers discover products that better match their dietary preferences. Customers will start seeing simple indicators that identify products aligned with their nutritional preferences and make it easier to compare options while they shop. We are also making replacements more personalized with a new model that better incorporates customers' dietary preferences. So if a customer's preferred product is out of stock, we are much more likely to recommend a relevant replacement such as gluten-free, low-sugar, or allergen-free. Beyond improving today's customer experience, we are continuing to invest in what we believe is one of Instacart's biggest advantages, inventory intelligence. In July, we acquired Arpalus, whose computer vision technology turns a quick video scan into a highly accurate view of what is actually on the shelf. By combining Arpalus's technology with our operating model and network of approximately 600 thousand shoppers, we expect to drive additional fulfillment efficiency, enable more relevant AI-powered shopping experiences, and further strengthen our inventory intelligence. Our data advantage is helping us build the gold standard in agentic grocery shopping. Our AI assistant does not simply recommend recipes or generic product pairings. It understands the customer's preferences, recent purchase history, what is actually available at nearby stores, and current promotions. It then turns those insights into an order that is ready to be placed and delivered in as fast as an hour. Customers are already using our AI system to quickly restock their essentials, find deals and discounts, order ingredients from recipe suggestions, discover new products, and plan meals. Orders placed with our AI system are, on average, larger than our typical basket, and that is especially notable given our industry-leading average order value of $115. We are excited to build on this momentum and launch our AI assistant across our marketplace in North America over the next several weeks. We remain focused on affordability, which we know is one of our biggest opportunities to accelerate online grocery adoption. Retailers that offer no markups on item prices continue to drive faster growth and stronger customer retention. Instacart already has more retailers offering online grocery delivery with no markups than any other third-party marketplace in North America, and we are continuing to extend that advantage. Grocery Outlet is eliminating markups nationwide across our marketplace, alongside regional favorites like Strack & Van Til and Super King markets. New partners, including Ace Hardware, Calgary Co-op, Tractor Supply Company, and World Market, are also launching with no markups right out of the gate. The same scale and innovation that powers our marketplace also makes us a trusted technology partner for retailers' owned-and-operated channels. Retailers increasingly choose Instacart because we have already solved the hardest problems in online grocery. We bring those capabilities together in one connected platform spanning e-commerce, fulfillment, in-store, retail media, and AI, while keeping retailers' brands, customer relationships, and data their own. Our enterprise platform continues to be led by our e-commerce storefront solution, which powers more than 380 grocery sites and helps retailers drive incremental growth and stronger customer engagement. Recently, we launched Storefront Pro with new partners like Calgary Co-op and Dierbergs, and all these Q1 launches on Storefront Pro in the U.S. are already performing ahead of our expectations. We are bringing that same innovation into retailers' physical stores, where most grocery shopping still happens. Caper, our AI-powered smart cart, continues to scale with both new and existing partners including Weis Markets and Wegmans in the U.S., and now Morrisons in the U.K. We are also seeing strong momentum with FoodStorm, our order management system for retailers' catering, prepared foods, deli, and bakery departments. These perimeter sales are an important source of customer loyalty and they drive high-margin revenue for retailers. Recently, Costco launched FoodStorm-powered online ordering and delivery for custom cakes and party platters nationwide, digitizing an experience that was previously available only in the warehouse. We also signed Big Y for a chain-wide rollout of online catering and in-store shelf ordering kiosks, while Sprouts is expected to launch in-store kiosks across its California locations later this year. As part of our enterprise offering, we are taking the AI technology that we have built on our marketplace and offering it to retailers. In Q2, we signed new AI solution partners, including Stew Leonard's, The Save Mart Companies, and Woodman's. Each signed for Agentic Analytics, our solution that transforms a retailer's own data into instant actionable insights. These three retailers, in addition to Harmon's, also signed for our white-label AI assistant. We are also expanding our enterprise platform internationally beyond North America. Earlier this year, we launched Storefront Pro with Costco in France and Spain, which continues to perform well. Instaleap, which we acquired in Q2, is expanding our international reach and recently signed a new picking technology partnership with Morrisons, one of the United Kingdom's largest supermarket chains. All of this growth across marketplace and enterprise strengthens our advertising and data offering. Our strategy to diversify both supply and demand across our ecosystem continues to gain momentum. In Q2, advertising and other revenue grew 16% year-over-year, once again outpacing GTV growth. Our marketplace and network of Carrot Ads partners continue to grow as more e-commerce platforms turn to Instacart to power their retail media. This gives brands a simpler way to reach high-intent grocery customers across more retailers at a time when they are looking to manage fewer retail media networks. That attracts more brands to Instacart, encourages existing partners to invest more, and creates a stronger, more resilient advertising ecosystem. We continue to add new optimization tools to help advertisers achieve more of their goals. We recently rolled out AI-powered recommendations and Ad Manager to all advertisers, helping them improve performance through campaign and creative recommendations. In Q2, we began testing our Grow objective, which helps brands increase customer lifetime value by driving more repeat purchases, and we expanded our Acquire objective to display ads, helping brands reach more new customers. We are also introducing new ad formats that give brands more ways to engage customers. Our new Immersive Feed brings the kind of recipe and meal inspiration customers already enjoy on other platforms to Instacart in a shoppable vertical video format that helps brands drive discovery, engagement, and incremental reach. Finally, we are extending the value of Instacart's first-party data beyond our own platform. Brands increasingly want to use our insights wherever they already buy media, and our collaboration with Pinterest is a great example. In Q2, we made our Pinterest self-service offering available to all CPG partners, allowing advertisers to use Instacart audiences and closed-loop measurement for campaigns that they buy through Pinterest. Overall, we are excited by the momentum that we are driving across our business. As the leading grocery technology platform in a massive and still underpenetrated category, we continue to see a tremendous opportunity to attract more customers, retailers, brands, and shoppers to Instacart. Customers come to us for a shopping experience that continues to get better through more selection, quality, affordability, and convenience. Retailers choose us for a technology that helps them grow on Instacart and on their own digital channels and in their stores. Brands value our scaled full-funnel advertising ecosystem that delivers measurable results. And shoppers turn to Instacart for flexible earning opportunities. Each part of our platform strengthens the others. That is what makes Instacart unique, and it is what gives us further confidence in our ability to drive durable, profitable growth over the long term. With that, I will turn it over to Emily to walk through the financials.

Thank you, Chris. Hello, everyone. We delivered strong Q2 results reflecting broad-based strength across our platform and our operating model. In Q2, GTV was $10.35 billion, up 14% year-over-year, primarily driven by orders of 90.3 million, up 9% year-over-year. As expected, GTV growth outpaced orders growth, with orders growth performing in line with our expectations, primarily driven by growth in monthly customers. Average order value of $115 was up 4% 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 $746 million, up 13% year-over-year, representing 7.2% of GTV compared to 7.3% in Q2 2025. The slight year-over-year decrease as a percent of GTV was primarily driven by lower payment revenue, offset by an increase in fulfillment efficiency. As a reminder, because we manage multiple levers across our P&L, we expect that transaction revenue as a percent of GTV may fluctuate from quarter to quarter. Advertising and other revenue was $297 million, up 16% year-over-year, outpacing GTV growth and driving our advertising and other investment rate to 2.9%, up from 2.8% in Q2 2025. This outperformance in Q2 was driven by broad-based strength across large, mid-market, and emerging brands and was especially pronounced towards the end of the quarter alongside the World Cup. Total revenue was $1.04 billion, up 14% year-over-year, primarily driven by GTV growth. GAAP gross profit was $751 million, up 11% year-over-year, representing 7.3% of GTV compared to 7.5% in Q2 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 had scaled as we expanded certain 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 $608 million, representing 5.9% of GTV, compared to 6.1% of GTV in Q2 2025. Adjusted total operating expenses, which exclude the impact of stock-based compensation expense and certain other expenses, were $468 million and represented 4.5% of GTV compared to 4.8% of GTV in Q2 2025. The year-over-year improvement in both GAAP and adjusted total operating expenses reflects our continued focus on driving efficiencies while reinvesting in growth initiatives. GAAP net income was $111 million, down 4% year-over-year. This was primarily driven by an increase in stock-based compensation reflecting the year-over-year impact of shifting our first quarterly vesting date for our annual equity refresh grants from August to May. Adjusted EBITDA was $313 million, up 19% year-over-year. We also generated operating cash flow of $493 million, up 143% year-over-year, and free cash flow of $480 million, up 156% year-over-year, primarily driven by a large accounts receivable balance collected in Q2 2026, as well as higher receivables outstanding in the prior year period. In Q2, we repurchased $325 million of shares and ended the quarter with $998 million of remaining buyback capacity. We remain well on track to return the majority of free cash flow via repurchases this year, and closed Q2 with $1 billion in cash and similar assets. Now, on to our Q3 outlook. I want to start with a few points to keep in mind when it comes to our updated GTV and Adjusted EBITDA guidance philosophy. First, our guidance continues to reflect the most up-to-date data available at the time we report earnings. That has not changed, neither has how we run the business. Second, starting with our Q3 2026 outlook, we have widened our GTV and Adjusted EBITDA guidance ranges to reflect our increased operating scale. Third, while we have beaten the high end of our guidance ranges in the past, going forward, we expect to land within the GTV and Adjusted EBITDA guidance ranges we provide, with the midpoint being our best estimate of where we expect to land. With that in mind for Q3 2026, we anticipate GTV of $10.3 billion to $10.55 billion, representing $10.425 billion and year-over-year growth of 14% at the midpoint. We continue to expect GTV to outpace orders growth. We also anticipate Adjusted EBITDA of $320 million to $340 million, representing $330 million and year-over-year growth of 19% at the midpoint. For advertising and other revenue, in Q3, we expect to grow 15% to 18% year-over-year, once again outpacing our anticipated GTV growth and reflecting broad-based strength across our ads ecosystem. For the full year, we continue to expect Adjusted EBITDA to grow faster than GTV year-over-year, while moderating its 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 Q2 results and are building on the momentum as we enter Q3. Our operating fundamentals are strong, and we are well-positioned to continue driving long-term profitable growth and shareholder value. With that, we will open up the call for live questions. Operator, you may begin.

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. In the interest of time, we do kindly ask that you please limit yourself to one question at this time. Our first question will come from Nikhil Devnani from Bernstein. Your line is open.

Hi there. Thank you for taking the question. I wanted to ask about GTV growth. You grew about 14% in Q2, and at the upper end of your guidance ranges it points to a little bit of acceleration potential for the business. Would love to hear what you are seeing in terms of the underlying drivers of this momentum, what is getting better, and then as you step back, given we really seem to be at a moment for grocery e-commerce adoption, how durable do you think this general trend of acceleration and strength can be as you look out over a multi-quarter period? Thank you.

Hi, Nikhil, it's Chris. Thanks for the question. Let me unpack our growth drivers and the strength that we are seeing, and that should help illustrate why I am so confident in our ability to drive durable, profitable growth into the future. As I said in my opening statement, our business is performing incredibly well. We have meaningfully accelerated our growth over the past three quarters, including in Q2 with 14% GTV growth. We keep delivering quarter after quarter and are executing very well. We are seeing ongoing strength across marketplace and enterprise. What is driving that is straightforward: we are attracting more customers and giving them more reasons to come back to Instacart. Over the past three quarters, we have activated net new customers at our fastest year-over-year growth rate since 2022, and that is helping us drive strong monthly customer growth while we continue to deepen customer engagement. Our marketplace fundamentals are very strong. It is clear that data is one of our biggest advantages, and we are using that advantage to make our core grocery experience better every single quarter, whether that is with order accuracy, personalization, affordability, or new agentic shopping experiences. AI is already helping to improve the customer experience. All of that innovation and technology extends to our enterprise platform where retailers are choosing Instacart for our purpose-built grocery technology. So as I mentioned, we launched Storefront Pro with Calgary Co-op and Dierbergs. Aldi in the U.S. is already exceeding our expectations following the launch last quarter. We are signing more retailers for AI solutions, including Save Mart, Stew Leonard's, and Woodman's, for Agentic Analytics and for our white-label AI assistant. When you take a step back, we are very pleased with the momentum that we are seeing across the platform, and we believe that we are positioned very well for Q3, where we have guided to 14% growth at the midpoint. Thank you.

Our next question will come from Eric Sheridan from Goldman Sachs. Your line is open.

Maybe coming back to your remarks on the enterprise, Chris, if you could just go a little bit deeper on how the enterprise offering is changing the nature of your relationship with the industry broadly, what do you think that means for both the supply side and growing a wide array of supply in the next couple of years? And how do you also think about the extension of the enterprise strategy leading to more monetization from the industry as well? Thanks so much.

Yes, thanks, Eric. I will start with the enterprise strategy and what we are building, and then Emily can jump in on the margin side. Overall, we continue to believe enterprise is playing a highly strategic role for us with retailers and in our ability to deliver the best customer experience across multiple surfaces. There are a few reasons why enterprise is such a differentiator for us. First, enterprise is enabling much deeper retail relationships where we are truly partnering and innovating together with retailers. We are engaging in short- and long-term planning and developing joint road maps. These relationships are ultimately unlocking a far superior customer experience across retailers' owned-and-operated websites as well as on our marketplace because of the collaboration and the depth of technical integrations that would not have existed otherwise. For us, enterprise is driving overall efficiency across the platform. We are able to extend marketplace innovation to our enterprise clients, and that is lowering our cost to serve because of the shared infrastructure. It is also allowing us to reinvest back into shared technology that benefits both of us. And, of course, the enterprise business comes with increased order volume and increased density, which also helps us on the cost side. So enterprise is a very exciting growth factor for us, but it is also highly strategic and part of the bigger picture of what we are building.

Hey, Eric. Thanks for the question. As it relates to monetization of enterprise, the way we think about it is that we have a broad portfolio of products and services that really work together when it comes to our retailer relationships and then ultimately drive revenue and profit for us. On the GTV side, marketplace and enterprise businesses really reinforce each other. We have talked about this in the past where marketplace technology extends to enterprise, which also enables us to scale fulfillment costs, which obviously benefits both sides of the ecosystem. Then you layer things like ads on top of that, and it scales across both sides of our business. As marketplace and enterprise grow, so does our ability to monetize through advertising. The more services we add, like Carrot Ads, the more supply we create and that creates more demand from the brands that we serve. That interdependence is really important to think about. Over the long term, we also plan to continue expanding our portfolio of products. That is where you think about elements Chris touched on earlier like FoodStorm, expanding into the perimeter of retailers, and AI solutions, which are early but starting to gain traction with a number of major retailers. So hopefully that gives a sense for how we think about long-term monetization of enterprise. Thank you.

Our next question comes from Bernie McTernan from BMO Capital Markets. Your line is open.

Thanks. You became Google's first grocery partner for Gemini integration and AI mode shopping functionality. How should we think about the strategic and financial implications of this partnership, including customer acquisition, engagement, and potential monetization opportunities? Thanks.

Yeah, thanks, Bernie. Our strategy when it comes to third-party platforms like Gemini is to be wherever customers want to shop while continuing to build the very best AI grocery experience directly on Instacart. It is very early on what you are citing with Gemini, but we view it as an incremental demand channel in a very large and underpenetrated category. We think there is potential for these types of integrations to grow the category over time. By co-creating the grocery experience with partners like OpenAI, Anthropic, and Gemini, we are giving customers more ways to discover and shop on Instacart, which we believe can help accelerate adoption over the short and long term. So that is how we are thinking about the partnership: as a demand generation channel in the short and long term. There is nothing material to speak of in the short term, but we are watching these channels closely. Thank you.

Our next question comes from Colin Sebastian from Baird. Your line is open.

Thanks. Good afternoon. Chris, maybe a follow-up on enterprise. I am curious if increasing digital competition in the grocery sector is having an impact on your pipeline there. And relatedly, how the international enterprise adoption is tracking against expectations? And then, Emily, on the widened guidance range, I just want to make sure I understand: is that added conservatism, is that higher variability, or a shift in how you want the Street to interpret guidance? Thanks.

Thanks, Colin. On the first part, increased digital-first competition is helping to rally retailers around North America and around the world to continue to invest in their own capabilities. At this point, high-quality e-commerce with a high-quality customer service element is table stakes for retailers and it is a complex thing to build on your own. Many retailers are turning to us, and that is why you are seeing traction. Internationally, I continue to be very encouraged by the opportunity to bring that same tech to retailers outside of North America. This is still early days, but we do believe international represents an exciting long-term growth opportunity for us. On one hand, we are ambitious in our plans; on the other hand, we are approaching that opportunity with discipline. We are leading with our enterprise suite and deploying products that have already been proven with retailers in North America. We are not building net-new, highly custom solutions for retailers in new markets. We are deploying solutions like Storefront Pro, our Caper carts, and FoodStorm to address the common challenges across grocery retailers. That gives us high confidence that our tech will translate well internationally as we move into those markets.

Great, and on the guidance range, I think this is fairly straightforward. Our scale has increased meaningfully since we went public, and when we think about the range on a percentage basis and look at our peers, we had outgrown the range that we came public with several years ago. So it was an opportunity to resize the range relative to our current operating scale. At the same time, we revisited our guidance philosophy. While we have beaten the high end of the range in the past, going forward, our expectation is to land within the range with the midpoint as our best estimate. As always, our guidance reflects everything we are seeing in the market to date and is our best understanding of how we think we can land the quarter. Thank you.

Our next question comes from Jason Helfstein from Oppenheimer. Your line is open.

Thanks. Sorry to harp on Enterprise, but I think that is something we are all pretty excited about. When you think about enterprise revenue plus advertising as a bucket, do you think over time, because you have not quantified that within transactions, that could become the majority of the business? Ultimately, we look at this as more of a platform play where people initially looked at the business more on the shopper side. Second, any help, Emily, on how we should think of advertising as a percent of GTV next year? It has been pretty consistent — could we actually start to see a breakout as a percent of GTV? Thanks.

Thanks, Jason. I will take the first part. As we have said in the past, we operate both our marketplace and our enterprise as one fully integrated platform. Both marketplace and enterprise are growing and generating profit dollars for us. Importantly, as Emily said earlier, they reinforce each other in many ways. Each retailer that sits on both marketplace and enterprise is unique in their offerings and the tools they use from Instacart, so we look at everything holistically. The success of our enterprise strategy shows up across our total company reported metrics. There is a clear value loop: we take the technology we build on marketplace and put it in the hands of retailers through our enterprise offering. Our deep enterprise relationships allow us to launch more services and integrations for retailers that benefit us back on marketplace. Having both marketplace and enterprise platforms allows us to reach more customers, gain order density benefits, and realize greater shopping efficiencies. Advertising allows CPGs to reach customers on both marketplace and a retailer's storefront, so all of these pieces are highly intertwined. Because we manage this as one integrated portfolio, we can balance investments, lean into the highest ROI opportunities, and reinvest efficiencies back into the platform, all of which supports our commitment to drive overall growth and profitability progression.

On the ads question, we appreciate the recognition of the strength we've been seeing. It is really nice to see acceleration in that business and broad-based strength across large, midsize, and emerging brands. We feel very good about what we are seeing and are pleased to have guided to 15% to 18% ads and other growth into Q3, reflecting continued underlying strength. We do not guide beyond the next quarter, but we have committed to long-term target ranges that imply continued ads and other growth that is higher than GTV growth over time. It is not necessarily always linear; there can be short-term puts and takes. But our expectation and ambition is to grow ads and other faster than GTV, and we are seeing the results of the strategy we've discussed: extending the platform beyond marketplace, growing our advertiser base, increasing performance, enhancing measurement — all working well together. Thank you.

Our next question will come from Deepak Mathivanan from Cantor Fitzgerald. Your line is open.

Great. Thanks for taking the question. You talked about the adoption of the AI shopping assistant. Can you talk about adoption, the use cases, how you are driving customers to use the experience, and what benefits you are seeing on the KPIs? Then, Emily, AOVs have basically reached the level they were before you launched restaurants on the platform and the small-basket orders. Can you give some color on the underlying trends on AOV? That would be helpful. Thanks so much.

Thanks, Deepak. Happy to talk about our AI assistant. We have been very pleased with the pilot, and as I mentioned, we plan to launch our AI assistant across North America over the next several weeks. Success is driven by our data advantage and what we have been able to create as a result. Our AI assistant does not just recommend generic recipes or pairings; it understands a customer's preferences, recent purchase history, what is actually available at a nearby store, and current promotions, and it turns all of that into an order that is ready to be placed and delivered in an hour. That capability is built on our rich data: 1.6 billion lifetime orders, a two-billion-item product catalog, and a shopper network in physical stores giving us real-time signals of what is on the shelf. That combination differentiates the AI assistant we have built. From a customer engagement perspective, customers are using it to build weekly carts, discover new products, and plan meals. For example, a customer might ask, "Plan four weeknight dinners my kids will eat for under $150," and we build a real shoppable cart using in-stock items at the customer's favorite retailer. Or they might say, "Rebuild last week's order, but swap in something for taco night," and we'll combine their purchase history while introducing fresh discovery ideas for that meal. Orders placed with our AI assistant are on average larger than our typical basket, which is notable because our AOV is already $115. We are very happy with how this is progressing and feel well-positioned to deliver a high-quality agentic experience for our customers.

On AOV, first, it's important to acknowledge the strength of AOV. We have consistently had high AOVs, reflecting our strategy to serve the full weekly shop use case, which differentiates us from others in the market that serve more of a fill-in use case. When we introduced restaurants with a $10 minimum over the last two years, we called that out as a short-term headwind to AOV, but we have now lapped that headwind. In terms of drivers of AOV strength today, there are a few things. One is deepening engagement: as customers spend more time on Instacart, they tend to spend more over time. We continue to see outperformance from club retailers, which typically have larger AOVs, and we do particularly well there. We also have growth from our high-AOV business customers, including recent launches like Restaurant Depot. Overall, we're seeing strength from returning to our core, which is meeting more of our customers' grocery needs.

Our next question will come from Josh Beck from Raymond James. Your line is open.

Yes. Thank you for taking the question. I wanted to go back to the assistant learning. Basket size has been an early standout. I'm curious — maybe you need more data to see this — but how are you thinking about frequency and conversion? Some of these shopping experiences can compress behavior. How are you thinking about that? Then, with respect to advertising within the assistant experience, the blog read like there are not necessarily a lot of ads yet, but you are experimenting with formats like sponsored recipes. How do you think about ad monetization for the cart assistant versus the non-assistant experience? Thank you.

Thanks, Josh. I will start on the metrics we are seeing. We believe AI will be a meaningful growth driver for us and for the category over time. Grocery shopping is uniquely complex, time-consuming, and deeply personal, shaped by individual dietary needs. Our AI assistant delivers an agentic experience intended to remove that friction, making shopping more personalized and intuitive, whether customers are reordering staples or planning family meals. We have an advantage because of our data and retailer integrations: proprietary data from 1.6 billion orders, our fulfillment network, and enterprise integrations. That combination allows us to move from front-end AI experiences to actually completing the order at scale, which is difficult to do. I expect AI to drive better conversion, higher retention, larger baskets, and more frequent ordering over time. On ads, we are heavily embracing AI throughout our ads offering. It is core to our advertising innovation. We have rolled out AI-powered features and tools for advertisers that drive better results while improving the customer experience. Examples include AI-powered recommendations in Ad Manager that identify ways to improve campaign performance, flag products with missing images to improve the consumer experience, recommend brand hierarchy for better reporting, and suggest ROAS optimization. Earlier this year, we launched a generative recommendations model that uses real-time context to better understand consumer intent. For instance, adding milk to your cart might previously recommend cookies or cereal, but now, if you also have flour and eggs, we infer a baking occasion and recommend vanilla or cinnamon, which drives higher engagement and better advertising results. We are also using machine learning for specific advertiser outcomes, such as testing a Grow objective to increase repeat purchases and expanding the Acquire objective to display ads to reach new customers. AI is woven throughout the entire ads experience and we expect it to remain a durable source of advertising innovation going forward.

Our next question will come from Shweta Khajuria from Wolfe Research. Your line is open.

Thanks for taking my questions. Two please. First, on enterprise and international markets, could you talk about how international conversations differ as you try to expand enterprise in those regions versus what you have seen in the U.S., and to the degree the level of investment you may need now that you have spent more time over the past few quarters? Second, on price parity, where are you with price parity today versus some competitors, and is that going to be a differentiating factor over the next three to six quarters? Is that going to be an expectation? Thank you.

Thanks. On international, the conversations are surprisingly similar to those we have in North America because retailers are trying to solve the same problems: how to scale an e-commerce platform, how to fulfill at scale, how to provide rich recommendations, and how to manage cart and checkout. Retailers want an end-to-end experience that works together. The solutions we've built in North America are highly applicable around the world. Our Instaleap acquisition gives us more reach in international markets and addresses some problems unique to those markets, like serving multiple marketplaces with fulfillment technology. We are leaning into expanding those conversations and are already seeing positive signals: Storefront Pro launches with Costco in France and Spain have performed ahead of expectations, reinforcing our confidence in the strategy. It's early, but we like the progress and believe our enterprise-first approach sets us up well to expand internationally. On price parity, retailers set item-level prices on our marketplace and on their owned-and-operated sites that we power. Some retailers choose to mark up prices to help offset fees we charge; some choose not to. We see customers seeking value and gravitating toward retailers who do not mark up. Data we've shared shows non-markup retailers grow more than 10 points faster on average and retain customers better. Eliminating markups is a clear mechanism for retailers to drive incremental sales, especially when competing for share of sales against large digital-first retailers. Our approach is to work closely with retail partners so they understand the data and the business case, but the cost to move to non-markup is theirs to bear. As I mentioned earlier, we already have more retailers that do not mark up relative to other third-party marketplaces, so we are a leader in this space.

Our next question will come from Andrew Boone from Citizens. Your line is open.

Chris, you mentioned the fastest new customer adds you've seen. Can you unpack that? What are you doing differently that is converting better? And on the Arpalus acquisition, can you help us understand the benefit of having better in-store data? What does that unlock for monetization or operations? Thank you.

Thanks for the question. On new customer acquisition, this is the result of prioritizing the things that matter to customers: personalization so customers feel we know them and can anticipate their needs, including health and nutrition tags; a high-quality agentic experience that understands shopping intent and helps build baskets and plan meals; continuous improvement in order quality, with 16 consecutive quarters of improvement in both found rate and perfect order fill rate, which earns customers' trust; and prioritizing affordability through loyalty programs, weekly deals, and working with retailers to reduce markups. Combining these investments with our position as a category leader in an underpenetrated market gives us confidence in attracting customers to our platform. On Arpalus, it exemplifies our M&A philosophy: buy technology that complements our strategy and accelerates time to market. Arpalus' computer vision directly supports our priority of delivering the highest-quality grocery experience. By putting this technology in the hands of our more than 600 thousand shoppers, we get better tools to identify products on the actual shelf, which will improve fulfillment accuracy, drive fulfillment efficiency, enable more relevant AI-powered shopping experiences, and further strengthen our inventory intelligence. This is important for the platform and the customer experience we deliver.

Our next question comes from Bernie McTernan from Needham & Company. Your line is open.

Great. Good afternoon. Thanks for taking the question. Could you shed some light on the Instaleap part in the U.K.? It sounded like there was some picking and delivery aspect to the partnership with Morrisons, which I think could be a major unlock. Is that a blueprint you can bring to other markets to address enterprise challenges? Thank you.

Great question, Bernie. We are very excited about the Instaleap and Morrisons partnership in the U.K. It is picking technology, and it offers capabilities slightly different from our first-party offering. It allows retailers to orchestrate deliveries across multiple platforms, which was something Morrisons wanted. It is strong picking technology for the retailer, and we increasingly think this is something we can scale in more markets. The Instaleap acquisition helps expand our global footprint because they already work with many retailers, and the technology is resonating with retailers they were not working with before. That gives us additional excitement about the acquisition and the potential to scale similar solutions in other markets.

Our next question comes from Michael Morton from MoffettNathanson. Your line is open.

Hi, good evening. I was wondering if we could get an update on the breakdown of priority orders versus standard orders and the 30-minute window. Consumers continually demand increased delivery speed, and that seems to play to your advantage. Also, given Amazon's limited SKU offering due to its first-party model, could you share any data on your average shoppers' long-tail distribution of inventory needs? Why does a consumer need the wider selection a marketplace grocery offers versus a first-party offering like Amazon? Thank you.

I will start with priority orders. We have not updated a specific percentage breakdown recently because these are decisions we make to optimize the overall marketplace balance. Over time, we have adjusted pricing on priority to find a healthy equilibrium for the ecosystem. We're trying to balance all parts of the marketplace rather than push priority to an extreme that would undermine the product. We are constantly working on speed as a core value proposition, but it is one part of a mix that includes selection and quality. Our standard ETAs have also improved along with priority, so it's a composition of factors. Regarding selection, it is the combination of speed with the ability to execute an order in the timeframe customers want while offering everything they are looking for. Customers have strong opinions about brands, dietary needs, and preferences, which is why stores carry a wide variety of SKUs. In our data, on average, customers shop at more than five retailers over their lifetime, and Instacart Plus members shop at more than double that, reflecting a desire for the full inventory of options that a marketplace ecosystem provides. Selection drives demand when you can serve it in the timeframe customers need, which is often immediate or as soon as possible thereafter. Thank you.

Our next question comes from Igal Arounian from Wedbush. Your line is open.

I wanted to ask what you are seeing outside of core grocery, within restaurants, retail Express, and similar areas. What are the trends there? And given your M&A activity, any more color on the approach and capital allocation? How important does M&A remain, and can we expect more? Thanks.

Thanks for the question. On restaurants, our thesis for adding restaurants to the platform has played out well. By adding a high-frequency use case, we have been able to drive stronger grocery engagement. Customers who have ordered from restaurants have ordered more groceries. This strategy layers on top of our marketplace foundation, enabling us to optimize marketing and engagement to drive customers to the best use case at any given time, whether grocery, other retail categories, or restaurants. This ability to cater marketing and engagement strategies accordingly drives durable long-term engagement. On capital allocation, our framework is consistent: invest in the business first, maintain firepower for M&A, then opportunistically repurchase shares. Our recent acquisitions — Instaleap and Arpalus — fit our approach of buying technology that makes sense to buy versus build and accelerates time to market. Instaleap expands our international reach and picking capabilities; Arpalus strengthens inventory intelligence. On buybacks, Emily can provide more specifics.

We have continued our buyback strategy consistent with what we've shared previously. In Q2, we repurchased $325 million of shares, which reflects our continued confidence in the business. We remain well on track to return the majority of free cash flow via repurchases this year. We ended the quarter with just under $1 billion of remaining buyback capacity, so I expect buybacks to continue to be an important part of our overall capital allocation strategy.

And we will take our last question for today from Ronald Josey from Citi. Your line is open.

Thanks for sticking me in here. Two quick questions. One, on the demand side, Emily, I think club has been a driver of AOV for several quarters now — can you help us understand why? And Chris, on the data side, given two billion products and tens of millions of inventory signals, how do your grocer partners view Instacart from a differentiation perspective relative to others, given your size and scale? How do they think about your data advantage? Thank you.

I can start on the demand side. The AOV strength driven by club retailers has a couple of components. Consumers are seeking value, and club retailers perform well in that environment both online and offline. Customers look for value; that is reflected in strong club performance across the ecosystem. Regarding Costco specifically, our relationship and benefits we launched for executive members coming up on a year ago have been successful and have driven strength. Club retailers tend to sell larger pack sizes and higher-ticket items, so it's in the nature of those retailers to have higher AOVs. We continue to see strength in that part of the business.

On the data advantage, retailers think of us differently because we're playing a fundamentally different game. We take the innovation we build on marketplace and apply it to enterprise technology for retailers, powering their e-commerce and fulfillment, ad tech stacks, and often extending ad demand onto their websites. We're now offering AI solutions, white-labeling our AI assistant, and building AI analytics for retailers. That creates holistic partnerships where we deeply integrate, plan jointly for the short and long term, and innovate across both marketplace and owned-and-operated experiences. No other third-party marketplace is building this level of integrated, enterprise-grade grocery technology and translating marketplace learnings into retailer solutions at this scale. That is what differentiates us in the eyes of our retail partners.

This does conclude today's program. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.