Online grocery delivery platform Instacart (NASDAQ: CART) announced better-than-expected revenue in Q4 CY2025, with sales up 12.3% year on year to $992 million. Its GAAP profit of $0.30 per share was 41.3% below analysts’ consensus estimates.

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Company Overview

Powering more than one billion grocery orders since its founding, Instacart (NASDAQ: CART) is an online grocery shopping and delivery platform that partners with retailers to help customers shop from local stores through its app or website.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Instacart grew its sales at a decent 13.6% compounded annual growth rate. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.

This quarter, Instacart reported year-on-year revenue growth of 12.3%, and its $992 million of revenue exceeded Wall Street’s estimates by 2%.

Looking ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Cash Is King

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Instacart has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the consumer internet sector, averaging 21.5% over the last two years.

Taking a step back, we can see that Instacart’s margin expanded by 14.4 percentage points over the last few years. This is encouraging because it gives the company more optionality.

Instacart’s free cash flow clocked in at $172 million in Q4, equivalent to a 17.3% margin. This result was good as its margin was 1.4 percentage points higher than in the same quarter last year, building on its favorable historical trend.

Key Takeaways from Instacart’s Q4 Results

It was encouraging to see Instacart beat analysts’ revenue and EBITDA expectations this quarter. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 14.6% to $38.27 immediately after reporting.

Instacart had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).