(Adds shares in paragraph 2) Aug 6 (Reuters) - Instacart forecast its third-quarter gross transaction value and core profit above Wall Street estimates on Tuesday, betting on higher transaction and advertisement fees and more orders on its online grocery delivery platform. Shares of the company were up 2.8% in extended trading.
The company has partnered with retailers to offer same-day delivery of products ranging from home improvement to beauty and skin care to fight competition in the U.S. It has also forayed into food delivery through a tie up with Uber.
Instacart expects its third-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be between $205 million and $215 million, above the LSEG estimates of $204.6 million. Earlier in the day, Uber said initial trends from its ties with the company were "encouraging", particularly in less densely populated areas where Instacart has a stronger presence.
"We're also seeing higher average basket sizes for restaurant orders than those on other platforms," Instacart CEO Fidji Simo said. Total orders rose 7% over the year earlier to 70.8 million in the quarter ended June 30, but growth was slower compared to the previous three-month period.
Instacart — which sells ad spaces on its site — has also been doubling down on its advertising business on hopes of increasing demand from consumer-facing companies that want to promote products online. Advertising and other revenue climbed 11% in the quar.