Revenue

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

3. Revenue

Disaggregation of Revenue

The following table summarizes the disaggregation of revenue according to type of revenue and is consistent with how the Company evaluates financial performance. The Company believes this depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

	Year Ended December 31,
	2021		2022		2023
	(in millions)
Transaction	$	1,262	$	1,811	$	2,171
Advertising and other	572		740		871
Total revenue	$	1,834	$	2,551	$	3,042

Revenue by geographic areas based on bill-to location was as follows:

	Year Ended December 31,
	2021		2022		2023
	(in millions)
United States	$	1,789	$	2,470	$	2,936
International (1)	45		81		106
Total revenue	$	1,834	$	2,551	$	3,042

___________

(1) No individual international country represented 10% or more of the Company’s total revenue for the years ended December 31, 2021, 2022, and 2023.

Contract Assets and Liabilities

The Company records deferred revenue, which is a contract liability, when the Company receives customer payments in advance of the performance obligations being satisfied on the Company’s contracts. Deferred revenue is primarily comprised of balances related to Instacart+ memberships. Substantially all of the Company’s deferred revenue as of December 31, 2022 and 2023 is expected to be recognized within a year. During the years ended December 31, 2022 and 2023, the Company recognized $146 million and $177 million of revenue, respectively, from the deferred revenue balance as of December 31, 2021 and 2022.

There were no material contract assets as of December 31, 2022 or December 31, 2023.

Equity Agreements with Retailers

From time to time, the Company has entered into equity agreements with retailers for the purchase or grant of non-voting common stock warrants and non-voting common stock (collectively, the “Equity Agreements”). These Equity Agreements are generally executed at or near the time of execution of commercial agreements for the Company’s services. In accordance with ASC 606, the Company considers any excess of the fair value of the equity instruments issued over any cash payments received in exchange for the instrument to be consideration paid to the retailers and therefore, a reduction of revenue. In total, the Company recognized reductions to revenue of $5 million and $3 million during the years ended December 31, 2021 and 2022, respectively. Immediately prior to the completion of the IPO, shares of non-voting common stock underlying the Equity Agreements, including shares subject to related warrant agreements, were converted into shares of voting common stock which were subsequently reclassified into an equivalent number of shares of common stock. There were no reductions to revenue during the year ended December 31, 2023.

November 2017 Retailer Warrants

In November 2017, the Company entered into a commercial agreement with a retailer, and in connection with the commercial agreement, the Company entered into a warrant agreement to issue warrants for the purchase of up to 9,289,410 shares of non-voting common stock with an exercise price of $18.52. The warrants vest subject to the achievement of three time-based or performance-based milestones. The first milestone was a time-based milestone in which 5,573,650 shares vest after 36 months have elapsed subsequent to the execution date of the commercial agreement. The second and third milestones were performance-based milestones in which 1,857,880 shares each vest based on achievement of certain performance metrics by the Company. These warrants were exercisable, solely with respect to the shares that have vested in connection with a particular milestone, in whole or in part, and in all cases only prior to the expiration of the warrant. These warrants were exercisable as of the earlier of a Deemed Liquidation Event, defined as the liquidation, dissolution, or wind-up the business, or the consummation of any merger or consolidation or any sale, lease, transfer, exclusive license, or other disposition of all or substantially all the assets of the Company, or the six-year anniversary of the date of the commercial agreement, after a modification of the warrants in October 2022 to extend the expiration period. During the year ended December 31, 2020, the first and second milestones were achieved, and an aggregate of 7,431,530 shares vested.

As of December 31, 2022, 7,431,530 warrants were outstanding, vested, and exercisable. The weighted-average remaining contractual term and the aggregate intrinsic value as of December 31, 2022 of the warrants outstanding and vested was 0.88 years and $87 million, respectively. During the year ended December 31, 2022, no warrants were exercised, cancelled, or expired.

On August 22, 2023, the Company entered into an amendment to provide for the net exercise of the warrants solely in connection with an IPO whereby any shares issued upon exercise would equal the difference in value between the fair value of the shares and the exercise price of the warrants on the exercise date. No reductions to revenue were recorded as there was no change to the fair value of the warrant as a result of the modification. In September 2023, the retailer net exercised warrants to purchase 7,431,530 shares of non-voting common stock in connection with the IPO, which resulted in the net issuance of 2,843,784 shares of non-voting common stock, which were subsequently reclassified into an equivalent number of shares of common stock. During the year ended December 31, 2023, 1,857,880 shares expired related to the third milestone. As of December 31, 2023, there were no warrants outstanding under this warrant agreement.

July 2018 Retailer Warrants

In July 2018, the Company entered into a warrant agreement with another retailer to issue warrants for the purchase of up to 14,863,040 shares of non-voting common stock with an exercise price of $18.52. The warrants vest subject to achievement of time-based milestones. Vesting commenced on January 1, 2018, the vesting start date, with 3,715,760 shares each vesting on the 12 and 24-month anniversaries of the vesting commencement date and four tranches of 1,857,880 shares each vesting every six months thereafter. The retailer could exercise any or all shares vested for a given milestone on or within 90 days following the date of the milestone being achieved. These warrants expire the earliest of 90 days subsequent to the 48-month anniversary of the warrant agreement, a Deemed Liquidation Event (as defined above), or the date the warrant is no longer eligible to be exercised or vest with respect to any shares.

During the year ended December 31, 2022, 1,857,880 of these warrants vested. During the year ended December 31, 2022, the retailer exercised warrants to purchase 1,857,880 shares of non-voting common stock, at a price of $18.52 per share with total proceeds of $34 million. There were no warrants outstanding under this warrant agreement as of December 31, 2022.

July 2018 Retailer Subscription Agreement

In July 2018, in conjunction with the warrant agreement with the same retailer, the Company also entered into a subscription agreement that provided for the issuance of 3,715,760 shares of non-voting common stock for no cash consideration. The shares issuable pursuant to the subscription agreement vest upon four time-based milestones, subject to continued compliance with the commercial agreement. Vesting commenced on January 1, 2018, the vesting start date, with 1,393,410 shares vesting on the 12 and 24-month anniversary, and 464,470 shares vesting on the 36 and 48-month anniversary of the vesting start date.

During the year ended December 31, 2022, 464,470 shares vested and were issued. None of the shares issuable pursuant to the subscription agreement were cancelled during the year ended December 31, 2022. No shares remain issuable pursuant to this subscription agreement as of December 31, 2022.