In positive signal for tech IPO market, Instacart and Klaviyo file to go public

UPDATED 17:29 EDT / AUGUST 25 2023

by Maria Deutscher

Grocery delivery startup Instacart and marketing software provider Klaviyo Inc. filed to go public today, signaling that investor interest in tech company listings could be picking up.

The filings follow 18 months in which not a single major tech company floated its shares. The dearth in stock market listings has been referred to as an “IPO drought.” Chip designer Arm Ltd. also filed for a public offering this week, suggesting that it too believes the IPO market is starting to thaw.

IPOs are the key source of liquidity, some of which then gets funneled back into new startups. They’re seen as a prime driver of the tech economy.

Instacart, officially Maplebear Inc., provides a grocery delivery service that enables users to order merchandise from more than 80,000 stores. The company said in its IPO prospectus today that its network of retail partners covers about 85% of the U.S. grocery market. Instacart generates revenue by charging delivery fees and selling ad space in its service’s interface to brands.

Instacart’s revenue reached $1.12 billion in the six months ended June 30 after growing 31% year-over-year. In the same time frame, the company flipped a $74 million loss into a $242 million profit. Instacart says that it has been operating profitability for the past five quarters.

It managed to improve its finances significantly even though customer demand has been growing at a sluggish pace recently. In the six months through June 30, the number of grocery orders placed by users stayed flat year-over-year at about 132.9 million. The combined dollar value of orders increased 4%, to $14.93 billion.

Its advertising business, which allows brands to promote their products through its grocery delivery service, fared better. Advertising and other revenue segment reached $406 million in the six months ended June 30 after growing 24% year-over-year.

Instacart will list its shares on the Nasdaq under the ticker symbol “CART.” The company stated in its IPO paperwork that it plans to “continue investing significant resources” in product development after the stock listing. One focus of the development effort is Connected Stores, an offering designed to help retailers streamline their operations with technologies such as smart shopping carts.

Klaviyo, the other company that filed to go public today, competes in an entirely different market than Instacart. It provides a platform that brands use to distribute promotional emails, SMS messages and push notifications to customers. The platform sends marketing messages at the times when shoppers are most likely to make a purchase.

Like Instacart, Klaviyo recently turned profitable. The company generated a net income of $15.16 million in the six months ended June 30. It lost $24.56 million a year earlier.

Klaviyo managed to climb out of the red while growing its revenue at the same time. The company’s sales jumped 54%, to $320.7 million, in the six months through June 30. Klaviyo said in its IPO prospectus that 57% of this revenue growth was driven by demand from its existing customer base, which includes about 13,000 organizations.

The company will go public on the New York Stock Exchange under the ticker symbol “KVYO.” Sources told Reuters that the company hopes to raise at least $750 million through its public offering, which is expected to take place as early as this year.

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