Maplebear (CART) - 2023 Q3 - Quarterly Report

Part I - Financial Information This part presents the company's unaudited financial statements, management's analysis, market risks, and internal controls Item 1. Financial Statements The unaudited financial statements reflect the company's performance, cash flows, and IPO-driven equity changes Condensed Consolidated Balance Sheets The balance sheet shows increased assets and a shift from preferred stock to equity following the company's IPO Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2022 | Sep 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,505 | $2,010 | | Total current assets | $2,740 | $3,073 | | Total assets | $3,669 | $4,421 | | Liabilities & Equity | | | | Total current liabilities | $795 | $683 | | Total liabilities | $911 | $762 | | Redeemable convertible preferred stock | $2,822 | $0 | | Total stockholders' equity (deficit) | ($64) | $3,484 | Condensed Consolidated Statements of Operations The income statement reveals revenue growth but a significant net loss due to IPO-related stock compensation Statement of Operations Summary (in millions) | Metric | Q3 2022 | Q3 2023 | 9 Months 2022 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $668 | $764 | $1,794 | $2,239 | | Gross Profit | $485 | $561 | $1,254 | $1,670 | | Total operating expenses | $452 | $3,018 | $1,294 | $3,858 | | Net income (loss) | $36 | ($1,999) | ($38) | ($1,757) | - The significant increase in operating expenses and resulting net loss were primarily due to a one-time stock-based compensation expense of approximately $2.6 billion recognized in connection with the company's IPO[14][243] Condensed Consolidated Statements of Cash Flows Cash flows show increased operating cash, with financing activities reflecting IPO proceeds offset by tax payments Cash Flow Summary (Nine Months Ended Sep 30, in millions) | Activity | 2022 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $228 | $353 | | Net cash provided by investing activities | $70 | $146 | | Net cash provided by financing activities | $35 | $6 | | Net increase in cash | $326 | $505 | - Financing activities in 2023 included $401 million in net proceeds from the IPO and $175 million from the issuance of Series A redeemable convertible preferred stock, largely offset by a $570 million payment for taxes related to the net share settlement of equity awards[81] Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and key disclosures on the IPO, revenue, acquisitions, and legal matters Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes performance, highlighting IPO impacts, operational growth, and macroeconomic headwinds - In September 2023, the company completed its IPO, raising net proceeds of $392 million, and a concurrent private placement of Series A Preferred Stock for $175 million[86][267] - The IPO triggered the vesting of certain RSUs, resulting in the recognition of $2.6 billion of stock-based compensation expense and a related $570 million tax withholding payment in Q3 2023[243][363] Q3 2023 Key Financial and Operational Highlights (YoY) | Metric | Q3 2022 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Orders (millions) | 63.8 | 66.2 | 4% | | GTV (millions) | $7,080 | $7,494 | 6% | | Revenue (millions) | $668 | $764 | 14% | | Net Income (Loss) (millions) | $36 | ($1,999) | NM | | Adjusted EBITDA (millions) | $74 | $163 | 120% | - Macroeconomic trends such as inflation have led to higher GTV and average order values, but customers are purchasing fewer items per order[22][244] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company identifies its primary market risks as foreign currency, interest rate, and inflation - The company's main market risks are identified as foreign currency exchange, interest rate, and inflation[386] - Foreign currency and interest rate risks are considered not material, as a hypothetical 10% change in either would not have a material impact on the financial statements[387][390] - Inflation risk is more pronounced, affecting consumer demand and order values, though the company states it has not had a material effect on its overall business thus far[391][398] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[399] - No changes in internal control over financial reporting occurred during the third quarter of 2023 that have materially affected, or are reasonably likely to materially affect, internal controls[400] Part II - Other Information This part details legal proceedings, key business risk factors, and information on equity sales and repurchases Item 1. Legal Proceedings The company faces numerous legal proceedings, primarily concerning the classification of its shoppers - The company faces regular claims, lawsuits, and government investigations challenging the classification of its shoppers as independent contractors[397][402] - A significant legal uncertainty revolves around California's Proposition 22, which is now being appealed to the California Supreme Court[33][406] - As of September 30, 2023, the company has accrued a legal reserve of $56 million related to misclassification claims and proceedings[404] Item 1A. Risk Factors The company faces risks from its history of losses, competition, retailer dependency, and shopper classification - The company has a history of losses and may be unable to sustain profitability as growth rates slow and it continues to invest heavily in the business[411][420] - A primary risk is the potential for shoppers to be reclassified as employees, which would significantly increase costs and require changes to the business model[411][637] - The business is highly dependent on its relationships with a small number of key retailers, with the top three accounting for approximately 43% of GTV in 2022[447][453] - The market is highly competitive, with rivals including Amazon, Walmart, Target, DoorDash, and Uber Eats, many of whom are well-capitalized[460][461][462] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section details the use of IPO proceeds for tax obligations and a new $500 million share repurchase program - The net proceeds from the IPO ($392 million) and the private placement were used entirely to satisfy tax withholding and remittance obligations for equity awards settled in connection with the IPO[520] - In November 2023, the Board of Directors approved a share repurchase program authorizing the purchase of up to $500 million of common stock[265][521]