Grocery-delivery service Instacart is tightening its belt.
The company announced plans to lay off 250 workers, roughly 7% of its workforce, effective March 31. That comes despite a jump in earnings in the fourth quarter.
In addition, the company said three top officials are planning to leave the company. Chief operating officer Asha Sharma will depart as of March 1 and will not be replaced. Chief technology officer Varouj Chitilian and chief architect JJ Zhuang are also leaving, but only the CTO role will be backfilled. All three are leaving for personal reasons, the company says.
Many of the layoffs will be in the middle-management category as Instacart strives to create a flatter organizational structure. The cuts will also focus on teams on larger projects, including those who work on advertising through Roku, Google Ads, and more. Benefits and severance payments are expected to cost the company between $19 million and $24 million.
It was just five months ago that Instacart had its initial public offering. After spiking initially, shares have settled in the mid-$20 range. Since its debut, the company has seen its stock fall more than 25%. Fourth-quarter revenue for Instacart came in at $803 million, which was largely in line with analyst expectations.
Instacart is profitable, but growth is an issue for the company, which thrived during the pandemic when people were hesitant to leave their houses.
Instacart delivers groceries and other goods in over 5,500 cities, working with more than 85,000 stores. It relies on independent contractors to deliver those goods to customers, which cuts into its profit margin.
Officials at the company say Instacart is currently focusing on building AI capabilities to become more efficient and, ideally, more profitable.
Instacart’s cuts are just the latest layoffs in the tech world. Google, Instagram, and Amazon all slashed their workforces in January. Year to date, 34,560 tech workers have lost their jobs, according to Layoffs.fyi.
[This report has been updated to clarify that while Instacart remains profitable, growth is a hurdle. The previous report implied that profitability was difficult for the company.]