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*Stock Advisor returns as of February 24, 2025

Now, I'll turn over the call to Fidji for her opening remarks.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks, Rebecca, and hello, everyone. I hope you had the chance to read my shareholder letter where I highlighted our strong finish to 2024 and the positive momentum we're carrying into 2025. As a category leader in a massive and under-penetrated market, we're not just focused on leading in terms of share of sales, but also by setting the pace for innovation and growth. And for us, these things go hand in hand.

So, the more we innovate, the more indispensable our platform becomes for customers, retailers, and brands. Let me share a few recent examples of how we're delivering on this promise. First, for our customers, we're laser-focused on becoming an even bigger part of their everyday lives. In the past year, we launched new service options like super saver and free pickup, expanded family accounts to all users, and can continuously optimize our marketing and incentive programs.

Additionally, our continued momentum with restaurants and the rollout of our industry-leading $10 minimum basket has given customers more reasons to choose Instacart, whether that's for delivery from hundreds of thousands of restaurants nationwide or incremental top-up grocery orders. Our efforts have paid off. We've grown the overall number of people who use Instacart in the past year and drove quarterly users to order monthly, and monthly users to order weekly at faster rates year over year. In addition to growing order frequency, we also offer more value to our Instacart+ members who are growing faster than monthly users and remain our most loyal and engaged audience.

Now, for our retail partners. We are committed to helping them better meet their customers needs no matter where or how they choose to shop. With grocery prices increasing over 25% since 2019, the need to innovate and enable savings for customers has never been greater. That's why we've built industry-leading solutions such as EBT SNAP acceptance, loyalty program integrations, and digital fliers, each of which now covers over 80% of our GTVs.

We also continue to encourage grocers to move to price parity with their stores as we've seen that the ones that do have grown much faster on our platform. Recently, Kroger introduced same as in-store pricing on items featured in their weekly ad, and Schnucks and Heritage Grocers Group both moved to price parity chainwide and across all items, too. The solution we built doesn't just benefit the more than 1,800 retail banners on our marketplace, but also the approximately 600 enterprise storefronts that we power. Thanks to our investments in our enterprise solutions, we've driven double-digit percentage point increases in growth for the majority of retailers following their upgrade to our latest storefront technologies.

And we are onboarding more new retailers to our enterprise solutions than in the past. In fact in 2024, we launched 30 net new retailer sites, more than double the year before. By empowering retailers to grow their businesses, we're expanding our scale and making our technology and service even stronger and more efficient. And finally, for brands, we're helping brands tackle their biggest challenges while positioning ourselves as a one-stop shop for seamless multi-channel advertising.

At the heart of this is performance. By leveraging our suite of innovative ad products, powerful ML models, advanced targeting and measurement tools, our performance remains best in class across a number of key metrics like ROAS, click-through rates, and sales lift. This is exactly what brands are looking for when deciding where to allocate their ad budgets, which is why we've grown to over 7,000 active brand partners on our platform who collectively spent north of $1 billion annual run rate on our platform in Q4. This leading technology and performance, plus the breadth and depth of our demand, is why we get to attract more and more retailers who want us to power ads on their own properties, which allows us to gain even more scale.

We now have over 220 ad partners who contribute more inventory to our network and, therefore, allow us to deliver even greater performance for our advertisers. This results in a virtuous cycle of growth, performance, and scale. And while this was always our strategy, it's really great to see it start to build momentum. Pulling all of this together, our innovation is driving growth across the board.

What's particularly exciting is that this momentum is fueled by our solid unit economics and critical advantages, giving us a unique ability to capitalize on the massive opportunity in front of us in ways that our competitors simply can't. Years after restaurant delivery platforms followed us into the space, we're still the clear category leader. Among digital first platforms, we're leading in share of sales by far in small baskets and even more so in large baskets, with greater than 70% share in baskets of $75 and up. We continue to activate the most new customers to online grocery, in particular with large baskets, where our multiples higher than the next biggest player.

All of these results in Instacart capturing the most GTV from new customers placing their first grocery convenience and alcohol orders on a digital-first platform. And after customers start using Instacart, we're about five times better at converting small basket customers to large basket customers than other marketplaces, too. So, overall, we are continuing to find new opportunities to make our business even more efficient, which allows us to maintain a disciplined but aggressive approach to reinvesting in growth. By executing on this strategy, we're confident in our ability to extend our category leadership position, deliver short- and long-term profitable growth for Instacart and our stakeholders, and transform the industry at large.

I couldn't be more excited about what's ahead. And with that, I'll turn it over to Emily to talk about our financials.

Emily Reuter -- Chief Financial Officer

Thank you, Fidji. 2024 was a great year for Instacart, and the investments we're making have us well-positioned to deliver more profitable growth in 2025 and beyond. Now, let me provide a bit more color on our most recent financial results and outlook. In Q4, we closed the year strong.

We delivered GTV at the high end of our guidance range, growing 10% year over year. This performance consisted of an 11% increase in orders, driven by growth in both users and order frequency, partially offset by a 1% decline in average order value driven by restaurant orders. Transaction revenue grew 10% year over year as we continue to drive shopper efficiencies and reinvested in affordability initiatives. Advertising and other revenue also increased by 10% year over year, driven by strong performances from emerging brands and many large brand partners.

This, combined with operating expense leverage, resulted in solid profitability across key metrics. GAAP net income of $148 million increased by $13 million year over year, even after lapping a sizable tax benefit in the prior-year quarter. Adjusted EBITDA of $252 million exceeded the high end of our guidance range and was up 27% year over year. Operating cash flow of $153 million decreased year over year due to fluctuations in working capital.

We finished 2024 with cash and similar assets of $1.5 billion compared to $2.3 billion the year prior. In Q4, we also bought back $5 million worth of shares, bringing our cumulative repurchases in 2024 to 46 million shares for approximately $1.4 billion and had $312 million of buyback capacity remaining to opportunistically repurchase shares in 2025 and beyond. Overall, our Q4 results were underpinned by our strong operating fundamentals. Order growth is being fueled by monthly user growth and higher order frequency.

We continue to see deeper penetration of Instacart+ members among our overall user base. And the engagement of our members has been strong, especially as we've launched new use cases like restaurants and $10 minimum baskets. From a cohort perspective, we continue to bring in more new users and GTV in 2024 than we did pre-pandemic. In fact, our 2024 cohort delivered the strongest engagement we've seen in recent years.

At the same time, our existing cohorts are stable, and existing users continue to increase their order frequency and spend per user over time, including in the last year. All of this is incredibly encouraging and gives us even more confidence to reinvest the efficiency we continue to drive across our business into many of the growth initiatives Fidji discussed earlier on the call and more. We have an incredible opportunity to leverage our critical advantages to innovate in ways that will accelerate online grocery adoption, unlock more growth for our partners, extend our category leadership, and generate more value for Instacart and our shareholders. Now, for our Q1 outlook, we expect Q1 GTV to be between $9 billion and $9.15 billion, representing year-over-year growth of 8% to 10% and reflecting our strong start to the year.

It also includes a just over 1 percentage point headwind from lapping leap day in the prior-year period. We also expect average order value to decline year over year, primarily driven by restaurant orders and our new $10 minimum basket feature, resulting in orders growth outpacing GTV growth in the period. We're also guiding to Q1 adjusted EBITDA of $220 million to $230 million. We expect our year-over-year growth in adjusted EBITDA to be primarily driven by ongoing adjusted operating expense leverage, as well as advertising and other revenue growth outpacing our anticipated GTV growth in the period.

We also expect adjusted EBITDA to decline quarter over quarter, primarily due to typical seasonality in advertising and other revenue. We remain committed to delivering steady annual adjusted EBITDA expansion even as we maintain an aggressive approach to reinvesting in growth initiatives. We also take a disciplined approach to stock-based compensation. Based on a stock price in line with recent trading levels, we are targeting 2025 stock-based compensation to be less than $425 million, with Q1 being the lowest quarter of SBC, followed by an anticipated step-up in Q2 due to the timing of our annual refresh grants.

With that, we will open up the call for live questions. Operator, you may begin.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Doug Anmuth with JPMorgan. Your line is open.

Doug Anmuth -- Analyst

Great. Thanks so much for taking the questions. Can you talk more about some of the key investment areas that, you know, you're thinking about for '25, especially some of the in-store solutions? You called out Caper Carts. And then, curious, you highlighted restaurants as well.

So, if you could talk about those. And then, Emily, perhaps, just when you're thinking about steady annual adjusted EBITDA margin expansion, can you help us understand how you'd frame that? And does that mean carrying through like incremental margins that you're seeing in 1Q through the year or something different than that? Thanks.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks, Doug. On our key investment areas, it's important to remember that we still continue to primarily invest in our core. And you have seen that throughout '24 where we have made our core stronger across selection, affordability, convenience, speed, and continue to do that. So, when you look at 2025, again, this remains the core areas that we want to continue investing in.

In the selection -- on the selection side, restaurants is obviously a part of that. That has helped us increase selection on our platform, but we are doing that in grocery as well. So, it's really both. I've talked a lot about affordability.

We still believe that this is an absolutely critical thing for us to continue leaning into in order to continue accelerating online adoption, and we like what we're seeing with all of the solutions that we've developed, from EBT SNAP in earlier years, to digital fliers more recently. You can expect to see us continue to develop more and more of such solutions in the future. Another thing that is a top priority, as I've talked about, is our enterprise solutions as a whole. Caper is certainly one of them, and we're very excited about what we're seeing with Caper in terms of sales lift that Caper is generating at retailers where it's rolled out.

We're seeing double-digit increases in basket size at a lot of the retailers that were in pilots with which is really strengthening the business case for broader rollouts. So, we're very excited about that. But our enterprise solutions are bigger than Capers. That includes our storefront technologies or fulfillment technologies.

And as I said in my intro, we have seen a lot of strength there, thanks to past investments, in making these technologies even more performant, which has driven accelerated growth for retailers that have upgraded to these new technologies, as well as growth from new retailers. Onboarding on these technologies is even faster than in the past with 30 new retailers coming on to these technologies more than double what we've done in the past. So, we're really excited by the momentum in enterprise. You can expect us to continue to invest in these technologies at a time where grocers need them more than ever.

And then, finally, it's less on the top line, but let's not forget innovation in advertising. As you've probably seen in the letter, we have innovated massively in the last year across new formats, new measurement capabilities, new metrics, incorporating AI into our products. And that remains a big area of investment for us that is paying off with ads revenue projected to grow faster than our GTV guide in Q1. So, very excited about that.

I'll turn it over to Emily on the second part of the question.

Emily Reuter -- Chief Financial Officer

Thanks, Doug, for the question. So, as it relates to adjusted EBITDA, what we're committing to is to continue to expand EBITDA on an absolute and margin basis on an annual basis. So, there will be some noise potentially quarter to quarter. Obviously, we talked about Q1, the impact from advertising seasonality, which is, you know, normal cyclical seasonality that you see in the overall ads business and also to allow us the flexibility to reinvest when we see opportunity to drive long-term profitable growth.

But as you saw, obviously, in the last year in 2024, we were able to expand EBITDA meaningfully on both of those metrics. And we expect to continue to do that, although on a somewhat more moderate pace going forward.

Doug Anmuth -- Analyst

Thank you both.

Operator

Thank you. Our next question comes from Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan -- Analyst

Thank you so much. Maybe I could just ask one question. Looking back to the progress you made in 2024, how do you see the platform set up for a mixture of grocery-driven and nongrocery-driven growth with respect to the contribution to GTV as you see what you're seeing in terms of how users might be using the platform differently or changing behavior or the acceptability of a wider array of supply on the platform from a commerce standpoint? Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks, Eric, for the question. So, what we're seeing is strength across really both sides of that equation, grocery and nongrocery side. So, the thing that I really want to call out is the reason we added restaurants on the platform is not just to create an additional restaurant use case, but because we had a thesis that it would also increase our grocery business by creating more stickiness of the overall product, higher value of Instacart+. And that's exactly what we're seeing.

And in fact, we are seeing this halo effect on grocery strengthening over time, which is really, really exciting. And so, we're not breaking these things out because, in fact, when people engage more with the platform, whether that's, you know, adopting a new use case like restaurants or some of our new verticals or whether it's, you know, spending more on grocery, it's usually has a halo effect on all of their other behaviors. And as a result, that increases the case for continuing to lean into deepening the adoption of these new use cases. We are very pleased with what we are seeing in restaurants, but it's still very early in terms of penetration of our user base and adoption.

We are excited about all the potential ahead, and so we expect, you know, continued growth from both of those segments and, more importantly, for the combination of them.

Eric Sheridan -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Nikhil Devnani with Bernstein. Your line is open.

Nikhil Devnani -- Analyst

Hi. Thank you for taking my question. I wanted to ask two, please. First around the reduction in free delivery thresholds for Instacart+, how do we think about the economics of these incremental orders? Do you expect the smaller baskets to be loss leaders to better retain customers and drive LTV? Or do the economics work on a stand-alone basis if someone is placing a $10 or $20 order with free delivery? And then, my second question, the Coles Australia partnership is quite interesting.

While it might be expensive to build consumer-facing platforms internationally, do you see an opportunity to be a global enterprise solution for more grocery stores and more countries even if you're not operating a consumer-facing marketplace in those regions? Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks for the questions, Nikhil. On -- I'll start with the second one. On Coles, so we're really excited to have started to deploy Caper Carts with Coles in Australia. As a reminder, we also deployed Caper Carts in Austria with ALDI where we're very pleased with the results.

And to your broader question, we very much agree with this take, which is that we have a set of enterprise solutions that have really proven to drive great results for retailers in the U.S. And there's absolutely no reason why this enterprise solutions wouldn't also benefit international retailers. We are starting to see some traction internationally as you're calling out with retailers really reaching out to us to pilot Caper and, as part of that, discover the rest of our solutions. I want to call out that it's still very early, very, very -- you know, very early in the process, and we're still very focused on the U.S.

where there's still a lot of opportunity to go tap into, and we don't want to get distracted. But international is going to be, we think, a driver of growth in the future for enterprise solution, given how performance we've been in the U.S. On your second question on the reduction in minimum basket, what we're seeing so far is an increase in order frequency, an increase in total GTV, and higher Instacart+ adoption, without seeing any impact on bigger basket orders. So, for that reason, we are very excited about what we're seeing with this change, and that's why we're leaning into it.

We're able to do this at economics that we like because we have been able to batch some of these orders given that we have high order density of orders within those stores. And again, like, this minimum basket size is industry-leading because we are the ones that have the scale to do that at economics. That can be competitive with more runway to go to continue optimizing as we continue to get order growth.

Nikhil Devnani -- Analyst

Thank you, Fidji.

Operator

Thank you. Our next question comes from Ron Josey with Citi. Your line is open.

Ronald Josey -- Analyst

Great. Thanks for taking the question. I had a question on Fidji and then one for Emily on cost. So, on affordability, Fidji, I just wanted to understand or hear your thoughts on the investments that Instacart has made to improve overall affordability.

Obviously, we just talked about lower delivery fees, but then the Kroger partnership on same pricing. There's couponing now on the site. We'd love to hear how these aspects or, perhaps, core drivers of order growth. So, one is on affordability progress.

And then, Emily, just on guidance here, we all saw the Super Bowl ad. That was fun. Congrats. Wanted to hear about the impact of marketing spend and if you've seen any benefits from the ad thus far.

Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

All right, I'll take the first question. So, on the affordability front, we continue to make a lot of progress. In the past year alone, we have helped customers save about $1.2 billion in savings through all of the initiatives that we've put together. And we are continuing to see more and more adoption of these initiatives.

As I mentioned in my introduction, whether it's EBT SNAP, loyalty, or digital flier, each of them are now at more than 80% of GTV coverage, which is really exciting. And the more we do that, the more we see, you know, all of the positive externalities that Emily has talked about in terms of improvement in order frequency, the 2024 cohort being the strongest we've seen in recent years. We think that there's very much a link between all of our affordability efforts and the strength in our underlying fundamentals, especially as we enter 2025. There is still a lot more to do, though.

We all know that, you know, the more retailers we can move to send prices online as a store the better, and we are pleased with the progress here. We are pleased to see Schnucks moving to in-store prices, same thing with Heritage Grocers. Pleased to see Kroger do that on their weekly flier. And we have more and more tools that we are making at their disposal like oversight pricing optimization to show them the business case of moving to price parity and help them figure out how to do that while preserving their margins.

And so, we're excited about what we're seeing, but still continuing to lean into these solutions and developing more like the tender-loving baskets that you've heard about. Emily?

Emily Reuter -- Chief Financial Officer

Yes. Thanks, Ron, for the question. So, in terms of overall marketing spend, you know, the way that we think about our -- frankly our marketing portfolio, but even even more broadly than that is, when we decide to invest in something, we're really looking at how are we funding that from the existing portfolio. So, I would think about Super Bowl in that same light where we decided to invest in the Super Bowl opportunity.

That means that we think there is better opportunity there than elsewhere in our portfolio. So, I don't think about it as incremental spend in that sense. You know, Super Bowl ads are, you know, kind of designed more for brand awareness, you know, driving brand favorability. And, of course, we're in the early days of looking at the impact.

But so far, very pleased with what we've seen.

Ronald Josey -- Analyst

Great. Thank you, Emily. Thank you, Fidji.

Operator

Thank you. Our next question comes from Ross Sandler with Barclays. Your line is open.

Ross Sandler -- Analyst

Great. One on advertising and then the obligatory AI question. So, first on advertising, so the environment for CPG looks a little bit mixed here in 2025. How would you characterize your pipeline between large and large CPG and emerging brands? And do you think this new category share of digital shelf space metric is going to help with future budget allocations to Instacart? And, Emily, I think you said ads would grow faster than GTV for -- was that for the full year or for 1Q? And then, I'll follow up with the second.

Thanks a lot.

Fidji Simo -- Chairman and Chief Executive Officer

Great. So, on the ads growing faster than our GTV guide, this is for Q1. On your broader point, so, as you know, we have talked for the last year about our efforts to diversify our -- or advertise our base and attract more of them to our platform. And these diversification efforts are absolutely working.

We now have 7,000 active brands on the platform. We are seeing extreme strength in emerging brands. And so, we're very pleased with how that's gone. We are -- it's worth calling out, since you mentioned large brands, that we also have many large brands leaning in and actually capturing share by leaning into our product.

In terms of what is going to generate more budgets, it's really a mix of things. The metric you called out, which we released this quarter, which is like share of digital shelf space, is a very helpful metric for brands to really understand if they're spending enough to show up when customers are looking for these types of products. And that's making them realize that if you pull back on spend, then naturally, you're not going to be there when customers are looking for this category of products. And that explains why when brands pull back, they tend to lose share.

When they lean in, they tend to gain share. And so, that's a helpful metric to kind of contextualize that and help brands really understand those mechanics. But it's part of a broader suite of things that are getting them to lean in. We have, you know, sales lift measurement which shows 15% increase in sales.

We have integration with Circana, which are showing across several brands, increase in in-store sales, so really proving the incrementality of our ads, and that's incredibly important. And then, also continuing to innovate with more formats, more reasons for brands to spend. Whether that's our sponsored recipes, products, whether that's free gifts, whether that's our occasions pilot, all of these are new format innovations that are giving brands more opportunities to show up in maybe searches -- they wouldn't have shown up in the past -- and giving them more reasons to lean into Instacart. So, we're pleased with what we're seeing.

The strategy is clearly working. The diversification is happening, and we feel, as a result, you know, a much stronger position than we were in the past.

Ross Sandler -- Analyst

That's great. And if I can squeeze one more in on AI. So, you guys mentioned how you're using AI to track store inventory and substitutions and, ultimately, reduce the error rates of ordering. So, how -- could you just elaborate on that? And then, how meaningful of an impact could that kind of thing have on overall customer retention and ultimately, I guess, profitability for the business?

Fidji Simo -- Chairman and Chief Executive Officer

Yeah. So, first off, we use AI in everything that we do across the business. This is just one of the many examples. But we did call out in the letter in particular this quarter, having made improvements to our replacements by training on 10 times more data.

Just to give you a sense of scale, in 2024, we have made 300 million replacements with 95% satisfaction rate. That is kind of mind blowing scale, and that's why we are able to such accuracy on finding a replacement that you like and getting to that level of satisfaction. So, it's a combination of great AI. But that great AI needs to be powered by a lot of data points.

And that's where our scale and our leading market position really helps in delivering these results. And that applies to replacement, but that also applies to your point on managing inventory in general, where we not only integrate with retailers on their inventory management systems, but also take into account all of the shopper data that we get from shoppers telling us what's on the shelves and not on the shelves, which is much more real time than what we get from retailers. And we're going to augment that in the future with what I mentioned in the letter, which is a technology for shoppers to scan the aisles of the grocery store and through computer vision, having the ability to extract even more data, even more often on what's currently on the shelves. You ask whether that drives customer retention? I can tell you, it absolutely, absolutely does.

Quality is critical to moving the grocery industry online. And every point of sound rate and fill rate matters enormously to drive retention. And I'm proud that we've been able to increase both sound rate and fill rate for 10 consecutive quarters. We are now at very high levels.

And despite that, we continue to uh release new technologies, whether that be the thing I just talked about, or integrating with retailers, electronic shelf tags for peak to light to continue getting these numbers up because we sweat the basis points on these metrics.

Ross Sandler -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Jason Helfstein with Oppenheimer. Your line is open.

Jason Helfstein -- Analyst

Thanks. Just one question. Fidji, so GTV and order growth for the fourth quarter and first quarter outlook is solid. But we're struggling to understand why the company can't grow advertising faster.

I think most people would look at these numbers and think you're losing share to the larger retail media platforms. So, I guess the question is like what is the unlock to get advertising growth to 15% to 20% over some kind of medium term? Or is this like an unrealistic expectation or however you want to take the question? Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thank you. So, first off, you know, we do expect ad and other revenue to grow faster than our GTV guide in Q1. So, that's a strong signal of going in the direction that you're mentioning. I think, fundamentally, when you compare us to other retail media platforms, it's worth remembering that many of these retail media platforms have many other sources of demand than just food and beverage.

And as we discussed in the prior question, the macroeconomic environment on food and beverage is still challenged. So, you know, we feel very good about our position within that because we have leading performance and, therefore, we attract, you know, a very good share of these budgets. But it's worth remembering that we are in a macro environment where specific food and beverage business budgets are still challenged. Now, I don't think that stays like that.

And I think the way to continue to drive accelerated growth in the future is to continue leaning into our performance, which is why you're seeing us release more and more ways to measure and demonstrate that performance to advertisers, continue to lean into innovation, which is why you're seeing us release new formats that give more reasons to advertisers to spend with us, continue to lean into diversification because we see emerging brands growing much, much, much faster than the large guys. And that's what makes us continue to be very confident in our long-term target range of ads being between 4% to 5% of GTV. So, for -- between all of these things, we feel very good about our ads business, but also worth remembering that we are still operating under a challenged macro.

Jason Helfstein -- Analyst

Thank you.

Operator

Thank you. Our next question comes from James Lee with Mizuho Securities USA. Your line is open.

James Lee -- Analyst

Great. Thanks for taking my questions. My question is regarding shopper supply trends. Can you maybe talk about the supply and demand dynamics there? Any impact from tighter immigration controls here? Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks for the question. Shopper supply is very healthy. In fact, we still continue to have a wait list in most cities, and so that makes us feel very good about that. We continue to have extremely good retention of shoppers.

And, in fact, now, the majority of our orders are delivered by our most tenured shoppers, which has a direct impact on the quality of these orders so that's why we care so much about tenure because with the more tenure you have, usually the higher quality of orders you can deliver. And so, we feel very good about our retention. It's also worth remembering that our demographics are very different from the demographics of, let's say, ride sharing or restaurant delivery because the job is different. It's much more spent inside the store.

So, we tend to see about two-thirds of our shoppers being females, more than 50% of them being parents. And so, for all of these reasons, we feel very good about our supply dynamics and the ability to continue ramping up our supply to serve additional demand.

James Lee -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Michael Morton with MoffettNathanson. Your line is open.

Michael Morton -- Analyst

Hi, Thank you so much for the question. I was wondering if we could maybe talk a little bit about the take rate quarter over quarter and just also thinking about the seasonality compared to last year. Could you talk about some of the drivers behind it, where you're investing some of the impacts of the fee structure, contra revenue, and you have restaurants flowing through the business? And then, there's a lot of moving parts with inflation and grocery, and you were talking about the macro environment. Could you maybe talk about the performance for AOVs of the core grocery business year over year? Thank you.

Emily Reuter -- Chief Financial Officer

Sure. So, I believe when you're mentioning take rate, you're referring to transaction revenue, so I'll speak to that. But let me know if that's not --

Michael Morton -- Analyst

Yes.

Emily Reuter -- Chief Financial Officer

OK, great. So, when we're thinking about transaction revenue, you know, we've been operating, as a percentage of GTV, in the upper half of our long-term target range. And really, consistently, over the last year and even before then, we've talked about being very happy where we are and actually talked about the fact that we expect this to fluctuate over time. Now, why does it fluctuate? There's a number of different factors within transaction revenue.

Everything from, you know, retailer revenue, that's the revenue we get from our retail partners; customer revenue, payment revenue. And then, that's offset on the negative side by how much it costs us to deliver each order. So, shopper pay, it's offset by coupons, incentives, things like that, and it's also offset by appeasements and refunds. So, there's a lot going on within transaction revenue.

And that's specifically why we've said in the past, we are not intending to drive transaction revenue up into the right because a lot of the decisions when we talked about early in the call, actively managing our business, a lot of the decisions that we're making involve choices that we're making regarding reinvesting in the business and reinvesting specifically in transaction revenue. So, within transaction revenue, we've continued to drive efficiencies with shopper pay, and that's allowed us to reinvest in initiatives like affordability. So, that's things, like we talked about, offering customers the best pricing, lowering delivery cost options for people who maybe need lower price point options. Those are things like no rush and super saver and pickup that we talked about earlier.

It also involves ramping new use cases. So, restaurants -- the impact of restaurants would be captured there. And then, it also factors in the impact of additional IC+ benefits. So, we've talked a lot today about the $10 minimum basket.

Now, as I said, these will fluctuate within quarters depending on, you know, where we're reinvesting. It also depends on where we're investing across the P&L. So, in the past, I've talked about trade-offs we make between investments we make in sales and marketing as an example. So, we may choose to spend more in incentives in one quarter and more in regular way sort of paid marketing that hits sales and marketing in a different quarter.

Overall, as I talked about, our goal is to drive steady annual adjusted EBITDA progression, and we want to maintain that flexibility to operate the business where we see the best return on every dollar of spend. Oh, sorry, what was the second question? On the macro environment in terms of AOV in core grocery? As I talked about earlier in Q4, a broader AOV was down on a year-over-year basis due to restaurants. The other thing that I would note, and we talked about this a year ago, is that on a quarter-over-quarter basis, we do have some impact of smaller orders in the lead-up to holidays. So, think about this as, you know, in the day or two leading up to Thanksgiving or Christmas when people are doing smaller fill in orders.

So, there is a small seasonality impact as well. From a Q1 perspective, we'll continue to see that impact from restaurants where, of course, restaurant orders are smaller AOV in general even though our restaurant orders are meaningfully higher than the industry. But we'll also start to see the impact of the $10 minimum basket. As a result of all of that, we do expect that orders will grow faster than GTV in Q1.

Michael Morton -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Brian Nowak with Morgan Stanley. Your line is open.

Brian Nowak -- Analyst

Thanks for taking my questions. I have two. The first one actually goes back to Emily to your last point about sort of the trade-offs you make and kind of the investments that you're making. Could you just sort of talk to us a little bit about the 2025 budgeting process and how you think about constraints to faster top-line growth? You know, are there areas where you could lean in more at lower incremental margins to drive more growth? Are there areas where you're pulling back just so we can kind of understand the growth versus profitability framework for 2025? And then, the second one, just on the pressure from the restaurant AOVs, can you just help us, how large is restaurant as a percentage of GTV in the fourth quarter just so we can kind of get an understanding for the core versus the restaurant impact? Thanks.

Emily Reuter -- Chief Financial Officer

Sure. So, starting with the 2025 budgeting process, you know, as we talked about earlier, you know, one of the somewhat constraining factors is that, you know, we've committed to and are committed to continuing to show and prove out the economics of our business. We've obviously done a great job of that in the past, having expanded adjusted EBITDA very meaningfully in 2024 on both an absolute and percentage basis. And so, we want to continue to do that.

Above and beyond that, we are continuing to grind down costs in our business, become, you know, very efficient across every line in the business. And you've seen that. Obviously, adjusted opex meaningfully expanding on a year over year -- sorry, meaningfully -- the margins getting much better on a year-over-year basis. And so, we'll continue to look at ways to sort of grind down costs, and that allows us to free up incremental dollars to reinvest in the business.

Now, above and beyond that, we're really looking at our full portfolio of options. Now, that includes investing in things like marketing and paid marketing. And we're looking, you know, very actively week to week, month to month at what are the returns of those dollars, do we like those returns. And we do that within the context of a five-year NPV.

Obviously, looking for faster returns than that but giving ourselves the flexibility to invest in things that will return over the long term. We then look at opportunities, as I mentioned, within transaction revenue. And that can be how do we think about our fee structures. So, we talked about $10 minimum basket as something we're adding to Instacart+ membership.

So, there's really sort of a holistic view of everything that we can be doing, how do they line up to the priorities of driving selection, affordability, speed, quality that we're trying to drive in the business. And those are not static. So, of course, we have a 2025 plan, but as things are working better in some cases we lean in, other things that maybe aren't working as well, we'll certainly pull back. And so, I think of it as a very active management process that we have throughout the year.

The last thing I'll say on that is there are also longer-term bets, as you know, that we're making in the business. So, something like Caper as an example, it's a part of the business that we've already been investing in for some time. So, that's not new incremental cost necessarily, but something that obviously factors into our overall 2025 budgeting process. From a restaurant perspective, GTV perspective, we really don't break out restaurants because, as Fidji mentioned earlier, there is this real flywheel effect that comes back to grocery.

It was really the thesis of the deal. We saw it play out from the beginning, and we're seeing it strengthen over time. And so, we really think about this as a set of offerings, a platform that we have for our users where we want them to come, use restaurants, and then, you know, have that create a situation where they're then purchasing more or more grocery orders and more grocery GTV. What I would say is that restaurant adoption is still very early, so we do see much more runway to continue to grow throughout 2025 and beyond.

Operator

Thank you. Our next question comes from Justin Patterson with KeyBanc. Your line is open.

Miles Jakubiak -- KeyBanc Capital Markets -- Analyst

Great. Thanks for taking the question. This is Miles Jakubiak on for Justin. First, just one on Caper Carts, it seems like early learnings there have been really positive.

So, curious how quickly you guys think that you can ramp the implementation of Caper Carts to a meaningful amount? And what are the main sticking points to getting that meaningfully ramped? And then, just one on the 1Q guide, it seems like guidance implies some pretty strong order volume growth, especially comping the leap year, extra day within there. So, wondering if you could just provide some more context on what's driving that and if there's anything with the fee changes or restaurant business that we should keep in mind there. Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks, Miles. I'll take the first question on Caper. We are seeing very good results from the pilot across a variety of aspects. One that is obviously the most important one is do customers love the product, and we are seeing extremely strong product market fit there.

Customers are telling us that it makes their shopping experience more fun, that it allows them to discover more products and engage with coupons and discounts. Gamification capabilities are increasing engagement with that. So, we're really excited about what we're seeing on the consumer side. On the retailer side, that translates into an increase in basket size and, therefore, sales as a result of that customer excitement.

And that means that retailers are definitely leaning into, you know, the results of these pilots and being excited by what they're seeing. It's also worth noting that as part of rolling out of Caper, we also share ads revenue with retailers on those carts, and that creates an additional revenue stream for retailers. So, on top of an increase in sales that is in the double-digit range with many grocers, you also have an additional, you know, new revenue stream that's an increase in advertising. And on that advertising business line, we rolled out Caper Carts this quarter.

And what we're seeing is an engagement with Caper Carts that's in line with online engagement, which is very exciting and shows us that there is real potential there for advertising for our brands, but also as a result for creating a revenue stream for retailers and for ourselves. In terms of ramp, we have thousands of cart commitments in the works right now with retailers. That's across retailers big and small, so we are very excited about what we're seeing. That being said, it's worth remembering that, you know, these are physical products that you need to deploy across thousands of stores; make sure that, operationally, it lands very well; make sure that, you know, the stores are ready and trained to receive that.

The good news is that this is our bread and butter. This is what we know how to do very well. We've done very similar things when we rolled out the pickup business across the U.S. So, we know how to do that.

But it does take a little bit of time because it's very operational. But then, once you've done that and you are showing these double-digit increase in sales, you are integrated with retailers operations, and you are showing them an additional revenue stream, it's a product that has the potential to be exceptionally sticky and allowing us to address the 87% of grocery sales that haven't moved online yet. So, the last thing I'll add, which I think is exciting, is that we also started testing the ability to tell users about reordering their cart online from the cart. And when you think about moving people from offline to online and making them multi-channel customers, Caper Carts are going to be a fundamental touch point in our ability to do that and make it very easy for someone who's an in-store customer to reorder their basket online and vice versa.

So, excited about what we're seeing still early days.

Emily Reuter -- Chief Financial Officer

From a guidance and order volume growth perspective, what I'd say is if you go back a couple quarters, you know, a majority of our growth was being driven -- or majority of our orders growth was being driven by malgrowth. And so, what we started to see in Q3 and Q4 was that order frequency was starting to grow. And that does align with around the time that we launched our restaurants integration. And so, that is a factor that's at play.

Now q4 was the first quarter where orders growth outpaced GTV growth, and that's something we expect to see going into Q1. So, I think the way that I would describe it is that, you know, part of that is a continuation of the trend that we saw from restaurants in the back half of 2024. And then, we're layering on, you know, the impact of small baskets order frequency that we're starting to see in the first part of this year. Now the other thing I would just mention is that, you know, where we see the most adoption of both restaurants and also small baskets is going to be with our Instacart+ members because these are benefits, you know, where specifically they get an outside benefit.

And these are our most engaged users. So, you see that again show up in that order frequency metric.

Miles Jakubiak -- KeyBanc Capital Markets -- Analyst

Thanks for the help.

Operator

Thank you. Our next question comes from Shweta Khajuria with Wolfe Research. Your line is open.

Shweta Khajuria -- Analyst

Hello. Thanks a lot for taking my question. I guess my question is on advertising development through the year. So, if you were to point to, perhaps, two to three key investments that you are excited about and focused on to drive that ad revenue growth? What would you point to? Is it, you know, the technology, the ad tech stack, partnerships with brands keeping macro aside? Thanks a lot.

Fidji Simo -- Chairman and Chief Executive Officer

Yeah, thanks for the question, Shweta. I would say it's four big things. One is performance, second is scale, third is diversification, and fourth is innovation. So, I'll go through them one by one.

On performance, I've touched on it, but, you know, I will continue hammering that because that is fundamentally always the most important thing. And so, we're very proud of having the leading ROAS, leading CTR of multi-retailer platforms. That's -- you know, continuing to demonstrate that and improve that with more capabilities remains the No. 1 way in which you attract advertising budget.

Second one is scale. And by that, I mean not just scale on our marketplace, but scale also through Carrot Ads. And that's a big area of investment for us. We now have 220 retailers whose ads we power on their own properties.

That's a number that's growing. And we also, you know, beyond that, want to have a business offline with Caper Ads as I just mentioned, as well as many partnerships with Meta, Google, Roku, The Trade Desk, NBCU, that allow us to also power ads on these ad platforms with our data. And that gives us massive scale and really makes us a one-stop shop for brands. And what we're hearing from brands is that they love the performance and measurability of retail media.

They do not like the fragmentation of retail media and the fact that there's a proliferation of them. It doesn't make sense for brands to go to, you know, hundreds of different retail media platforms, and they want to turn to us as the aggregator for these platforms that can really, you know, be the hub for all of that. And we've had a lot of success doing that, again, because we have leading performance, leading demand, leading technology, that gives us a, you know, a perfect rationale for more retailers to come and join our platform. We have seen that with Thrive, for example, which we launched in Q4.

And the results have exceeded our expectations. We just signed Hy-Vee as an additional partner. We expanded with Schnucks where our retail media revenue together increased by 7x. And so, again, scale is absolutely critical, and Caper Carts is a huge area of opportunity and investment for us.

The third axis I talked about was diversification. Again, that's because attracting more new advertisers is obviously a level of growth, but that's also because we're seeing high investment rates among these advertisers. And we think there's a big opportunity to continue to diversify our advertiser base. And then, lastly, innovation, I won't repeat all of them, but you'll see us innovating in new formats, especially formats that allow advertisers to advertise in aisles that are not usually surfaced in.

So, for example, through sponsored recipes, you're able to advertise your salsa when someone is looking for chips. And that's an opportunity for advertisers to capture more demand that they wouldn't have gotten with existing formats. And we're really industry-leading on these new formats. With sponsor recipes, for example, we're seeing 35% new to brand sales, which is really important for brands to attract new customers, and 70% of impressions coming from aisles that are not the typical aisle of that advertiser.

So, very strong results there, very strong results with our new AI landing pages, which are generating a 20% increase in sales for the campaign. With shelf use, for example. Great results with our new measurement capability like share of digital shelf. And so, it's really a combination of all of these innovations that not only set us up immediately better, but also lays the groundwork for more growth in the future as we give advertisers more reasons to spend with us.

Shweta Khajuria -- Analyst

Okay. Thanks, Fidji.

Operator

Thank you. Our next question comes from Justin Post with Bank of America. Your line is open.

Justin Post -- Analyst

I was wondering if you could give us an update on your subscriber growth or percentage of GTV from subscribers. And then, any update on the Walmart relationship testing in the U.S.? Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Yeah. So, the majority of our GTV is still coming from Instacart+ members. And as I said at the beginning, while we don't update on specific subscriber numbers, the growth of Instacart+ members has outpaced the growth of our monthly active orders. And that means we're seeing deeper penetration of Instacart+, as well as very strong engagement from members.

So, we really like what we're seeing, and that's a direct result of having created a lot more value inside Instacart+ over the last year. Obviously, through the addition of hundreds of thousands of restaurants, through the addition of the $10 minimum basket partnership, partnership with New York Times and Peacock, the ability to add more members of your family to your Instacart+ account, all of these things have contributed to the strength we are seeing in Instacart+, so we feel very good about that. As for Walmart, as you know, we have -- we are rolled out in several hundred stores with Walmart in the U.S., in addition to a full rollout with Sam's Club, as well as a full rollout with Walmart in Canada. We continue to see that we are highly incremental to their own business.

And for that reason, we think the results are highly positive. However, when it comes to an expansion, of course, we would love to expand with Walmart, but that's their decision, not ours, and nothing to report on that side.

Justin Post -- Analyst

Great. Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Steven Fox with Fox Advisors, LLC. Your line is open.

Steven Fox -- Analyst

Hi, Thanks for taking my question. I just had one big picture question, and I apologize if this underappreciates the complexity of your business. But you've highlighted a ton of different initiatives that seem to generally be having success. And I know they're in different stages.

But it seems like as you move on that there's an opportunity to accelerate the business further from -- as some of these mature. I guess I was wondering how you would sort of, you know, maybe calm that idea or maybe support that idea if we were thinking out maybe over the next 12 to 24 months for some even better top-line growth. Thanks.

Fidji Simo -- Chairman and Chief Executive Officer

Thanks, Steven. So, as you know, we don't guide beyond Q1. But what I can tell you is that I personally look at the leading indicators of our business. And the leading indicators are typically are we increasing the number of users we're attracting to the platform.

The answer is a resounding yes. In fact, the 2024 cohort was, you know, larger than the 2019 cohort and was also the strongest engagement that we've seen in recent years. So, in terms of new user acquisition and retention, I feel very good about that. I feel very good about our existing users, also increasing order frequency over time.

Thanks to all the new use cases that we've created, as well as our affordability initiatives. I feel very good about Instacart+ penetration continuing to deepen as we've just talked about and shared data around. I feel very good about the competitive environment where we continue to have category leadership and continue to see that we are far ahead of the competition on the core fundamentals of the business, of usage selection, but also quality, which is very, very hard to get to the level we're at. And we continue to get even better.

And so, we feel like these advantages are incredibly defensible and should continue to contribute to our success in the long run. And because we have this strong operating fundamentals, that gives us even greater confidence in our ability to reinvest in growth and lean into our role as category leader, which is to accelerate the move of the industry from offline to online. We know it's an industry that has moved slower than certainly anyone wished, and we see that as our role to accelerate that adoption. We feel that we have all of the ingredients in place to do that and to continue leading into our role as category leader in ways that competitors just can't match.

So, for all of these reasons, I feel very good about our future.

Steven Fox -- Analyst

Great, that's very helpful. Thank you.

Fidji Simo -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. That's all the time we have for questions. This concludes today's conference call. [Operator signoff]

Duration: 0 minutes

Call participants:

Rebecca Yoshiyama -- Head of Investor Relations

Fidji Simo -- Chairman and Chief Executive Officer

Emily Reuter -- Chief Financial Officer

Doug Anmuth -- Analyst

Eric Sheridan -- Analyst

Nikhil Devnani -- Analyst

Ronald Josey -- Analyst

Ron Josey -- Analyst

Ross Sandler -- Analyst

Jason Helfstein -- Analyst

James Lee -- Analyst

Michael Morton -- Analyst

Brian Nowak -- Analyst

Miles Jakubiak -- KeyBanc Capital Markets -- Analyst

Shweta Khajuria -- Analyst

Justin Post -- Analyst

Steven Fox -- Analyst

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Instacart (CART) Q4 2024 Earnings Call Transcript was originally published by The Motley Fool