Q2 2022 DoorDash Inc Earnings Call
Now, maybe perhaps from smaller players and kind of niche categories can you talk about whether youre seeing any benefits from a favorable operating environment either on frequency or kind of customer acquisition right. Now and then maybe prepare I know you don't want to guide for 2023, specifically, yet, but maybe how should we think conceptually about the.
2023 EBITDA band.
Profit pools become larger do you still see kind of big investment areas that would maybe keep the profit bands at these levels or can it gradually of Joe. Thank you so much.
Hey, Deepak, it's Tony Yes look on the first question.
Our business has been always very competitive ever since we started the company nine years ago, and I think thats whats been.
Very impressive to US is just how resilient our business has been both in light of.
Competitive activities, both recent and in the years that we've been building toward ash as well as just.
The macro environment as we do see some consumer spending softening, but largely we've been not impacted by that downward pressure.
We think that.
You see a lot of kind of the premise of your question are reflected in our results. I mean, this is a quarter in which we beat the top line as well as on bottom line, we grew results 25%.
<unk> year on year.
And we'd be quite handedly on the bottom line as well and this is on top of.
A lot of the types of things that we're investing in one that I'll call out is that while we're not seeing any elevated pressures from certain types of incentives from competitors. We are doing is we are taking care of our audiences. We invested over $40 million alone in the second quarter just to make sure that the doctors who are on the road doing the hard work.
Can keep the profits that they expect to keep given some of the rising cost with feel and so we're not seeing any of the elevated pressures, we're seeing fairly normal activity on that side and I think as a result, given our industry, leading retention and order frequency.
You continue to see our growth and our share gains.
Deepak on your second question around 2023, we're not providing quantitative 2023 guidance. We will provide 23 guidance. When we report Q4, which is on a normal cycle, but I will provide some sort of thematic context.
This is going into 'twenty three we do expect our core U S and a strong business to grow and increase its contribution profit at current course and speed we plan to increase annual EBITDA by a modest amount, but this is after absorbing a full year award so said differently core door dash ex wound will expand it.
Into 2023, even though the consolidated EBITDA won't grow meaningfully and the only caveat you'll need to this is this could change if we identify attractive growth opportunities. We continue to remain in investment mode and look for these opportunities that benefit our retention and frequency where current course and speed, we would expect annual EBITDA to grow by a modest amount.
Okay. Thanks, Tony Thanks.
Thank you.
Question comes from the line of Lloyd Walmsley from UBS. Your line is open.
Yeah.
Thanks for taking the question two if I can in the letter you guys talked about the logistics led marketplace I guess.
How much room do you will see over the next few years to reduce cost per order what are some of the key drivers to kind of get there and we like where is the lowest hanging fruit.
And then second one would just be you've talked in the past about how you view that.
You don't try to beat EBITDA you really.
Trying to kind of come in in the range and if you beat it because theyre just werent attractive investment entities like was there was there something changing in the marketing landscape or any reason you guys, let it flow through or just just a function of.
Some of the kind of inflation coming through as a surprise and you didn't have time to reinvest at anything you can share there would be great. Thanks.
Yeah, Hey, Lloyd it's Tony I'll take the first question and then maybe for Barry can take the second part of the question.
With respect to efficiency gains from logistics I think this has been a hallmark of the <unk> story and also of the volt story know that we've officially closed that partnership in which if you think about the game that we're playing or the business that we're in we're really in the game of building a minimum efficient scale business that is the type of business. When you were talking.
About a hyper local business where order density.
The most important metric and in order to achieve that and you kind of have to do two things one of the things you talked about in your question, which is really around high quality logistics efficiency and the other is high quality retention and order behavior from customers without discounting and that sort of activity and dor assets really achieve both and on the <unk>.
Around gain extra logistics efficiency, we continue to find areas of opportunity I mean, we've certainly.
I have been leaders in our space.
Up to this point, but I still see massive room to keep increasing the selection of our platform and improve logistics quality on our platform. The affordability of our service and certainly our customer service levels on logistics more specifically, whether it's working on efficiency improvements at the store as well.
That's how we think about.
How we should auto assign orders, especially now that we're entering multiple categories of deliveries. In addition to restaurant deliveries I think there's a long room to go and we're seeing that both in our numbers.
In the most recent quarter as well as in the quarters, leading up to this point.
And load on the second part of your question first I'll talk about Q2, and then I'll talk about some general philosophy.
In terms of the Q2 performance on EBITDA was unique.
A matter of two factors the push of some buildings as we described in the letter as a result of consumer price inflation are subdued.
Higher because of higher prices and that then translates into higher commission dollars as one of the times. So this fees both of which benefited revenue drop through to EBITDA. So that's what drove the upside in.
Q2 in terms of EBITDA.
In terms of general philosophy, EBITDA as a function of really two things for us. It's the margin expansion that we continue to drive in our U S restaurant business. That's one and then the second is the level of investment, we make which are.
Discretionary by the way below the investment we make in our new verticals.
National businesses that level of investment varies from quarter to quarter business signals, we see and you can see that volatility in our historical trends, where some quarters, we produce more EBITDA than others, because depending on what we see in terms of retention and order frequency, we might invest more or less and so EBITDA range is really meant.
But where we land within that range based depending on the level of investment.
Okay. Thank you.
Thank you. Your next question comes from the line of Youssef Squali from <unk> Securities. Your line is open.
Great. Thank you very much guys. Congrats on a really impressive quarter all things considered.
My question is around the contribution can you maybe speak to the contribution that you're baking into the.
2022 top and bottom line, how to think about growth there considering kind of what's going on in Europe , and just broadly speaking maybe Tony can you address the issue of about how do you kind of take.
Kind of a relatively subscale business in Europe .
Across multiple geographies and kind of grow it.
Meaningfully for it to become a big part of the business you are positioned in the U S has been quite the opposite has been market leader market dominant in a single market. So any help there would be would be great. Thank you.
So maybe I'll start and then Tony can chime in I mean, the board business grew over 50% year on year and that's in Stark contrast to what we've seen with with other companies that operate in the similar geographic region and really it all comes back down to two things the fundamentals of the business in terms of its industry, leading retention and growing.
Order frequency and we've seen it as long as you create a product that has high retention or the frequency and ultimately translate into better growth because you're retaining your customers better and that benefit compounds versus alternatives. When you end up losing.
Customers because of where your attention.
We went out in terms of the.
The investment cycle.
Both markets are relatively new both in terms of merchant adoption as well as user adoption as an example, even in.
Oldest market adoption levels are less than 10% of the population that historically, there's a lot of room to grow just as you grow your footprint within these countries as well as merchant selection and grew the consumer base and so that's driving the investments, we're making and we'll continue investing as long as we see strong signal on retention and order frequency.
Yes, and on the second part of the question I think it's important to start with maybe some historical context go down memory Lane.
Just a few years ago Jordache was certainly not the market leader and and door dash.
Specially five six years ago was quite capital constrained relative to any of its peers by a pretty far margin and so how was it possible that a quote unquote subscale company was able to rise to market leadership, while it really was mastering the order level execution of the business and again this is a hyper local business.
The order density and achieving minimum efficient scale through leading retention order frequency, which is really measured and whether or not you built a superior product of selection of quality pricing and service and then on the other end whether or not you have the most capital efficient logistics operations and I think when they look.
At the elements that caused door dasher rise to market leadership I find very similar kind of characteristics and the bolt business, which is what excited us about.
Their business not only today as Premier mentioned far outgrowing some of their European peers.
But maybe much more excited are weak and their potential because when I compare the foundation of what they've built and I look at the opportunity ahead of them I mean, even in their oldest markets bolt is less than 10% penetrated on a global basis, both duration Bolton our non U S markets are less than 5% of restaurants.
And outside of restaurants, less than 1% of non food spend and so like.
When I compare the two.
Foundation that volt is built on one hand and on the other hand compare it to the opportunity ahead, it's exactly what <unk> said, which is that it's absolutely the right time to invest and I think you already see evidence of this is vault has become a market leader in many of their markets already.
That's great. Thank you and Premier did you quantify the contribution to the <unk> hundred 53 billion.
In jewelry from.
We don't break out the guidance between Bulletin Board Ashford when we do report earnings we will split out organic versus what its contribution.
Got it thank you both.
Yeah.
Thank you.
Question comes from the line of Ben Mcfadden from Needham Your line is open.
Great. Thanks for taking the question.
A lot of grocers in the marketplace doing delivery and online ordering in house. In addition to being opened up to third party marketplaces like yourself. So they are a competitor, but also a partner can you talk about some of the advantages that you have for customer acquisition and retention relative to them and then also with the 50% growth in rural.
This past quarter for <unk>.
50% higher probably than some of the other European delivery operators can you just remind us whether it's market growth or just pure market share gains in terms of what's driving this growth.
Yes.
Sure maybe I'll take the first question and then I'll, let <unk> take the second question.
So.
I'm not sure.
This touches.
The spirit of your question, but we view all merchants, including grocers as partners I mean, if you think about the mission of the company mission of the company is to on one hand build the largest local commerce marketplace, where we're driving incremental demand all of these retailers.
They'd be restaurants grocers convenience stores other types of retail stores and then on the other hand built the largest local commerce platform, where we give the tools, whether it's logistics or the service in the form of Tau that stripe or ordering of the service in the form of duress storefront to all of these retailers so that they can build their own digital operations. So we really view.
<unk>.
In equal parts, our mission to help grow on one hand, which is to bring that incremental demand and on the other hand empower them to do it on their own and in fact, we see these customers on these different channels to be quite different I mean, if you think about it if a customer is quite used to and knows exactly what they want to order from a particular retailer.
It makes quite a lot of sense for them on that occasion to actually order directly from the retailer, but on the greatest privilege that we have in this business is that people eat 20 to 25 times, a week and they shop, even more times than that on top of that we would consider their non trade spend and so for other occasions, maybe when they're not exactly sure what it is that they're looking.
For it but they want to buy something from the neighborhood, that's where the door dash marketplace really comes in hand, and so we really view the retailer the merchants, whether it's a grocer or other type of store as our partner and we have two ways in which we help them.
And then on your second question around Bull's growth, it's really driven by two things <unk> growth. There was aided by some customer acquisition, but also by just by higher retention compared to the other players in the market and then second order frequency growth.
As board brings on more selection both into the restaurant as well as the non restaurant category. We're seeing some of the same things that you saw in the U S where order frequency at a cohort level has continued to grow in both of those things.
Particularly in the face of some of the more extreme Google diversion that you saw in Europe has led to the 50% year on year growth that you cited.
Thanks for taking my questions.
Thank you.
Your next question comes from the line of Brian Nowak from Morgan Stanley . Your line is open.
Thanks for taking my questions guys I have two just the first one the gross margins in the quarter were a little weaker than we thought at least could you just sort of talking about about some of the puts and takes on gross margins of the business and how should we think about the gross margins of the vault business sort of going into the into the back half than maybe.
Even longer term in 2023.
Hey, Brian its produce let me let me start.
Both of your questions.
So first of all our cost of sales increase that we saw on a year on year basis was mainly driven by two things the benchmarks and insurance costs on dashboards.
Launched more and more dash marginal costs associated with those orders impact cost of sales so roughly half of the increase in cost of sales as a percentage of <unk> is driven by nationals. The other half is driven by an increase in insurance costs, which was in line with our expectations pointed to our comments from last quarter, where we said we experienced some.
The increase in insurance reserves due to the outsized impact of a few large claims and we began to take actions.
Good to speak with you on our platform starting in this quarter, but it takes a while for these changes to reflect in our claims data and so as we previously discussed we expect insurance costs to increase in the near term.
On the whole new both the dashboard constantly goes where the insurance cost is reflected in the guidance, we've provided and so it's not.
Incremental to the guidance has already reflected and then in terms of gross margin for root healing voice a combination of as I view, it sort of three distinct pieces.
Those investments that are going into Japan, and Germany is a brand new market launch less than two years ago move to get the flywheel going in terms of selection quantity and price you've got investments in both market, which is the equivalent of our dash months voice first party distribution business and then you've got the rest of what I call core food delivery.
Gross food delivery has had consistent improvement gross margin levels.
As we continue driving efficiency in order then to be the local level and you'll start seeing the same type of efficiency in terms of vessel cost kick in to produce increasing levels of gross margin, Japan and Germany in both markets remain in investment mode. As we continue to work on.
Coverage selection quality and pricing.
That's very helpful. Thanks, Robert.
Thank you. Your next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is open.
Thanks, so much for taking the question maybe two if I can.
First Tony I know you.
Youre talking a lot in the shareholder letter about not seeing anything yet on the consumer spending behavior patterns, but I think one of the questions. We all get a lot from investors is you are seeing some large companies already say, how they would run their business differently. If the consumer spending environment did change is there any sense you can give us.
How youre sort of game planning out different economic scenarios for the business and how you might change investment philosophies or growth philosophy for the company. If you did hit a rough patch in terms of consumer spending and it went through the platform and then maybe an additional question on grocery and convenience and some of the new cat.
<unk> can you give us a little bit of sense of folks who use multiple products across the platform what that might mean in terms of LTV or how youre thinking about leaning in and promoting.
Different category expansion.
Per customer basis of what that might do for your economics longer term. Thanks, so much.
Eric It's maybe I'll start with the first one around around how we're going to manage the business and EBITDA impact would go to US and then Tony can talk about the <unk>.
From some of the new categories. So maybe the first place to start is core U S restaurant business is growing and continues to generate significant cash flow and historically, we've taken that cash flow and invested the vast majority of it in order to grow our scale in these large and underpenetrated categories in which we operate again as I said earlier these investments a disk.
Presciently and so that means.
We are investing is because we continue to see strong signals a product market fit and some of those improving unit economics just to give you an example.
On any given day, if I look at the top 10 stores on on door at Ash in terms of sales dashboard shows up there and that's a strong signal of product market fit.
To the extent that we don't see continued improvements in terms of.
The unit economics of continued improvements in retention or the frequency.
Will alter the pace of our investment we've been very disciplined in terms of capital allocation, so far and we'll continue to do so going forward.
Yes, and I think of it.
I'll add a little bit.
That's just my view on the macro environment and then I'll hit your second question about the multi category customer so.
Obviously, we've been booking right in terms of how the tough macroeconomic.
Headwinds that I think is hitting a lot of industries.
How that might apply to us we've been searching for this for many quarters now and I think so far the reason why largely we've been.
Less impacted us because one our product is dynamic.
Bidding constantly improving if you look at selection for instance in the.
12 months, leading up to the end of the second quarter. We've added 80 net new stores onto the platform. We've made improvements to many quality metrics in terms of our delivery experiences, whether it's speed or accuracy and other types of improvements. We've made many improvements to the shopping experience at a lower friction for consumers and so.
I think Thats one point the second point is I think we still have to remember that relative especially to other maybe categories of commerce or E. Commerce. We are still very early in our penetration even as the market leader just take the US Is one example, where less than 8% of total restaurant industry sales and we compare that to other categories.
<unk> it is much earlier in its evolution.
And then the final thing I would just add is just to be steady macro.
We've been looking at macroeconomics I think there's only been a couple of years of history in which food spend has actually declined due to challenging macroeconomic pressures and I think that just because it is less of a discretionary spend relative to other categories of spend.
But that said to premier's point, where for equal opportunity growth investors that are very disciplined jordache historically hasnt had a lot of resources and so we take very seriously every dollar of spend and as you saw in the second quarter. If we don't think that there is a great investments we made over the same timeframe to generate a great return, we're not going to make that investment.
And so thats true with all new projects, that's true with marketing investments, that's true with engineering and product investments that's true with head count that's really true for every line item in the P&L alright, moving on to your second question, which I think was about the impact of a.
Consumer shopping in multiple categories.
<unk>. This is just part of the mission of the company is to make sure we bring everything inside the neighborhood not just from restaurants and to the.
The last disclosure, we made was I think in the fourth quarter, where we said that about 14% of our customers are now shopping.
These non restaurant categories, and we are seeing higher retention order frequency activity from these customers who are.
Who are engaging in multiple categories I think this makes.
It makes quite a lot of sense as we're solving now different jobs and tasks for the customer, but that said look we still have to earn every yet and so we have a long ways to go in terms of the product experience and each one of these categories before we'd be satisfied with that.
Sure.
Okay. Thank you.
Thank you.
Your next question comes from the line of Andrew Boone from JMP Securities. Your line is open.
Hi, good afternoon, and thanks for taking my questions. I know you guys talked earlier about logistics benefits that you guys are running through the platform, but can you double click on the drivers of cash or cost savings that you guys highlighted in the letter.
And then we haven't talked about <unk> in a while can you provide an update there is there any change that you're seeing in terms of enterprise adoption now that we're kind of beyond peak COVID-19. Thanks, so much.
Andrew maybe I'll start with the dashboard cost question and then Tony can take the one on our platform services.
So in terms of in terms of the actual cost I mean at the end of the day, there's multiple components of this including as to when you do it earlier.
How the stores operations in terms of.
How quickly they get the dash or not so there's opportunities to continue optimizing that there's opportunities to continue dispatching from closer and closer to that shows which by the way as the density of your network increases as you get more.
Borders occurring within the sort of neighborhood within a certain store you've got the ability as much as much as batch whether you've got the ability to get the Bachelor it to the store quicker than you otherwise otherwise might have and so.
Because really if you think about the sources of opportunity is really reducing the amount of time. It takes for that should we get to the store introducing the amount of time that a national spend in the store and we continue to work both those levers and that's what's resulted in improvement in terms of actual costs that we're seeing the second thing.
Which was really just to clarify.
Last year was anomalous in terms of the actual cost because we were operating in a very expensive labor environment those fueled by fiscal stimulus. So in some ways that should cause this year.
My mind normalizing back to historical levels.
Was there anything incremental so last year was elevated this year if it isn't.
Yeah.
Yeah, and with respect to your.
The second question around our platform services products such as drive.
We see continued excitement for the stores, but in many ways our platform services business experiences similar seasonality as our marketplace business, where the second and third quarters are generally more muted and activity and thats, mostly because as customers are back out.
Any of whom are taking advantage of the good weather as well as perhaps lost vacations from from the gain of two years of Covid and now eating out again or visiting retail stores again that these stores have to make sure that their in store activity is protected and taken care of in the customer service levels are exceptional before they.
Invest aggressively in their off premise business, so while theres some seasonal kinds of activity happening in that business I think the COVID-19 highs in terms of the excitement to invest and continue to excel.
Accelerate the momentum behind e-commerce for all of these retailers across any category remains just as high as ever and so thats something that we expect to continue to help grow our platform services business, whether they're large merchants like some of the ones you mentioned, who participate with products like <unk> or smaller merchants that really need help.
We're getting online for the first time in growing their kind of same store sales off premise with products like jordache storefront and so our focus right now is making sure that those products can be easier to use.
And that we can build products to help teach the playbook that we've used to build a successful digital marketplace in our own right such that these businesses can do it on their own.
Okay.
Thank you.
Thank you. Your next question comes from the line of Ron Josey from Citi. Your line is open great.
Great. Thanks for taking the question maybe two please.
The chart in the in the note in the letter that talks about existing consumer order rates 2022 is trending higher than previous years.
And suggesting that these users in 2022 and more engaged I'm sure can you just talk about the drivers here is a greater repeat rates adoption of newer verticals impacted dash past I'm sure. It's all of the above and so maybe the bigger question is just are these newer users. This newer cohort of users talk about how that compares to the prior cohorts or are they just doing more and then.
Maybe premieres it quick.
As a quick follow up you mentioned just the strong cash flow generated from the U S restaurant business.
Any way to provide some guideposts or insight in terms of that profitability of that U S restaurant business. Thank you.
Hey, Ron so on.
Let me start with the second one first on the U S restaurant profitability were not actually we haven't provided any disclosure to break that out other than to say that.
These generating more contribution profit and has improved both in terms of its net revenue margins as one of its contribution profit as a percentage of <unk> on a year on year basis. So we're happy with the progress there and as we've said previously.
It's a valuable funding source that we use to make investments in these new categories that we are growing in terms of your question around the order rate chart really by the way that the purpose of that charter is to demonstrate the fact that the ordering trends were similar to what we've seen historically and to make the point that increase in <unk>.
As soon as it is.
Eventually we can even consumer spending has not had an adverse impact.
All core and so it's hard for us to untangle the impacted consumer spending from ordinary course seasonality, but taking a step back in terms of the 2022 cohorts, we're happy with the quality. So far you remember we run our sales and marketing to payback period, and we've been operating within the same payback because for quite some time known so what's driving that.
It is not just an enhanced order frequency, which is continued growing.
On a year on year basis as a result.
Movement in selection Colby embraces would've been categories that we're adding but also improvements in terms of the core margin structure of the product and so the core product has gotten more profitable impart due to soft orders, but also in part because of improvements in terms of actual cost the quantity of orders, which improves our customer support costs and so on and that coupled with the order for.
Frequency has contributed to better Tvs.
Hopefully we can payback.
Thanks, David I appreciate it.
Thank you. Your next question comes from the line of Ross Sandler from Barclays. Your line is open.
Hey, guys.
Two from me.
<unk>, the 30% retention stat for volt.
Is that comparable to the 48% for core door Dash I know they don't have a subscription business built out yet in some of their markets are a little bit younger. So could you just walk us through that.
Was that 30 compared to some of the EU competitors that they are.
<unk> in their home markets and do you think the gap is as wide between the 30 and the competition as it is.
The 48 and your U S competition in the.
Second question is just you guys gave a good overview of how the.
Consumers holding up I'm, just curious is the frequency for dash past kind of standalone holding up as well as non dash path. I know there is a mix shift towards SaaS, paas, which is driving up frequency, but could you just talk about those two kind of separately.
Yes, Ross, maybe I'll start and Tony can chime in so first on the 30% retention of I'm not sure what the 48% is that youre, referring to the 30% of the month 12 retention and if you actually compare that to door dash.
Versus bolt on an apples to apples basis.
Pretty comparably to bring in some markets, it's even higher so we feel good about the retention stats certainly compared to our data and when you look at our data.
Using third party sources.
We understand that our retention is better than anybody else in the category in terms of the European competitors, there isn't an exact apples to apples source, where the competitive market to market based on what we're seeing in terms of competitors in the UK and other markets that are covered the 30% actually compares very favorably.
On the question of Dashboards dashboards frequency as well as order if you could sort of classic product you need to look at it on a on a cohort level, yes, you've got mix shift between as you get more dashboard subscribers. The blended order frequency goes but even on a cohort level. The underlying order frequency has continued to grow and what's driving that is these new <unk>.
<unk>, we're seeing people adopt new categories, Tony referred to the 14% adoption rate at the end of Q4, which has continued to grow in Q1, and Q2 and Thats driving order frequency and if we can see growth at the corporate level.
Thank you.
Your next question comes from the line of Jason <unk> from Oppenheimer. Your line is open.
Okay.
Thanks.
I just wanted to dig a bit more into dash path.
With the economy reopening and kind of returned to work progressing in a certain direction and increased use of ride sharing is it making it customer acquisition of dash path any less efficient or more challenging and then secondly, I think you said that.
You pointed out dasher costs are down this year versus last year, but specifically and perhaps this month and last month are you seeing there.
The cost to acquire new dash or has come down even further thank you.
So first on the dashboard front.
She says we've not observed any impact on our dashboard sign ups.
The result of people going back to the office of increases I would shut in or anything like that in fact, our dashboard subs.
Continued to grow both on a year on year abuses in sort of in quarter on quarter basis due to record high. So we feel good that that's supposed to be a key component of driving better affordability for our consumers and the growth has been consistent underlying so that's great.
In terms of in terms of actual costs.
The reduction in <unk> cost was really driven by two things as we build the battery cost per order, which I mentioned earlier was really a normalization from the elevated levels last year because of increased fiscal stimulus. But also was if you recall last year increased advertising costs, because everyone is competing producers in that environment has gotten.
But better which has driven lower dash of costs in Q2, and those costs continue to remain.
Where they were in the last in the last couple of months.
<unk>.
Thank you.
Yeah.
Thank you.
Your next question comes from the line of Douglas Anmuth from J P. Morgan Your line is open.
Thanks for taking my questions I, just wanted to circle back on on profitability than just the EBITDA.
For the full year should we think about the.
The increase at the low end there should we think about the same dynamics that you suggested in <unk> in terms of driven mostly by inflation and is that all coming on the dash side of the business or are.
Are we seeing any improvement perhaps in your outlook there for bowl. Thanks.
Doug can you can you clarify that you're talking about Q3 Q.
Q4.
The full year outlook for EBITDA.
Yes, the full year.
We're bringing it up because we've made progress here in the business. Both in terms of overall scale as increase relative to our expectations at the beginning of the year. If you remember our guidance at the beginning of the year was I think it was 49 or so people at the top end so that has gone up.
Second we are seeing positive benefits in terms of.
<unk>, which we talked about earlier, which resulted in more revenue and EBITDA third nacho costs are trending slightly better and thats been driven by two things. It's product changes that have helped drive increased retention of our vessels as well as some of the macro factors such as.
Rising cost of living and declining consumer savings that are helping increase the retention of our existing fleet. So it's these these various factors that have given us even more confidence on the on EBITDA as a result of which we.
We have increased the low end of our guidance.
It's really a commitment to see.
But we're going to stay above breakeven.
Great. Thank you perfect.
Thank you.
Question comes from the line of Nikhil <unk>. Your line is open.
Hey, there thanks for taking the question.
Just on the on the Q3 guide if we take rolled out it looks like <unk> is set to kind of step down sequentially for corridor at ash. So just wondering if you can get there with the assumption that the July trends kind of hold roughly flattish to the quarter or is there some.
Further kind of softness embedded in that outlook and then as a second question just given all the macro concerns have you seen any indications that consumers are trading down here on the types of restaurants that they order from and.
And then any kind of color you can provide on the demographics of the customer base would be helpful. Thank you.
Sure maybe I'll deal.
But back of that so the first thing I'll say is our consumer metrics.
We remained healthy so if you look at what happened in Q2.
<unk> grew by double digits year on year and order frequency grew a piece of consumer acquisition continued to remain healthy and these signals provide a solid foundation for growth in the long term with respect to the second half specifically, we expect normal seasonality. This year. So in general we.
We experienced growth in Q4, and Q1 sequential growth in Q2, and Q3 is usually muted as a result of summer seasonality. In fact, if you look at our Q2 to Q3 growth last year Youll see that our GOP dipped a little bit and we're baking that in.
Into the guide the second point I'd make is the macro environment continues to remain uncertain and so we haven't seen any impact from weakening consumer spend at least so far in Q2.
But we're counting for that uncertainty because it could have an impact on normal course seasonality and the bounce back that you see in Q4, and so that's what we're baking into our guidance.
And then can you repeat the question on macro.
Yes, just any indication that consumers might be trading down and the types of restaurants. They order from and just a reminder, what's your demographics look like for the customer base. Thanks.
Yes.
What I'll say on that point, because at least based on the data we've seen so far we haven't seen anything that would point to a particular income beer or people shifting from certain types of restaurants to another in fact, I think we said in the letter.
<unk> increased because of higher item prices, but that was offset by fewer items per order as consumers responded to inflation. So it's less of the shifting away.
And adjusting their buying behavior from other restaurants that just.
We're spending the same amount was buying fewer things and that just goes to show you how resilient the category is convenience and delivery and dining units become if the loot box repeatable part of People's lives and Youre seeing them in the data.
Thank you.
Your next question comes from the line of Michael Mcgovern from Bank of America. Your line is open.
Okay.
Hey, guys. Thanks for taking my question I wanted to dig a little bit into the gas rewards program. Just curious I noticed you listed gas. The program is one of the contributing factors to dash or cost per order actually being down. So I was wondering is there a potential impact on a dash of supply or data cost per order.
<unk>.
When the gas rewards program and then secondly is there a chance that that could be extended beyond August 31.
If there is a potential supply impact from that and are the savings from that ending in August currently being baked into guidance for Q3 and for the full year.
Hey, Michael its premier maybe ill take a stab at your question that we spent over $40 million on the on the gas savings program and we received very positive feedback from dashboards.
The commentary I think you're referring to is.
It's not a dash with cost broadly reduce but.
What ended up happening is the retention of our existing fleet improved and that the improvement in that retention of the existing fleet was driven by three things is the product changes that we would need in order to help attention. It's the gas rewards program to shrinking the fleet.
The increase in fuel costs for doctors and third the macro factors that we talked about around declining consumer savings and inflation and so it's the combination of these three things that we believe improve the retention of our existing fleet that then resulted in us needing fewer.
New dashboards, and therefore, requiring a greater portion of our bachelors organically than we otherwise would that then translate into lower debt cost.
In terms of renewing the program.
Too early to say right now we have.
Assume that.
Bill.
We continue to operate.
Bachelor program through the end of August and we'll make it call it depending on where gas prices are is one of those other things at the end of the day it might be a cheaper way to obtain multinationals, but we will see as we made progress during the quarter.
Alright, great. Thank you very much.
Thank you.
Your next question comes from the line of Mark Mahaney from Evercore ISI. Your line is open.
I wanted to ask about whether you're seeing any.
Pressure from competitors in non urban markets out there on the restaurant supply acquisition side or consumer incentives and.
Since the Amazon Grubhub deal was sort of announced does that does that show up at any of the metrics that you track. Thank you very much.
I can lead off and then feel free to chime in here.
So far we haven't seen it.
Impact whether its recent competitor announcements.
Or moves to invest in certain types of geographies versus other types of geographies and the numbers, but but obviously, we're taking stock of what's happening, but I think it's important to remember regardless of what's happening in the external environment that our focus is making sure that we continue building the best products at the end of the day the customer whether it's.
For our platform or someone else's theyre going to judge all of US on the combination of the selection of places we deliver from the quality of that delivery experience in terms of speed timeliness and accuracy. The affordability of the platform and the customer service level and it's that combination I think that so far has been evidenced.
By our performance with leading retention and order frequency that separated us from the pack and we have to just keep making sure that we stay ahead on that dimension at the end of the day.
It's that combination that ultimately is going to judge us or anyone else and even if you offer that product for free if that combination isn't warranted.
<unk> needs to be for the customer I'm not sure it's going to matter.
Okay.
Tony.
Yeah.
Thank you.
This concludes today's conference call I would like to thank our speakers and thank you all for joining US today. This now concludes the call you may now disconnect.
Okay.
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Okay.
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