Q4 2022 DoorDash Inc Earnings Call

We disclaim any obligation to update any forward looking statements, except as required by law.

During this call we will discuss certain non-GAAP financial measures.

Information regarding our non-GAAP financial measures, including a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures maybe found in our letter to shareholders, which is available on our IR website. These non-GAAP measures should be considered in addition to our GAAP results and are not intended to be a substitute for our GAAP results.

Finally, this call is being audio webcast on our IR website, and an audio replay of the call will be available on our website. Shortly after the call ends with that I will pass it to Tony for some brief remarks, and then we'll go into questions.

Tony.

Thanks, Andy.

Everyone. Thanks for joining us today typically we just dive right into Q&A, but for today's call I wanted to say a few words at the top about Christopher Premier and Ravi I'm.

I'm sure. Many of you have seen the news that we're naming <unk>, president and Chief operating officer, and Ravi as CFO as Christopher retires from operating roles and day to day management.

And at seven plus years here, Christopher or CP, as we call them internally at <unk>.

To shape, our business and our culture. He infused in operator mindset across the company and coached an entire generation of our leaders.

On a personal level I will miss him.

I've learned so much from him and consider myself lucky to count them as a business partner and friend today.

As news has a chance to celebrate Cp's 33 incredible years as an operator and what he has helped US build it also shows the strength of our systems and the amazing team. We have built at door dash for beer and <unk> have been with us for more than four years and have mastered every aspect of our business.

Both are without equal in this space and I am excited for what they'll achieve and what we'll continue building together.

Over our near 10 year history door Dash has been fortunate to have had a remarkably stable and high quality leadership team.

Nonetheless, everyone in our team has a succession plan.

We knew that CP will always be here and we've been ready for this possibility for some time.

And we're always developing our bench of talent as well as our systems and processes. So that the right people can step up when ready.

We operate in a very complicated and dynamic space and the understanding of nuance and the ability to translate this intuition into pragmatic judgement takes time.

<unk> that we have two people we've been grooming for a while and a group of operators behind them to continue executing with excellence without skipping a beat.

Amir and Ravi are also excellent stewards of our unique culture.

Again, I want to thank CP for everything he has done and congratulate both premier and Ravi.

I'm Super excited for what's ahead because of CP likes to say, we're just getting started.

With that I'll turn it back over to Andy and let's get started with your questions.

Okay.

We can go to questions now to take the first question. Please.

Thank you as a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad and please limit yourself to one question and one follow up.

Your first question comes from the line of Deepak <unk> with Wolfe Research. Your line is now open.

Great. Thanks for taking the questions. So a couple of questions first Tony the guidance paragraph in the press release noted ongoing significant investments reflected in the outlook can you update us on what the largest areas of incremental investments planned for 2023 are which businesses start getting additional capital and are showing promising growth.

And scaling potential and then a second one for bill congrats on the new roles.

This definitely some uncertainty around potential regulation in markets like New York City I know the proposal is delayed until the end of the month, but how are you thinking about the impact on your business currently and kind of what have you factored into the preliminary 2023 outlook. Thank you so much.

Hey, Deepak I'll take a stab at both of those questions and feel free to others to chime in I think your first question was really just around how we were thinking about our capital allocation.

To start I think it's important to just level set on our philosophy for investing which has stayed the same ever since we've been a public company and really has been the same since day, one and building door Dash, which is our goal is to maximize long term profit dollars and so that both has a scale components to it as well as.

A unit economics component to it and to me.

Both of them are very important and it's most important to get the sequencing right. So that we are allocating capital in the most efficient ways. So when you look at this allocation.

For whether it's 'twenty three or in the years to come a lot of the investment is going towards and building our categories beyond restaurants, both in the United States as well as globally as well as our operations outside of the U S. As we're now live in 26 countries. I mean, I think it's been remarkable the progress that we've seen so far.

In both the share gains as well as just the level of product market fit that we've achieved in both of these both of these dimensions with new categories. We're now the largest platform with the most amount of partners outside of restaurants in North America.

<unk> gained share in the majority of our international markets and our volt business overseas in Europe is growing much faster than peers and so we're seeing a lot of progress there and we're doubling on that momentum at the same time, we're very observant about our unit economics and a lot of that.

Progression is reflected in some of the guidance that we shared for 'twenty three but also and what we expect to see on a go forward basis as we continue to improve the efficiency of our operations. In addition to the quality of our product level.

If anyone else wants to add on this.

Joining us for being maybe a little bit and then Rob you can take the New York City question, Deepak Tony alluded to.

Strategy to continue investing behind building out a new categories as well as international.

Sure.

We put up significant proof points that are quite encouraging in terms of our progress.

Scale. So just a couple of data points last quarter, we've said our U S convenience and grocery business. This was in Q3.

<unk> grew to over 80% that business grew 60% year on year in Q4. So it still continues to grow at a meaningfully higher growth rates compared to the restaurants.

Third Party U S grocery business grew 100% year on year, both in Q3, and Q4 and then vote.

We're doing a shareholder letter on a constant currency basis is growing 50% year on year, which is again significantly faster than its European peers, and so I think this is as positive proof points in terms of not just product market fit for our ability to drive scale on the platform. In addition, we've got proof points of continued improvement in unit.

<unk>, we've talked about a third party convenience business.

Earlier in 2020, do we said it would get to breakeven on the bandwidth profit pieces in 2022 in Q4, we did exactly what we said we were going to do we got to variable profit breakeven third party grocery business continues to improve its margin so to be clear we have a long way to go but as we continue to improve the products and the <unk>.

<unk>, we believe we can continue to drive outsized growth in all of these and as we are investing behind and continued margin improvement probably as you want to take the New York City question, Yes.

Yes. Thanks for your thanks, Deepak for the question on the New York sitting back we've been thinking about this for a while now the impact from a cost perspective is included in our EBITDA guidance going forward.

There are a number of levers from an operational perspective that we can put in place, including passing on any fees to our audiences to ensure that we can meet our profitability expectations.

Got it. Thank you so much for the answer is really appreciate it.

Yeah.

Your next question comes from the line of Brian Nowak with Morgan Stanley . Your line is now open.

Thanks for taking my questions would be two the first one on the dash past member number you know another another strong quarter of period of growth.

Talk a little bit about the biggest drivers of that dash pass adoption growth and any update on spend per member across the dash passers and the second one is sort of look at the 2023 guidance can you just sort of give us a little of any break down at all how we think about the the G O V and the EBITDA from the core U S restaurant business as opposed to all of you.

Emerging and faster growing businesses in the Asia and it's those two pieces.

Yes, maybe I'll start on the best first question Bryan and then.

Robbie can chime into 'twenty three guidance question in terms of what's driving the growth there really look the dash bus.

Growth has been remarkably consistent over the course of this past year, we exited 21 with 10 million subscribers.

Hitting this year with 15 million.

Pace of that growth has been consistent despite a variety of competitor offerings from both of our competitors in this space and that goes to is just evidence to me at least that the combination of selection price and quality that we offer through our program is resonating with with customers in terms of what's driving the growth it's not been partnership.

Driven some of our competitors might be.

As we speak.

That's a competitive strategy that others are using.

The majority of our growth at least as far as the Bachelors program goes.

It is from our own channels as well as through traditional performance marketing channels. So it's.

It's not partnership driven.

These are organic channels that ultimately drive the growth that we've seen in the product second piece continues.

Pretty consistently and so there's a lot of room to grow if you think about the size of the Nationals program 50 million subs, it's still a far cry from other programs, whether it's the number of Netflix members of Prime subscribers. There is a lot of room for us to continue growing and we're happy with the pace of growth historically, and we're not seeing any signs of that slow down.

Thanks, David Let me take the question on the guide.

We are not breaking out any specifics, but our U S restaurant businesses, the largest business and it's going to be the major driver both on the top line as well as the bottom line as we talked about in the shareholder letter, we do expect to increase margins both from our U S restaurants, as well as all of our investment areas going into 2023.

Okay.

Great. Thank you both.

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open.

Thanks, so much for taking the question, maybe if I could focus on Walt.

Can you talk a little bit in terms of multipart on elements of the subscription base of Walton what do you see as an opportunity set there as well as some of the competitive dynamic and I stood in investment mode and Walter what's that meant for a mixture of growth and possibly taking market share and some of those key markets for Walt thanks, So much.

Hey, Eric It's Tony Yeah, I'll, I'll get started and others can chime in.

I think the thesis for volt has remained remarkably consistent when we met the team two years ago.

We were first struck by how similar whereas operators and how we thought about just building businesses, but at the same time, what we were really impressed by from a business perspective was just the superior level of retention and order frequency. It had achieved with its product relative to peers and I think that's that remains to be what we've seen.

Today in the data is we've now been partners for a couple of years now where you just see the constant progression.

Of its outperformance on a relative basis, and it's just coming from those cohorts getting larger that retain at higher levels, who order and engage more often that effectively the geometric sequence of.

The growth that is what youre seeing on a relative basis, it actually isn't that much yet attributed to it.

Subscription products.

Anything else, which actually lends to.

It's the future potential I mean, there is there is a couple of things that we're pretty excited about one is just how underpenetrated. It is in most of its geographies and even its most mature established markets.

Bolt actually serves a fraction of the actual population and second to the premise of the question. There are quite a lot of products that volt hasnt, yet introduced and in most of these markets.

I think Theyre also doesn't really exist that much e-commerce in terms of its behavior relative to some of.

What you see here in the United States, and so I think theres a lot of opportunity across a variety of vectors for growth.

And just on the competitive dynamic question you asked the question of market share third party data, particularly in some of the countries of the World operates isn't clean, but if you just simply look at the.

Constant currency growth rate of 50% and you compare it to.

The European peers, or our European divisions of more global peers.

The world business is growing significantly faster so to me that suggests market share gains. Despite the fact that we don't have precise third party data to back that up.

Your next question comes from the line of Lloyd Walmsley with UBS. Your line is now open.

Thanks.

Try to try to bundle a few in the one.

You've historically talked about.

Guidance philosophy being you give a range you are not really targeting the right data.

Beat the high end or hit the high end, it's more a function of are there things to invest in that look compelling.

We find things that you.

You don't end up hitting hitting the high end is that still the way you guys think about guidance philosophy, and how do we think about.

The growth opportunities you see perhaps in the 'twenty three versus prior years, especially as you kind of get more comfortable I think with the bolt and a few of them.

In a few markets.

Hey, Lloyd.

Question on guidance philosophy, the way we guide.

Way, we run the business I mean, none of that's changed I think we've said historically.

The way we run the business is try to maximize scale and put as much on the top line as possible.

And we're investing in that regard in order to maximize scale.

Now as far as the EBITDA guidance goes the guidance range is really meant to create a sense of discipline. So that we ensure we can try to fall within the range now precisely where we fall depends on the exact investment opportunities available.

And the returns versus our expectations and so to the extent as you pointed out investments are available and we like the returns without a toy payback thresholds, we will invest in recent things we've seen it seen as we've outperformed on the top line, where theres been strength in consumer metrics, you've seen that I mean your metrics you see now.

Plus numbers that has contributed to incremental topline that has helped us.

Get closer to the top end of the EBITDA range. Despite a healthy level of investment. So that's just to clarify where we've landed in the range with the objective.

The philosophy has not changed in terms of how we manage the business and invest for growth and then be our objective is not to try to beat the EBITDA range with regard to land within it.

Your next question comes from the line of Michael Mcgovern with Bank of America. Your line is now open.

Hey, guys. Thanks, so much for taking my question.

I recall back earlier in 2022, you gave.

Number that you had 80000 net new restaurants and merchants I think in Q2 and I was curious how thats tracking at this point as we get into.

More potentially recessionary environment and do you have kind of an underlying assumption for how that will track in 2023, I guess, how important is it to continue to drive new restaurant in merchant sign ups.

Ya.

Yeah, Hey, Michael So we continue to see growth in the selection on the platform and that's true both for restaurants and Thats also true for non restaurants actually.

I'd say, there's kind of a confluence of two external factors.

In addition to just I think the team's great execution, which is one you just see more and more physical.

Physical retailers digitizing their entire business, which both as a tailwind to our marketplace of joining the marketplace for the first time I mean, if you looked at.

Some of the brands that we on boarded in.

2022, a lot of that even diversified beyond restaurants into the grocery sector with additions like sprouts or rallies, we announced all of these earlier this year.

Then you have <unk>.

<unk> and the retail category, whether it be sephora or dicks sporting goods.

So a lot of these retailers are digitizing more of their business and coming online to get that incremental business from the largest local commerce marketplace.

The second kind of thing Thats happening is the fact that because they're trying to digitize their entire operation that these retailers. They are also partnering with our platform products as well products like Doris strive toward ash storefronts.

Were there they're trying to run more of their business.

In a fashion that both I think takes advantage of the comedians economy, but also I think just creates a better business model from for themselves right, where they can make more productive use of their square footage by adding more and more sales into a fixed space and so that's what we're seeing.

We are seeing.

Quite a lot of additions.

Non stop candidly both on the restaurant side as well as on the non restaurant front.

And Mike just one technical point is that why don't if I restaurants goes out of business each year right. So.

This is a moving target this constantly new restaurants that are appearing that we need to make sure. We're staying ahead often so the sales team is always busy and that always putting a bigger and bigger targets in order to make sure that the selection that's available on our platform is as fresh.

Got it thank you.

Your next question comes from the line of Nikhil <unk> with Bernstein. Your line is now open.

Hey, there. Thanks for taking my question I had a couple please.

So in the S. One you had provided some really helpful disclosure around contribution margins expanding four mature cohorts.

Since then there's been some changes labor regulatory but also kind of you scaled up more yes more subscribers today, just wondering if that 8% threshold that those cohorts got too is that still the right way to think about kind of mature cohort profitability for the business today.

And then I had a separate question on new verticals.

Are they acting as a new customer acquisition acquisition channel or is it more a function of engaging the existing customer base. Thanks.

Maybe I'll take the first one.

Lower level margins.

And are progressing well we showed you last quarter. The total contribution profit for the U S restaurant business, which is essentially the aggregate performance of all of the courts and so if you take a step back the contribution profit of our core business has consistently improved over the past few years. Despite both post COVID-19 reopening despite drop going into which is regulatory.

Shock to the system inflation and other things and this is really the output of this focus on improving the efficiency of our logistics network and proving out the factory and so on and so the purpose of that disclosure was to try to provide a simplified view of what the progression that we've seen through the cohort margins, but on an aggregated basis and to give.

You have a sense of the incremental margins, we're seeing in the U S restaurant business that are in line with local side historically.

Can you remind me of the second question. Please.

Yes, sure just on the new verticals are they acting as a channel for new customer acquisition altogether or is it more about engaging with your customers you already have.

Okay got it yes.

It's two things so it's strategically important for for two purposes first we see a growing number of new customers starting with non restaurant category. So yes. It is a source of customer acquisition, because there might be customers out there that didn't find the restaurant. They were looking for and are now defined door dash interesting because their favorite grocery store their favorite continue.

<unk> stores on the platform so yes a.

A growing number of new customers start.

The journey with door dash with the new with the non restaurant categories.

And this is based on early signals.

The work we've done so far preliminary seems to suggest that customers who order from.

Both restaurant and non restaurant categories have an increase in their order rate, which is the product of retention and order frequency compared to those that are single categories. So.

Both of these things.

What are the reasons for us to continue building.

Multi category in order to be all things in local commerce.

For our cities and the last point I would make is.

We are seeing increasing adoption of our new verticals amongst us and EU based so we had said in Q4 last year or 14% of revenues had purchased.

Non restaurant categories that number in Q4. This year was 17%. So we're seeing steady growth, which has increased adoption in a larger base year on year revenues.

Thanks, Robert that's helpful.

Your next question comes from the line of Bernie Mcternan with Mizuho. Your line is now open.

Great. Thank you for taking the questions.

Maybe just a clarification I just wanted to make sure I got you right Premier that you said $15 million Dash pass subscribers at the end of the quarter, So that'd be.

Similar to our against the $10 million last year and then if you could just discuss the payback period on those subs and if the cost to acquire them has been consistent over the last year or two.

Yes. So first question, yes, $15 million right, so $10 million at the end of 'twenty, one increase to over $15 million at the end of 'twenty two payback period, we've not disclosed we continue to run efficiently does payback periods are actually not materially different this year.

Year than they were earlier on in the year. So if you're if what Youre asking me is has a competitor cross selling.

<unk> made it harder for us to <unk>.

<unk> subscribers, we haven't seen any noticeable impact so far I think I said earlier the pace of <unk> subscriber growth has been relatively consistent each quarter and on top of that we track the number of new customers that joined the industry our share of new customers joining the industry has been consistent with past dues and in fact has actually increased towards the <unk>.

And so both of these data points give me comfort that we haven't seen any noticeable impact from any.

Any cross selling.

Great. Thank you.

Okay.

Your next question comes from the line of Doug Anmuth with Jpmorgan. Your line is now open.

Thanks, So much for taking my questions I just had a couple about the 'twenty three outlook I was hoping you could talk a little bit more about.

CPI is just kind of how you see them.

Yes.

Frequency and I guess in for Jason.

Okay.

Model.

Awesome.

And then secondly can you talk about gross margins.

Good.

Perhaps headwind for next year.

Do you need that to me.

Got it.

Thank you.

Hi, This is Robin let me take the question on the first piece on the 'twenty three guidance itself in terms of Kpis. Our goal is to continue to drive both monthly active users as well as order frequency.

Continue to see strong signals in our retention, which has stabilized over the last several months newer cohorts continue to come in and order frequency higher than what we've seen earlier in the year now to your second point.

Okay.

Can you repeat your second question.

Is it growth.

Gross margin function.

Goodbye.

Sure.

Yes.

Yes on the gross margin piece itself, if you actually break apart the gross margin corridor <unk> gross margin, excluding won't actually increased on a year on year basis that was driven by improvements in industrial cost as a percentage of jewelry as well as credits and refunds.

Part of that was offset by the higher insurance costs that we've seen in the business.

On a consolidated basis gross margin declined because of mix shift towards award looking ahead and pointed three we do expect gross margin to be higher than Q4 levels.

Great. Thank you.

Your next question comes from the line of Michael Martin with SBB. Your line is now open.

Thank you for the question a question on new vertical businesses.

If you look at something like package pickup it suggests that the time sensitive nature of your fish and core restaurants could be lower and maybe higher levels of batching. So I was wondering if you could speak to any of the early demand trends and then unit economics Youre seeing on some of these new verticals like packaged pickups compared.

Two prior new verticals and then just lastly, maybe any update on non restaurant GOP growth.

Growth would be would be great. If you could thank you.

Yes, sure maybe I can take the it's Tony I'll I can take the first part of the question and someone can answer I think the growth rate question, which which we do.

Disclose before so on the.

On the package piece.

We're obviously very excited about what we can build or when you think about it we have 3 million <unk> that come to the platform every 90 days.

And we have the most sophisticated logistics systems for last mile and when I think about the opportunity it's quite a men's just because most of the last mile systems were built during a time when frankly, there wasn't e-commerce rights, which means that.

A lot of the setup isn't really well suited for doing true last mile deliveries and that's that's actually why we think there's quite a lot that we can do that if we can deliver ice cream in 10 minutes or.

Pizza.

In a similar period of time, we can certainly deliver.

Something that is less perishable with greater time and to your point theres lots of opportunities to make the logistics really efficient so.

We're quite excited about what this can be I do think that over time. In addition to becoming the largest local commerce marketplace will also be the last mile infrastructure in most cities globally. It's just going to take quite a lot of time to get there and the package piece has seen quite a lot of demand, but it's pretty early I would say.

In terms of how it works and so I think it really is a good.

Example of how we try to solve customer problems at door Dash and a lot of why we got into that business was really seen some of the requests from our customers come in to support and then acting upon it and running an experiment and then seeing if we can actually build a product that customers love.

And then we will actually consider the scaling.

Afterwards, and so it's still in the period of finding and achieving product market fit that's really aware of that.

Impairment is right now, but we have many of these experiments across the board at <unk> and that's one of the reasons why it's so fun to work here.

Yes, and on your question on new categories growth.

Mentioned this earlier in the call the reiterated.

Our U S convenience and grocery business grew roughly.

Roughly 60% year on year in Q4, our U S grocery business grew roughly a 100% year on year in Q4, and then our board business grew 50% on a constant currency basis again visa visa.

These are attractive growth rates and we're happy to post.

Thank you so much.

Your next question comes from the line of Brian Fitzgerald with Wells Fargo. Your line is now open.

Thanks, maybe related question, Tony you have large and growing.

Blake's and datasets.

<unk>, which is maybe the most important driver of <unk>.

AI and machine learning models, and it's certainly front and center in the press Nowadays I'm wondering if you could talk a little bit about how you think these processes impact your business and how you leverage them.

On a daily basis.

Yes, it's a great question like look Theres Im actually really glad that AI is having its kind of mainstream moments. These days and I think there is quite a lot of potential here and I do think a lot of it is actually.

Couched in the way that you described it which is that the importance of the data and taking that data into translate into pragmatic product products that actually solve customer problems right. That's kind of the key and so for us we've actually been.

Working with different AI in each of our products probably for the last three or four years now.

Some of it you see in the ranking in the recommendations product we use with consumers a lot of it you see behind the scenes with logistics.

You see that now also in our support products I mean, it's really getting us across the board in other words I think it's it's.

Very hard when I think you are at the precipice of a technology to figure out the exact application in which it's going to really realize the technologies full potential, but we certainly see all of these.

Benefits.

Small improvements that then compound over time and when you're at the scale that we've achieved in our business lines. It really adds up and so I really think that this is gonna be a big push for us on a go forward basis or a continued big question I should say on a go forward basis, and it's something I'm Super excited about it.

Yeah.

Your next question comes from the line of Youssef Squali with curious Securities. Your line is now open.

Great. Thank you very much and premier and Ravi Congrats so I guess, a two part question one.

Macro around the consumer seems to be a bit wobbly right now between a strong employment and dwindling balance sheet. I was wondering if maybe you can comment on what you've seen so far in January and February I know you've already guided in the guide looks really good but if I look at the guide for the year. It seems like Youre not really assuming much of an improvement.

One two Q4 at least from a <unk> standpoint, so maybe can you just address what youre seeing right now and kind of what you're baking in in terms of your guide for the rest of the year in terms of the sequential growth.

Let me take this one if you look at our results.

Consistently delivering double digit growth rate in jewelry over the last seven quarters. In fact, our revenue is actually outpacing our jewelry growth rate. When you look at the core consumer input metrics. They are just coming off of a record quarter in terms of monthly active users as well as desktop subscribers.

What we're seeing in the business the order frequency of the newer cohorts continues to be higher than the older cohorts.

The retention of our newer cohorts has been pretty stable for the last several months.

To your question on Q1 itself, it's off to a great start we.

We are seeing continued share gains since the beginning of the year and thats whats baked into our guidance for the rest of the year as well.

Got it and then just sorry, just to add on the full year comment users its premiere.

As already said, we've got we're seeing strong consumer metrics currently right within Q4 and strength into Q1, and so you've got high visibility into the first half of the Euro which is why you're seeing a strong Q1 guide for the full year, particularly as you as you talk with the second half.

Uncertainty around macro issues, and what kind of a beacon that uncertainty and also your outlook because it's not about a lack of confidence in the fundamentals is about uncertainty on the on the macro conditions.

Super helpful. Thanks Premier.

Yeah.

Your next question comes from the line of Andrew Boone with JMP Securities. Your line is now open.

Thanks, so much for taking my questions.

Delivery hero has made significant investments in its form.

Can you help us by DFS.

One of your <unk> convenience.

And then secondly on corporate the significant opportunity can you just update you.

Your progress in terms of making more profit relationship.

Thanks, Matt.

Okay.

Could you repeat the second question sorry.

Mohan.

I'm thinking about the the old seamless opportunity with corporate.

Just having a more of a corporate relationship.

And office ordering as more people are back in August .

Yeah, I can take both of those questions. It's Tony So I think the first question was around.

Dash smarts so.

So we haven't broken out.

The investment piece behind us.

Our budget for dashboards, but here's kind of how I've thought about dashboards, which as you know first I think it's important to acknowledge that it's not a stand alone.

Right. It's a feature built on top of the largest local commerce marketplace that has the most number of consumers who are the most engaged and also the most number of doctors, none of whom we have to reacquire.

The second comment, which makes it just much more capital efficient from an investment perspective.

Relative to a standalone efforts the second comment I'd make here is really the purpose behind the investment. So if you think about.

Where.

Non restaurant delivery is today.

Things like grocery delivery take as an example, it really hasn't achieved the full potential of what we believe the category could become I mean at the end of the day the customers looking to get everything they ordered inside their cars theyre looking for it at prices that are relatively the same as what they would expect to pay in store and obviously, they expect the delivery with greater convenience.

If they were to do it on their own.

But today.

That's not what the current day products offer.

But at the same time.

We have to make sure that we can work together with retailers to bridge. Both the short term challenges of working with third party retail infrastructure that isn't optimized nor was it designed for delivery.

And create and invent a new model.

In which we can co create with retailers such that we can move the industry forward and actually solve these customer problems to achieve the full potential of grocery delivery or non restaurant delivery and so that's really the purpose and we found quite a lot of different use cases once you.

Actually master the basics retail, which we're still learning how to do and we're only about 18 months into the effort, but we really like what we see and.

But I think it's important to understand just from a capital efficiency perspective, how different it is relative to doing it on a standalone basis and I think your second question was around corporate orders.

I agree I mean, I think that obviously it took a bit of a hiatus during the onset of the COVID-19 pandemic we're all.

Obviously offices were shut down and people are less confident about how work would be done and so on and so forth and thats actually win.

A lot of our team was able to.

Very quickly pivot into building products that would actually sulfur workers at home as all of US kind of got more accustomed to the idea of working remotely or not in the office, especially now as people are getting back into the office and I think things have stabilized effectively in this post COVID-19 world I definitely think that that's a big opportunity.

Going forward.

Thank you.

Your next question comes from the line of Steven Fox with Fox Advisors. Your line is now open.

Couple of questions first you mentioned in the letter how are you.

Managing for better affordability with your customer.

Customers can you talk a little bit more about that in weather.

That brings you under like an inflation curve, we would think of broadly or or how do we think about that going forward and similar question on the paragraphs talking about how you've gotten more efficient.

Obviously, youre going to get more efficient this year too on some of the things you mentioned, but like how does that curve look this year versus last year in your minds as it contributes to EBITDA. Thanks.

Sure maybe I'll take the first part of the question, which I believe was around affordability and then I'll, let Robert take the second part on the efficiency side, so on the affordability side.

I mean, we've.

As disclosed in the letter we've taken down transaction costs for consumers by about 8% in the past year and we're always trying to drive this down right and we're always trying to drive this down as we add selection improved delivery times improve the accuracy and the quality of those deliveries. So obviously, we're trying to do more than one thing at the same instance, but when it comes to affordability.

Certainly a dash path has been big driver a lot of the affordability gains for our customers.

Especially as we continue to see consistent adds into the Dash Kras program, but at the same time you know we're working on quite a lot of other initiatives as well to make sure that we can keep making the service more and more affordable certainly we're trying to beat inflation, but hopefully we can do much better than that.

Especially as we find more accretive ways and delivering more and more value back to consumers.

Let me take the second one on efficiency. So that's when we think about efficiency. It always starts with improving product quality when we improve product quality. The retention of the platform goes up whether it's consumers or doctors when the retention goes up we don't have to spend as much on retaining existing numerous investors, which drive leverage on our sales and marketing.

The second advantage, we have and to improve product quality as the fulfillment cost per order goes down whether it's support cost Gaslog Warsaw refund.

Also in addition to that as the product quality goes up awareness increases which makes us.

The ability to acquire consumers access at attractive prices, even more attractive.

Combination of these three factors is what's driving the efficiency youre seeing in the business and I believe there is a lot more room for us to continue to improve product quality, which will further drive efficiency gains and our goal is to reinvest that efficiency back into driving scale in the business and some of the efficiency gains that you see are included in our EBITDA guidance going forward.

Great. That's all very very helpful. Thank you.

Your next question comes from the line of Ron Josey with Citi. Your line is now open.

Great. Thanks for taking the question Premier Congrats on the promotion of President Ravi in your new role I wanted to.

Maybe a follow up for <unk> I think I heard you say <unk> grocery was up 100% and <unk> I think thats the same growth rate as in <unk>. So talk to us about how they use cases evolving here is as grocery and door dash, primarily still top off or are you getting Sunday orders any insights there would be helpful. And then we're now a few months post the restructuring at the end of November and so we'd love to.

Your insights on the savings, but perhaps more importantly, just progress operationally around efficiency and while still building and launching new products, how thats going internally. Thank you guys.

Yes, maybe.

I can start on on both of those questions and then I'll, let others.

Add to them I think so again on the first part with respect to grocery yes. It continues to perform and continues to take share and Youre right I mean the entry.

Into third party grocery really four door dash has been in solving this pop up use case, right, where you can think of it almost as being the express aisle and in many ways and that was a way to familiarize ourselves with consumers as we kind of.

But moved outside of the restaurant category and I think it was certainly something that worked I mean, you see it in the games and share, but you also see it in the improving profitability of that business.

At the same instance.

We've certainly been working a lot on.

Creating more and more an item based shopping experience at door Dash now that takes lots of work on the backend around catalog and many things.

And I think that's also now showing promise where we can solve both the use case of top up where I think we're quite advantaged advantaged with our logistics network as well as just how consumers perceive us but also the stock up use case, where people are buying bigger and bigger carts for there.

More staple items and so we're now.

Both of these types of use cases, even though we entered the category with more of a top up use case.

On the second question.

I'll, let you know maybe others time.

Some of the numbers, but from an efficiency perspective, certainly that was a really painful decision right I think I think it's helpful to have some context here.

How we got there were.

Over the last three years.

The business revenues have grown about seven acts and we were really trying to catch up to that growth. So the head count grew about forex.

And so we're playing catch up but then we kind of didn't get it exactly right and kind of got a bit of ahead of our skis on the hiring and so that that made certain things a bit cluttered and certainly we needed to make sure that we right sized the organization. So that we're set up great for the future, which we feel very confident about from an execution.

Perspective, we actually feel like it's made us more focused on the most important things and and as a result by Decluttering some of the.

Management layers as well as maybe coordination meetings that were.

Once quite a large cost to the system, we're getting a lot better. It doesn't mean, we're perfect. We have many things that figure out we're still building many things as we.

We continue to innovate beyond restaurants, as we expand internationally and as we expand beyond our marketplace and build these platform products, we're always going to keep investing and invent new products, but we have to do it with a more focused basis.

And Ron.

Let me talk about the rest of it I just wanted to confirm so yes in Q3 of last.

We typically do we said the grocery business have grown over 100% in Q4. It grew roughly 100% just shy of 100%. So those numbers are right.

Hey, guys. Thank you.

Just on the leverage itself, yes, we do expect to drive leverage on our operating expenses in 2023 and Thats been included in our EBITDA guidance that we've given.

Thanks Ravi.

Your next question comes from the line of Brad Erickson with RBC. Your line is now open.

Yeah. Thanks, just two follow ups I guess, one on the health of the consumer touched on it earlier being I guess broadly stable just curious if you look at Europe I think.

Some others have commented that may actually be getting better and maybe even accelerating at the moment just curious if youre seeing that too and what you've assumed as a trajectory there for the full year guide for Europe , and then just one clarification on the grocery and convenience is there any.

60% growth you've called out is there any meaningful delta there between the organic growth rate.

60% are they basically about the same.

So on the first question.

We haven't broken out the board, but we are projecting strong growth for next year.

One caveat I will I will make Brad is when you look at Q1 Q1 has the almond growing comp issue, which I suspect youre here.

Or even from other companies as well Q1 of last year.

Spike because of all the krona, so youll see that in the growth rates of <unk>.

For Q1, this year, but that doesn't change.

<unk> gone through.

And the full year outlook for volt.

On your second question.

I didn't understand I understand what you meant by organic growth for us the entirety of our convenience and grocery business.

That growth is all organic so I'm not sure if that's what you're asking perhaps I misunderstood the question.

Yes.

Yes.

I think the numbers that we were giving out or just use so that was organic.

Got it thank you.

This concludes our Q&A for today and for today's conference call. Thank you. So much for attending you may now disconnect.

Yes.

Yes.

Yes.