Q2 2023 DoorDash Inc Earnings Call
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Good afternoon, and welcome to the door Dash second quarter 2023 earnings call. My name is Brianna and I will be your conference operator today. Please.
Please note that this call is being recorded.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time. Please press star followed by the number one on your telephone keypad to withdraw your question again press Star one.
I will now turn the call over to Andy Hargreaves you May begin your conference.
Thanks Breanna.
Good afternoon, everyone and thanks for joining us for our second quarter 2023 earnings call I'm very pleased to be joined today by co founder Chairman and CEO Tony Schuh.
CFO Ravi you know kind of.
We'll be making forward looking statements during today's call, including our expectations for our business financial position operating performance our market guidance strategies, our investment approach alignment with merchants and doctors and the consumer spending environment forward looking statements are subject to risks and uncertainties that could cause actual results to differ.
Materially from those described many of them. These uncertainties are described in our SEC filings, including form 10, Ks and 10-Qs.
You should not rely on our forward looking statements as predictions of future events, we disclaim any obligation to update any forward looking statements, except as required by law during.
During this call we will discuss certain non-GAAP financial measures information information regarding our non-GAAP financial measures, including a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures may be found in our earnings press release, which is available on our IR website. These.
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, an audio replay of the call will be available. Shortly after the call ends Briana I'll pass it back to you and we can take our first question.
Thank you.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Your first question comes from Deepak <unk> with Wolfe Research Your line is open.
Great Hey, guys. Thanks for taking the question, maybe one for Tony and one for Rami, Tony can you give a little more color on what categories drove the acceleration in U S. Non restaurant verticals into Q. Other rainy that is sort of at an inflection point of the ESCO, where we can expect healthy contribution to growth over the next few quarters.
And then maybe one for Robby.
Illustrative Excel Caf was very helpful and can I ask maybe if you kind of like think about dash in the context of that where the company. Currently is do you think you are in year, two or year for in the chart or maybe asked another way are you at a place right now where the rate of profitability increase in many different businesses is kind of odd.
Offsetting the rate of losses.
A few which could lead to sort of sustain profitability improvement or is this sort of a transitory period in which you are looking for signals before you scale investments and many other products. Thanks. So much any context, you can add would be great.
Okay.
Hey, Deepak, it's Tony I'll take the first one.
<unk> growth outside of restaurants.
Well I mean.
Hopefully you all saw in our our June update when we celebrated 10 years as a company, we actually have rolled out.
One of our biggest product updates.
And that really well.
One of the featured.
Or are things that we shipped was actually the launch of both of our grocery and retail tabs.
And I think this is another good.
Example of how we do product development in a very disciplined way, which kind of I think the lines a bit to the to the sentiment behind your second question, where everything effectively a stage gated.
And we give maximum exposure or investment once we see that they are ready for prime time, and I think when it comes to a lot of these categories outside of restaurants.
I think you saw a lot of that growth for us happened in the first couple of years with the pandemic in which we launched with third party convenience retailers, whether they'd be the likes of Walgreens, Cvs 711, and many many others.
But then over the last two and a half years, we built a multibillion dollar grocery business from scratch.
And it was really ready for primetime exposure and that's one of the things that you saw.
We now have more non restaurant stores on the platform in North America versus any other platform, we're growing faster than every other platform and gaining share dramatically.
Brent in virtually all categories and certainly in very specifically also in grocery you also see this in retail we've seen a lot of growth in categories that.
Is even outside of food, whether that'd be in sporting goods with Dick's sporting goods or office suppliers with the office depot officemax or the pet category with Petsmart.
Petsmart and Petco, how are the health and beauty category for.
For us so a lot of this is happening and we and we found ourselves in a position where not only where we are seeing very resilient growth in the core U S restaurants category at all time high frequencies, which gives us just more shots on goal to introduce a lot of these new categories, but we also saw the readiness and.
In terms of product market fit from a selection quality of service and affordability perspective, when it came to our grocery in our retail offerings and Thats why we made the announcement and why we shipped.
The features that we did in June .
Hey, Deepak to your second point, maybe taking a step back and look what youre seeing in the business is a combination of a couple of things one the growth in the business continues to be very strong in fact in Q2 growth actually accelerated compared to Q1, given the business is positive on a unit economics basis.
Driving some of the upside in EBITDA that you're seeing in the business at the same time, our core restaurants business is continuing to improve in terms of overall profitability as well as both new verticals as well as international are also becoming efficient when you look at the unit economics year on year, that's driving the underlying EBITDA say that youre seeing in the business, but for US as you know it is always important.
But we're constantly looking to reinvest back in the business, we did that in Q2, as well, which drove some of the upside in growth as well as the category share gains that Tony talked about.
As I look forward are willing to constantly reinvest because our goal is to build the largest local commerce business possible and reporting back to the chart Ideally the chart goes on forever because they are always looking to manage efficiently. They're obviously looking to reinvest back in the business to build the largest local commerce business possible.
Yeah.
Thank you.
Next question comes from Mark Mahaney with Evercore. Your line is now open.
Okay. Let me try two questions one high level question for you Tony you talked about solving big problems for local commerce. So could you just sketch out what you think are some of those big problems that you've not yet fully or not yet partially addressed like logistics and marketing like when you think about those problems beyond that what do you think are the biggest problems for local commerce and then would you prefer.
Any color on just talk about what the acquisition here, we are a year on in how do you think that's fair to seek gone according to plan better than plan the.
Year on in the positive and negative surprises you've come across thank you very much.
Yeah, Hey, Mark I'll take both of those questions.
On the first one with respect to large problems to solve the first I think this probably goes without saying, but I think it's worth.
Repeating just given the resilience are continued resilience I should say of the strength of the restaurant delivery business and even though that business has achieved a great deal.
It's still single digit percentage of representation of the U S restaurants industry in terms of total sales. So I think I don't want to.
Just skip over some of the businesses that we do run today versus just talk exclusively about the invention of new businesses are solving new problems. So I think there's still a lot to solve in our core business, which I believe has many many years.
Runway in it and when we talk about some of these new categories. That's obviously almost starting just many years behind given the fact that we launched a lot of these new businesses.
About two and a half years ago. So.
I want to start with that as context, but.
I think when you talk about a lot of local commerce I mean, let's think about it I mean, the the pandemic in many ways was a very.
Alarming and aggressive wakeup call for every business to be an omnichannel business and I think it.
For a period of time enforced.
Physical retailers to exclusively invest in online because that was the only channel available to them, but I think that as we now kind of especially as E Commerce goes back into it.
A bit of a steady state curve of adoption I think theres a lot of problems there to solve I think that there is the world only tends to want to go faster.
Customer expectations tend to only going one direction when it comes to something like delivery whether thats.
With food or other types of items beyond food.
That is only going to happen at a greater and greater rate than if you were a physical retail or you need to think about how youre going to participate in that and so there's lots of logistical problems. We have to solve in order to do that and we're investing quite tremendously.
And building up.
These partnerships, but also in a lot of infrastructure. So that we can create the tooling.
Products like dashboard, such that we can.
Work concurrently with all of these retailers so that they can actually compete.
At the highest scales.
With global ambitions, so I think that's it.
A big part of it is still making sure that last mile delivery can be true not just for a handful of retailers, but for every retailer small medium and large.
Second and beyond this theres a lot of tools that now local businesses need to invent I.
I think a lot of times people think Oh ecommerce. That's just the website or that's just a mobile app and youre done well actually everything needs to be rethought up right. For example, if you used to take care of customer support request inside your store, whether its a shopping requests where a dining request, but you can't do that anymore. If the orders are happening through your digital.
Channel Youre going to have to invent customer service in a different way if you're used to.
<unk> been once very successful buying real estate at the right locations at the right prices and effectively using that as a way to market well that's no longer good enough and there's going to be in many ways in which you're going to have to think about not only attracting customers but building.
<unk> relationships with all of the customers that you do have and so I think theres lots of problems to solve but.
Whether that's in logistics, whether that's customer service, whether that's it.
Honestly every part of what you do now needs to turn from physical to digital that's what all businesses need to do.
So theres a lot a lot of work and the roadmap ahead it is quite lumpy.
Your second question was about volt.
<unk> bold is meeting our expectations, which were really high to start with I mean in general we tend to have very high expectations of ourselves and I think when you look at the volt performance or.
What are the thesis I should say starting a couple of years ago before we closed the partnership a year ago. It was really betting on.
A world class team that has achieved the highest retention and order frequency in other words built the best product in the world.
And whether or not we can.
Keep growing those geographies, which have long runways for growth as well as take some of their exceptional management and run a global portfolio and so those are kind of the two ccs and involved a couple of years ago.
On the first point of whether or not we can keep growing I mean, I think you can kind of see it in the growth rates, we're growing at multiples of what anyone else is growing.
Internationally and we're also improving our unit economics at the same time.
And so I think from a business perspective.
That's really meeting the bar the second is more of a management perspective.
And what you see there is that we'll actually Micky and the team actually runs all of door dashes markets outside of the U S and so I think we're seeing.
A very a very strong start on that front as well as that team now is taking up a bigger geography, and we now get to split the management bandwidth in the right way. So that we can give international which is a huge.
That's an area for us the rights single threaded focus and do the same for our U S business as well.
Thank you Tony.
Okay.
Your next question comes from Nicole <unk> with Bernstein. Your line is now open.
Hi, there. Thank you for taking the question.
I had one on the investment framework as well in the letter. So you mentioned kind of a six year period of investment and a 1 billion spent on U S restaurants before I start to generate some cash when you look at the investment areas you have today do.
Do you expect them to take longer to return and costs more because they might be more operationally complex. So theres more incumbents.
Or do you expect a return to actually be quicker because you've already built a strong network of consumers and dashes and then maybe a second question Tony you've talked about people eating 20 to 25 times a week as the opportunity. What's the ceiling you think on frequency for your business and kind of the primary constraints.
Between bridging the gap to to that point. Thank you.
Yeah, Alright, well Nicky maybe I'll take both of those I think the first is on the how.
Do we think about investments and the second is really.
Around where we are on on frequency and where it can go on the first.
Yes.
Let me just say, we kind of offered.
A quantitative framework.
In the shareholder letter on how we've thought about things, but but it was meant as a guide not as.
Something that is just a formula that always can be applied right. I mean, sometimes these things take judgment and and so the answer to your question about.
Our timelines are investment dollar is going to be larger or longer or shorter or or I guess less it really depends on the problem at hand, right. I mean, obviously, we have the benefit of having the largest local commerce audience that has the greatest frequency, which gives us the most shots on goal, but that doesn't mean that.
<unk>.
We just wind de facto I mean, we have to still build the best in class product for each problem that we're trying to solve and then I think the benefit of the scale will actually really translate in a way that makes productive sense for all of the audiences and frankly generate a great return for all for everybody and.
So.
I don't think there's necessarily one way to think about this we try our best to play a first principles approach to each problem.
Obviously, you want to take advantage, where we can but the way we tend to think about this is first and foremost how do we solve a problem with that.
In a way that is significantly better than how incumbents are doing it today.
Make sure that we are very disciplined in both the product investments as well as the dollar investment in which we stage gate.
Those investments because precious resources, whether it's the attention we can given our in our distribution where the dollars that we have in our budget.
Or frankly, the people that we have working at the company.
That's a big consideration and then the final consideration is whether or not we see an efficient path towards strong long term economics, and so that's and just in general how we think about it but I wouldn't over rotate necessarily on.
That being the exact formula that we have to repeat over and again.
Your second question I think has to do with frequency and its long term potential.
The short answer is we continue to see the numbers grow right and I think on the one hand, there's a few ways to look at this I think.
In your question I think you're kind of saying well there is.
There's 20 to 25 eating opportunities be it shopping opportunities on top of that per week, we're talking about north of 100 occasions, a month, that's certainly I think theoretically Max and I think.
That's one way to look at it. We also can look at it from just some what are some of our power users are top decile users are are actually doing today. So it's not even a theoretical number and we think that we can keep drawing much much bigger I guess is the short answer I mean are our top decile users are you.
Our service.
A very large number of double digit times I guess is what I would say and so for us it's thinking about well how do we actually graduate people to that and the answer is there isn't.
Silver bullet here right. It's the combination of the selection of stores the affordability of the program the quality of the service and making sure that we get the efficient we can deliver the efficient frontier for each individual user each individual location and if we can do that these numbers will continue moving up.
Okay great.
Our goal is to.
Target track our teams for both unit economics as well as volume, we're comfortable with the timeframe as long as they're making progress across both of those and if you look at the results of both of our investment areas. We are growing quite nicely as well as the unit economics continue to improve we obviously want to run these businesses efficiently. We are happy with the progress we've made so far.
Great. Thank you both.
Your next question comes from Ron Josey with Citi. Your line is now open great.
Great. Thanks for taking the question guys maybe too.
Tony I think you mentioned this earlier as well, but just the frequencies at all time highs in what is traditionally a slower quarter or two can you just talk about the drivers here in the here and now I guess more as this dash passengers, having a greater impact.
We're cohorts ramping faster the revamped app as we talked about it I'm sure. It's all of the above if there's anything to call out, though that would be interesting on frequency and then Ravi on contribution profit I think the press release talked about U S restaurant marketplace generating annualized $2 4 billion contribution profit. This quarter. So can you just talk about.
And that's essentially all contribution profit for the company. So talk about the margins across non food I think convenience or was this a sustainably positive they're talking about grocery Walt any insights there would be helpful. Thank you.
Yes, so on the first question.
In terms of where the growth is coming from.
We're seeing it mainly in.
Two big areas right one is users.
And the other is the frequency and you are right in that there is no one individual driver of this I mean desktop did have a record quarter. So it's.
You know continues to achieve all time highs.
So youre right as one of the assumptions that that was one of the drivers, but we're also just seeing <unk>.
Stronger and stronger cohorts I think that this is a question at the certainly at the beginning of the pandemic and certainly at the beginning of the reopening of the first reopening in 2021, but I think what you've seen now for eight to 10 straight quarters.
In addition to the output metrics and the <unk> revenue.
Input metrics, we're seeing are stronger and stronger cohort retention and growth and that's a combination of offering the best selection quality affordability. The new use cases to your point around non restaurants, certainly adds to it but there's also improvements in the core restaurants business as well. So I think all of these things.
It is adding to it but the short answer to your question, what's driving the growth its users and frequency.
Okay.
Just a couple of points there on your second question I mean, the $2 4 billion contribution that was the U S restaurants contribution from Q3 of last year.
Honestly that has grown substantially since that point.
What youre seeing in the businesses that we are continuing to improve the underlying product, whether it's adding more selection and improving the quality of the product.
That's driving efficiency of all lines of business. What we saw this past quarter was like I mentioned earlier, all restaurants improved in terms of unit economics as well as profitability.
Both new verticals and international areas improvement in terms of unit economics.
Specifically when I look at the new vertical area last year, we mentioned that third party convenience was positive on a unit economic basis. It has continued to grow from that point, both grocery as well as our smart there's been a step change improvement in the unit economics compared to last year International business accelerated in the quarter as well as unit economics improved again all.
All of the unit economic improvement, we are seeing is being driven by product innovation driven leverage our industrial costs, we've driven leverage across credits and refunds as well as sales and marketing.
That's great. Thank you guys.
Your next question comes from Lloyd Wamsley with UBS. Your line is now open.
Thanks, two questions. If I can just first just following up on Mark's question earlier can you maybe give us a sense of some of the interesting greenfield investment areas that might be interesting to you. All it seems like maybe there is youre open to things that are perhaps less directly adjacent than some of what we've seen.
Already like advertising work.
Or otherwise.
Im misreading that anything you can share there and then the second one it just it seems like we're in a sweet spot getting healthy growth and good margins.
Clearly.
Restaurant business firing on all cylinders and good progress on unit economics of the investment areas, but yes.
As you showed in your letter sometimes unit economics are improving a lot as you fuel investment behind that it can be.
A headwind and an absolute basis, where are we in that cycle with some of these investment areas like should we expect.
While unit economics are getting a lot better.
And then a step up in investment behind that that may mute the flow through of that.
Anything anything you can share on that kind of medium term outlook for for where we are in that cycle there on existing growth growth investments.
Yes, maybe ill.
Take a shot at the first one and maybe say a few things on the second one two and then I'll.
And ask Ravi to jump in on the second one as well I think on the first one.
I mean, you are right in saying that there is no like exact formula of.
What are the exact adjacent problems to solve when it comes to unlocking local commerce right. I mean, I think if you think about today, even e-commerce is still a.
Minority.
<unk>.
Of overall retail and then when you look within local commerce. So the small medium and large physical businesses offline that are trying to come online and kind of compete against maybe digital only or kind of traditional ecommerce players I mean, they are even further behind race and so our mission has always been.
To grow and to empower these businesses. So we have to on one hand build a marketplace that can drive incremental demand.
At profitable sales and on the other hand, we have to give them tools and so some of these tools are related but at the end of the day. It's just.
What does it take to solve the customers problems and we think that local businesses.
Can solve a lot of the problems when it comes to consumption that traditional ecommerce businesses solve and and so we have to just make sure that we can build the tooling to allow them to do that both through their own channel as well as through ours.
I think on the second question.
I think one of the important things here is.
We certainly are.
Just kind of like two thoughts I have on your question. The first is we don't get to control when product market fit occurs right and.
So a lot of the.
Yeah.
Even though we would love to have prescribed organizational timeline set for round every project with a perfect formula that's exactly replicable across all projects, that's not exactly what the customer cares about what the customer is going.
Yes votes with their activity, whether or not we've done a good job and so for US you know sometimes these things are you move one step forward a couple of step sideways, one step backwards three steps forward and I think that.
While.
We demonstrated in our restaurants business as well as these investment areas is that when you step back and take a look holistically or over a multiyear horizon, you'll get this nice looking.
Looking up into the right graph, that's not usually what happens in real life right. So I think it's pretty hard sometimes.
You were just making investments.
During the period, especially as they're searching for product market fit.
To have any prescribed timelines.
But on the flip side. It doesn't mean that you have to that at all in that period of time, either right I think a lot of what we're trying to explain or a shareholder letter is just our investment philosophy that we're not just betting at all costs, we're betting when we see signal.
And when we see that signal do we actually scale. This was true in our product development we didn't.
Released the grocery we didnt release maximum exposure to our grocery product until very recently after two and a half years, we didn't do that for a retail categories either.
And we don't do that from a dollars and cents perspective on the P&L either so I think when it comes to the timeline I think judgment is quite important and I think the most important thing to take away from the shareholder letter or is that a disciplined way and thinking about how to make these investments.
Hey, Lloyd just to add to what Tony talked about I think to your second question first we don't focus on the absolute level of investment in terms of the quantum of dollars.
Our philosophy has always been the Golar teams, we golar lines of business on two metrics, which is demand in terms of volume growth as well as unit economics as long as both of those are progressing in the right direction and according to plan.
We do continue to invest because the most important thing in our business has scale and you've seen that in our restaurant business. We've seen that in our third party convenient business our bullet as long as we are seeing success in terms of volume and the unit economics are continuing to improve we're going to invest behind our investment areas.
Yes, it makes sense. Thank you guys.
Your next question comes from Douglas Anmuth with Jpmorgan. Your line is now open.
Thanks for taking the questions a couple just on the Dasher side can you just talk about the drivers of lower than expected acquisition costs in <unk> and then what makes you think those efficiencies may not continue in the back half and then with the update recently any thoughts early thoughts I know, but on the flexible pay mom.
It'll for dashes and.
And perhaps any discussion around unit economics.
For you guys. Thanks.
Yeah, Doug I'll take both of those the natural acquisition cost itself in any given quarter. There is some volatility in our doctoral acquisition costs. So I wouldn't read too much into it let me give you a few examples in Q1, we under forecasted volume. So we had to ramp our national acquisition spend in the quarter. That's what we saw in Q1.
In Q2, we saw a couple of things first the underlying product improvements. We've made the handheld does in terms of industrial retention number two we also benefited from seasonality, where you have college kids come back during the summer and we see this every single summer what we said in our letter is we expect the product improvements to continue to bear fruit in a SEC.
Don't have but we don't expect the same level of benefit or efficiency from seasonality, but again I wouldn't read too much into the water to water movement, because there is some inherent volatility industrial acquisition.
And your second point, the dashboard product changes we've made.
Douglas Harter financial move for us, whereas it was mostly about offering choice of influence of weather at <unk>. If you think about our national was really doctors are at different parts of their journey. Some naturals are new to the platform, where they just want to hit the button and start, earning there's others, where more experience I don't want to pick and choose the orders that they want to go after what are those truly about.
Giving the choice to doctors to continue to engage with us on the platform depending on where they are in their journey less so about the financial move for us hopefully that helps.
Helpful. Thank you.
Your next question comes from Brian Nowak from Morgan Stanley . Your line is now open.
Great. Thanks, guys, maybe maybe too.
The first one.
Tony just sort of talk about your 10 year old are the oldest the core U S restaurant business.
As you sort of think about customer is voting with their activity talk to us about sort of how you break down the forward growth and what you have to invest in the kind of continuing to grow that core U S restaurant business from here across users frequency and spend per transaction.
How do you continue to get more customers to devote more and that core oldest business and then the second one on the grocery non restaurant piece in the U S recognize the new App design is having an impact.
When do you think about sort of increasing your marketing to bring new users into the funnel from grocery first has that started yet or is that something to think about in the back half or in 2004.
Yes, maybe I can take a shot at both of those I think on the first question of growing the U S restaurants business.
I wish it was just one lever that we'd have to pull but I mean, we continue as we have to work on selection the quality of the service they affordable affordability of the programs in our customer support right. I mean this is one of these businesses were.
It's really easy to make surface level comments.
The business.
But really the execution happens at the order level and you have to.
Be better on each one.
And for Us.
I think the criteria to be better and it really goes back to the hallmarks of how we have achieved the scale that we have in the restaurants business in the first place, which is offering the best combination of selection quality affordability and service and so there is certainly a lot of things that we have in the books plan for each one of these areas, but but that's really how we always think of.
Building, a better product and we can measure whether or not we're making progress based on our retention and order frequency and we continue to have the highest retention and order frequency rates amongst any other platform.
The second question I mean.
It.
In some ways. Some of this is already happening where we have to your point customers may be finding out about door dash for the first time.
Through a non restaurant category.
Whether that's grocery is or pets or flowers or some of the retail categories that we just discussed earlier.
Already outside of the restaurant category, we attract more of new customers that are ordering from these non restaurants for the first time in the industry than any other platform.
And I think that's pretty remarkable given that a lot of these categories for us when we started about two and a half years ago, which suggest that some of this activity is actually already happening organically of course, we're investing in some marketing behind this.
For sure, especially as I think we are making the evolution of <unk>.
From being a a restaurant delivery product to something that delivers your entire cities. We're not there yet obviously, we have a long ways to go on the selection quality and affordability, but I think it's encouraging to see that we already attract more new customers into this field than anyone else in that a lot of customers are coming to us for the first time naphtha restaurants.
Yeah.
I'd just like to tell you what he talked about what we saw in the quarter was growth in both users and whether the order frequency.
Order frequency hit an all time high it's growing year on year user growth has also been very strong the way. We think about it is if you think about our platform. We have roughly over 30 million active shoppers on our platform any given month, but if you look at that number over the course of the last year that number is multiples higher it just.
A fraction of the overall users using the platform.
Don't you the scope of the opportunity on the user growth side.
Order frequency again very similar the blended order frequency across the platform is mid single digits off of the base of more than 100 years of lagoons. So when I look at both of those the scope of the opportunity in front of US is large and the good news is again what moves board is largely the same it's improving selection improving quality and making the product more affordable. So when I look ahead as.
We are continuing to innovate on the product I am confident that will drive growth both across users as well as auto frequency.
Thank you both.
Your next question comes from Eric Sheridan with Goldman Sachs. Your line is now open.
Thanks, so much for taking the question reading the letter and some of the answers so far and the point I just wanted to come back to this concept of signal.
Think about the mix between being a marketplace and be more of a first party players yourself and local commerce and whats signal you might be looking for when you think about a business like dashboard and thinking about growing geographic footprint or SKU diversification inside that business as a.
<unk> area for investment over the medium to long term to be a larger and more scaled <unk> player against the local commerce at maturity.
Yeah, So Eric I'll take that.
Important to start with the context of why we even are investing in some of our <unk> efforts in the first place, which really comes back to this capability.
Point of making sure that we can enable every small medium and large physical business to compete.
Effectively and efficiently in the digital world and.
At the end of the day, what we're trying to build ultimately is a product that can deliver you everything from your.
City exactly what you ordered and at around the same price that you would have paid yourself to do that service, but today, that's not where a status quo. Its right in terms of I think any product that delivers anything outside of.
Yes.
Restaurants for sure and so that's kind of why we invested in dashboards in the first place and so it's always in concert of.
And partnership excuse me with our.
And our merchant partners of how to make sure that something like dashboard can be a useful service for them.
It's not necessarily signal or is our one P now going to <unk>.
The bigger portion of it is actually instead learning how to do it really well such that when we work with these third parties and think about inventing some products for the future that this could be one capability said in her back pocket.
Thanks Kim.
Your next question comes from Ross Sandler with Barclays. Your line is now open.
Alright, Thanks, guys first of all shout out to our Andy Ravi or Whoever's idea was to put the SPC table.
Bond with a letter I appreciate that.
But my question Tony is about dash past. So you guys were.
First in the industry to rollout subscription, obviously drives a huge amount of value, but but now we're at the point in the industry words maturing and Theres a lot of other subscription services from folks who compete with you guys in grocery folks who compete with you guys in restaurant.
E Commerce companies, we compete with you guys. So as you look out.
The future of Dash path do you feel like selection.
And your advantage in selection is enough to continue to differentiate or do you think you need to add different things to the bundle.
What are they going to be like physical retail or I don't know digital services et cetera.
To continue to.
To differentiate dash path based on what's on that thanks a lot.
Yeah. So there is customer expectations always gone one direction right I think I've said this plenty of times and I think that goes for subscription programs too, but the other thing that goes for subscription programs is the most important thing is usage rate you want to subscription programs that are really successful.
For those that got us the.
Most often which is what drives the value right.
And sometimes thats measured in dollars and cents, that's up sometimes thats measured in time spent on our service and overtime saved from a service and et cetera, right and so for US I don't think it's necessarily one advantage right I wish. It were just one advantage they may actually be quite easy to invest from a product perspective, but it's always been.
Thinking about the selection the quality the affordability of the program such that we can drive the north star of usage and so we're going to always have to invest.
To make sure that our products are getting used the most I think the benefit for us as that.
The category that we started in eating which we've talked about on this call for a.
<unk> is the largest and most frequent which means that it does have the largest usage from both I think how people think about spending their discretionary income to just what they do physically.
To survive and so I think.
That was a very natural.
Candidly the reason why we started in the restaurant delivery category, but as we expand and try to be more useful to the cities that we operate in and all of the different types of categories of retail that we participate with them, we're going to have to keep thinking about investing more into things that will continue to drive the usage of our subscription.
Programs, which is ultimately what will drive the value of desktop.
Yeah.
And Ron just to add.
Tony said really what youre seeing in the businesses as we are continuing to improve the selection and the quality of the business. That's driving meus <unk>. So you are getting at a higher rate than ordering more and the order more of they have been treated in the platform and graduate to Dash best in fact, if you look at Q2, <unk> and a good quarter, where subscribers grew not just quarterly but.
And you'll be it goes one of the best quarters ever for dash paths for us.
Thank you.
Your next question comes from Michael Mcgovern with Bank of America. Your line is now open.
Hey, guys. Thanks for taking my question, just maybe a couple for Ravi on guidance it looks like even at the upper end of guidance for Q3, we're expecting a little bit of a quarter on quarter drop in <unk>. So I'm just curious.
Is that just seasonality or anything else to point out there for the quarter on quarter drop.
And then second question, if I take the upper end of guidance.
Between Q3, and the full year.
It looks like Q4's, EBITDA profit and margin.
It will be higher in Q4 than at any other point in the year. So just in that upside scenario hitting the upper end of guidance what are some of the factors that contribute to that.
Yes, Michael ill take both of those like on the guidance point itself I mean, what youre seeing in the businesses.
Obviously consumer spending continues to be strong the underlying cohorts continue to be very stable, that's what's giving us confidence to first of all you know both of the jewelry guy for the rest of the year.
Noticing in Q3 as normal seasonality that we largely see every year is nothing more to that sort of seasonality in terms of EBITDA guidance I mean again like I said earlier and the combination of continued improvement in growth, whereas the overall business is positive on a unit economic basis Q4 growth is higher than Q3, youre going to see some ups.
And EBITDA flow through number two the product improvements that you're making is continuing to drive efficiency.
And do remember anything we are constantly looking to reinvest back into the business and you have good opportunities to invest we're going to continue to drive efficient growth as long as we can see within our disciplined parameters.
Got it thank you.
Yeah.
Our next question comes from Youssef Squali with <unk>. Your line is now open.
Excellent. Thank you so much so maybe Tony going back to the investments that are in the framework.
That youre putting out there.
Outside of customers in dash or is in the network did that create two charges in the Super powerful can you maybe talk about competition core competencies that you believe that you are kind of leverage and just better than anybody else out there that kind of digital potential compare unfair competitive advantage.
Now we need to grow so much faster and then.
Ravi I think you talked or you mentioned that your <unk> would be your aggregate jewelry accelerated year on year.
That is that statement true for <unk> as well.
Yeah.
Yes, so on.
The first question.
Yeah.
I think there is there is a.
There's basically like a timeline or a sequencing if you will almost a how to arrive at the answer to your question which is.
First when it comes to building our products from the very beginning the.
Okay.
What allows that product to grow faster relative to someone else's is whether or not we solve the customers problems better right and I think what's hard to see in this business is that it's really a combination of things that a customer is asking us to solve their asking them to make sure. We can get the right stores and the right items from those store.
<unk>.
At the right price point at the right service level and obviously, if things go south that we fix it.
And and there is no shortcut in many ways.
And kind of.
Betting on any one of these factors you kind of have to be better at the combination and I think that if you can achieve that then you kind of have this timeline where.
After a certain point of scale.
<unk>.
It translates into a few benefits structural benefits one of those benefits is.
Recall customers kind of come to us first as the eating app.
Yeah.
We're working on that to make that true in every country, but but in the United States. That's certainly the starting point is and again when eating as a starting place where you have the most shots on goal and Ravi talked about the multiples of.
Of the 30 million monthly active shoppers, who shop with us once a year I mean, there is an even bigger number than that that comes in just opens the Abu doesn't shop at all.
And so in many ways, we don't have to acquire any more new customers from external channels. We can just go within our own ecosystem, because we started with the largest one which when it comes to consumption, which is which is eating.
Other benefits come from the scale logistics components that you talked about knowing how to operate that really efficiently is something that continues to compound in terms of.
Given our natural funding source for other types of investments that we wanted to make.
So I think the way I think about this is always the execution starts first making sure that we can solve a problem better than and someone else can so that we can create the best product that's what generates the growth.
And then structurally over time.
What are the things that actually.
Can we actually use the product advantage that we've built to generate a structural advantage and I think youre seeing that in both instances, which is why you've seen the resilience and the growth in the in the core restaurants business Thats why you have seen.
Faster growth in share gains in these non restaurant businesses as well as improving our very very quickly improving unit economics and Thats why we continue to continuing to invest.
Mhm.
On your second question orders accelerated from Q1 to Q2 in our jewelry and if I break it down by the different lines of business or U S restaurants, even at our scale the order growth was stable.
New vertical with international as Tony just mentioned they both accelerated from Q1 to Q2.
Yes.
Got it okay. That's helpful. Thank you.
Yeah.
In the interest of time, there will be no further questions with that we'll conclude today's conference call. Thank you for joining US you may now disconnect.
Yeah.
Okay.
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Okay.
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