Q4 2023 DoorDash Inc Earnings Call

<unk> of Investor relations to begin the call Andy over to you.

Thanks, Wendy good afternoon, everybody and thanks for joining us on our Q4 2023 earnings call I am very pleased today to be joined by co founder Chairman and CEO, Tony Schuh, and CFO Ravi Anaconda will be making forward looking statements during today's call, including our expectations for our business financial position opt.

<unk> performance, our guidance strategies capital allocation approach and the broader economic environment forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described many of these uncertainties are described in our SEC filings, including form 10, Ks and 10-Qs you should not rely on our forward looking.

<unk> as predictions of future events, we disclaim any obligation to update or 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 financial measures, including a reconciliation to the most directly comparable GAAP financial measures may be found in our earnings.

<unk> release, which is available on our IR website. These non-GAAP measures should not be 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 on our website. Shortly after the call ends.

I will pass it back to you and we can take our first question.

The floor is now open for your questions.

To ask a question.

Simply press the star followed by the number one and your telephone keypad will now take a moment to compile a roster.

Our first question comes from the line of Michael Morton with Moffett Nathanson. Please go ahead.

Hi, good evening, thanks for the question.

First one for Tony and then a second one for Ravi Ravi.

Tony.

Love to hear your thoughts on what you think the future structure of the grocery market looks like.

Order density increases on a store level.

Industry participant thinking you might see more growth in the merchant model.

Also as consumers demand more speed that kind of plays to your advantage with the dash above the sea Ah ha.

How you see that evolving and in for Ravi.

We get a lot of investor questions on the ability to leverage sales and marketing on a per order basis. It seems like it might have slowed down just a tad in fourth quarter and then looking at the forward guide.

Could you talk a little bit about the opportunity to continue leverage sales and marketing. Thank you.

Hey, Michael this is Tony.

Regarding your question on grocery.

Think of it really depends on what it is that you're trying to build in terms for the customer I mean, if you think about it our customer is going to evaluate across several dimensions, there and evaluate what grocers they can order from.

How good the order quality is in terms of the stay order.

Items do they get exactly of those extra items, the affordability of the service and obviously what happens with customer support, especially if things don't go perfectly and so we're always judged.

And on those dimensions, and we're always building initiatives towards that.

And a lot of this.

Totally Nathan if you think about.

George Bush's entry into basically happened about three years ago.

Started by nailing the top up these cases, where we're solving the Midland.

And delivering the items assumed that most often your berries.

<unk> cereals coffee is extra.

Oh It was done in concert with the top grocers.

Grocers.

The ocean a lot of the work towards solving bigger.

Yes.

And so.

Solving for diffuse case for the consumer and I think.

So it's going to have things too because when I got these for us.

Most of the behavior for consumers is still happening.

Our purchasing groceries physical store, that's held out we still have as an industry for a long way to go but getting our products.

<unk> such they can replace the offline experience all of this is going to be done in concert with grocers and again. If this is kind of continuum of where we want to make sure that we can sell for more than just one dimension speed is one of those things, but theres going to be other factors that we have to get right as well.

Hey, Mike on the second point on sales and marketing digging into <unk>. Firstly talk about the Q2 to Q4, and then talk about the forward looking what we expect in 2044.

Third if you before we did generate leverage on consumer acquisition. The change that you're seeing is largely related to <unk> acquisition.

To support the higher growth that we saw in Q4 as well as as you know there is some seasonal effect from industrial acquisition cost in Q4 in order for us to be able to continue to supply to the volumes that we had in Q4 as I look ahead, David when I think about overall leverage from our sales and marketing perspective, hopefully and works here. One is we are trying to maximize.

Payback periods and our goal is to continue to be within the payback periods are not looking at the absolute level of dollar investment we're still within the payback periods on the consumer side, we are still acquiring a healthy level of consumers over half of the new consumers in the U S to start their journey with door dash, So thats going to be a continued area for us to continue to drive growth on the second one.

But I think about overall leverage it purely starts from product would you have done we have done in the last year or so as we've continued to drive improvements in the product, but it's on the dashboard.

Okay.

Thanks, Doug.

Got it.

Pension and <unk>.

We'll see benefits on overall screening.

Also.

Absolute level of dollar investment, we're still within the payback periods on the consumer side, we are still acquiring a healthy level of consumers over half of the new consumers in the U S. Today start their journey with door dash. So that's going to be a continued way for us to continue to drive growth on the second one that I think about overall leverage it purely starts from product with <unk>.

When I look at.

More volatile.

Good morning.

Thank you.

Our next question comes from the line of unique keel.

<unk> Burns. Please go ahead.

Hi, there. Thanks for taking the question I had a couple please on the Q4 outlook.

Done we have done in the last year or so as we've continued to drive improvements in the product, but also on the dasher side or the consumer side that ultimately improves retention as our retention goes up you'll start to see benefits from an overall sales and marketing perspective also so when I look at 2024, we do expect to generate leverage from an overall sales and marketing.

So first off I think Joey guidance, calling for a few points of deceleration Q4, Q1, and then more broadly. So could you. Please talk about what you might be seeing business, that's driving that outlook.

Is that a reflection of the core U S market place.

Speaker Change: Thank you.

Or <unk>.

Speaker Change: Yeah.

<unk>.

Segment.

Speaker Change: Our next question comes from the line of Nikhil.

And then on the EBITDA look for the year.

I think the latter mentioned they rent.

Nikhil: Deaf Nani with Bernstein. Please go ahead.

Thanks, Tony.

Speaker Change: Hi, there. Thanks for taking the question I had a couple please on the 24 outlook. So first off on the <unk> guidance it looks like Youre, calling for a few points of deceleration.

So just on the.

But again it might be late two first just wondering what.

What drives visit.

In typical margin.

Nikhil: Q4 into Q1, and then for the year more broadly so could you. Please talk about what you might be seeing in the business that's driving that outlook.

Improvement in casualty.

Yes, I think Illinois border.

Just one other.

I mean, just looking back at our goal is to grow and.

Nikhil: Is that a reflection of the core U S marketplace in restaurants, or a trend that you are consistently seeing across segments.

We can.

<unk>.

For ourselves.

Nikhil: And then for my second question on the EBITDA outlook for the year I think the latter mentioned a ramp in margins in the back half of 'twenty. Four. So is there something you can call out Ravi on maybe specific investments that you might be leaning harder into in the first half just wondering what what drives the comfort and visibility into more meaningful margin improvement.

Look we've been public for years now with consistently strong growth.

Good quarter.

This is Leonard our scale if you will.

Let me use that growing at double digit rates.

$37 million, which.

For us even order fleet growth.

So when I look at all the users.

Nikhil: In the back half of the year. Thank you.

Order frequency.

Nikhil: Yes.

Okay.

Ravi: Take both of those right on the first one on the growth point I mean, just to backup a minute rate. Our goal is to grow as fast as we can within their disciplined parameters that we've talked about ourselves I mean look we've been public for three years now where we've driven consistently strong growth every single quarter, what youre seeing in the business is even at our scale.

A small portion of everybody applications out of that.

Yes.

That just goes to show the best opportunities.

Okay.

Similarly on the occupancy side.

Compared to the reusable.

Further adding.

Adding in disconnects.

Okay.

Ravi: If you look at our overall meus theyre growing at a double digit rate. We have hit 37 million, which is an all time record for us even order frequency continues to grow when I look at the opportunity either on the users or the order frequency site. The users that are active on the platform are still a small portion of everybody who use the app at least once in the last year that just goes to.

Could drive solution products.

Quality continues with.

Strength.

It's retention.

The frequencies are continuing to grow our group.

As long as we continue to make better and very confident that they're going to be able to drive strong growth across restaurants, new vertical as well as internationally.

Ravi: Show you the breadth of the opportunity ahead of us Similarly on the order frequency side I mean, the blended order frequency is still very low compared to the number of usable moments, we have especially if you think about all of the categories that we are adding in the business what you're seeing in the business is that we're continuing to drive selection as we're making the product more affordable as the quality continues to increase.

And the second point around EBITDA and look maybe.

Okay.

Pleased with the performance of the business.

Keno profitability quite honestly, if you look at it.

Three years.

What do you think.

So we are generating volume and be dilutive.

Political as well.

Ravi: Youre seeing that strength come through whether it's retention or order frequency. Both are continuing to grow our goal is as long as we continue to make the product better I'm very confident that we're going to be able to drive strong growth across our restaurants, new verticals as well as international.

We've driven unit economics across the major lines of business.

Those two together you saw in the second half EBITDA being higher than the first half EBITDA, which is very similar to what we saw in the prior year and 'twenty two as well.

When I look at 'twenty, four I would think.

Thanks.

The trend to be very similar but if I can ask EBITDA is going to be higher than the first half EBITDA, but more importantly, our philosophy is we're going to operate the business with the same level of rigor and discipline with the goal being trying to drive durable growth and at the same time improve the profitability of the business and to the specific factors around first half versus the second half.

Ravi: And the second point around EBITDA, I mean look Neil I mean, we've been very pleased with the performance of the business you've scaled profitability quite nicely. If you look at it over the last couple of years. What you saw in 'twenty. Three is a few things we have generated volume improvements through the course of the year, we've driven unit economic improvement.

We are investing in the first half I mean, the investments are we are seeing strength in restaurants that have seen strength in new verticals. We are seeing strength in our international business you can see that in the results both from a growth as well as a profitability perspective, I do expect those investments to generate leverage in the second half and secondly, if you have volume continuing to scale, but the unit economics.

Ravi: Across all major lines of business. When you put those two together you saw the second half EBITDA being higher than the first half EBITDA, which is very similar to what we saw in the prior year and 'twenty two as well.

Ravi: When I look at 'twenty four I would expect the trend to be very similar with our second half EBITDA is going to be higher than the first half EBITDA, but more importantly, our philosophy is we're going to operate the business with the same level of rigor and discipline with the goal being trying to drive durable growth and at the same time improve the profitability of the business.

Continuing to improve you're going to see more of the EBITDA in the second half versus the first half and even from a margin perspective, I would expect the second half margin to be higher than first half as well as the full year.

To pull back a minute right.

Ravi: The specific factors around first half versus the second half we are investing in the first half I mean, the investments are we are seeing strength in restaurants, we're seeing strengthen new verticals, we're seeing strength in our international business you can see that in the results both from a growth as well as a profitability perspective.

Pleased with full year guide for EBITDA, because we are driving margin improvement and B, we are driving overall profitability improvement quite considerably.

Thanks Ravi.

Okay.

Our next question comes from the line of Deepak <unk> with Wolfe Research. Please go ahead.

Ravi: Do expect those investments to generate leverage in the second half and.

Ravi: And secondly, if you have volume continuing to scale plus the unit economics, continuing to improve you're going to see more of the EBITDA in the second half versus the first half and even from a margin perspective, I would expect the second half margin to be higher than first half as well as the full year, but just to pull back a minute rate I'm very pleased with the full year guide for <unk>.

Great. Thanks for taking the question Tony wanted to see if you can elaborate on the key areas of investments inside international and new verticals, maybe in terms of countries and products as you kind of scale. These efforts how should we think about the contribution margin <unk> of these initiatives versus what you saw in maybe the core restaurant business.

Ravi: <unk>, because we are driving margin improvement and B, we are driving overall profitability improvement quite considerably.

Or even.

The convenience business over the last three to four years and then maybe one for Rami.

Speaker Change: Thanks Ravi.

For Q EBITDA I know you don't always aim to beat the high end of the guidance consistently did you observe any sort of change in the margin trajectory of the business or anything you would call out as maybe one or two initiatives that drove investment higher during the quarter, perhaps in the last couple of months. Thank you so much.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Deepak, Matt Bannon with Wolfe Research. Please go ahead.

Deepak: Great. Thanks for taking the questions Tony wanted to see if you can elaborate on the key areas of investments inside of international and new verticals, maybe in terms of countries and products as you kind of scale. These efforts how should we think about the contribution margin goal of these initiatives versus what you saw in maybe the core restaurant business.

Hey, Deepak, it's Tony I'll take the first one which is about investing into international and also into new verticals. So on international.

Deepak: Or even the.

Really are investing across the board with a fairly similar.

Speaker Change: The convenience business over the last three to four years and then maybe one for Rami.

<unk>, which is really finding product market fit and then finding an efficient way to grow in certain markets.

Speaker Change: On <unk> EBITDA I know you don't always aim to beat the high end of the guidance consistently did you observe any sort of change in the margin trajectory of the business or anything you would call out as maybe one or two initiatives that drove investments higher during the quarter.

It's more about the former and the majority of markets. It's more about the latter but there are markets that are younger in the portfolio I would say across the board the penetration levels in terms of our.

Speaker Change: Perhaps in the last couple of months. Thank you so much.

Coverage of consumers as well as the merchants that we have remaining to serve is still quite low certainly lower than where we are in the U S, but even lower I would say.

Speaker Change: Hey, Deepak, it's Tony I'll take the first one which is about investing into international and also into new verticals. So on international we really are investing across the board.

Where they can be given the runway that we see so it's.

Speaker Change: With a fairly similar.

It's really about making sure that we're efficient and disciplined in investing across whether we are.

Tony: Framework, which is really finding product market fit and then finding an efficient way to grow in certain markets.

In search of product market fit and improving that or whether we are scaling that quite nicely in which case you see both an improvement in growth retention as well as unit economics.

Deepak: It's more about the former and the majority of markets. It's more about the latter but there are markets that are younger in the portfolio I would say across the board the penetration levels in terms of our.

On the new vertical side.

Deepak: Coverage of consumers as well as the merchants that we have remaining to serve is still quite low certainly lower than where we are in the U S, but even lower I would say.

I mean I think this is Ben.

Just a yet another quarter of continued strength I mean, the growth on a bigger base has accelerated now three quarters in a row, that's really coming from across the board in our investments into grocery that convenience category <unk> retail.

Deepak: Where they can be given the runway that we see so it's.

Deepak: It's really about making sure that we're efficient and discipline in investing across whether we are.

So really we're seeing improvements in growth retention unit economics across all major lines within our investment areas.

In search of product market fit and improving that or whether we are scaling that quite nicely in which case you see both an improvement in growth retention as well as unit economics.

Lots of work so that would probably take a much more than the hour to discuss with respect to products that were working on but all of them are trying to better the selection that we offer the quality of the service the affordability of the service and the customer support levels.

Deepak: On the new vertical side.

Deepak: I mean I think this is Ben.

Deepak: Just a yet another quarter of continued strength I mean, the growth on a bigger base has accelerated now three quarters in a row.

Hey, Deepak it's Ravi.

Tony thought on the first question and then I'll take the second question.

Deepak: It's really coming from across the board in our investments into grocery the convenience category <unk> retail.

<unk>.

To your point around margins.

Across the investment areas, what we are seeing in the business is really strong performance not just across growth, but when I look at the unit economics. There has been a material step function change improvement both on the new vertical side as well as the international side and your specific question on.

So really we're seeing improvements in growth retention unit economics across all major lines within our investment areas.

Deepak: Lots of work so that would probably take a much more than the hour to discuss with respect to products. So we're working on but all of them are trying to better the selection that we offer the quality of the service the affordability of the service and the customer support levels.

The contribution margin I think if I look at the basket of our overall international business with several countries, where the core restaurants business is actually contribution margin positive and still a lot of runway for both growth as well as improvement in the margin structure.

Ray: Hey, Deepak it's ray.

And your second point Deepak around Q4, again, I mean, the performance was great, but nothing specific that we would call out what youre seeing is volume continuing to grow in fact, new verticals. The volume actually accelerated in Q4 compared to Q3 grocery was a bright spot where grocery volume also accelerated in Q4 compared to Q3 International volume continues to be very strong and.

Ray: Tony thought on the first question and then I'll take the second question.

Ray: <unk>.

Ray: To your point around margins.

Ray: Across the investment areas, where youre seeing in the business is really strong performance not just across growth, but when I look at the unit economics, that's been a material step function change improvement both on the new vertical side as well as the international side and your specific question.

We're also seeing unit economic improvement that's basically what drove the performance both on the top line as well as the bottom line in Q4.

Ray: The contribution margin if I look at the basket of our overall international business with several countries, where the core restaurants business is actually contribution margin positive and still a lot of runway for both growth as well as improvement in the margin structure.

Thank you so much.

Our next question comes from the line of Bernie Mcternan with Needham and company. Please go ahead.

Ray: And your second point and Deepak around Q4, again, I mean, the performance was great, but nothing specific that we would call out what youre seeing is volume continuing to grow in fact, new verticals. The volume actually accelerated in Q4 compared to Q3 grocery was a bright spot where grocery volume also accelerated in Q4 compared to Q3 International volume continues to be very strong and.

Thanks for taking the questions maybe just to start the New York City minimum wage. So you guys put through some price increases just wondering how you expect this impact to <unk> in the year and then if our math is right. I think you guys added 5 million <unk> subs in 'twenty $2 million to $3 million and 23, so over the next year or two.

We're also seeing unit economic improvement that's basically what drove the performance both on the top line as well as the bottom line in Q4.

Maybe a couple of years, how big do you think dash past can get and any commentary on early benefits of oil plus if it's if it's been a contributor to the base.

Speaker Change: Thank you so much.

Speaker Change: Our next question comes from the line of Bernie Mcternan with Needham and company. Please go ahead.

Sure Bert it's John I'll start and feel free to chime in Ravi first question.

Is it a regulation.

Bernie Mcternan: Thanks for taking the questions maybe just to start the New York City minimum wage sorry, you guys put through some price increases just wondering how you expect this impact to <unk> in the year and then if our math is right. I think you guys added 5 million <unk> subs in 'twenty $2 million to $3 million and 23, so over the next year or two.

I mean by and large.

The way, we see the landscape is fairly similar to how we've seen it every year in the 10 years that we've been building door dash, which is <unk>.

Most governments that we work with want to actually work with us and want to work with business and they understand that.

Bernie Mcternan: Maybe a couple of years, how big do you think dash past can get and any commentary on early benefits of oil plus if it's if it's been a contributor to the base.

In order for something like door dash to work it has to work for all audiences. We're always trying to keep the most affordable prices for consumers, we want to maximize the sales for local businesses and we want to offer the most number of work opportunities for dashboards.

Bernie Mcternan: Sure Bert it's John I'll start and feel free to chime in Ravi first question.

Yeah.

The vast vast vast majority of places that we operate in.

Speaker Change: As unregulated.

Speaker Change: I mean by and large.

Speaker Change: The way, we see the landscape is fairly similar to how we've seen it every year in the 10 years that we've been building toward ash, which is <unk>.

Work. This way I think there are a handful of markets one of which you call out New York City.

It kind of takes policies to the extreme and I think thats had some adverse impacts against its wishes, which is whenever you see regulation enter the way. It does in a place like New York City, what you see as costs rise for the overall system.

Speaker Change: Most governments that we work with want to actually work with us and want to work with business and they understand that.

Speaker Change: In order for something like door dash to work it has to work for all audiences. We're always trying to keep the most affordable prices for consumers, we want to maximize the sales for local businesses and we want to offer the most number of work opportunities for assets.

There are there's less accessibility to consumers to your point about rising costs.

There are lower sales for local businesses and there are fewer work opportunities for <unk>.

Yeah.

Speaker Change: The vast vast vast majority of places that we operate in.

We largely expect bass.

Speaker Change: Work. This way I think there are a handful of markets one of which you call out New York City.

The vast vast majority of cities will be fairly central in terms of how they think about working together with companies like ourselves, but there are a handful of markets in which.

Speaker Change: Kind of takes policies to the extreme and I think has had some adverse impacts against its wishes, which is whenever you see regulation enter the way. It does in a place like New York City, what you see as costs rise for the overall system.

<unk> taken extreme policies.

We don't expect that to change much and in terms of the financial impact to all of that is reflected in our guidance.

Speaker Change: There are there's less accessibility to consumers to your point about rising costs.

Your second question was around Dash path.

<unk> had a great year I mean, it was a record year in terms of its membership as well as the order frequency that we saw with Josh pass subscribers. This includes volt cluster as well in fact internationally, we actually saw the members for desktop plus double in the quarter and so we're certainly seeing quite a lot of strength there.

Speaker Change: There are lower sales for local businesses and there are fewer work opportunities for <unk>.

Speaker Change: We largely expect that.

Speaker Change: The vast vast majority of cities will be fairly central in terms of how they think about working together with companies like ourselves, but there are a handful of markets in which.

I mean, the way I think about it is I mean, theres 100 possible use cases per month for every consumer.

Speaker Change: <unk> taken extreme policies.

In terms of the categories and their consumption, whether that's eating or buying in retail.

Speaker Change: We don't expect that to change much and in terms of the financial impact all of that is reflected in our guidance.

Even for our best customers and certainly for the average.

Speaker Change: Your second question was around Dash path.

Fiber.

Speaker Change: <unk> had a great year I mean, it was a record year in terms of its membership as well as the order frequency that we saw with Josh pass subscribers. This includes volt plus as well in fact internationally, we actually saw the members for desktop.

It's a fraction of those use cases, so when I think about the runway I think it's quite far and if we can.

Certainly serve every use case for local commerce, I think the subscriber base would be fairly healthy.

Hey.

Speaker Change: <unk> plus double in the quarter and so we're certainly seeing quite a lot of strength there.

Ravi I would just add to <unk> point around New York City, and as you can see.

Given the Q1 EBITDA guidance.

Speaker Change: I mean, the way I think about it is I mean, there is a 100 possible use cases per month for every consumer in terms of the categories and their consumption, whether that's eating or buying in retail even for our best customers and certainly for the average subscriber. We're just a fraction of those use cases.

Absorbing some of the regulatory costs in Q1.

Doing spectacular ramp down as they ramp up efficiency as well as we take other actions in the marketplace and your second point around impact on volume.

It's a small portion of the overall volume in the business. So I would expect the impact on volume to be very minimal.

And when I think about the runway I think it's quite far and if we can.

Speaker Change: Certainly serve every use case for local commerce, I think the subscriber base would be fairly healthy.

Our next question comes from the line of Andrew.

Hey.

With JMP Securities. Please go ahead.

Speaker Change: Ravi I would just add to Tony's point around New York City and as you can.

Thanks, So much for my question I wanted to go back to the expense and internationally Nicholson better understand tactic, which.

Speaker Change: Even the Q1 EBITDA guide we are absorbing some of the regulatory costs in Q1, I do expect that to ramp down as they ramp up efficiency as well as we take other actions in the marketplace.

Because the investors surrounding production is it on the tumor dash just help us understand more <unk>, so you're right.

Speaker Change: And your second point around impact on volume again, it's a small portion of the overall volume in the business. So I would expect the impact on volume to be very minimal.

John.

And then in the.

Called out increased first party district cost Cogs can you just talk about where you are with parts and our progress towards profitability overall, thanks, so much.

Speaker Change: Our next question comes from the line of Andrew Boone with JMP Securities. Please go ahead.

Yes.

Okay.

Pretty much and question.

Yourself, which is I mean, we're investing in all of them.

Andrew M. Boone: Thanks, So much for taking my questions I wanted to go back to the investments in international New verticals and better understand tactically. What you guys are doing the investments around improving selection is it on the consumer dasher side, just help us understand more directly what exactly it is that you're doing.

Consumer judges.

Adding to that one.

One.

Launched awesome.

Taylor.

Over 2023, even there we wanted to.

Andrew M. Boone: And then in the press release called out increased first party distribution costs for Cogs can you just talk about where you are with dashboards and our progress towards profitability overall, thanks, so much.

Recently here.

We are certainly helping improve the affiliates services and there's lots of work there.

We are on improving all of the year.

I think hardest chapter three growth basis, whether it's physically or digitally in terms of sales.

Speaker Change: Hey, Andrew.

Speaker Change: I mean, I think you've pretty much answered the question.

Speaker Change: Yourself, which is I mean, we're investing in all the dimensions in which a consumer judges US right. So we're adding selection to the platform and we've launched a lot of awesome retailers.

Inventory did they have a shot.

That is one of the biggest reasons in terms of license since consumers are ready to go.

Besides stores.

And in <unk>.

Speaker Change: Over 2023, even this year, we launched with a hold most recently here in the U S.

As always.

Trying to get.

And.

Yeah.

We are certainly helping to improve the affordability of the service and Theres lots of work to do there.

It's similar but it's a <unk>.

New verticals or retailer across the REIT sector.

Speaker Change: We are working on improving the quality of the service I mean, I think the hardest challenge that every grocer faces, whether it's physically or digitally in terms of sales is knowing how much inventory they have on the shelves.

Second there was a lot earlier.

Ration level, we have a lot more.

We have to launch a lot more strongly than we have to sign up we have a lot more.

In terms of launching our subscription Rams and the countries I mean, they've seen great option, so far but we're very early in terms of the launch.

And that is one of the biggest reasons in terms of why sometimes consumers prefer to go and shop inside stores.

And we always have to make sure that the product better.

Speaker Change: And customer support is always something that we're trying to get better.

Yes, Andrew.

Speaker Change: And when I look internationally.

Ground last month.

Speaker Change: It's similar but it's across more categories thats, not just new verticals or retail. It's also across the restaurant sector were just a lot earlier there in terms of the penetration levels. We have a lot more places we have to launch we have a lot more restaurants and retailers we have to sign up we have a lot more work to do in terms of launching.

Really happy with.

Print is we've expanded the footprint.

You probably years ago, just to make sure.

The volume density across all the market deteriorated turning our focus continues to be driving same store sales growth by better mortality to England.

True.

The overall.

Our subscription programs and the countries I mean, they've seen great adoption, so far but we're very early in terms of the launch.

The product market fit we are both retention is what frequency when you look at the performance of the business I mean, we.

We're really pleased.

Doing well.

Speaker Change: And then we always have to make sure that we can make the product better.

Our goal is to continue to improve the volume in that business as well as continuing to drive <unk>.

Speaker Change: Yes, Andrew.

Speaker Change: Ill take the second question around dashboards.

That economic improvement, where we've seen some material improvement compared to last year as I look at 2024, our priority is going to be continuing to keep the existing footprint while increasing.

Speaker Change: Really happy with where the footprint is we've expanded the footprint.

Speaker Change: A couple of years ago, just to make sure.

Andrew M. Boone: The volume density across all the markets that we operate in today. Our focus continues to be driving same store sales growth by better merchandising continued to improve.

As well as driving good products in that business.

Thank you.

Our next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

Andrew M. Boone: The overall.

Andrew M. Boone: The product market fit we are both retention as well as auto frequency. When you look at the performance of the business I mean, we're really pleased.

Great. Thanks for taking my questions are excuse me I have two.

Andrew M. Boone: It's doing well.

Andrew M. Boone: A better plan our goal is to continue to improve in both the volume in that business as well as continuing to drive unit economic improvement, where we've seen a material improvement compared to last year as I look at 2024, our priority is going to be continuing to keep the existing footprint, while increasing volume as well as driving unit economics in that business.

The first one Tony sort of fiber.

Prioritization of investments I know youre very data driven and so and certainly at the grocery and new vertical goals you talked in the letter about adding more merchants.

Most worrying experiences execution pricing when you sort of study the data at.

What is holding back adoption or driving churn or any of the negative and you don't want to see.

Speaker Change: Thank you.

Where are sort of the pinch points you really want to solve first to try to continue to drive some strong grocery adoption in 2024 and the second one Ravi would go back to one of your earlier answers. We talked about you you call that quota step change function on new vertical unit economics, just any color on sort of.

Speaker Change: Our next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

Brian Nowak: Great. Thanks for taking my questions sorry, excuse me I have two.

The first one Tony on sort of <unk>.

Brian Nowak: Prioritization of investments I know you are a very data driven and so when you sort of look at the grocery and new verticals you talk in the letter about adding more merchants more seamless ordering experiences execution pricing. When you start to study the data at what is holding back adoption or driving churn or any of the <unk>.

Which of the areas of the business and the blocking and tackling sort of drove that step change improvement in unit economics of the year. Thanks.

Hey, Brian with respect to them.

<unk>.

All of the barriers to adoption.

Brian Nowak: If you don't want to see.

Brian Nowak: Where are sort of the pinch points you really want to solve first to try to continue to drive some strong grocery adoption in 2024 and the second one Ravi would go back to one of your earlier answers. We talked about you called Dakota step change function in new vertical unit economics, just any color on sort of.

I think there are a few but I'll start by saying that things are generally going pretty well.

I mean, we have over 20% of <unk>.

Customers ordering in the non restaurants category for the first time I mean, we're now north of 100000 plus.

The stores that are outside of restaurants that are on our platform, which we estimate to be the largest in North America.

Ravi: Which of the areas of the business and the blocking and tackling sort of drove that that step change improvement in unit economics of the year. Thanks.

More and more grocers retailers are coming inbound.

And then similarly, more and more consumers are shopping for the first time in the grocery category on door Dash. Even ahead of restaurants. So I think theres a lot of goodness to see and if you think about.

Speaker Change: Hey, Brian with respect to.

Speaker Change: All of the barriers to adoption.

Speaker Change: I think there are a few but.

Brian Nowak: Start by saying that things are generally going pretty well.

What that's centered on that's really been centered on the.

Brian Nowak: I mean, we have over 20% of customers ordering in the non restaurants category for the first time I mean, we're now north of 100000 plus.

The fact that we launched with this type of use case, which we effectively had to invent if you think about it people new door dash really as a place to get lunch and dinner very quickly and so we launched this product where you can get <unk>.

Brian Nowak: Stores that are outside of restaurants that are on our platform, which we estimate to be the largest in North America.

In the middle of the week run done as fast as possible when you run out of eggs or cereal or youre berries that usually events like the most fulfilling trip to go inside a physical store yourself, but it's also something you wanted to be.

Brian Nowak: More and more grocers retailers are coming inbound.

Brian Nowak: And then similarly, more and more consumers are shopping for the first time in the grocery category on door Dash. Even ahead of restaurants. So I think theres a lot of goodness to see and if you think about.

Be done quickly and so that's something that we solved pretty well at the same time I think there are a lot of barriers that may view, just pan out and look at the industry. I mean digital sales are ecommerce penetration of grocery is still amongst the lowest if not the lowest across all categories with E Commerce.

Brian Nowak: What that centered on that has really been centered on.

Brian Nowak: The fact that we launched with this type of use case, which we effectively had to invent if you think about it people new door dash really as a place to get lunch and dinner very quickly and so we launched this product where you can get.

And I think there is.

Many reasons.

First is how do you make sure that you can get exactly what a customer wants.

Brian Nowak: In the middle of the week run done as fast as possible. When you run out of eggs are serial or youre berries that usually events like the most fulfilling trip to go inside our physical store yourself, but it's also something you wanted to.

<unk> delivered to their home I mean, if you if you look at one of the challenges that grocers have whether it's through their physical stores or their online channels, it's not knowing how much inventory that they actually carry.

Brian Nowak: Be done quickly and so that's something that we solved pretty well at the same time I think there are a lot of barriers in my view just pan out and look at the industry. I mean digital sales are ecommerce penetration of grocery is still amongst the lowest if not the lowest across all categories with E Commerce.

There is other berries around affordability I think customers largely expect to pay similar to what they pay inside the store when they.

That's something delivered.

And when you look at.

Selection, that's something that we're just working towards I mean, it's.

Brian Nowak: And I think there is.

It's happening actually pretty <unk>.

Brian Nowak: Many reasons.

Brian Nowak: First is how do you make sure that you can get exactly what a customer wants to deliver.

<unk> and consistently where three years ago. When we just launched our service we were working with maybe a couple of dozen retailers.

Brian Nowak: <unk> delivered to their home I mean, if you if you look at one of the challenges that grocers have whether it's through their physical stores or their online channels, it's not knowing how much inventory that they actually carry.

Retailers now.

And one hundreds with with hundreds of thousands of stores us so that it remains a barrier and I think the final thing is that it's just going to take a bit of time I mean, I think most people in the country or in the world know door dash and vault as a place to get lunch or dinner delivered I think it takes some time to get.

Brian Nowak: Theres other berries around affordability I think customers largely expect to pay similar to what they pay inside the store when they.

Brian Nowak: Get something delivered.

Brian Nowak: And when you look at.

Everyone to know that you can get your city delivered.

Brian Nowak: Selection, that's something that we're just working towards that.

We've certainly made it a priority on grocery I think it's paid off really well I mean, we see it everyday in the numbers in terms of growth retention as well as improvements in unit economics, but look it's a long ways to go I mean, we're three years into it where we went from zero to a multibillion, which we're excited about but I think it's just the beginning.

That is happening actually pretty rapidly and consistently where three years ago. When we just launched our service we were working with maybe a couple of dozen.

Brian Nowak: Retailers now thats in the hundreds with with hundreds of thousands of stores. So that it remains a barrier and I think the final thing is that it's just going to take a bit of time I mean, I think most people in the country or in the world know door dash and vault as a place to get lunch or dinner delivered I think it takes some time to get.

Hey, Brian.

Second one right in terms of the.

So function genuine improvement in unit economics.

Started out by saying that like in these businesses that we operate one of the more important things to scale.

Brian Nowak: Everyone to know that you can get your city deliver.

Ultimately scale as we saw in the restaurant business that drives volume growth, which ultimately drives efficiency in the business.

Brian Nowak: We've certainly made it a priority on grocery I think it's paid off really well I mean, we see it everyday in the numbers in terms of growth retention as well as improvements in unit economics, but look it's a long ways to go I mean, we're three years into it.

If you combine that with the overall platform density that we have whether it's quality, where we are able to accrue benefits across the platform on improvements in credits and refunds or the dashboard site efficiency. All of that is driving the improvements you are seeing in the unit economic improvement across both restaurants and honestly across all parts of the new vertical is poor.

Brian Nowak: We went from zero to a multibillion, which we're excited about but I think it's just the beginning.

Speaker Change: Hey, Brian on the second one right in terms of.

Folio and as many.

Brian Nowak: The step function change in improvement in unit economics.

Parts of the P&L that we are driving efficiency across the board and the second dimension I would give you is when you think about the portfolio and break it apart right third party convenience, we've talked about the fact that dollars unit economic breakeven.

Brian Nowak: I'll start off by saying that in these businesses that we operate one of the more important things to scale.

Brian Nowak: Ultimately scale as we saw in the restaurant business that drives volume growth, which ultimately drives efficiency in the business.

Several quarters ago.

<unk> business has continued to grow as well as improving the overall unit economics grocery we are seeing something very similar with the overall unit economics have continued to improve.

Brian Nowak: If you combine that with the overall platform density that we have whether it's quality, where we're able to accrue benefits across the platform on improvements in credits and refunds or the dashboard site efficiency. All of that is driving the improvements you are seeing in the unit economic improvement across both restaurants and honestly across all parts of the new vertical is poor.

Look I mean I realize there was a question.

These businesses are going to be profitable for us, but when I look at the data I have no doubt in my mind that all parts of our new verticals business is going to be profitable overtime, but again, it's important to remember we are still very early in the journey, we're seeing great signals across growth in volume you saw that in Q4, where the business accelerated as well as growth in unit economics are good.

Folio and as many.

Brian Nowak: Part of the P&L that we are driving efficiency across the board and the second I mentioned I would give you is when you think about the portfolio and break it apart right third party convenience, we've talked about the fact that those unit economic breakeven.

All is to continue to invest because that will ultimately drive the free cash flow generation in the business.

Brian Nowak: Several quarters ago.

Brian Nowak: Our business has continued to grow as well as improving the overall unit economics.

Great. Thank you both.

Our next question comes from the line of James Lee with Mizuho Securities. Please go ahead.

Speaker Change: I look I mean, I realize there was a question.

Speaker Change: These businesses are going to be profitable for us, but when I look at the data I have no doubt in my mind that all parts of our new verticals business is going to be profitable over time, but again, it's important to remember we are still very early in the journey, we're seeing great signals across growth in volume you saw that in Q4, where the business accelerated as well as growth in unit economics are good.

Great. Thanks for taking my questions. My question is mostly on grocery business and may be Tony can you lay out the plan.

Try to explain how you plan to expand the supply of grocers going forward.

And what does that process, maybe Intel do you need to hire more salespeople maybe system integration to retailers.

Speaker Change: All is to continue to invest because that will ultimately drive the free cash flow generation in the business.

And also give a sense at what point can you get to the same size as <unk>.

Your largest competitor thanks.

Speaker Change: Great. Thank you both.

Speaker Change: Our next question comes from the line of James Lee with Mizuho Securities. Please go ahead.

Hey, James.

Yes, I mean, I would say that getting supply of groceries onto the platform has not been an issue for us I mean, it's actually gone really well and really quickly I mean, if you asked me three years ago do we have thought that would be north of 100000 stores in North America.

James Lee: Great. Thanks for taking my questions. My question is mostly our grocery business and may be Tony can you lay out the plan.

James Lee: Try to explain how you plan to expand the supply of grocers going forward.

From close to zero I'm not sure.

James Lee: And what does that process, maybe Intel do you need to hire more salespeople maybe system integration to retailers.

And if you asked me.

Whether or not that we would have over 20% of customers.

Ordering.

James Lee: And also give a sense at what point can you get to the same size as <unk>.

Outside of restaurants.

I'm not sure and I think if you asked me where these things continue to grow as quickly as they have I'm also not sure and I think one of the reasons why it's been.

James Lee: Our largest competitor.

Speaker Change: Hey, James.

James Lee: Yes, I mean, I would say that getting supply of groceries onto the platform has not been an issue for us I mean, it's actually gone really well and really quickly I mean, if you asked me three years ago do we have thought that would be north of 100000 stores in North America.

Fairly straightforward in terms of Onboarding. These grocers is that they see and door Dash, Inc. The largest local commerce base of users that are shopping with the greatest frequency, which means it's very highly incremental I mean <unk> seen that.

James Lee: From close to zero I'm not sure.

With.

James Lee: And if you asked me.

Each grocers that we work with we conduct incrementally test that continue to show that <unk> is just adding more and more sales for them and also frankly solving new use cases that they hadn't.

James Lee: Whether or not that we would have over 20% of customers.

James Lee: Ordering.

James Lee: Outside of restaurants.

James Lee: I'm not sure and I think if you asked me where these things continue to grow as quickly as they have I'm also not sure and I think one of the reasons why it has been.

Previously solved and I think they also see and door dash a partner that they can build with <unk>.

Decades or centuries into the future.

James Lee: Fairly straightforward in terms of Onboarding. These grocers is that they see and door Dash, Inc. The largest local commerce base of users that are shopping with the greatest frequency, which means it's very highly incremental I mean <unk> seen that.

Right, Tony if I can add one here I think last time, you also talk about in terms of grocery and the App you try to improve the user experience make it more seamless that help you to improve the fill rate and substitution rate any update on that specifically thanks.

James Lee: With each grocers that we work with we conduct instrumentality tests that continue to show that <unk> is just adding more and more sales for them and also frankly solving new use cases that they had in.

Yes, it's gone really well.

Thank the results kind of speak for themselves I mean, we know acquire more customers than any other platform, who shop and the convenience of our grocery or alcohol.

James Lee: Previously solved and I think they also see and door dash a partner that they can build with <unk>.

James Lee: Decades or centuries into the future.

Segments than anyone else.

I think we cited in Q3 that our grocery business is growing.

Speaker Change: Alright, Tony if I can add one here I think last time, you also talk about in terms of grocery and the App you try to improve the user experience make it more seamless that help you to improve the fill rate and substitution rate any update on that specifically thanks.

Triple digits, which I think when you compare to peers suggest that we're outpacing by many multiples.

So I think the numbers kind of speak for themselves.

Awesome. Thank you.

Our next question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.

Tony: Yes, it's gone really well.

Tony: Thank the results kind of speak for themselves I mean, we know acquire more customers than any other platform, who shop and the convenience of our grocery or alcohol.

Hey, I just wanted to ask about dash passion World plus members. When you think about the growth of that program going forward. So this is.

A great customer retention customer engagement tool what are the things you can do to.

Tony: Segments than anyone else.

Tony: I think we cited in Q3 that our grocery business is growing.

Further accelerate the adoption of dash past is it do you find it.

Tony: Triple digits, which I think when you compare to peers suggests that we're outpacing by many multiples.

Is it more features and functionality is it is it more competitive pricing or lower pricing what is it.

Tony: So I think the numbers kind of speak for themselves.

How's that that subscriber base to double in the space of a couple of years, what do you think the most interesting missing features today. Thank you.

Speaker Change: Awesome. Thank you.

Speaker Change: Our next question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.

Hey, Mark it's Tony.

Mark Mahaney: Hey, I just wanted to ask about dash passion World plus members. When you think about the growth of that program going forward. So this is.

I think there is a few things here with respect that membership adoption I think the first is just making sure that members are aware of the <unk>.

Mark Mahaney: A great customer retention customer engagement tool what are the things you can do to.

Savings that they are actually receiving I think if you think about door dash, we have within our own ecosystem of hundreds of millions of customers, who ordered with us but as you saw we wrote in our in our shareholder letter that was 37 million monthly active customers and so there's a pretty large base, who I think.

Mark Mahaney: Further accelerate the adoption of dash past is it do you find it.

Mark Mahaney: Is it more features and functionality is it is it more competitive pricing or lower pricing what is it that.

Mark Mahaney: How's that that sub debt subscriber base to double in the space of a couple of years, what do you think the most interesting missing features today. Thank you.

We have to.

Meet them, where they are in terms of.

Usage behavior, and then make them aware of the possible savings.

Tony: Hey, Mark it's Tony.

Savings that there could be so I think the number one job number one is really making sure that we can make all customers within the door at ash and bolt ecosystem to understand the savings that they would be receiving I think job number two is always increasing the value.

Tony: I think there is a few things here with respect that membership adoption I think the first is just making sure that members are aware of that.

Tony: Savings that they are actually receiving I think if you think about door dash, we have within our own ecosystem of hundreds of millions of customers, who have ordered with us but as you saw we wrote in our in our shareholder letter that was 37 million monthly active customers and so there's a pretty large base, who I think we.

The members receive and so that's something that we're always working towards.

And we will add more and more benefits overtime.

Okay. Thank you Tony.

Our next question comes from the line of Doug Anmuth with Jpmorgan. Please go ahead.

Tony: Have to.

Tony: I meet them, where they are in terms of.

Tony: Usage behavior, and then make them aware of the possible savings.

Thanks, so much for taking questions.

Tony: Savings that there could be so I think the number one job number one is really making sure that we can make all customers within the <unk> ecosystem to understand the savings that they would be receiving I think job number two is always increasing the value.

Tony you highlighted 7 million bashers in 'twenty, three and it was good to see some of the details from the <unk> Survey can you just talk to us about current dasher supply levels and how youre feeling about dasher satisfaction and then also individual dasher earnings trajectory and then.

The members receive and so that's something that we're always working towards.

Tony: And we will add more and more benefits over time.

The second question on anything you'd call out in terms of generative AI benefits, thus far in the business around efficiency or anything on the new product side. Thanks.

Speaker Change: Okay. Thank you Tony.

Speaker Change: Our next question comes from the line of Doug Anmuth with Jpmorgan. Please go ahead.

Sure.

Your first question, Doug I believe was on Dasher supply I mean, it's been the healthiest we've seen.

Doug Anmuth: Thanks, so much for taking questions.

Doug Anmuth: Tony you highlighted 7 million <unk> in 'twenty, three and it was good to see some of the details from the <unk> Survey can you just talk to us about current dasher supply levels and how youre feeling about dasher satisfaction and then also individual dasher earnings trajectory and then.

And I think this is something that we called out in the letter aware.

It really is precisely because of the number one feature that we offer in the door as level as flexibility that.

There are such high levels of engagement right I mean, we have.

As you said $7 million, plus staffers, who aren't over $15 billion in the year.

Doug Anmuth: The second question on anything you'd call out in terms of generative AI benefits, thus far in the business around efficiency or anything on the new product side. Thanks.

These <unk> on average only.

Dash about four hours, a week, 90% of them dash fewer than 10 hours a week. So the reason the vast vast majority north of 80 plus percent of them have other full time work.

Doug Anmuth: Sure.

Tony: Your first question, Doug I believe was on Dasher supply I mean, it's been the healthiest we've seen.

It really is an complementarity to what they already do.

Tony: And I think this is something that we called out in the letter aware.

Tony: It really is precisely because of the number one feature that we offer in the dose level is flexibility.

I think thats one of the reasons that youre seeing that so satisfaction is high engagement. It is at.

At all time highs and it's been easier and easier for us to make sure that we can supply the routes that doesn't mean that we don't have work to do by the way and then we have a lot of work to do and making sure that the friction to use the app a lot easier, making sure that we can create more earnings opportunities for doctors, we launched some new payment models for <unk>.

Tony: There are such high levels of engagement right I mean, we have.

Tony: As you said $7 million, plus staffers, who earn over $15 billion in the year.

Tony: These <unk> on average only.

Tony: Dash about four hours, a week, 90% of them dash fewer than 10 hours a week. So they read in the vast majority north of 80 plus percent of them have other full time work.

For the first time in 2023 in a while.

So theres a lot of work to both optimize as well as innovate and create new services for doctors.

Tony: It really is an complementarity to what they already do.

On the second question I think was on generative AI and the benefits that we've seen we've been working with.

Tony: So I think thats one of the reasons that youre seeing thats a satisfaction is high engagement as is.

With a lot of these.

Large language models for probably a couple of years at this point they certainly do serve some benefits.

Tony: At all time highs and it's been easier and easier for us to make sure that we can supply the roads that doesn't mean that we don't have work to do by the way and then we have a lot of work to do and making sure that the friction to use the app a lot easier, making sure that we can create more earnings opportunities for doctors, we launched some new payment models for <unk>.

And areas, where you see lots of structured information that digests nicely into these L O EMS and which then you can.

<unk> solves I mean, if you see a lot of work that's being repetitive.

Tony: <unk> for the first time in 2023 in a while.

That is done manually for instance, a lot of that can be we've seen efficiency gains with generative AI we're always.

Tony: So theres a lot of work to both optimize as well as innovate and create new services for doctors.

Tony: On the second question I think was on generative AI and the benefit that we've seen we've been working with.

Trying to do our best.

Play with the newest technologies, but at the same time I think a lot of times. The question I always ask myself as you know technology is a tool we have to make sure we understand the job to be done and apply the correct tool. So I think.

With a lot of these.

Tony: Large language models for probably a couple of years at this point they certainly do serve some benefits.

Tony: And areas, where you see lots of structured information that digests nicely into these L O EMS and which then you can.

With respect to generative.

We have seen efficiencies in.

Many areas.

But I think it's something that's going to be explored for many years to come.

Solve I mean, if you see a lot of work that's being repetitive.

Okay. Thank you Tony.

Tony: That is done manually for instance, a lot of that can be we've seen efficiency gains with generative AI we're always.

Our next question comes from the line of Brad Erickson with RBC capital markets. Please go ahead.

Tony: Trying to do our best to <unk>.

Yes. Thanks.

Tony: With the newest technologies, but at the same time I think a lot of times. The question I always ask myself as you know technology is a tool we have to make sure we understand the job to be done and apply the correct tool. So I think.

I guess first for Tony when you think about adding that value to dash past you kind of just talked about a minute ago.

Do you ever think about maybe partnering with anyone and kind of like an adjacent or even say different end market. For example, or would would that added value kind of be more likely homegrown would you say.

Tony: With respect to generative AI, we have seen efficiencies in.

Tony: Many areas.

And then second just for Ravi.

Tony: But I think its something thats going to be explored for many years to come.

I guess, a few quarters ago now you'd laid out a really nice chart, highlighting kind of how youre losses, sometimes we're going up on new verticals Ngls, even though your unit economics were also kind of improving at the same time so.

Speaker Change: Okay. Thank you Tony.

Speaker Change: Our next question comes from the line of Brad Erickson with RBC capital markets. Please go ahead.

As we look at the guidance or are there a lot of end markets or Geos, where that's still kind of a case or I guess are we reaching a point at some point, where those two lines kind of start to go the same direction or is that maybe already happening just any color there would be great. Thanks.

Brad Erickson: Yes. Thanks.

Brad Erickson: I guess first for Tony when you think about adding that value to dash past you kind of just talked about a minute ago.

Brad Erickson: Do you ever think about maybe partnering with anyone and kind of like an adjacent or even say different end market. For example, or would would that added value kind of be more likely homegrown would you say.

Hey, Brad Yes on your question on Dash past and benefits of whether those benefits come through partnership or built with them.

Brad Erickson: And then second just for Ravi.

There is a portfolio of bets here, but it's really starts within I think understanding our own ecosystem. We are fortunate that we have the largest local commerce base of customers in which we can offer these benefits and I think when you think about.

Brad Erickson: I guess, a few quarters ago now you'd laid out a really nice chart, highlighting kind of how your losses, sometimes we're going up on new verticals Ngls, even though your unit economics were also kind of improving at the same time. So as we look at the guidance or are there a lot of end markets or deals, where that's still kind of a case or I guess are we reaching a point at some point, where those two lines kind of start to go.

The depth of use cases as well as the breadth of use cases, I mean, there really isn't any category larger than eating in retail and so I think job number. One is we have to first make sure. We do a great job with what we have and I think.

Brad Erickson: The same direction or is that maybe already happening just any color there would be great. Thanks.

Speaker Change: Hey, Brad Yes on your question on Dash past and benefits, whether those benefits come through partnership or built with them.

If it makes sense to have certain partnerships, we will certainly consider those but I think job number one is just realizing how big of an opportunity we have within our own ecosystem and building the best products for our customers.

Speaker Change: There is a portfolio of bets here, but it's really starts within I think understanding our own ecosystem. We are fortunate that we have the largest local commerce base of customers in which we can offer these benefits and I think when you think about.

Brian I'll take the second one on the overall investment level rate look I mean.

We're not trying to optimize the business for an overall quantum of investment dollars when you're thinking about operating the business right. Our goal is to maximize long term free cash flow per share.

Speaker Change: The depth of use cases as well as the breadth of use cases, I mean, there really isn't any category larger than eating in retail and so I think job number. One is we have to first make sure. We do a great job with what we have and I think.

Being in the business across the board new verticals as well as international is volume is growing very nicely in fact.

Mentioned in my earlier question to both Brian and Deepak <unk>.

Speaker Change: If it makes sense to have certain partnerships, we will certainly consider those but I think job number one is just realizing how big of an opportunity we have within our own ecosystem and building the best products for our customers.

Volume is continuing to accelerate in the second half for our new verticals business International business is continuing to grow combined with that Youre seeing improvement in unit economics, as we drive efficiency and across the P&L.

Speaker Change: Brian I'll take the second one on the overall investment level rate look I mean.

Both of those together that's strong signal for us both from a product market fit as well as a profitability perspective, our goal and as long as we are continuing to see that strength as long as we're able to drive growth efficiently. We're going to continue to invest behind that because that's a driver for our long term free cash flow generation in our business and both of those I'm very confident they're going to contribute to the <unk>.

Speaker Change: We're not trying to optimize the business for an overall quantum of investment dollars when youre thinking about operating the business right. Our goal is to maximize long term free cash flow per share what youre seeing in the business across the board new verticals as well as international is volume is growing very nicely in fact.

Profitability of the entire business for us.

Speaker Change: Mentioned in my earlier question to both Brian and Deepak <unk>.

Got it thank you.

Speaker Change: Volume is continuing to accelerate in the second half for our new verticals business International business is continuing to grow combined with that we are seeing improvement in unit economics, as we drive efficiency and across the P&L.

Our next question comes from the line that can grow Ralph <unk> with Wells Fargo. Please go ahead.

Thank you very much two if I may 1st on.

Speaker Change: Both of those together that's strong signal for us both from a product market fit as well as a profitability perspective, our goal and as long as we are continuing to see that strength as long as we're able to drive growth efficiently. We're going to continue to invest behind that because that's a driver for our long term free cash flow generation in our business and both of those I'm very confident are going to contribute to the <unk>.

The regulatory side I believe most most of the markets are currently independent contractor model with the exception of Germany. It.

It seems like the EU platform work director of it is going to be published any day.

Do you expect to have to reclassify workers in Europe, and then the second one.

Is based on is on the capital return side based on the on the 24 EBITDA guidance.

Profitability of the entire business for us.

Speaker Change: Got it thank you.

And the renewed share purchase authorization I was hoping maybe you could update us on your medium term.

Ralph Ski: Our next question comes from the line that can grow Ralph ski with Wells Fargo. Please go ahead.

About capital returns you talked about maximizing free cash flow per share.

Ralph Ski: Thank you very much two if I may 1st on.

Ralph Ski: The regulatory side I believe most most of the markets are currently independent contractor model with the exception of Germany. It seems like the EU platform work director of it is going to be published any day.

You've talked a lot about what youre doing on the numerator can you talk a little bit more about the Dol dominator there. Thank you.

Yeah, Hey, Ken I can start this is Tony and Rob you feel free to follow up I think on your first question, which is about regulation in the EU and the platform Workers' directive.

Ralph Ski: Do you expect to have to reclassify what workers in Europe and then the second one is based on is on the capital return side based on the on the 24 EBITDA guidance.

Yes, I mean, it's certainly an ongoing.

Piece of work that regulators are coming up with and I think the good news here is that theyre doing it in partnership with industry and we expect.

Ralph Ski: The renewed share purchase authorization I was.

Hoping maybe you could update us on your medium term thoughts about capital returns you talked about maximizing free cash flow per share.

A very productive outcome for everyone I think that.

Ralph Ski: I know you've talked a lot about what youre doing on the numerator can you talk a little bit more about the denominator there. Thank you.

By and large when I made my comment earlier to the I think there is an earlier question about regulation I mean, there really arent just a handful of cities across the world. So not just EU or U S or other places in which I think governments don't want to work productively with companies I think.

Speaker Change: Yeah, Hey, Ken I can start and as Tony and Rob you feel free to follow up I think on your first question, which is about regulation in the EU and the platform in Orca directive.

Speaker Change: Yes, I mean, it's certainly an ongoing.

The majority a vast vast vast majority of scenario. We've seen is that governments want to work with companies I mean, why wouldn't you mean why wouldn't you want to increase the GDP of the local economy and create more work opportunities more sales for all businesses and more accessibility for consumers I think that every government recognizes that.

Speaker Change: Piece of work that regulators are coming up with and I think the good news here is that theyre doing it in partnership with industry and we expect.

Speaker Change: A very productive outcome for everyone I think that.

Speaker Change: By and large when I made my comment earlier to the I think there is an earlier question about regulation I mean, there really arent just a handful of cities across the world. So not just EU or U S or other places in which I think governments don't want to work productively with companies I think.

That's a positive some situation for their constituents and we see that in the EU. We also see that in most parts of the world.

I think your second question was around capital allocation.

Maybe I can start and then and then.

Speaker Change: The the majority a vast vast vast majority of scenario. We've seen is that governments want to work.

And then Ravi.

I'll try to.

I'll take the rest.

In general I mean, we're always trying to look to build products for customers and we think that that's the best way to maximize long term free cash flow per share obviously to your point. There is two component parts of that there's the first component in which we're doing our best to grow as fast as possible within a disciplined set of parameters.

Speaker Change: With companies I mean, why wouldn't you mean why wouldn't you want to increase the GDP of the local economy and create more work opportunities more sales for local businesses and more accessibility.

Speaker Change: <unk> for consumers I think that every government recognizes that that's a positive some situation for their constituents and we see that in the EU. We also see that in most parts of the world.

So that we set for ourselves a lot of that isn't just a budget, but also just how we run the business and run different projects against.

Speaker Change: I think your second question was around capital allocation.

And for state of progress, whether they're in search of product market fit theres a different set of operating metrics that we look at if they're in a phase of scaling and looking for efficient ways to grow there.

Speaker Change: Maybe I can start and then and then.

Speaker Change: And then Ravi.

Ravi: Feel free to.

Ravi: I'll take the rest.

Ravi: In general I mean, we're always trying to look to build products for customers and we think that thats. The best way to maximize long term free cash flow per share obviously to your point. There is two component parts of that there's the first component in which we're doing our best to grow as fast as possible within a disciplined set of parameters.

Operating metrics if they are.

Cash flow generative theres another set of metrics.

On the latter.

The denominator, we're always looking to make sure that we do this.

With disciplined stock based compensation is certainly is a very real expense, we want to make sure that we're as disciplined as possible with head count and I'm pleased with the fact that we have been relatively flat on share count over the last six quarters, even though revenue has grown considerably over the same time period and look I think it's also been very healthy for our company culture toward ashes.

Ravi: We set for ourselves a lot of that isn't just a budget, but also just how we run the business and run different projects against.

Against their state of progress, whether they're in search of product market fit theres a different set of operating metrics that we look at if they're in a phase of scaling and looking for efficient ways to grow there is another set of operating metrics. If they are.

The company, that's quite scrappy in terms of how well, we how we like to operate and we'd like to continue operating with the same speed and quality.

Ravi: Cash flow generative theres another set of operating metrics, we look at so I think thats on the former on the latter.

Ken just a couple of wind side I think we've given guidance around both SBC as well as the share count I mean, you can see we are focused on driving leverage from our stock based compensation I mean, it's a true real cost of the business there given our leverage last year and expect to continue to drive leverage in that agreement.

Ravi: The denominator, we're always looking to make sure that we do this.

Ravi: With disciplined stock based compensation is certainly is a very real expense, we want to make sure that we're as disciplined as possible with head count and I'm pleased with the fact that we have been relatively flat on share count over the last six quarters, even though revenue has grown considerably over the same time period and look I think it's also been very healthy for our company culture toward ashes.

Share count perspective, and you can see be honest you issue and that we have given we expect the overall on institutions to come down because it's actually.

MPC is a lagging indicator until this.

Ravi: Accompanying thats quite scrappy in terms of how well, we how we like to operate and we'd like to continue operating with the same speed and quality.

Thank you.

Yeah.

Our final question today comes from the line of Michael Mcgovern with the Bank of America. Please go ahead.

Ravi: Ken just a couple of one side I think we've given guidance around both SBC as well as the share count I mean, you can see we are focused on driving leverage from our stock based compensation I mean, it's a true real cost to the business there given our leverage last year and expect to continue to drive leverage in that agreement.

Hey, guys. Thanks for taking my questions I have two.

First of all I'd to ask about the partner Commission rate, which you mentioned is down year over year I was just curious as you build out all of these new features for partners you have under 1% churn per restaurants as you mentioned.

Ravi: Share count perspective, and you can see the oddest your issuance that we've given we expect the overall our distributions to come down because it's actually.

That rate going down just a function of signing up a lot of new merchants and kind of what is your expectation long term for your partner Commission rate and then secondly, I was just wondering if you could talk a bit about the advertising business and when you mentioned in your full year guidance that net revenue margin going up in the second half of the year.

Ravi: NBC is a lagging indicator as always.

Thank you.

Ravi: Yeah.

Ravi: Our final question today comes from the line of Michael Mcgovern with the Bank of America. Please go ahead.

<unk>.

Michael Mcgovern: Hey, guys. Thanks for taking my questions I have two.

Does the advertising business contribute significantly to that so thank you.

Michael Mcgovern: First of all I'd ask about the partner Commission rate, which you mentioned is down year over year I was just curious as you build out all of these new features for partners you have under 1% churn for restaurants. As you mentioned is that rate going down just a function of signing up a lot of new merchants and kind of what is your expectation long term for your partner Commission rate.

Sure, Hey, Mike I'll start and feel free to add in here Ravi. So on the first question, which I believe is around partner commissions were always trying to maximize the value that we bring every single partner right and.

We're fortunate that.

We've generated lots of sales on behalf of these merchants and we've spent over $40 billion of R&D sales and marketing.

Michael Mcgovern: Then secondly, I was just wondering if you could talk a bit about the advertising business and.

Michael Mcgovern: When you mentioned in your full year guidance that net revenue margin going up in the second half of the year potentially.

<unk> team spend over the past few years in helping achieve that level of sales, which I think would be very difficult slash impossible for these merchants that replicate on their own.

Michael Mcgovern: Does the advertising business contribute significantly.

Speaker Change: To that so thank you.

Speaker Change: Sure, Hey, Mike I'll start and feel free to add in here Ravi. So on the first question, which I believe is around partner commissions were always trying to maximize the value that we bring every single partner right and.

And I think that's why you see that those churn numbers are low and actually frankly that they continue to get lower so for us, it's making sure that we're always delivering more value to these customers such that.

We will continue to grow together I mean, I think there's a long runway ahead before every physical merchant can truly argue and compete on their own as companies in the digital economy I think we've done a nice job in our first decade of helping the restaurant category get there, but I think we have a lot more work to do certainly within <unk>.

Speaker Change: We're fortunate that.

Speaker Change: We've generated lots of sales on <unk>.

Speaker Change: Behalf of these merchants and we've spent over $40 billion of R&D sales and marketing.

Speaker Change: <unk> team spend over the past few years in helping achieve that level of sales, which I think would be very difficult slash impossible for these merchants that replicate on their own.

Restaurants, and I think we're just getting started outside of restaurants I think your second question was around ads.

Speaker Change: And I think Thats why you see that does churn numbers are low and actually frankly that.

I mean, the ads business has done really well I mean, I think that it's.

Speaker Change: They continue to get lower so for us, it's making sure that we're always delivering more value to these customers such that.

It's not something probably we've talked about that much but it's certainly grown I think measured to the.

Size of business that we're at and for US again, I think the key operating tenant here is that.

Speaker Change: We will continue to grow together I mean, I think there's a long runway ahead before every physical merchant can truly argue and compete on their own as companies in the digital economy I think we've done a nice job in our first decade of helping the restaurant category get there, but I think we have a lot more work to do certainly within our restaurants.

Healthy ads business, we believe in which delivers best in class industry returns for advertisers as well as.

No.

It continues to allow us to have the best consumer experience is one in which we have to have a healthy and growing marketplace. That's what causes or allows the cause for a healthy ads business not the other way around and so for us.

Speaker Change: And I think we're just getting started outside of restaurants.

Speaker Change: Your second question was around ads.

Speaker Change: Yes, I mean, the ads business has gone really well I mean, I think that it's.

Speaker Change: It's not something probably we've talked about that much but it's certainly grown I think measured to the.

It's always making sure that we can achieve.

On those two dimensions, where we have the best in class returns for advertisers, which we believe we have as well as you know.

Speaker Change: Size of business that we're at and for US again, I think the key operating tenant here is that.

The smallest or ideally zero degradation in the consumer experience, which I'm really proud that the team has accomplished.

Speaker Change: Healthy ads business, we believe in which delivers best in class industry returns for advertisers as well as.

It's done it's done really well.

Speaker Change: It continues to allow us to have the best consumer experience is one in which we have to have a healthy and growing marketplace. That's what causes or allows the cause for a healthy ads business not the other way around and so for us.

Hey, Mike I'll take the question around the.

Net revenue margin garden that just to give you a little bit more context around how I expect the margins to scale through the rest of the year across both revenue as well as gross margin I would expect that to increase as we go through the rest of the year definitely to your point as is contributing to that in addition to that I expect us to drive leverage from an overall industrial cost perspective.

It's always making sure that we can achieve.

Speaker Change: On those two dimensions, where we have the best in class returns for advertisers, which we believe we have as well as.

Consistently working on quality, we're consistently trying to improve the overall efficiency, we have on discounts and promos again, you should expect us to see drive improvements across the P&L, which will ultimately drive both the revenue as well as gross margin, which will also flow through from a contribution on EBITDA margin perspective in the second half of New York.

Speaker Change: The smallest or ideally zero degradation in the consumer experience, which I'm really proud that the team has accomplished.

Speaker Change: It's done it's done really well.

Speaker Change: Hey, Mike I'll take the question around the net revenue margin garden that just to give you a little bit more context around how are.

Compared to the first half of the year.

Mike: Expect the margins to scale through the rest of the year across both revenue as well as gross margin I would expect that to increase as we go through the rest of the year definitely to your point as is contributing to that in addition to that I expect us to drive leverage from an overall industrial cost perspective, we are consistently working on quality, we're consistently trying to improve the overall efficiency we have.

Got it thanks, so much.

Ladies and gentlemen. This concludes today's call you may now disconnect.

Mike: Discounts and promos again, you should expect us to see drive improvement across the P&L, which will ultimately drive both the revenue as well as gross margin, which will also flow through from a contribution on EBITDA margin perspective in the second half of the year compared to the first half of the year.

Speaker Change: Got it thanks, so much.

Speaker Change: Ladies and gentlemen. This concludes today's call you may now disconnect.

Speaker Change: Goodbye.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Ladies and gentlemen this.