Q2 2024 DoorDash Inc Earnings Call

Operator: I'm very pleased to be joined today by Co-Founder Chair and CEO Tony Xu and CFO Ravi Inukonda. We'll be making forward-looking statements during today's call, including our expectations for our business, financial position, operating 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 our Form 10-Ks and 10-Qs, which do not rely on our forward-looking statements as predictions of future events.

Operator: We disclaim any obligation to update any forward-looking statements except as required by law. During this call, we will also discuss certain non-GAAP financial measures. Information regarding our non-GAAP financial measures, including a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures, may be found in our earnings release, which is available on our website.

Any forward looking statements during today's call, including our expectations for our business financial position operating 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.

Scribed in our SEC filings, including our form 10, Ks and Qs you.

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 this call. We will also discuss certain non-GAAP financial measures information regarding our non-GAAP financial measures, including a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures may be found in our earnings release, which is available on our Investor Relations website.

Operator: These non-GAAP measures should be considered in addition to our GAAP results and are not intended to be a substitute for them. Finally, this call is being webcast on our investor relations website, and an audio replay of the call will be available on the same website shortly after the call. I'll pass it back to you, and we can take the first one.

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 Investor Relations website, and an audio replay of the call will be available at the same website. Shortly after the call ends.

Speaker Change: I'll pass it back to you and we can take the first question.

Speaker Change: Thank you ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and we would like to ask a question. Please press star followed by the number one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now begin our question and answer session. If you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad.

Operator: We'll pause for a moment to compile the Q&A roster. Thank you. The first question comes from the line of Nikhil Devnani from Bernstein.

For a moment to compile the Q&A roster. Thank you.

Speaker Change: The first question comes from the line of Nikhil <unk> from Bernstein. Please go ahead.

Nikhil Devnani: Please go ahead. Hi, thanks for taking the question. I wanted to ask about what you're seeing from an overall demand perspective. There's a lot of talk right now about softening restaurant demand. Your outlook points to some deceleration but still looks very healthy. So I guess to what degree are you seeing changes in behavior or softening on that front? And my follow-on to that is a bit more of the secular story here.

Nikhil <unk>: Hi, Thanks for taking the question.

Nikhil <unk>: I wanted to ask about what youre seeing from an overall demand perspective, if there is a lot of talk right now about softening restaurant demand.

Speaker Change: Points to some deceleration, but still looks very healthy so I guess to what degree are you seeing changes in behavior or softening on that front.

Tony Xu: So, I mean, how would you characterize the new customer funnel for the U.S. restaurant marketplace? I think there's a common perception that all customers should have been acquired during the pandemic. But what do you see on that front in terms of how new customers are still adopting this service today? And how does that make you feel; how do you think about where we are on kind of the growth curve there? Hey, Nikhil, it's Tony.

Speaker Change: And my follow on to that is a bit more of a secular story here. So I mean, how would you characterize the new customer funnel for the U S restaurant marketplace. I think there is a common perception that all customers should've been acquired during the pandemic, but what do you see on that front in terms of how new customers are still adopting this service today and how does that make you.

Speaker Change: How do you think about where we are on kind of the growth curve. There. Thank you.

Hey, Nicole its Tony I'll take both of those and feel free to chime in Ravi.

Tony Xu: I'll take both of those and feel free to chime in, Ravi. You know, we're seeing really strong demand on the consumer side. So we're not actually seeing some of the challenges that you may be hearing about or reading about in other headlines. I think there are a few reasons for this. You know, I think we're still in the earliest innings of the move toward digital and the overall omni-channel experiences that every restaurant and retailer is participating in.

Tony: We're seeing really strong demand on the consumer side. So we're not actually seeing some of the challenges that you may be hearing about or reading about and other headlines I think there are a few reasons for this I think first we're still in the early innings of the move towards digital and the overall omnichannel experiences that every restaurant and retailer.

Speaker Change: <unk> is participating in and we're lucky to play in the part that is growing I mean, if you looked at digital only that's growing not just for us at <unk> on our marketplace. It's also growing for us on our first party platform as we power a lot of these restaurant and retailer websites for ordering as well as their delivery channels and.

Tony Xu: And, you know, we're lucky to play in the part that is growing. I mean, if you look only at digital, that's growing not just for us at DoorDash on our marketplace, it's also growing for us in our first-party platform as we power a lot of these restaurant and retailer websites for ordering as well as their delivery channels. And they see that too, by the way. While some restaurants, to your point, may be seeing some headwinds in traffic, I mean, their digital channels are growing very robustly.

Tony: And they see that too by the way.

Tony: While some restaurants to your point, maybe seeing some headwinds in traffic and in their digital channels are growing very robustly many multiples of.

Tony Xu: Many multiples of, you know, I think their overall growth and we see that, you know, similarly. But at the same time, we're still just single-digit penetration in restaurants, and outside of restaurants, we were even lower than that.

Speaker Change: I think there are overall growth and we see that similarly, but at the same time, we are still just single digit penetration in restaurants, and outside our restaurants or even lower than that so we see a long runway for growth there.

Tony Xu: So we see a long runway for growth there. The second point I'd make is that, you know, our product continues to get better. I mean, if you looked at our cohort behavior, whether it's retention or order frequency, I mean, all of these things are as good or better than our pandemic cohorts, you know, for every cohort since the pandemic. And so I think that's a reflection and testament to the work that the team is doing.

Speaker Change: The second point I'd make is that our product continues to get better I mean, if you looked at our cohort behavior, whether it's retention or order frequency I mean, all of these things are as good or better than even our pandemic cohorts for every cohort since the pandemic and so I think that's a reflection and testament to the work that the team is doing we already.

Tony: <unk> category, leading selection, but we are continuing to extend that lead and we have the best quality as well as the lowest cost logistics network and the most places in the U S. Not just for restaurants, but also for retail that continues to get more accurate and faster.

Tony Xu: You know, we already have category-leading selection, but we're continuing to extend that lead. We have the best quality as well as the lowest cost logistics network in most places in the US, not just for restaurants but also for retail. That continues to get more accurate and faster.

Tony Xu: You know, we continue to work on our affordability programs. I mean, DashPath had an all-time high in terms of its subscriber base. So I think a lot of people are responding, you know, across all of the dimensions in which we are judged from the consumer's view. The final point I'd make is that, you know, we are increasing the number of use cases on DoorDash. We continue to see tremendous growth much faster than the industry.

Speaker Change: We continue to work on our affordability programs I mean dash pass had an all time high.

Tony: In terms of its subscriber base. So I think a lot of people are resonating across all of the dimensions in which we are judge from the consumers view. The final point I'd make is that we are.

Tony Xu: I mean, you know, many, many, many a fold faster than anyone else, both in the US as well as globally in restaurants, but also outside of restaurants and increasingly we're seeing, you know, customers come to us for the first time actually, you know, for non-restaurant use cases. And so, and in terms of your question on new customers, I mean, we actually see, you know, a couple of things, you know, one, we still acquire, you know, more than anyone else, I mean, more than, in restaurants, more than one out of every two new customers that come into the industry, outside of restaurants, we're about one in every two, so in any category of local commerce, we acquire more new customers than anyone else, and I think what you see about the point about like, hey, look, you know, is the new customer point saturating you know, the way I think about this is, you know, for us at DoorDash, yes, we have, you know, tens of millions of customers every single month, but we have many multiples of that ordering with us every single year, so within even our own ecosystem, whether they're a new customer or a customer that's an occasional customer that's coming back now to the platform, within our own ecosystem, we have a long runway for growth, and so, yes, we're getting new customers, especially in restaurants and new categories, I mean, I mentioned some of those stats, but we're also getting customers who are in our ecosystem, they don't participate yet with us, you know, every single month or every single day, but increasingly, they're getting, Nikhil, just to add a couple of points, you know, to what Tony talked about, right, the demand on the platform continues to be very strong. When we look at the underlying cohorts, they're very strong. The recent cohorts are actually as strong as any of the older cohorts that we've seen.

Tony: Increasing the number of use cases on door dash, we continue to see just tremendous growth much faster than the industry I mean, many many many.

Tony: Fold faster than anyone else both in the U S as well as globally.

Tony: In restaurants, but also outside of restaurants and increasingly we're seeing customers come to us for the first time actually.

Tony: Non restaurant use cases.

Tony: And so and then in terms of your question on new customers I mean, we actually see a couple of things one we still acquire.

Tony: More than anyone else I mean more in restaurants more than one out of every two new customers that come into the industry outside of restaurants were about one in every two so in any category of local commerce, we acquire more new customers than anyone else and I think what you see about the point about like Hey look.

Tony: As the new customer point saturating the way I think about this is for US a door dash, yes, we have.

Tony: Tens of millions of customers every single month, but we have many multiples of that ordering with us every single year, so within even our own ecosystem, whether they're a new customer or a customer that's an occasional customer that's coming back now to the platform.

Tony: Within our own ecosystem, we have a long runway for growth and so yes, we're getting new customers, especially in restaurants, and new categories. I mentioned some of those stats, but we're also getting customers who are.

Tony: In our ecosystem they don't participate yet with US every single month of every single day, but increasingly they are getting there.

Clinical: Clinical just to add a couple of points to what Tony talked about right. The demand on the platform continues to be very strong when we look at the underlying cohorts, they're very strong in the recent quarters that actually are stronger than <unk> seen even for the quarter restaurant business. When I look at the growth rate in jewelry on a year over year basis.

Ravi Inukonda: Even for the core restaurant business, when I look at the growth rate in GOV on a year-over-year basis, the growth in Q2 is very consistent with what we saw in Q1. In fact, even from a linearity perspective, the business actually grew faster in June compared to April. Tony talked about some of this, but DashPath had a really strong quarter, an all-time high in terms of subscribers, and order frequency continues to be at an all-time high. So the underlying cohort strength is actually very strong, and demand continues to be very strong across the board. Thank you both.

Speaker Change: Growth in Q2 is very consistent with what we saw in Q1, even from a linearity perspective that business actually grew faster in June compared to April Tony talked about some of this but dash better a really strong quarter. All time high in terms of subscribers order frequency continues to be at an all time high so the underlying cohorts and is actually very strong and the demand.

Tony: Continues to be very strong across the board for us.

Tony: Yeah.

Speaker Change: Thank you both.

Speaker Change: The next question comes from the line of Pearl sensor from Barclays. Please go ahead.

Ross Sandler: The next question comes from the line of Ross Sandler from Barclays; please go ahead. Hey guys. First one on the take rate. It's up quarter on quarter, year on year. The revenue take rate. And then in the letter, you talked about reducing consumer feed, and you just mentioned DashPass growing a lot faster than overall. So could you talk about, like, what's driving that? Are you seeing efficiencies in Dasher cost or something else like driver efficiency, causing that take rate to go up as much as it is?

Pearl sensor: Hey, guys.

Pearl sensor: First one on the take rate.

Speaker Change: It's up quarter on quarter year on year.

Speaker Change: Revenue take rate.

Speaker Change: In the letter you talked about reducing consumer fees and you just mentioned dash past grown alone SaaS driven overall, so could you talk about like what's driving that.

Speaker Change: Are you seeing efficiencies on cash or cost or something else like drive.

Speaker Change: Causing uptake rate to go up as much it is.

Tony: And then the second one is you also mentioned that.

Speaker Change: The majority of your largest international markets have better retention in the U S could.

Speaker Change: Could you just give us a little bit more color on what's driving that.

Tony: Kind of the growth of offering or levels of competition or something else.

Speaker Change: That's all thanks a lot.

Tony: David I'll take the first one Tony can jump in on the second one, but I think a perspective, let me break out what's going on with revenue. If you think about our revenue there is a few different components.

Ross Sandler: And then the second one is, you also mentioned that the majority of your largest international markets have better retention than the US. Could you just give us a little bit more color on what's driving that? Is that kind of the breadth of offering or levels of competition or something else? That's all. Thanks a lot. Hey, Ross, I'll take the first one.

Ravi Inukonda: Tony, feel free to jump in on the second one. But from a technical perspective, Ross, let me break it down for you, you know, what's going on with revenue. If you think about revenue, there are a few different components. You have the ads business, which is growing really fast. We have our platform business, which is also growing really fast; both of those are driving the improvement you're seeing in both revenue growth as well as efficiency. At the same time, you also have cost lines, whether it's Dasher or quality; the team has done a great job of improving that. You know, compared to last year, we've seen improvements in efficiency. For us, the goal has always been to continue to drive improvement from an efficiency perspective.

Tony: You have the ads business, which is growing really fast.

Speaker Change: That's one business, which is also growing really fast.

Tony: Both of those are driving the improvement you're seeing in both revenue growth as well as take rate.

Tony: At the same time, you also have cost lines, whether it's dasher or quality. The team has done a great job of improving that compared to last year, we are seeing improvements in efficiency.

Tony: The goal has always been continue to drive improvements from an efficiency perspective, but at the same time. We're also going to continue to find opportunities to invest that back in growth as I look ahead room at a good perspective, I do expect us to improve and grow our <unk> business as well as our platform business even on the cost line, there's a lot of opportunity for us to continue to drive improvements and efficiency.

Ravi Inukonda: But at the same time, we're also going to continue to find opportunities to reinvest that back in. As I look ahead from a take rate perspective, I do expect us to improve and grow our ads business as well as our platform business. Even on the cost line, there's still a lot of opportunity for us to continue to drive improvements in efficiency.

Ravi Inukonda: At the same time, we're going to try to find good opportunities where we can drive investments in retention order frequency while continuing to improve the overall take rate. And Russ, on the second question about international markets and just the retention and frequency levels there, I mean, it's really a story of two things. One is, well, we started with a very robust set of, you know, fundamentals and foundation, right? I mean, this really was the key investment thesis behind teaming up with Volt.

Tony: The same time, we're going to try to find good opportunities that we could drive investments in retention order frequency, while continuing to improve the overall take rate in the business.

Tony: And Ross on the second question about international markets, and just the retention and frequency levels, there I mean it.

Ross: It's really a story of two things one is while we started with a very robust set of.

Ross: Fundamentals in foundation right I mean, this really was the key investment thesis behind teaming up with bolt I mean, when we were.

Ravi Inukonda: I mean, when we were looking internationally in terms of expansion opportunities, one of the things, perhaps the top thing that got us most excited about teaming up with Volt was the fact that they had leading retention and frequency in every market that they competed in. And, you know, that's a combination of a few things, right?

Tony: Looking internationally and in terms of expansion opportunities one of the things.

Ross: Perhaps the top thing that got us most excited about teaming up with vault was the fact that they had leading retention and frequency in every market that they competed.

Ross: And that's a combination of a few things right, but at the end of the day comes down to.

Tony Xu: But at the end of the day, it comes down to offering the best combination of influence for customers: the best selection, the best quality of service in terms of delivery quality, the best affordability, and the best support. The second thing I would say is that, you know, since teaming up with Volt, which closed in 21, it's been, you know, a couple years now; we've added, you know, some of the lessons that we've learned at DoorDash, lessons in, you know, making improvements to each one of these inputs.

Tony: Operating the best combination of inputs for customers. The best selection the best quality of service in terms of delivery quality the best.

Ross: Affordability and the best support.

Ross: The second thing I would say.

Tony Xu: And that combination, I think, is what you see driving growth and all, you know, virtually, you know, taking share gains in every market that we play in. The next question comes from the line of Michael Morton from Moffitt Nathanson. Please go ahead.

Tony: Is that since teaming up with bold, which closed in 'twenty. One it's been a couple of years now.

Tony: We've added some of the lessons that we've learned at door dash lessons in making improvements to each one of these.

Tony: Inputs and that combination I think is what you see that's driving the growth and virtually taking share gains in every market that we plan.

Tony: The next question comes from the line of Michael Martin from Moffett Nathanson. Please go ahead.

Michael Martin: Hi, guys. Thanks for the question if we could maybe do to on an international following up on some of the comments Tony just made and then maybe a quick one on growth rate Tony I loved hearing more about the retention aspects for international but can you talk about.

Michael Morton: Hi guys. Thanks for the question. If we could maybe do two, one on international, following up on some of the comments Tony just made, and then maybe a quick one on groceries. Tony, I love hearing more about the retention aspects of international, but like you talk about in the press release today, two full years with Walt, I would love to learn some more just beyond the retention aspects, some key takeaways after running this business for two full years on what it takes for the best performance in these international markets

Speaker Change: Press release today.

Speaker Change: Four years with we'll love to learn some more just beyond the retention aspects.

Speaker Change: Some key takeaways that for running that business for two full years on what it takes for the.

Michael Morton: Is it market structure, market share, consumer spending capabilities, and then how that might dictate your plans to grow in new countries and, or maybe exit certain markets where you don't like the industry structure? And then just a quick one on CPG advertising, some learnings and differences you've picked up compared to your restaurant advertising business would be great. Thank you.

Speaker Change: The best performance in these international markets is it market structure market scare consumers spending capability and then how that might dictate your plans to grow in new countries and or maybe exit certain markets, where you don't like the industry structure and then just a quick one.

Speaker Change: On CPG advertising, some learnings and differences you've picked up compared to your restaurant advertising business would be great. Thank you.

Speaker Change: Sure Yes.

Tony Xu: Sure. Yeah, on the first question regarding, you know, international and just lessons learned, I mean, the first thing I would say is that, you know, there's no silver bullet in operating these kinds of businesses. But the story is really the same in virtually every market. Sure, every market, to your point, has different challenges and different, you know, dynamics in the market. But at the end of the day, you know, it comes down to who can create the best service for customers, couriers, and merchants. And I think remembering that, as simple as it sounds, is actually quite important.

Michael Martin: Yes.

Speaker Change: The first question regarding internationally just lessons learned I mean, the first thing I would say that is that there is no. There's no silver bullet and in operating these kind of businesses, but the story is really the same in virtually every market sure every market to your point has different challenges and different die.

Michael Martin: <unk> in the market, but at the end of the day it comes down to who can create the best service for our customers.

Speaker Change: Careers and merchants and.

Michael Martin: I think remembering that as simple as it sounds.

Michael Martin: It is actually quite important because I think theres always.

Tony Xu: Because I think, you know, there's always a lot of competitive activities in our space. But I think that, you know, making sure that you can win by building the best product, as measured by the highest retention and frequency levels. I mean, that's kind of what we've always held ourselves to. That's what the customer holds us to. And I think that, you know, we've been lucky in that we've been able to achieve that bar, at least better than anyone else in all the markets that we plan for. But at the same time, it's, you know, also not good enough.

Michael Martin: A lot of competitive activities in our space, but I think that making sure that you can win on building the best product as measured by the highest retention and frequency levels I mean, thats kind of what we've always held ourselves to that's what the customer calls us to and I think that we've been lucky.

Michael Martin: Lucky in that we've been able to achieve that bar at least better than anyone else in all the markets that we plan, but at the same time. It's also not good enough. If you look at just how underpenetrated. So many of these markets are especially outside of the United States and.

Tony Xu: If you look at just how underpenetrated, you know, so many of these markets are, especially outside of the United States. And that's true in the restaurants category, but that's true virtually in every category, which just means that we've got a long ways to go before we're satisfied with what we've done for customers in solving the local commerce opportunity. With respect to CPG, you know, I think it's been just a really fast learning curve for us.

Michael Martin: And that's true in the restaurants category, but that's true virtually in every category, which just means that we've got a long ways to go before we're satisfied with what we've done for our customers in solving the local commerce opportunity.

Michael Martin: With respect to CPG.

Michael Martin: I think it's been just a really.

Michael Martin: Fast learning curve for US I think we had a lot of attention and excitement from virtually every top CPG advertiser because they saw the largest local commerce platform offering adds for the first time, you know three years ago.

Tony Xu: You know, I think we got a lot of attention and excitement from virtually every top CPG advertiser because, you know, they saw the largest local commerce platform offering ads for the first time, three years ago, that had the highest frequency, the highest membership base for local commerce, and the highest cross-sell between categories. And so obviously, their question is like, hey, what are you waiting for?

Michael Martin: That had the highest frequency the highest membership base for local commerce and the highest cross sell between categories.

Speaker Change: So obviously there are questions like Hey, what are you waiting for when are you guys going to actually open up the platform. So that we can meet new customers at the same time, we also have to balance the other side, which is.

Tony Xu: When are you guys going to actually open up the platform so that we can meet new customers? At the same time, you know, we also have to balance the other side, which is, you know, an advertising business can only be built off the back of a healthy and robust marketplace business, and it doesn't really go the other way around. So you kind of need the marketplace business to grow in order for your advertising business to have a long runway for healthy growth.

Michael Martin: And an advertising business can only be built off the back of a healthy and robust marketplace business and it doesn't really go the other way around the economy the marketplace business to grow in order for your advertising business to have a long runway for healthy growth and so that's kind of what we've always looked for but it's always.

Tony Xu: And so that's kind of what we've always looked for, but it's always had two guiding principles: how do we offer the best in-class consumer experience with no degradation in experience, and how do we offer the best return for advertisers?

Speaker Change: As two guiding principles, how do we offer the best in class consumer experience.

Michael Martin: With no degradation in experience and how do we offer the best return for advertisers and that's true for small restaurants that is true for big restaurants, that's your big Cpg's Thats true for small mid market Cpg's.

Tony Xu: And that's true for small restaurants. That's true for big restaurants. That's true for big CPGs.

Speaker Change: I think that one thing that you see now that we're in the third year of doing this is we're starting to finally make.

Michael Martin: Great progress in just offering a very balanced portfolio I think we started by offering an introducing ads to restaurants, where I think that was something that was very natural to some of the activities that we had done before then.

Tony Xu: That's true for small mid-market CPGs; great progress in just offering a very balanced portfolio. I think we started by offering and introducing ads to restaurants, where I think that was something that was very natural to some of the activities that we had done before then. But now, you know, that's pretty much fully built out for CPGs.

Michael Martin: But now that's pretty much.

Speaker Change: Fully built out for <unk>, and I and I think now it's making sure that we grow that in a responsible way achieving again the balance between consumer consumer happiness and advertiser returns.

Tony Xu: And I think now it's making sure that, you know, we grow that with, you know, in a responsible way achieving, again, the balance between consumer happiness and advertiser. In my guess, Ravi, just to add, you know, a couple of points that Tony talked about on the international side. Again, the formula for us, like Tony mentioned, is largely similar. We've seen strength in retention; we've seen strength in order frequency, as well as gross profit.

Michael Martin: Hey, Mike, it's Robin just to add to.

Mike: You know couple of what Tony talked about on the international side again, the formula for Us.

Speaker Change: <unk> is largely similar to seeing strengthen retention, we're seeing strength in order frequency as well as gross profit last call I talked about the fact that the.

Tony Xu: Last call, I talked about the fact that the entire international portfolio is gross profit positive, and it has continued to improve. For us, what's important is we want to drive scale; scale drives efficiency in the business. We've done that in the U.S., and it's the same formula we're using in the international markets as well. Thank you. The next question comes from the line of Andrew Boone from JMP Securities. Please go ahead.

Speaker Change: The entire international portfolio was gross profit positive and it is continuing to improve for US. What's important is we wanted to drive scale scale drives efficiency in the business. We've done that in the U S and it's the same formula where you're using in the international markets as well.

Speaker Change: Thank you.

Mike: Okay.

Mike: The next question comes from the line of Andrew Boone from JMP Securities. Please go ahead.

Andrew Boone: Great. Thanks, so much for taking my questions.

Andrew Boone: Great, thanks so much for taking my question. You mentioned in the press release a better frequency for new vehicles. Can you help us better understand that for drivers, and then where are you seeing better frequencies?

Andrew Boone: You mentioned in the press release better frequently for new verticals can you help us better understand that the drivers and then where are you seeing better frequency.

Tony Xu: And then a question really on ramping new merchants. You know, we've noticed that incentives are kind of larger. As we think about you guys normalizing on selection, can you just help us understand the size of the investment it takes to bring new merchants onto the platform? Thanks so much.

Andrew Boone: And then a question really on ramping new merchants, we've noticed that incentives are kind of larger as we think about you guys. Normalizing on selection can you just help us understand the size of the investment it takes to bring new merchants on the platform. Thanks, so much.

Speaker Change: Sure I can take the first part of the question I mean.

Ravi Inukonda: Sure, I can take the first part of the question. I mean, Andrew, I guess in general, I mean, we see order frequency increases, both within restaurants and incrementally on top of that from new verticals. It depends a lot on the, you know, on the geography and which, you know, new selection that has been on boarded or so, you know, how strong the selection density is within a market, you know, For example, obviously we've been very strong in grocery and in convenience, that's been a big focus for us for years and you know, we're excited actually, just this morning we announced an update to our partnership with Chase, which now makes us Chase's exclusive partner in both restaurant delivery and grocery delivery for all of their cardholders.

Andrew Boone: Andrew I guess in general I mean, we see order frequency increases both within restaurants and.

Speaker Change: Incrementally on top of that from new verticals and it depends a lot on the geography in which.

Speaker Change: New selection that has been onboard it or how strong the selection density is within a market.

Andrew Boone: For example, obviously, we have been very strong in grocery and convenience that's been a big focus for us for three years and we're excited actually I'm actually just this morning, we announced.

Andrew Boone: An update to our.

Andrew Boone: Through our partnership with Chase, which now makes us.

Andrew Boone: Chase's exclusive partner in both restaurant delivery and grocery delivery for all of their cardholders and so I think youre seeing the appreciation of our performance not just by consumers, but also by.

Ravi Inukonda: And so I think you're seeing, not just by consumers but also by, you know, other large companies out there that are trying to tap into a very valuable base of customers, a lot of whom are coming to us for grocery and for, you know, these new verticals. But there are examples where, you know, we just launched recently, for example, Ulta Beauty. So as we've launched health and beauty, you know, some customers come to us for the first time, whether it's Ulta, Sephora, other health and beauty merchants for the first time, or Lowe's in the home improvement category. So they're not coming from one area. As we add more categories, we see more order frequency growth. Yeah, Andrew. I'll take the second one.

Andrew Boone: Other large companies out there that are trying to tap into a very valuable base of customers a lot of whom are coming to us for.

Andrew Boone: For our grocery and for these new verticals, but there are examples where we've just launched recently for example at Ulta beauty.

Andrew Boone: As we've launched health and beauty some customers come to us for the first time, whether it's to alter to sephora to other health and beauty merchants for the first time or lows and the home improvement categories. So it's not coming from one area as we add more categories, we see more order frequency growth.

Andrew Boone: Yes, Andrew I'll take the second one maybe just a couple of points on the first one that Dan mentioned our goal is to drive overall order frequency up we're not going to drive just the restaurant order frequency up are the new verticals order frequency up in fact looking at the auto frequency on a blended basis is about how we think about the business is truly a 400 business when I look at the cohorts even the <unk>.

Tony Xu: Maybe just a couple of points on the first one that Tony mentioned, right? Our goal is to drive overall order frequency up. We're not trying to drive just the restaurant order frequency up or the new verticals order frequency up. In fact, looking at the order frequency on a blended basis is not how we think about the business.

Ravi Inukonda: It's truly a cohorted business. When I look at the cohorts, even the aged cohorts, they're engaging better with us. Their order frequency is going up, partly because the product has gotten better. You have more categories. Delivery times have gotten better. The entire base, the order frequency continues to go up.

Speaker Change: East cohorts that engaging better with us the order frequency is going up partly because the product has gotten better you have more categories delivery times have gotten better.

Speaker Change: Diabetes. The order frequency continues to go up the newer cohorts actually joining it better auto frequency than many of the older cohorts and to your second point on selection investments I mean look I mean, our goal is to continue to drive selection higher.

Ravi Inukonda: The newer cohorts are actually joining at a better order frequency than many of the older cohorts. At your second point on, you know, selection investment, look, I mean, our goal is to continue to drive selection higher. It's a core part of our strategy. We are adding selection in restaurants. We are definitely adding more selection on the grocery side as well as international.

Andrew Boone: Core part of our strategy, we are adding selection in restaurants.

Andrew Boone: Really adding more selection on the grocery side as well as international the way, we think about it is as long as we are driving incremental <unk> as long as the conversion is continuing to increase and continue to drive selection higher and youre seeing that strength being reflected in March as the demand, but the underlying cohorts of the business as well.

Brad Erickson: The way we think about it is as long as we are driving incremental GOV, as long as the conversion is continuing to increase, we're going to continue to drive selection higher. And you're seeing that strength being reflected in not just the demand but the underlying cohorts of the business as well. Thank you. The next question comes from the line of Brad Erickson from RBC Capital Markets. Please go ahead. Thanks. I just have two here.

Andrew Boone: Thank you.

Andrew Boone: The next question comes from the line of Brad Erickson from RBC capital markets. Please go ahead.

Andrew Boone: Thanks.

Brad Erickson: One, on the incremental flow through of EBITDA, so relative to GOV, it looks like it ticked up a bit, a quarter of a quarter, maybe a couple hundred basis points. Can you call out just any drivers of the difference there?

Brad Erickson: To hear one.

Speaker Change: On the incremental flow through of EBITDA relative.

Speaker Change: Relative to <unk>, it looks like it ticked up.

Speaker Change: Quarter over quarter, and maybe a couple hundred basis points can you call out just any drivers of the difference there.

Ravi Inukonda: And then second, and a bigger picture, Ravi just, you know, you know, just talked about improving unit economics on the gross margin side across all parts of the business. So it kind of seems like that should roughly rhyme with EBITDA expansion over time. What are any other sort of considerations as to why that would not be the case? If you could, please? Thank you. Yeah, let me take the first one, and I'll get into the second one later.

Ravi: You can and then second kind of bigger picture Ravi just.

Speaker Change: Talked about the improving unit economics on the gross margin side across all parts of the business. So kind of it seems like that should roughly rhyme with EBITDA expansion over time, what are any other sort of considerations as to why that would not be the case. If you could thank you.

Speaker Change: Yes, let me take the first one.

Ravi Inukonda: On the EBITDA upside that we saw in Q2, there were two factors, right? One, you saw us continue to drive higher growth; GEO became better than expectations. The overall business is gross profit positive. So you're seeing that flow through to the bottom line. And you also have improvements in unit economics and gross profit across most major lines of business. And you're seeing that impact the overall business as well. From a philosophy perspective, right? I want to be clear that our goal is to grow as fast as we can. By being inside of the range from an EBITDA perspective, I would expect that to be the case going But, longer term, let me break the business apart.

Speaker Change: Into the second one on the EBITDA side that we saw in Q2 I mean, there's two factors I beg one you saw us continue to drive higher growth jewelry came in better than expectations. The overall business gross profit positive so you're seeing that flow through to the bottom line.

Speaker Change: Do you also have improvement in unit economics gross profit across most major lines of business Youre seeing that impact the overall business as well from a philosophy perspective, right. I mean, I think I wanted to hear I like our goal is to grow faster than again by being inside of the range from an EBITDA perspective.

Speaker Change: I would expect that could be the case going forward in Q3, as well, but a longer delay.

Speaker Change: Let me break the business apart on the restaurant side, we've done a great job of improving the contribution margin in <unk>. Despite absorbing some of the regulatory cost there's a lot of opportunity for us to continuing to drive margin higher there, it's not going to be at the same clip as we've done over the last couple of years, new verticals as well as international is still early we're seeing good growth we are seeing good opportunity.

Ravi Inukonda: On the restaurant side, we've done a great job of improving the contribution margin in H1 despite absorbing some of the regulatory costs. There's still a lot of opportunity for us to continue to drive margin higher there, but it's not going to be at the same clip as we've done over the last couple of years. New verticals, as well as international, are still early.

Ravi Inukonda: We've seen good growth. We've seen good opportunities to continue to invest in them, but these businesses are not truly optimized for efficiency.

Ravi: To continue to invest there.

Ravi: These businesses are not truly optimize for efficiency as we continue to drive efficiency higher across the P&L I would expect margins to continue to improve more importantly, whereas the formula has always been invested behind retention order frequency as well as continued improvement in gross profit we have seen that in the business. If we find good areas to continue to drive investment and we're going to do that.

Ravi Inukonda: As we continue to drive efficiency higher across the P&L, I would expect margins to continue to improve. More importantly for us, the formula has always been invested behind retention, order frequency, as well as continued improvement in gross profit. We have seen that in the business. If we find good areas to continue to drive investment, we'll do that. Our goal is to drive GOV growth while being disciplined from an overall investment perspective.

Ravi: Goal is to drive jewelry growth by being disciplined from an overall investment perspective.

Speaker Change: Got it that's great. Thank you.

Bernard McTernan: That's great. Thank you. The next question comes from the line of Bernie McTernan from Needham; please go ahead. Great, thank you. I just wanted to stick with international.

Ravi: The next question comes from the line of Bernie Mcternan from Needham. Please go ahead.

Bernie Mcternan: Great. Thank you I just wanted to stick on international.

Bernard McTernan: Tony, you mentioned in the shareholder letter how your international ambitions remain well above what you'd be able to achieve so far. So just wanted to see, you know, does that mean more countries, you know, different categories, or different products coming to your current markets? And basically, do you have the right asset mix currently to achieve those ambitions? Yeah, hey, Bernie.

Bernie Mcternan: You mentioned in the shareholder letter, how international ambitions remain well above what you'd be able to achieve so far. So just wanted to see does that mean more countries different categories or different products coming to your kind of current.

Speaker Change: And basically do you have the right asset mix currently to achieve those ambitions.

Ravi: Yeah, Hey, Bernie I mean.

Tony Xu: I mean, to add to some of the comments I made previously, you know, we have a good foundation to build from in all of our markets. I mean, that's kind of how we start. And if you don't have that, I think it's difficult to kind of solve every local commerce problem.

Speaker Change: Yes to add to some of the comments I made previously we havent Good foundation to build from in all of our markets. I mean, that's kind of how we start and if you don't have that I think it's difficult to kind of.

Bernie: Solve every local commerce problem for us.

Bernie: Obviously, it starts with the restaurants business, which.

Ravi: Whether it's internationally or here in the U S.

Ravi: We have leading retention and frequency, which is a great place to build upon.

Tony Xu: You know, for us, that obviously starts with the restaurant business, which, whether it's internationally or here in the US, we have leading retention and frequency, which is a great place to build upon. And we've added quite a lot of categories to all of our markets, actually. And those are growing really, really nicely. But when I look outside of the US, I would say that the vast majority, you know, virtually every country outside the US for us is still behind what we think the penetration levels ought to be if we actually, you know, brought all of the products that we have in the market here in the US over. We're not there yet, right? We have a great house in which the structure is very, very good.

Ravi: And we've added quite a lot of.

Ravi: Categories and to all of our markets actually Amit and those are growing really really nicely, but when I look outside of the U S. I would say that the.

Ravi: The vast majority virtually every country outside the U S for us its still behind what we think the penetration levels ought to be we actually brought all of the products that we have in market here in the U S.

Ravi: Overseas we're not.

Tony Xu: We're growing many times faster than our peers. We're doing a nice job of, you know, launching new products that we've built from the DoorDash side to all of our markets. But on the flip side, I would say that the levels there are still, you know, not where they ought to be.

Ravi: Area, right, where we have a great house in which that the structure is very very good for growing many fold faster than our peers were doing a nice job of launching new products.

Ravi: That we built through the door at Ash side.

Ravi: All of our markets.

Speaker Change: On the flip side I would say that.

Ravi: The levels there are still.

Ravi: Not where they ought to be.

Speaker Change: Got a long ways to go on getting restaurant selection, where it needs to be we are off to a fantastic start outside of restaurants, especially given our retail I would say, there's a little less developed.

Tony Xu: You know, we've got a long way to go on getting restaurant selection where it needs to be. We are off to a fantastic start outside of restaurants, especially given that retail is, I would say, a little less developed on a comparative basis when you look outside of the U.S. versus, say, the retail industry within the U.S. And then when I look at, you know, the five businesses that we have, as well as other businesses that we're incubating, I think the potential to bring this, you know, globally to Thanks. The next question comes from the line of Michael McGovern from Bank of America. Please go ahead.

Speaker Change: On a comparative basis, when you look outside of the U S versus say the retail industry within the U S. And then when I look at the five businesses that we have as well as other businesses that we're incubating I think the potential to bring this globally to be the largest local commerce platform in any country I think that remains.

Speaker Change: Just a very very large opportunity for many years of growth.

Tony: Makes sense thanks, Tony.

Tony: The next question comes from the line of Michael Mcgovern from Bank of America. Please go ahead.

Michael Mcgovern: Hey, guys. Thanks for taking my question I wanted to ask a again a little bit about the restaurant menu inflation is there any dynamic underlying the <unk> number that is basically suggesting that there is some level of food inflation and maybe have some offsetting things like dry.

Michael Mcgovern: Hey guys, thanks for taking my question. I want to ask again a little bit about restaurant menu inflation. Is there any dynamic underlying the AOV number that is basically suggesting that there is some level of food inflation and maybe some offsetting things like drive that are making AOV not increase?

Speaker Change: Ive that are that are making a L V not increase and then.

Speaker Change: Also just quickly I wanted to see if you'd comment on regulatory with perhaps 22 being upheld in California.

Michael Mcgovern: And then also just quickly, I want to see if you comment on the regulatory changes with Prop 22 being upheld in California. And, you know, are you still seeing any impact in New York City and Seattle from regulatory changes there? Thank you. Hey, Mike, I'll take the first one.

Speaker Change: And are you still seeing any impact in New York City, and Seattle from regulatory changes there. Thank you.

Speaker Change: Hey, Michael I'll take the first one Tony will take the second one on the regulatory on the first one I mean look I mean inflation was not had a big impact on our business. If you think about it like when inflation first speak about a year ago, we saw fewer items per order, but overall, we've also driven consumer fees down.

Ravi Inukonda: Tony will take the second one on regulatory. On the first one, I mean, look, I mean, inflation has not had a big impact on our business. If you think about it, right, like when inflation first peaked about a year ago, we saw fewer items per order. But overall, we've also driven consumer fees down. So I look at the overall, even the restaurant business, from an AOE perspective, it's relatively flat year on year. So we're not seeing any impact on that.

Tony: Overall, even the restaurant business from an OE perspective, it's relatively flat year on year.

Tony: Not seeing any impact on that.

Speaker Change: And pretty pleased with the progress we've made on the overall affordability, which is continuing to drive the growth that youre seeing in the business.

Tony: Yeah on the second question with respect to regulate regulatory.

Tony Xu: And, you know, pretty pleased with the progress we've made on overall affordability, which is continuing to drive the growth that you're seeing. Yeah, second question with respect to regulatory issues. It's actually pretty much the same story that I think, you know, we've communicated, you know, ever since doing the first earnings call. And really, it reflects even what we thought 10 years ago when we started forecasting what might be true in regulatory, in particular, on the labor piece across the world, which is, you know, I think the majority of the world, the overwhelming majority, most jurisdictions want to actually support us in giving dashers what they want, which is the flexibility of a work opportunity that's never existed before, and also protections that we believe they deserve. I mean, to your point or the premise of the question, you're right. I mean, it's good to see that lawmakers, most recently with Health Plot 22 here in California.

Tony: It's been pretty much the same story that I think we've communicated.

Tony: <unk>.

Speaker Change: Doing the first earnings call.

Speaker Change: And really a reflective in what we thought 10 years ago, when we started forecasting what might be true.

Speaker Change: In regulatory in particular on the on the on the labor piece across the World, which is I think in.

Speaker Change: The majority of the.

Speaker Change: Of the world the overwhelming majority.

Speaker Change: Most jurisdictions wanted actually support us in giving dash is what they want which is.

Speaker Change: The flexibility of.

Speaker Change: A work opportunity that's never existed before.

Speaker Change: And also protections that we believe they deserve I mean to your point or the premise of the question you are right I mean.

Speaker Change: It's good to see that lawmakers most recently.

Tony Xu: We expect that, you know, not just because we're right on the wall, but because we think it's the right thing to do. It's actually giving users, in this case, the dasher, the driver, exactly what they're looking for. I always have to remind people that over 90% of dashers do fewer than 10 hours a week on the platform. The average dasher does three to four hours a week.

Speaker Change: Upheld 22 here in California, we expect that we expected that not just because we are right on the law because we think it's the right thing to do it's actually giving users in this case, the dash or the driver exactly what theyre looking.

Speaker Change: I always have to remind people that over 90% of doctors do fewer than 10 hours a week on the platform. The averaged Ashford is three to four hours a week.

Tony Xu: You know, the overwhelming majority, over 80%, 85% of dashers actually have full-time jobs. So they're specifically telling us we do not want to be told what hours to work or where to work them. And so we see that most governments, lawmakers around the world, certainly here in the U.S. right now, actually want to, you know, do right by the dasher and actually support us in what we want to do for workers.

Speaker Change: The overwhelming majority over 80%, 85% of Dash was actually have full time jobs. So theyre, specifically, telling us we do not want to be told what hours to work or wear to work and so on.

Speaker Change: We see that most governments lawmakers around the world certainly here in the U S as well actually want to do right by the dasher and actually support us and what we want to do for workers.

Tony Xu: I also hope, you know, whether it's this election cycle or future election cycles, whether it's here in the U.S. or around the world, that things will moderate a bit in terms of temperature, and that this can be, you know, something that we as a company, as well as other companies in the space, can work productively with any government to actually achieve what voters want. And I don't know, Ravi, did you want to comment on New York or Seattle or any of the economic activities? Yeah, maybe in New York and Seattle.

Speaker Change: I hope you know, whether this election cycle or future election cycles, whether it's here in the U S or around the world that things will moderate a bit in terms of temperature.

Speaker Change: And that this can be something that we as a company as well as other companies in the space can work productively with any government.

Speaker Change: To actually achieve what doctors want.

Speaker Change: And I don't know Robert did you want to comment on New Yorker, Seattle or any economic activity, yes, maybe on the New York and Seattle I talked about the fact in the last call that we did take a meaningful amount of impact on EBITDA from the regulatory costs in Q1 that did come down in Q2, just like I said in Florida, a lot of that is being driven by.

Ravi Inukonda: You know, I talked about the fact in the last call that we did have a meaningful amount of impact on EBITDA from the regulatory cost in Q1 that did come down in Q2. Just like I said. A lot of that is being driven by the underlying improvements we've made in product to drive efficiency higher. I do expect those costs to continue to reduce as we go through the rest of the year.

Speaker Change: The underlying improvements we've made in product to drive efficiency higher I do expect those cost to continue to reduce as we go through the rest of the year look I mean, our goal in philosophy has always been any market that we operate in water on with sustainable unit economics, and thats going to be true for these markets as well, so I'm going to be a step function changes there will be a gradual change we really like.

Ravi Inukonda: Look, I mean, our goal and philosophy have always been that in any market that we operate in, we want to run with sustainable unit economics, and that's going to be true for these markets as well. It's not going to be a step function change; it's going to be a gradual change. We really like, you know, what we're seeing in the business from an overall efficiency improvement perspective for those markets. Thank you. The next question comes from line up Ron Josey from CB.

Speaker Change: What youre seeing in the business from an overall efficiency improvement perspective for those markets.

Speaker Change: Got it thank you.

Speaker Change: The next question comes from the line of Ron Josey from CEB. Please go ahead.

Ron Josey: Great. Thank you for taking the question can you hear me okay.

Ron Josey: Please go ahead. Great. Thank you for taking the question. Can you hear me okay?

Speaker Change: Yes.

Ron Josey: Yep, go ahead, Ron. Oh, great. Perfect. So maybe a follow-up on what we were talking about earlier and all the improvements in efficiency. You know, the letter to the press release talked about reducing order defect rates and merchant churn while also lowering fees. And I'm just wondering if this lowering of fees is actually passing along the savings?

Ron Josey: Oh, great perfect. So maybe a follow up I mean, what we were talking about earlier and all the improvements on efficiencies.

Speaker Change: The letter to the press release talked about reducing order defect rates and merchant churn, while offering while also lowering fees.

Speaker Change: Just wondering this lowering fees is this passing along the savings and youre sort of seeing the benefits of call. It loading treated more efficiency lower fees higher order rates. Its all coming together I wanted to get your thoughts on just are you passing along the savings to consumers and then therefore see.

Ron Josey: And we're sort of seeing the benefits of call it lowering fees, more efficiency, lower fees, higher order rates. It's all coming together. I wanted to get your thoughts on just are you passing along these savings to consumers and then, therefore, seeing, you know, improving top line growth? I'm curious about that dynamic. Thank you. Yeah, hey, Ron, it's Tony.

Speaker Change: Improving topline growth I'm curious on that dynamic thank you.

Speaker Change: Yeah, Hey, Ron It's Tony I mean look we're always trying to do one thing right, which is the move in one direction I don't think I've ever spoken to a consumer whose assets are raised prices and so we are always trying to lower the fees and pass them on.

Tony Xu: I mean, look, we're always trying to do one thing, right, which is to move fees in one direction. I don't think I've ever spoken to a consumer who's asked us to raise prices. And so we are always trying to lower the fees and pass them on. And there are various ways in which you can do this. We're obviously trying to be more affordable, we're trying to increase and widen the selection lead that we have, we are trying to improve the quality of our logistics system. We believe we have the best one, but it doesn't mean that it's perfect.

Speaker Change: And there's various ways in which you can do that we're obviously trying to be more affordable, we're trying to increase and widen the selection.

Speaker Change: Lead that we have we are trying to improve the quality of our logistics system. We believe we have the best one but it doesn't mean that it's perfect.

Tony Xu: And so we have to get more accurate, we have to get faster, we have to be better about finding every product in the physical world, especially now that, you know, a lot of what we do is outside of restaurants, and, you know, inventory remains a challenge for every physical retailer. And so there's a lot of work to do, you know; we're not yet satisfied with where we are on all of the dimensions. We appreciate and, you know, tremendously respect all of the efforts that our teams have done in terms of building the best product in terms of having category-leading retention and frequency. We're not there yet.

Speaker Change: And so we have to get more accurate we have to get faster we have to be better about finding every product in the physical world, especially now that a lot of what we do is outside of restaurants and inventory remains a challenge.

Speaker Change: For every physical retailer and so there's a lot of work to do.

Speaker Change: We're not yet satisfied with where we are on all of the dimensions.

Speaker Change: We appreciate and tremendously.

Speaker Change: Respect all of the efforts that our teams have done in terms of building the best product in terms of having category, leading retention and frequency we're not there yet on the eyes of the consumer we can still be more affordable. We can still have better selection you can still have better quality and better support. So we're working on all of those things.

Ravi Inukonda: In the eyes of the consumer, we can still be more affordable, we can still have a better selection, we can still have better quality, and we can still have better support. So we're working on all of that. And not just to add to that, right, like the way we think about investing is that our goal is to grow as fast as we can while trying to be within the discipline. What you're seeing in the business is that restaurant growth has been very strong.

Speaker Change: And just to add to that the way we think about investing is our goal is to grow as fast as we can while trying to be within the disciplines and overdose, what youre seeing in the businesses restaurant growth had been very strong we're continuing to drive margins there higher youre seeing very similar dynamic in both new verticals as well as international the north of the growth, but overall improvement in profitability has been.

Ravi Inukonda: We're continuing to drive margins there higher; you're seeing a very similar dynamic in both new verticals as well as international. So not just the growth but overall improvement in profitability has been. For us, whenever we think about a dollar of efficiency, the next step we think about is how to get that back in the business. Because you want to drive order rates higher, you want to drive scale higher, and scale ultimately drives efficiency, and that's the consistent cycle that we've been on, and nothing has changed in regards to how we operate the business. Thank you, Tony. Thank you, Ravi. The next question comes from the line of Lee Horowitz from Deutsche Bank. Please go ahead.

Speaker Change: Higher, whereas whenever we think about a dollar of efficiency. The next step we think about it.

Speaker Change: Doug back into the business, because we want to drive order rates higher you want to drive scale higher scale ultimately drives efficiency and that's the consistent cycle that we've been on and nothing has changed in regards to how we operate the business.

Speaker Change: Thank you Tony Thank you Ravi.

Speaker Change: The next question comes from the line of Lee Horowitz from Deutsche Bank. Please go ahead.

Speaker Change: Alright, thanks for the questions.

Lee Horowitz: Thanks for the questions. Um, you know, in the past, you've called out sort of a fixed OPEX as a percentage of GOV for 24 that's expected to be stable. I guess that's still the operating assumption that we should be thinking about for this year. And then, sort of looking beyond this year, how are you thinking about your ability to drive leverage on a going forward basis as you digest sort of an admittedly small step in fixed OPEX?

Lee Horowitz: In the past you've called out sort of fixed opex as a percentage of <unk> for 24, that's expected to be stable I guess is that still the operating assumption that we should be thinking about for this year and then sort of looking beyond this year. How are you thinking about sort of your ability to drive leverage on a go forward basis as you digest sort of admittedly small staff and fixed opex.

Speaker Change: And then maybe just on the advertising business I guess looking out to next year you guys will have stacked up some really nice growth within your grocery business, which I assume was opened up the eyes of some of your CPG and partners would you expect sort of CPG and participation.

Lee Horowitz: And then maybe just on the advertising business, you know, I guess looking out to next year, you guys will have stacked up some really nice growth within your grocery business, which I assume was, you know, opened up the eyes of some of your CPG ad partners. Would you expect sort of CPG ad participation in the advertising product to perhaps, perhaps lag, some of the volume growth, as we've heard from some of your competitors in the space Thanks so much.

Speaker Change: And the advertising product, perhaps perhaps lag some of the volume growth as we've heard from some of your competitors in the space. Thanks, So much.

Speaker Change: Kelly I'll take the one on Opex, Tony will take the second one look I mean, our goal is not just to grow strongly in 2000 and for what our willingness to continue to drive strong growth for many years to come.

Ravi Inukonda: Really, I'll take the one on APEX, and Tony will take the second one. Look, I mean, you know, our goal is not just to grow strongly in 2024, but our goal is to continue to drive strong growth for many years to come. For us, the key there is to continue to innovate on the products. What we're seeing in the business is that when you continue to invest behind the product, you see improvements in retention, and you see improvements in order frequency. As I mentioned earlier, the 23 and the 24 cohorts are as strong as any of the older cohorts we've seen.

Speaker Change: For us the key there is continue to innovate on the product side, what we're seeing in the business is continuing to invest behind the product youre seeing improvements in retention, you're seeing improvements in auto frequency I mentioned earlier. The 23 on the 24 cohorts are as strong as any of the older cohorts we've seen.

Ravi Inukonda: Our philosophy has always been to invest behind the strength that we're seeing in the business. We are investing and adding resources in select areas, mostly on the engineering and the product side. And I think the benefits of that, you know, from an overall growth as well as an efficiency perspective. As I think about, you know, OPEX, I would expect OPEX to be roughly at the same level on a percentage of GDP basis for the rest of the year.

Speaker Change: Philosophy has always been to invest behind the strength that youre seeing in the business, we are investing and adding resources in select areas as most of you on the engineering and the product side and I think the benefits of that from an overall growth as well as an efficiency perspective, and I think about Opex I would expect opex roughly to be at the same level on a percentage of jewelry basis for the rest of the year.

Speaker Change: And then looking forward our goal is to continue to scale the business and our goal is to drive leverage in Opex, just like any other part of the P&L.

Ravi Inukonda: I mean, looking forward, our goal is to continue to scale the business, and our goal is to drive leverage in OPEX, just like, you know, any other part of the P&L. Hey, Lee, on the second question about, you know, the pacing of CPG ad growth, I mean, I mean, we really like what we see, right? I mean, right now, and it'll always be this, is to make sure that, you know, the principle that building a great marketplace comes before building a great ad business.

Speaker Change: On the second question about the pacing as CPG AD AD growth I mean, we really like what we see right I mean right now the focus again and it will always be this is to make sure that the principle.

Speaker Change: Principal that building a great marketplace comes before building a great business and if your marketplace business isn't growing in a sustainable and healthy way.

Ravi Inukonda: And if your marketplace business isn't growing in a sustainable and healthy way, that's not going to degrade the consumer experience, it almost doesn't matter, you know, everything that comes after that sentence. And so, you know, for us, I mean, to your point, you're right. I mean, our new verticals, whether it's grocery, convenience, alcohol, other retail categories, business is growing really fast. Every CPG, you know, is a customer, and the question is like, you know, how fast do we get into that spend? You know, the way I think about this is, you know, there's no rush to do it, and actually, you can actually make a pretty big mistake if you get into it too quickly.

Speaker Change: That's not going to degrade the consumer experience it almost doesn't matter.

Speaker Change: Everything that comes after that sentence in sale for us.

Speaker Change: And to your point you are right I mean, our new verticals, whether it's grocery convenience alcohol other retail categories business is growing really fast every CPG.

Speaker Change: It is a customer and the question is like how fast do we get into that spend.

Speaker Change:

Speaker Change: The way I think about this is there's no rush to doing it and actually you can actually make a pretty big mistake. If you get into it too quickly I mean as long as we have the biggest audience with the greatest level of activity in terms of frequency engagement.

Tony Xu: I mean, as long as we have the biggest audience with the greatest level of activity in terms of frequency, engagement, retention, and frequency, we're always going to be, you know, available to the CPG advertiser. And I think they're always going to be interested, and they're always looking for the best returns. And I think it tends to come from the marketplaces that aren't just the biggest, but also the ones with the highest activity and the highest growth rates. And so that's the balance for us. I mean, I mean, our CPG ad business is growing really, really fast. I'm very pleased with the performance by the team.

Speaker Change: Retention and frequency, we're always going to be available to the CPG Advertiser and I think there are always going to be interested and they're always looking for the best returns and I think it tends to come from the marketplaces that aren't the biggest just the biggest but also the ones with the highest activity in the highest growth rates and so.

Shweta Khajuria: But again, you know, in terms of pacing, and we'll think of it as sequencing, which is the marketplace, the health of the marketplace should always come before monetization. Helpful, thank you. The next question comes from Shweta Khajuria from Wolf Research. Please go ahead. Thank you for taking my questions. Let me try two, please.

Speaker Change: That's the balance for us.

Speaker Change: It's our CPG AD business for a really really fast and very pleased with the performance by the team, but again in terms of pacing I almost think of it as sequencing, which is the marketplace of the health of the marketplace should always come before the monetization of the marketplace.

Speaker Change: Helpful. Thank you.

Speaker Change: The next question comes from the line of Shred that Julia from Wolfe Research. Please go ahead.

Shweta Khajuria: One is on advertising growth. So could you talk about your current ad tech stack and where you are in terms of your products, and where you think there is opportunity to continue to grow and gain greater share? That is, whether you're talking about attribution, or you're targeting capabilities, or telling CPGs that we can get you incremental customers that you can't find elsewhere, whatever that is. Where are you today, and where is the opportunity?

Speaker Change: Thank you for taking my questions. Let me try two please one is on advertising growth.

Speaker Change: Could you talk about your current at that stack and where you are in terms of your products and where you think there is opportunity to continue to grow and gain greater share that is whether you are talking about attribution archaean targeting capability. They are telling you.

Speaker Change: <unk> that we can get you incremental customers that you can't find out that whatever that is where are you today and where is the opportunity and second is on competitive dynamics.

Tony Xu: And second, on competitive dynamics. Through the quarter, there was a lot of talk about perhaps you potentially losing shares, but it clearly doesn't sound like you are. Could you talk about whether you're seeing greater competitive intensity in suburban markets in the US and what you're seeing in international markets? Thanks a lot.

Speaker Change: Through the quarter there was a lot of talk about perhaps you potentially moving changed clearly doesn't sound like you are.

Speaker Change: Could you talk about the.

Speaker Change: Whether you are seeing greater competitive intensity in some urban markets in the U S and what Youre seeing in international markets. Thanks, a lot.

Speaker Change: Sure I can take both of those and feel free Ravi to Tad in Asia right now.

Tony Xu: Sure, I can take both of those, and feel free, Ravi, to add in. Shweta, you know, on the first question, you know, on the ad tech stack and just, you know, where we are. I mean, it's a three-year-old business. I mean, it's growing lights out fast. I think if it were a standalone business, you know, people would be very pleased with its performance. But, you know, again, to me, it's not about rushing it.

Speaker Change: The first question on AD Tech stack, and just where we are I mean, it's a three year old business I mean, it's growing lights out fast I think of our Standalone business.

Speaker Change: People will be very pleased with its performance but.

Speaker Change: Again to me, it's not about Russia, even though it's growing really really fast and we're in no disadvantage relative to anyone else. It doesn't mean that we should just step on the gas all the way so theres a lot more room I mean, if you look at where.

Tony Xu: Even though it's growing really, really fast, and we're at no disadvantage relative to anyone else, it doesn't mean that we should just step on the gas all the way. So there's a lot more room. I mean, if you look at where we started with ads, most of the stack was built for restaurants. And that probably makes sense, given, you know, our history.

Speaker Change: We started with ads most of the stack was built for for restaurants, and probably makes sense given our history.

Tony Xu: But DoorDash is no longer just a one category, one country company. We have five business lines, you know, 30-plus countries. And so, you know, to your point, we have to evolve and build maturity in the stack for, you know, bigger restaurants, for CPG advertisers, for advertisers across all categories, not just in food, but across all retail. So I think there's a very long and straightforward roadmap. What I liked is that, you know, and certainly what they've told me and also what we see in terms of their investments with us, they're ready to go.

Speaker Change: But <unk> is no longer just a one category one country company, we our five business lines.

Speaker Change: 30, plus countries and so to your point, we have to evolve and build maturity and the stack for bigger restaurants for CPG advertisers for advertisers across all categories not just in food, but.

Speaker Change: In all of retail so I think there's a very long and straightforward roadmap what I liked is that.

Speaker Change: And certainly what they've told me and also what we see in terms of their investments with US is that they are ready to go.

Tony Xu: And they're always going to be there so long as, you know, we offer them the best-in-class returns for them, which we believe derive from having the leading marketplace, both in terms of users as well as usage. And I think the rest will take care of itself.

Speaker Change: And there are always going to be there. So long as we offer the best in class returns for them, which we believe derived from having the leading marketplace. Both in terms of users as well as the usage.

Speaker Change: And I think the rest will take care of itself. So we feel good about.

Speaker Change: The growth there, but theres a lot more to.

Speaker Change: To come.

Tony Xu: So we feel good about, you know, the growth there, but there's a lot more to come. You know, on the second question, I mean... To be candid, we haven't really seen much change in the competitive landscape. I mean, there might be a lot of activity, but there's not a lot of progress, if you understand what I'm saying. I mean, I think it's mostly just noise that we've kind of heard.

Speaker Change: And the second question I mean to.

Speaker Change: To be candid, we haven't really seen much change in the competitive landscape I mean, there might be a lot of activity, but there's not a lot of progress. If you know what I'm, saying I mean, I think it's mostly noise that we've kind of heard and I think that whether you look at new customer acquisition, you look at existing behavior you still.

Tony Xu: And I think that, you know, whether you look at new customer acquisition or existing behavior, you still see that, at least in the eyes of the consumer, they seem to really prefer DoorDash. And I think, you know, what it speaks to is that you're always going to have a lot of activity. I mean, we've seen, you know; I've been doing this for over 11 years.

Speaker Change: We'll see that at least in the eyes of the consumer they seem to really preferred door dash.

Speaker Change: And I think you know.

Speaker Change: What it speaks to is that you're always going to have a lot of activity and we've seen.

Speaker Change: I've been doing this for over 11 years I've seen periods of very high promotional activity.

Tony Xu: I've seen periods of very high promotional activity, high partnership activity, and high other forms of activity. But at the end of the day, the one thing that any marketplace or any consumer product is judged on is retention and frequency. And that's something you can't cheat.

Speaker Change: Our pie partnership activity high other forms of activity, but at the end of the day. The one thing that any marketplace for any consumer product is judged on as retention and frequency and that's something you can't cheat you can't just game on a onetime basis.

Speaker Change: And all roads always points back to the marketplace that offers.

Tony Xu: You can't just game on a one-time basis. And, you know, all roads always point back to the marketplace that offers the best combination of selection, quality, price, and support. So far, we are in that marketplace, as long as we can continue, you know, our extension of our lead in the product. You know, I feel really strong about our position, irrespective of activity. But I think it's always been competitive, and I expect it to always be competitive. But in terms of like what's actually happening, whether it's in suburban markets or urban markets, nothing's really happening. Thank you, Tony.

Speaker Change: The best combination of selection quality pricing and support.

Speaker Change: So far we are in that marketplace, along as long as we can continue our.

Speaker Change: Our extension of our lead in the product I feel really strong about our position irrespective of activity, but I think it's always been competitive I expect us to always be competitive but in terms of like what's actually happening whether it's in suburban markets urban markets nothing has really changed.

Speaker Change: Thank you Joe if I can just tried harder.

Ravi Inukonda: The first point on ads, right? Like, I mean, we're still very early in our journey, like Tony talked about, right? You're seeing the impact of ads on both revenue as well as EBITDA, but the majority of the ad revenue is in the US. It's mostly focused on restaurants at this point, still early from a CPG as well as an international perspective. We're holding our teams, you know, with the constraint on conversion as well as merchant providers.

Speaker Change: At this point on ads right like I mean, we're still very early in our journey like Tony talked about I think youre seeing the impact of ads on both revenue as well as EBITDA, but the majority of the AD revenues in the U S.

Speaker Change: Most people cost on restaurants at this point too early from a CPG as well as an international perspective, we are holding our teams with.

Speaker Change: With the constraint on conversion as well as merchant led as long as those continue to be best in class. We are going to continue to improve the overall that business.

Ravi: Thanks Ravi.

Ravi Inukonda: As long as those continue to be best in class, we're going to continue to, you know, improve the overall ad. Thanks, Ravi. The next question comes from the line of John Colantuoni from Jefferies. Please go ahead.

Speaker Change: The next question comes from the line of John Colin Connolly from Jefferies. Please go ahead.

John Colantuoni: Thanks for taking my questions. You added tens of thousands of new merchants to the U.S. marketplace. I'm curious how that additional supply compared between the restaurant delivery business and New Verticals. And I know that it's just one of a number of investments that you're making to help drive improvements for the consumer offering, but I'm curious if you could help frame how much more room you have to continue expanding supply over time.

Speaker Change: Thanks for taking my questions.

Speaker Change: You added tens of thousands of new merchants to the U S marketplace I'm curious how that additional supply compared between the restaurant delivery business in new verticals and I know that just that's just one of a number of investments there.

Speaker Change: You are making to help drive improvements to the consumer offering, but I'm curious if you could help frame how much more room, you have to continue expanding supply over time.

John Colantuoni: And second question, just curious if you can quantify the impact of New York and Seattle and the changes that you made there on GOV and EBITDA in the second quarter. Thanks. Hey, John, it's Tony. I'll take the first one on adding selection. And maybe Ravi, you can take the second one.

Speaker Change: And second question just curious if you can quantify the impact of New York and Seattle and the changes that you made there on GOP and EBITDA in the second quarter.

Speaker Change: Hey, John its Tony I'll take the first one on adding selection and maybe Ravi you can take the second one.

Tony Xu: You know, on adding selection, I mean, it's really everywhere, John. I mean, there is no, you know, there is no, like, one category we're particularly targeting. I mean, we are trying to represent every city, you know, in a digital way, which means that unless we have every breathing merchant that is alive in the city, we don't have a great selection. And so that's really true. I mean, if you even were to, you know, drive out of, you know, any city center, our selection probably wanes, you know, as you go further out.

Speaker Change: On adding selection I mean, it's really everywhere John I mean that there is no.

Speaker Change: There is no like one category, we're particularly targeting I mean, we are trying to represent every city in a digital way, which means unless we have every breathing merchant.

Ravi: It is alive in the city, we don't have great selection.

Speaker Change: And so.

John: That's really true.

Speaker Change: If you even where to.

Speaker Change: Drive out from any city center or.

Speaker Change: Our selection probably wane.

Speaker Change: As you as you go further out and so I think we've got a long ways to go.

Tony Xu: And so I think we've got a long ways to go. And don't forget also with restaurants; you know, there's always new restaurants coming in. You know, one interesting fact about the restaurant industry, and this is virtually true in every country, is that the total number of restaurants every year almost always exceeds the previous year. But it's not necessarily the same number of restaurants. And that's because restaurants, you know, come and go.

Speaker Change: And don't forget also with restaurants, you know theres always new restaurants coming in one interesting fact about the restaurant industry and this is virtually through in every country is that.

Tony Xu: And, and so there's always a ton of work to do there. So the room to run restaurants is almost this perennial kind of body of work. And then with retail, I mean, we're just getting started. And so I think we have a long way to go in terms of adding selection. John on New York and Seattle, you know, from an overall GOV perspective, I mean, the combination of both of those markets doesn't make up a large portion from an overall company perspective.

Speaker Change: The total number of restaurants every year almost always exceeds theirs the previous year, but it's not necessarily the same set of restaurants, and thats, because restaurants come and go and and so theres always a ton of work to do there so the room to run on restaurants.

Speaker Change: Almost this perennial kind of body of work and then with retail I mean, we're just getting started and so I think we have a long ways to go in terms of adding selection.

John: John on the New York and Seattle from an overall jewelry perspective, the combination of both of those markets don't make up a large portion from an overall company perspective, so the impact from Julian volume from an overall company perspective has been small.

Tony Xu: So the impact from GOV and volume from an overall company perspective has been small; individual markets we're seeing some elasticity, but not enough to impact the overall total company. From an EBITDA perspective, I mean, look, you know, Q1, I mentioned that we did take a meaningful amount of impact on EBITDA from these costs. That cost did come down in Q2.

John: Individual markets, we are seeing from elasticity, but not to impact the overall company growth rate from an EBITDA perspective, I mean look Q1, I mentioned that we did take a meaningful amount of impact on EBITDA from these costs.

Ravi Inukonda: A lot of that is being driven by improvements we've made to the product and efficiency. As we go through the rest of the year, I do expect the cost impact from a EBITDA perspective to go down. This is part of, you know, the reasoning I mentioned, causing each EBITDA to be higher than the others, where we're seeing the impact of regulatory costs continue to reduce, as well as the volume continues to grow, as well as the gross profit for the various lines of business continue to grow as we go through the rest of the year. Thanks so much.

John: It did come down in Q2, a lot of that is being driven by improvements we've made on the product and the efficiency side as we go through the rest of the area to expect the cost impact from an EBITDA perspective to go down.

John: This was part of it.

Speaker Change: <unk> I mentioned.

Speaker Change: A street, we thought it would be higher than each one where youre seeing impact from regulatory costs continue to reduce as well as the volume continues to grow as long as the gross profit for the various lines of business continue to grow as we go through the rest of the year.

Speaker Change: Thanks, so much.

Speaker Change: The next question comes from the line of Mark Secret Tavis from the Benchmark Company go ahead.

Mark Zgutowicz: The next question comes from the line of Mark Zgutowicz from The Benchmark Company. Please go ahead. Thank you. Maybe I'll switch gears a little bit. Talking about price parity, obviously an important topic, doesn't seem to get much progress, though. And I'm curious if you're close to any initiatives that might incentivize grocers to get there, you know, possibly like prioritized ad placement, maybe what some of the puts and takes are there. And then Maybe flipping the ad expansion discussion on its head, I'm curious where you have seen, maybe in certain verticals or environments, degradation in app engagement or order frequency as a result of increased ad load. Thank you. Hey Mark. It's Tony.

Speaker Change: Yeah.

Speaker Change: Thank you maybe switching gears a little bit.

Speaker Change: Talking about price parity.

Speaker Change: An important topic.

Speaker Change: It doesn't seem to get a much progression, though and I'm curious if you've.

Speaker Change: A close to any.

Speaker Change: Initiatives that might incentivize grocers to to get there.

Speaker Change: Possibly like prioritize ad placement.

Speaker Change: Some of the puts and takes there.

Speaker Change: There and then.

Speaker Change: Maybe flipping the expansion discussion on its head.

Speaker Change: Curious, where you have seen maybe in certain verticals or environments degradation in app engagement or order frequency as a result of increased Heather. Thanks.

Tony: Hey, Mark it's Tony I'll take both of those and feel free to add here Ravi look on price parity I mean, youre absolutely right that it's an important point in terms of affordability right. I mean, we're always trying to make our products and services more affordable that's true and restaurants, that's driven grocery that's true and convenience.

Tony Xu: I'll take both of those. And, you know, feel free to add more here, Ravi. Look, on price parity, I mean, you're absolutely right that it's an important point in terms of affordability, right? I mean, we're always trying to make our products and services more affordable. That's true in restaurants. That's true in grocery stores. That's true in convenience, but that's true across the board. There's no simple or silver bullet, you know, answer, you know, to your question.

Speaker Change: Across the board there is no simple or silver bullet.

Speaker Change: Answer.

Ravi: To your question I mean, we're constantly working to make sure that we can align the business model on the incentives such that we can offer the most accessible and affordable service now look all of this comes in in conjunction with other things right. It's not hold that you can't just hold one thing static.

Tony Xu: I mean, we're constantly working to make sure that we can align the business model and the incentives such that, you know, we can offer the most accessible and affordable service. Now, look, all of this comes in conjunction with other things, right? It's not, you can't just hold one thing static.

Speaker Change: I mean theres a lot of other things that we have to do in terms of.

Tony Xu: You know, I mean, there's a lot of other things that we have to do in terms of making sure that the inventory is actually there, making sure that if you didn't get what you were hoping to get, that the substitution we made is perfect or acceptable to you. And so there are a lot of things that have to come together for what you're talking about. Price obviously is one component or one input on which we are judged, but there are so many other components too, and they sometimes interplay, right?

Speaker Change: Making sure that the inventory is actually there making sure that.

Speaker Change: Didn't get.

Speaker Change: What you were hoping to get that the substitution. We made is perfect or acceptable to you and so there is a lot of things that have to come together for what you are talking about price. Obviously is one component or one input in which we are judged.

Speaker Change: There are so many other components too and then sometimes.

Speaker Change: Interplay right as we find efficiencies.

Tony Xu: As we find efficiencies in our logistics work, or if we can rip out inefficiencies that shouldn't be in our system, those are costs that we can use to help fund other programs. And so there's a lot going on. There's no simple answer to your question, but it's something that will be a perennial part of what we do. On the second question, I mean, it's a great question, which is that you're absolutely right that ads do have a negative impact on the consumer experience. And that's why I kind of harp on this all the time, where you have to not be confused in terms of what drives what.

Speaker Change: In our logistics work.

Speaker Change: And Thats worked at that or if we can rip out inefficiencies that shouldn't be in our system. Those are costs that we can use to help fund other programs and so theres a lot.

Speaker Change: Going on Theres, no simple answer to.

Speaker Change: To your question, but it's something that will be a perennial part of what we do.

Speaker Change: On the second question I mean, it's a great question, which is that Youre, absolutely right that as do have an impact a negative impact on the consumer experience and that's why I kind of.

Speaker Change: Harp on this all the time, where you have to not be confused in terms of what drives what and in this case, it's a healthy marketplace that enables an ads business and not the other way around.

Tony Xu: And in this case, it's a healthy marketplace that enables an ad business and not the other way around. And so this is one thing on which I think we've been more conservative in making sure that we protect the consumer experience in terms of seeing degradation. We haven't seen much of it, partly because of how we're designing the systems. Again, we're super proud of, I think, our advertising business. I think the size of the business would be impressive as a standalone company.

Speaker Change: And and so this is one thing, which I think we've been more conservative on and making sure that we protect the consumer experience and so in terms of seeing degradation, we haven't seen much of it partly because of how we're designing the systems again, we're super proud of I think in our ads business I think the size of the biz.

Speaker Change: <unk> would be impressive as a standalone company, but at the same time.

Tony Xu: But at the same time, we have to make sure the sequencing is right where we are always making sure that we have the most engaged, the largest audience when it comes to local commerce. That will make it easy for everything else from an advertising perspective.

Speaker Change: We have to make sure. The sequencing is right, where we are always making sure that we have the most engaged the largest audience when it comes to their local commerce.

Speaker Change: That will make it easy for everything else from that perspective.

Speaker Change: That's helpful. Thank you.

Mark Zgutowicz: That's helpful. Thank you. Ladies and gentlemen, this concludes today's Q&A session and today's conference call. You may now disconnect. Thank you for your participation.

Speaker Change: Ladies and gentlemen, this concludes today's Q&A session and today's conference call. You May now disconnect. Thank you for your participation.

Speaker Change: Yes.