Q3 2024 DoorDash Inc Earnings Call
Good afternoon and good evening. My name is Aaron and I will be your conference operator for today. At this time I'd like to welcome everyone to the Door-Q3-2024 earnings call.
All lines have been placed on mute to prevent any background noise.
and a quick reminder if you would like to ask a question during today's call simply press star, followed by the number one on your telephone keypad. If at any point you'd like to withdraw your question, hit star, followed by the number one again. Thank you.
and with that I would like to turn today's call over to Andy Hargreaves, Andy, you can begin.
Thank you. Good afternoon everyone and thanks for joining us for our C3204 earnings call. I'm very pleased to be joined today by co-founder chair at CEO Tony Shoe and CFO Robby in Akonda.
We'll be making forward looking statement during today's call, including our expectations for our business, financial position, operating performance, profitability, our guidance, strategies, capital allocation approach, and the broader economic environment.
or looking statements are subject to risks and uncertainties that could cause actual results to different materialies from those scribes. Many of those uncertainties are described in our SEC filings including our form of tentates and tentates.
You should not rely on our forward-looking statements as predictions of future events or performance. We just claim any obligation to update our forward-looking statements except as required by law.
During this call, we'll discuss certain non-gap financial measures, information regarding our non-gap financial measures, including a reconciliation, the non-gap measure to the most directly comparable financial measures may be found on earnings release, which is available on our our website.
He's not yet mentioned should be considered in addition to our gap results and are not intended to be a substitute for a gap.
and the other side of the road.
Finally, the call is being audio-wedcasted on our IR website. An audio replay of the call will be available on our website shortly after the call ends.
With that, Aaron will pass it back to you and we can take our first question.
Okay, thank you Andy. Once again, ladies and gentlemen, it's star followed by the number one. If you would like to ask a question today. Our first question comes from the line of Nikiel Dev Nani with Bernstein. Your line is life.
Hi, thanks for taking the question. I wanted to ask a two-part question on international.
So in the past you've kind of illustrated this dynamic in the US business where at Go Horts experience a go forward and mature a little bit. You see improvements in the contribution margins by years three and four.
Now that you've been operating in some of these international markets for a few years now, have you seen a similar arc and magnitude of improvement on the contribution margin front for these cohorts as well? Or is it a little bit different for market structure reasons or other reasons?
And then my second question is around the degree of six cost leverage that you can get operating in so many different countries at once. I'm sure you get to share some technology and talent.
but given deliveries, hyperlocal, how does those two things shake out? Did your fixed cost burden in your new markets lower and easier to overcome or not really? Thank you.
Speaker Change: Thank you.
Hey, Nicky, let's talk to you all. I'll start and Robby, feel free to chime in here.
Speaker Change: I think one of your first questions, you know, ensure the answer is yes, we are seeing similar, you know, progress both top line and bottom line in our international market that we saw while building U.S. And that's because, you know, if we're rewind the clock for years ago when we...
Speaker Change: First part of what's wrong.
Speaker Change: What we saw in the company was something that looked very familiar to us at DoorNash, which is
Speaker Change: Company that had built the leading product when it came to retention and order frequency.
and that really is what drives the flywheel in terms of efficient growth.
We continue to see this last quarter as well as, you know, the last several years of partnering together with both continued strong.
Progress, where we virtually are gaining share in every single market that we play in. And we continue to see the bottom line of the performance and the performance. So you are seeing that progression and it's been very encouraging.
I guess I can start on the second question and I'll hand the mic over to Ravi. In terms of fixed cost leverage, in short the answer is yes, as we add subsequent markets or subsequent even products we do use.
Speaker Change: at Living.
For all intensive purposes the same team.
Speaker Change: You're right to say that these are hyperlocal businesses and services. So we do have to obviously start a new in terms of acquiring each of the different audiences.
Speaker Change: But in terms of the tech stack, in terms of the products, in terms of the know-how, whether that's expanding products within a geography, or adding net new geographies, you do see that operating leverage.
I think let me add a couple of points there right when you think about the performance of the overall international business I mean it has strong or border as well as the year itself has been very strong When you think about it from a growth perspective you know we are growing substantially faster than peers
which essentially means we've gained share and virtually most of the markets that we offer it in.
Last call if you recall I mentioned the fact that the overall international business is going to be a positive, it continues to be the case.
Speaker Change: The dynamics are similar, like this is a scale driven business. Our goal has always been if you find good opportunities to drive potential and order frequency we're going to double down in the vast. That's the same formula we're using in the international market. We're pleased that the goes profit continues to improve.
On the fixed cost, I mean similar dynamic will be found in the US again, a lot of it has to do deal with scale. But if you recall where we are in the international markets, we are still very early. We are investing, we are investing behind product. And that's what's causing the strain that you're seeing from a cohort retention and an order frequency perspective.
Thank you both.
Speaker Change: Thank you for your questions.
Speaker Change: Thanks for watching!
Our next question comes from the line of Michael Worton with Mothet Nathanson, your line is life.
Hey everyone, thanks for the question.
I wanted to start first, maybe one for Tony and then I had co-host questions for Robbie.
It's great to see the Wegman's grocery announcement. Just curious if we're getting closer to seeing an unlock of some of the largest gursers in the country who are not currently on door- platform coming on to.
Speaker Change: Door Dash and then on the grocery topic and thinking longer term and your ability to make strides into the market. Could you talk about the trends that you see for the grocery's who have been on the platform?
for the longer extended period of time that you see with larger baskets and maybe larger basket market share trends for the for the grocery's have been on the platform for two years and then for Robbie.
Your comments on cohorts the last couple quarters is really encouraging the new cohorts coming in being as strong as ever.
Question that we get from investors is who are these people? What are the demographics that isn't everybody already ordering so clearly not? We would love that you could maybe shine a little light on what they look like as this, skewing younger.
College H students, more visually inclined, you are moving out of their home every fall, going to college. Anything that would be great. Thanks again.
Speaker Change: Hey Michael, Tony. Yeah, on the first question related to grocery, we're pretty excited about what we're seeing in grocery I mean, we launched grocery at this point almost four years ago now and the entry point was
Speaker Change: by delivering a product that was relatively speaking new to the market, which was solving for this top-up experience where...
For consumers, we were replenishing that middle of the week run where you run out of the items that you consume the most often or the earliest or the ones that perish.
Speaker Change: The most frequently whether that's your berries, your fruits, your dairy products, your coffee, etc.
Speaker Change: and I think what that was, that that spurred was.
Both an introduction that was easy to understand for consumers and also something that Grocers hadn't seen before.
and made it very easy to onboard a lot of these roasters. Now all of these things take time, right? I mean, we had a, you know, build a new catalog from scratch. We obviously wanted to make progress on understanding inventory and the reliability of the inventory feeds that we're receiving which we thought is one of the biggest problems to solve here. And we've made tremendous progress pretty much across the board, whether that's...
Speaker Change: Adding selection, including some of the largest grocers in the country, we're just as excited as you are about white men. But also everyone else that's the corner grocery store to the middle market, you know, grocery.
stores and I think this is why you're seeing you know when it comes to customer adoption you know customers come to Door-ash first new customers into the grocery delivery industry and just in general to you know delivery out that restaurant comes to Door-ash first before any other platform and so I think you're already seen a lot of this and in terms of you know other trends
We see that as customers get used to ordering groceries on DoorSafe, 10 to order more items each subsequent visit.
So, you know, from a cohort perspective, you're noticing that, you know, we are increasing both the frequency as well as the spend and wallet share in terms of how consumer spend when it comes to their monthly bills on grocery.
and that's increasing with every single cohort. So in short, I think what we've seen is we have...
Speaker Change: He made much bigger market than we expected when it came to launching this top-up run product, which now has nicely translated into shopping for the other types of occasions, including your weekly stockups and those types of baskets.
and we just continue to see whether it's on the new customer acquisition site, leading share there and also on the retention site.
and positioning us to really continue to grow in a way that will outpace others as well as outpace our previous cohorts.
So I think the one on cohort side maybe I'll just level up and give you a broad year what we're seeing from an underlying cohort perspective. I mean you've been very pleased with the cohorts. I think about it like majority of the volumes still comes from existing cohorts for us.
The most instructive things for me when we are operating the business is to look at the engagement of the older cohorts And you can see the older cohorts as old as 5, 6, 7 years old, but still seeing good amount of retention as well as overall wallet sharing experience
and that tells you that the improvements we are making in the product with its selection whether it's adding new categories, all of that is driving the new, I mean the cohorts and that you're seeing in the business.
From a new cohort perspective, you are a couple of ways to think about this. One is we're still attracting a healthy amount of new consumers.
is not any different from a demographic perspective. We started to see cohorts come in from some of the suburban markets too.
and the reason for that is remember this is the product that continues to change.
The Add More Selection, Grocery in many cases, the selection is net you to the platform. And the second way we are seeing is not only our consumers new to restaurants.
Today we actually had consumers that start their journey with grocery as the first order that's the next new consumer that we're adding to the platform. But overall we're going to look at the underlying cohorts and the strength continues to be very strong. Both across existing as well as new.
Thank you so much.
Thank you for your questions.
Our next question comes to the line of Bernie McTernan with Needham.
Your line is light.
Great thanks for taking the question. Just wanted to ask about the partnership strategy, especially in light of the list announcement from tonight. So maybe just talk about the broader partnership strategy.
I know you all support and we're streaming companies for example, but is there anything different here with the list that there is the driver component as well?
Yeah, hey Bernie it's Tony, maybe I can take this one
So one of the things we have at DoorDash that we believe in and follow religiously is that we keep the main thing, the main thing, and the main thing at DoorDash is building an enabling local conference.
and so when you think about this...
Speaker Change: are perspective on all things partnership as well as building products. The 80 goes towards building products.
Which means that
You know, it's because that we've offered customers the best combination of selection, quality, affordability and service.
Speaker Change: to that.
Speaker Change: We get used the most often, or app. And because we get used the most often, it's how we actually are able to build, not only the most useful, but also the largest local commerce membership program, which is Dash Pass.
Speaker Change: You know, for us we do believe that there are others outside of our network.
Speaker Change: That can offer attractive benefits to our members. You saw this.
A few years ago when we first launched our partnership with Chase which week.
renewed in an expanded way earlier this year.
Then you saw the announcements and partnership with Max, which happened a couple months ago in...
from the Vattings Streaming Benefits to Dashboard subscribers.
and then today's announcement with left which we're really excited about. You know, with is a service that's, you know, used by millions of writers and...
Speaker Change: Many of those writers are already our door-ish customers, some of them are dashed mass subscribers, but a lot of them are also not dashed mass subscribers. And so it's a great opportunity for us to continue to add engagement to the dashed program as well as new dashed mass members.
and in return, you know, let's get access to the largest local commerce platform that sees the highest frequency program of its kind when it comes to consumer membership programs. And so I think that will be, you know, great for them as well.
But again, the AD for us remains to be building the products. And if you think about it, the runway for just organic growth, for dash pass, or really just for our own customer basis is quite large. I mean, we have hundreds of millions of customers who order with us every year, whether it's on door after on both.
Speaker Change: and only a fraction of those are members to either dash pass or a full plus. So we've got a long ways to go just within our own ecosystem.
And then when you look at this, you know, from the consumers perspective, although we've done a reasonably good job in terms of enabling local commerce and the categories that we play in today, we still only represent it.
Speaker Change: Single-digit fraction of the restaurant industry and a much smaller fraction of that outside of restaurant. So I think there's a long runway ahead.
And you know, the main thing for us continues to be improving our products so that we can be the most useful to customers that they use our products most often which will give us the privilege of having them as members in our programs.
Speaker Change: Make sense next Tony.
Thank you for your questions.
Our next question is from the line of Shweeta Kajaria with Wolf Research, your line is life.
Thank you so much for taking my questions. Let me try two please.
Shweeta Kajaria: Ravi, the day-crate contributors in the past you've mentioned it's ad-growth and platform contribution as well as cost-line efficiencies.
Could you maybe please rank order them in terms of the impact?
on daycare as you think about maybe near the midterm.
and then on price parity either tone your rubby, where do you think you want to be when it comes to grocery price parity in the mid-to-long term? Is there a future where it's going to be the same as in store prices? Is that the goal or is it that you want to be the most competitively priced online?
Speaker Change: and I would like to thank the British State for the support of the British State.
Speaker Change: I think the first one on the take rate, right? Let me start by just giving a broader framework around the inner play between revenue and U.V. in our business. I mean, if you think about revenue, it's been out facing the U.V. growth in our business.
That's been driven by ads as you mentioned. It's being driven by benefits that we get from the Commerce platform. And anytime we improve efficiency on the cost-line, whether it's natural cost or CNR, that drives revenue. So that's why I've been you growth it without facing our GOV growth rate.
At most specifically what we saw in the third quarter was two things. One is advertising and the second one is leverage from Dashra Coss.
I would read into the advertising as something is changed in which we operate the business, we are operating the ad business.
With the same amount of discipline it's growing in a very healthy manner.
We also report of the leverage that we've generated on the dashers sign
A lot of that is being driven by the underlying improvements for making on the product and we are...
Pretty happy with that.
More broadly when I think about or go forward, I would expect revenue to continue the office, you will be growth. But I would not think of it linearly in terms of the same amount of revenue quarter. So if you think about the operating philosophy for us.
When we find good opportunities to invest, we want to invest flexiblely up and down the piano. Sometimes those opportunities are going to present themselves in the revenue line and we're happy to take advantage of that.
Hey, you're glad to have Sony on your question on price parity. I think it's a good one. I do think though in the eyes of the consumer, they think about...
Grocery delivery against a few dimensions at the same instance and it's not just about price. One of the challenges you see in the Grocery delivery industry right now is that customers are asked to pay a premium even though they don't get exactly what they ordered.
And that's one of the key problems that we're trying to fix here at DoorDash, which is, first and foremost, how do we get customers exactly what they ordered?
Speaker Change: We think that we're making great strides against that dimension.
But there are other dimensions, prices one of them, and we are working with each one of our retail partners to making sure that we do have prices as competitive and affordable as possible. We do have some partners already there in terms of having or matching into our prices.
But we think that we can do more there. And at the same instance, we have to continue to offer the level of convenience, where we can be faster than what a customer can do on their own. And so I think the combination of those three things, of getting people exactly what they ordered, at prices that they would expect.
Speaker Change: certainly faster than they can do it on their own. That's kind of what we're going for. It is the combination of those things in which we're shooting for.
Thanks, Tony. Thank you, Robbie.
Speaker Change: Thank you for your question. Our next question is from the line of Deepak Mathi Vandan.
Speaker Change: Your line is life.
Hi, this is Cameron Lynch on 3D Proctus 2 quick questions. First, can you help us unpack the 19% GOV growth we saw this quarter at a high level between core restaurant and other categories such as grocery, either qualitatively or quantitatively. And second, we saw the GOV trends are up slightly this quarter. Is this due to product mix or urban price inflation? Would appreciate any additional color you can provide on what's driving this dynamic. Thanks.
Hey everyone, take both of those. I mean look, we are really pleased to know with the performance of the business on the growth line.
So let me talk about the input and then I'll talk a little bit about the output and the various drivers in the business.
From an underlying input perspective, the biggest thing for us is looking at the underlying cohorts
So, I answered the question, do I talk about the fact that the cohorts continue to remain very strong?
I look at users, users are still going at a double digit rate, users sit in all time high in the quarter, order frequency continues to bet on all time high, a lot of that is being driven by the underlying work we've done with its selection quality or affordability. All this set of the well not just you know for third quarter but going forward as well.
and from an output perspective you think about the way it is blind. So business, the restaurant business, the growth has actually been raised tables for the last few quarters.
What grows three new verticals in a national growing much faster than the rest on the business as well as the against here across growth as well as most of the international markets that we've operated in.
and your second point around the overall AOV increase, we've seen some increase in the overall growth business. Again, I wouldn't think of that as a major shift.
are going to ensure that we are bringing the highest number of consumers to order from more categories and the consumers ordering from more categories that number continues to increase your average in the order.
Thank you.
Thank you for your questions.
Our next question is from the line of Andrew Boone with JMP Securities, your line is live.
Thanks so much for making my questions. Ravi, I wanted to ask about the first product margin after the performance in the quarter. I'm just going to call out on the insurance benefit, but if there's anything else you want to highlight in terms of the upper finish there. And then, we'll require tabs in your opinion.
Tony, can you just step back and talk about what may be attractive in terms of emanating tropics going forward and why that's specific country and acquisition. Thanks so much.
I will take the course one on the course of the course. I will give you two ways to think about this. If you think of the business as a collection of businesses,
Speaker Change: What you're seeing is, I mean, we've performed really well. The team has executed really well compared to the plan that we've checked for ourselves in the beginning of the year. We've driven efficiencies in some parts of the business. We've invested that in other parts of the business and the output is what you're seeing for us on the face of the TNL.
More specifically, you think of other drivers?
Speaker Change: is obviously a better driver in terms of gross margin improvement. The second thing I would call out Andrew is we've talked about the fact that regulatory costs will continue to reduce as we go through the year. That's been another driver and the last one is efficiency from an overall logistics perspective.
But the key thing that I would underscore is, remember, I mean, we are not operating the business towards a specific gross margin percentage.
Speaker Change: We're trying to do a maximise over all profit dollars over the long term and the way we do that is every dollar of efficiency we find We're going to reimburse that back in the business and our goal is to flexible inverse that up and down the PNL wherever we see the opportunity.
Speaker Change: A goal has always been to build a large business, so I'll continue to be maniacally focused on your electronics. That's how we've operated and that's going to be the same philosophy in which we'll operate the business going forward as well.
Hey Andrew, it's Tony on the second question with regards to International M&A. Our standards and our continued to remain really high in the week.
Speaker Change: are consistent in our approach which really, you know, first and foremost starts with asking ourselves the question.
He does this candidate help us launch a new geography, bro or tam, and we're our product portfolio.
Speaker Change: The second question we...
Speaker Change: asks, does this help accelerate us in a differentiated way that we can do ourselves organically? Three is, do we believe that by partnering with the candidate that we can achieve long-term cash flows?
and the last one you know perhaps the most important is you know
Do we have a team that has the management talent and bandwidth?
to execute on the opportunity in a single threaded way. And when I look at that last one in particular, I mean, both has been on an incredible rod, I mean, ever since.
He will ever since founding, I mean actually if you
to say that it's now been 10 years for a bolt to actually celebrate a 10 years earlier this
This month and you know they've achieved over
Speaker Change: You know, $15 billion a sales for merchants in their lifetime and $3 billion dollars of earnings for per year and they've just been
and the radiography is then they continue to take.
Share virtually everywhere and they operate in.
and they continue to help us perform just as a management team. And so when I look at the performance over the last three years, they've certainly had earned the privilege to continue expansion. And then when I piece that together with TAS, playing in an attractive market in Romania, we get really excited about what the combination can do.
Speaker Change: Bye!
Speaker Change: Thank you.
Speaker Change: Thank you for your questions.
Our next question is from the line of James Lee with Mazeelo. Your line is life.
Thanks for taking my questions Tony I was wondering you didn't comment about Dashmark
and maybe you can give us an update like which business models are working and which business models still work on progress and maybe talk about something that's the growth of constraints that we should be thinking about.
And lastly, seems like something your PMP years are able to make quick commerce profitable, maybe help with something any differences you're seeing between North America and Europe.
Speaker Change: Sure.
On Dashboards, we're very excited about how they progressed.
If I rewind the clock, when we started dash-barps three and a half years ago, I mean, the first push was making sure that we can actually be a national service.
and one of the reasons for that was really in search of help merchants actually because we've always viewed dashboards over time as an infrastructure in which we can offer retailers to forward deploy their inventory.
But first we needed to prove ourselves and then certainly to merchant.
Speaker Change: that we knew how to run, you know, these were houses.
and I would say after three, you know, three and a half years the team's really has, you know, achieved, you know, that marker and so.
That course on their own have done really well in terms of learning how to execute by selling inventory exactly what's on the shelf.
which is very differentiated from the selling inventory that the available ones are pretty stores. They've done it at great prices and they've done it with awesome selection and very high reliability and speed. And so I think on its own dashboards, you know, have just...
Speaker Change: continue to grow, take share, and do really, really well. But that was where dashboards would end per se. We've also seen quite a lot of...
Progressing terms of our partnership.
with a lot of retailers. So we've first started that in Canada, in partnering with Loblaws, but we've also now have started some of those journeys here in the US as well as in other countries.
Where we are providing that infrastructure on behalf of retailers so that they can gain additional business at hours that they usually are closed in, as well as in geographies that they may not be as penetrated in. So we're quite excited about the potential that dashmarks bring both individually, but more so as...
Speaker Change: in partnership with retailers and merchants. And that's kind of what I expect going forward.
Speaker Change: Great, thank you.
Thank you for your question.
Our next question comes from the line of Mark Mahini with Everclear ISI. Your line is life.
Hey, this is David from Mark. It's the question on the Commerce Platform. Do you have any early feedback from merchant customers around the new products that you release last month? And then one more on the lift partnership.
Could you talk about the concentration of dash pass members between urban and suburban markets? Thank you.
Sure. On the first question with regards to the direct commos platform.
Speaker Change: I mean, this announcement for us really I would say has been a few years coming, meaning that it really just encapsulates what DoorDash has now become, which is really two parts, right? Part one of our mission has always been to roll a local economy and we do that by bringing in parental sales with a wrap.
And the second part is to empower a local economy to become digital businesses.
and so a lot of these physical businesses now are using products like Dorés Drive or Store Friends.
or some of the other products that we've talked about in order to become digital powerhouses in their own rights and with their own customers. And so we are seeing that. I mean, you have 100,000 businesses now, you know, who are part of the Doresh Commerce platform. So I think the numbers speak for themselves in terms of the excitement and I guess, you know, their perspective.
Speaker Change: If you look at, you know, DoorDash the Marketplace as the leading.
Speaker Change: Local Commerce Marketplace, where we do the best job of building products that connect consumers to merchants.
Speaker Change: Why wouldn't you want to partner with that and have that for yourself as the retailer? That's trying to become more and more digitally native. That's what we're seeing. With respect to, I think your second question about Dash Pass. We see...
Strength and Opportunity in terms of any partnership, whether it's left or you know, chased or...
Max: Max, across all of our members, otherwise, we wouldn't be that excited if it was just trying to target one group of customers while excluding a different group of customers.
But again, I think...
It's important to guide
Understand what the main thing is, 80% of what I believe is important for building membership programs by building the most useful products which get used to the most often. That's actually how, you earn the right to even starting membership program.
So that's the AD and then the 20th for us is in partnerships and we're super excited about the with partnership as we are about our other partners and we believe that they'll help us in energy geography.
We just do that as I think we don't have to think about dash paths itself is leading local comment subscription program and we continue to grow. In fact in the third quarter of the survey we have record number of subscribers which was an all time high over 18 million plus you know dash paths members.
They're everywhere, they're not differentiating between urban or urban. We see strength in across the world, which you see in the overall share gets that we've added in the quarter as well.
Max: Thank you.
Thanks for your questions.
Ladies and gentlemen, once again, if you would like to ask a question today, it is star followed by the number one you're to touch tone keypad. Our next question comes from the line of Michael McGovern with B.A. your line is life.
Hey guys, thanks for taking my question.
Michael Mcgovern: There's been a lot of attention on the topic of AVs recently, obviously for right share, but do you have a view on the potential future of the delivery use case for autonomous vehicles, that's something that you're maybe looking into for your partnership strategy. And then secondly, on restaurant sponsor listings.
Speaker Change: What are the latest trends that you're seeing in terms of merchant row as and customer conversion and how's that playing out in terms of demand for the ads? Thank you.
In my can take both of those.
On the first question related to autonomy, we're very excited. I think it's been in some ways as someone who's been working in the autonomous space now for several years.
It's a long time coming. I think some of the developments that maybe you've been reading about or seeing.
So maybe that's where I'll start, which said we've been working on the autonomy delivery problem for several years now dating as far back as 2017.
Speaker Change: And I think the most important thing to tell you about it after working on it for a while now is that it's actually quite different from autonomous right-hate-load.
and it's probably obvious to say, but when you don't have a passenger who can just easily go in and come out of the vehicle and you have to actually load and unload the vehicle when it comes to item delivery, that last 10 feet is actually quite tricky. It reminds me a lot of actually how Doraesh got started, I think when Doraesh got started 11 years ago a lot of people thought, oh, you should, you know, this is delivery and...
and something like right-hailing might be similar when it comes to dispatch algorithms or something like that. But if you were to apply the same dispatch algorithm for right-hailing as you differ, you'd almost always make the wrong decision.
If you dispass the closest driver to a passenger for example, which is what you would do in right-hailing, and you apply that to delivery, and either the inventory is not available or the food is not ready, then you kind of waste it every once in time.
And I would say that they're very fundamental differences in a similar way for autonomous delivery versus autonomous right-hailing. And so we're taking it for a principle approach.
In terms of what we're building at door to action in terms of marrying technology as well as operations to build a system.
to make this work. We're pretty excited about what we're working on as well as conversations with.
is a very different problem from maybe some of the things that you've read. Hopefully some things to share in the future and we'll tell you more about it then.
Speaker Change: The second question was around I think just ads and just friends in that business.
Speaker Change: I think more and more of what you're saying is that you just see kind of in continued progress on that business. And I think it starts from the fact that our marketplace continues to grow as pretty high rates given at scale.
And I've always said that, you know, a successful ad business is preceded and always preceded by a successful marketplace business.
And so that's what we continue to see where our staff business continues to have leading row-as or return on aspect for advertisers for restaurants that are increasing the for retailers.
and we see our consumer conversion improving as well where they're approaching organic rates. And so I think the combination of these two things.
Speaker Change: in tandem with a marketplace that is the largest.
For what it does in terms of connecting consumers locally to merchants. That's why you're seeing some of the results in terms of the ads business continuing to grow every high rates at high scale.
Speaker Change: Thank you.
Speaker Change: Thank you for your questions. Ladies and gentlemen, last call, if you would like to ask a question today, remember it's star, follow by the number one on your touch tone.
Speaker Change: Keep out. We have our next question from the line of Lee Horowitz with Doicchabank. Your line is life.
Thanks for coming with us and moving over CPPG advertising. You guys have obviously been stacking multiple quarters of really strong grocery volume growth and getting that marketplace to scale. I guess this is probably presumably grabbing the attention of your CPPG advertising partners.
I hope you got any indication from those partners and your conversations as they think about budgets for next year that they may lean in a bit more aggressively into your platform just given how much you have grown over the last year or so.
Speaker Change: Yeah, I can follow on to the last question here. I mean, the answer is yes. I mean, I think CBG advertisers have always been really excited about, because not only because of our strength in growth outside of restaurants,
But also just a combined view that we can offer because you can certainly sell a CPG item across both restaurants and retailers, across multiple categories.
Speaker Change: And by being the largest local commerce player we get to offer the most
Speaker Change: Beta and most views in most shots on goal for every brand to win their fair share. I think that's what's...
Speaker Change: increasing the excitement. On the flip side, I think the team, our team also deserves quite a lot of credit for building the maturing the product portfolio, which is still an area of emphasis for both our CPG at partners as well as our restaurant partners.
Great thanks. I mean you involved some grocery competition holistically. Obviously it's very fierce. You have first party delivery partners who can perhaps lean in on price given vertical integration, you have other marketplaces that have...
Speaker Change: You know other verticals that they can monetize on besides grocery and then obviously some focus of grocery marketplaces I guess within that hyper-competitive environment where do you see as the most defensible sort of characteristics for door-downs that should allow you guys to come out as one of the key winners in this vertical over a longer period of time
Speaker Change: Well, it starts with building the best product.
I mean, and I think this is kind of how you get out of any competitive market. I mean, if you look at the restaurant delivery industry, that's how it started 11 years ago too.
I think that the way that door ash has come to its firm position in restaurant delivery, whether it's in the U.S., or whether you look at us outside the U.S. or rolled outside of the U.S.
It starts by building the product that achieves the highest retention in order frequency, which is really a testament that you built the best product.
Speaker Change: It allows you to most efficiently grow. So I think first and foremost it comes down to product execution.
I think you're seeing that. I mean, you're seeing that where we are now the first place that consumers come to grocery delivery for. If they are a new customer to grocery delivery, that's also true if you're just getting something delivered locally outside of restaurants. So we're seeing that it's always been true for us in restaurants where for several years now it's been true where over half of customers that are shopping for restaurants delivery first comes to us.
for deliveries now outside of restaurants. It's approaching that mark too. We're seeing that. We're seeing strength on the retention and frequency side with every single cohort that continues to increase as we improve our selection, improve our pricing, improve our quality of delivery, improve our service. And I think that the moniical focus.
is what allows you to build the compounding advantage over time and allows you to grow at higher rates over multiple years.
Speaker Change: And we just do that, right? Like, I just want to consume our side, but we get good feedback from the merchant side as well, where merchant that we partner with have said that, you know, we're driving incremental same store sale, go for them.
The quality that we've arrived to the merchants has also been great and you see that in the results where a We are the fastest growing in the US as well as gaining share and also from a court perspective right the retention and order of the Quinti-Cartini Stankries
Yeah, I think the final thing I had to say about Lee is that, we also just get the most shots on goal. When you think about what gets delivered most often, it's prepared meals, which is in a different way of saying restaurant delivery.
and because we're the leading player in that space and because we're also both in terms of size as well as the frequency, we just get more at bats with these customers, which is...
Very helpful especially if you're not in the restaurant category saying grocery or other retail categories and it's also really helpful for advertisers too
Speaker Change: Thank you.
Thank you for your questions.
We have a final question for today from the line of John Colanty with Jeffries, your line is live.
John Colanty: Great thanks for squeezing me in here. So one of the sort of sales and marketing leverage continues to be a really nice tailwind for Eva Dough.
Can you peel back the onion and talk a little bit about...
on-subution from Driver and Centers.
John Colanty: and sort of when you think about the omnidiarism and look at supply and demand dynamics and your investments in driver experience, are you thinking about the magnitude of the ongoing contribution to margin expansion from leverage on incentives?
Speaker Change: and second question just turning to grocery. How important is capturing more of that big basket weekly shop to your long term profit aspirations in grocery? And what are the capabilities and investments you...
Still need to make the start driving more of those large basket orders. Thanks.
Speaker Change: Yeah John, I'll start to I will be back. You know, on your point around sales and marketing, I mean, I look John, when I think about sales and marketing or any type of operational efficiency that we drive in the business, it always starts with product.
because ultimately product drives retention for us which tries leverage in sales and marketing.
If you break that apart, we've seen a lot of leverage on casher acquisition over the last couple years.
A lot of that is being driven by the product improvements that we've made. It's easier for dashers to onboard, it's easier for dashers to get paid. All of that is driving retention of existing dashers higher, which ultimately drives leverage from a sales and marketing perspective.
Speaker Change: The second thing I would say is even on the consumer side, the teams have done a pretty good job of optimizing at a channel level. So you're seeing leverage from a consumer acquisition cost perspective as well.
Looking ahead, I mean, I go expect us to continue to improve the product which ultimately will drive leverage on sales and marketing But I expect the piece of change to be slightly sore than what we saw in the last few couple of years But overall, I think about the dash of acquisition of consumer acquisition, there's still opportunity for us to continue to go on drive leverage there
Speaker Change: and John on the second question with regards to just larger baskets and grocery. I mean, all of that for us is really just cherries on top of the cake. We're meaning that we don't actually need large baskets to make the math work.
for the grocery, and that's because we have the lowest cost structure. When it comes to delivery and logistics.
and so one of the things that we've been able to do is actually build a very high growth business.
Speaker Change: I'm with this
You know, smaller baskets as a way to introduce ourselves to consumers.
and Grocer's a like and I think it's actually surprised this is how large that market is. I think in some ways, there are examples almost what happens in Europe where people instead of buying one large basket for the week. They might buy several smaller baskets for the week. I think that's the phenomenon that we can afford that others may not be able to.
I think so anything that we get and we are getting these larger baskets especially after customers you know buy with us a couple of times
They start a mirroring kind of.
They're happens where they will buy maybe a couple of smaller baskets during the weekend by one large basket on the weekend. So we are seeing that. We see that with every single subsequent order. We also see that with every subsequent cohort.
But it doesn't have to be a focus for us to make the business financially sustainable.
Judges lack to have a rate I wouldn't think of it as a large basket versus a small basket or as when we build the business we're trying to build the business for all baskets.
If you think about it, go back to your sales and marketing question. We have a strategic advantage because, remember, you already have consumers on the platform. We already have dashers on the platform.
So the snow through from a gross margin to contribution margin for us is very high
When I think about the unidecanomic, the team has done a phenomenal amount of work over the course of the last year.
Speaker Change: When I look at that in the piano, that doesn't concern me. There's a combination of us being able to make the math work at smaller baskets, plus the sales and marketing leverage, where VR focus on is what's the size of the opportunity in terms of scale as well as overall gross profit dollars.
Speaker Change: Thanks so much.
Thank you for your question and ladies and gentlemen that will conclude our door-Q32024 earnings call. Thank you for attending. Have a great rest of your day.
Speaker Change: Thank you.