Q4 2024 DoorDash Inc Earnings Call
Thank you for standing by. My name is Christina and I will be your conference operator today. At this time, I would like to welcome everyone to the DOOR-Q4 2024 Earnings Call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, you could press star 1 again.
Speaker Change: Thank you. I would now like to turn the call over to Wes Twigg. Wes, the floor is now yours.
Wes Twigg: Good afternoon, everyone, and thanks for joining us for a Q4 2024 earnings call. I'm very pleased to be joined today by co-founder, chair, and CEO, Tony Hsu, and CFO, Bobby Anaconda.
Wes Twigg: We'll be making forward-looking statements during today's call, including, without limitation, our expectations for our business, financial position, operating performance, profitability, our guidance, strategies, capital allocation approach, and the broader economic environment.
Wes Twigg: 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 most recent Form 10-K and 10-Qs.
Wes Twigg: You should not rely on our forward-looking statements as predictions of future events or performance. We disclaim any obligation to update any forward-looking statements except as required by law.
Wes Twigg: During this call, we will discuss certain non-GAAP financial measures. Information regarding our non-GAAP financial measures, including a reconciliation of such non-GAAP measures to the most directly comparable GAAP financial measures, may be found in our earnings release, which is available on our investor relations website at ir.doordash.com.
Wes Twigg: These non-gap measures should be considered in addition to our gap results and are not intended to be a substitute for our gap results.
Wes Twigg: Finally, this call is being audio webcasted on our Investor Relations website. An audio replay of the call will be available on our website shortly after the call ends. Operator, I'll pass it back to you and we can take our first question.
Speaker Change: Great. And just a reminder, if anyone would like to ask a question, please press star followed by the number one on your telephone keypad. Again, that's star one to ask a question.
Speaker Change: And your first question comes from the line of Ross Sandler from Barclays. Your line is open.
Ross Sandler: Hey guys, Tony, thanks for the letter, all with some great new interesting stats in there. So I want to just start with some of these new penetration stats.
Thank you. Bye. Thank you. Bye.
Speaker Change: So, you're basically saying the funnel has like an 800 million person TAM.
Speaker Change: penetration and what does the most penetrated market look like for these stats like what's the the North Star on either frequency or penetration which kind of move hand in hand. Thanks a lot.
Speaker Change: Hey Russ, yeah I'll start and you know feel free if you want to add anything Robbie.
Speaker Change: You know, I think when I step back and look at the opportunity in front of us, I couldn't be more excited or bullish about both what we have been working on, as well as what is to come.
Speaker Change: And I think in part it's because of what you're talking about, which is the long runway in all of the areas where we've explored. You know, if you took our oldest area of exploration, U.S. restaurants,
Speaker Change: I mean that would be you know the quote-unquote most penetrated in terms of usage of our products.
Speaker Change: you know, we're still single-digit percentages of the U.S. restaurant industry sales.
If you looked globally, that number would be even smaller.
Speaker Change: And then obviously if you added in the retail categories or if you added in the first party channel that we also support across.
every category.
Amen.
Speaker Change: and then if you added the population point that you made, we are a speck of dust in terms of how penetrated we are. And I think the answer is really both in terms of penetration and frequency.
Speaker Change: On the penetration side, a lot of this has to do with, you know, getting into more geographies, launching more of the geographies that we currently serve but don't yet have, you know, a perfect product.
Speaker Change: as well as making sure that we do a great job in terms of
Speaker Change: serving the cohorts that we already have. One of the things that we've learned over the years is that it's really hard to keep improving the product, but it's also what we're paid to do.
Speaker Change: This is what I spend the most of my time on, which is making sure, how do we add more selection? How do we make the product's quality better in terms of accuracy?
Speaker Change: speed, reliability, how do we make it more affordable across the world, and how do we improve our customer support? And I just don't see an end in, you know, working each one of those vectors.
Speaker Change: That is even more true now, as I think about, you know, some of the newer areas of exploration. I mean, when I think about grocery or retail.
When I think about, you know, our commerce platform.
Speaker Change: I think all of these things are even in much stronger effect or much, you know, earlier days of exploration in terms of building a product that we are proud of and building a product that we believe
Speaker Change: will actually just change behavior. I mean, that's really ultimately what you're trying to do as you think about moving up the curve in both penetration and frequency.
And does that complete your question?
Yes, thank you.
Speaker Change: Okay, perfect. Your next question comes from the line of Shweta Kajaria from Wolf Research. Your line is open.
Shweta Kajaria: Thanks a lot for taking my questions. Let me try two please. Could you please talk about contribution profit margins, especially in your international markets?
When we think about.
Shweta Kajaria: retention improvement versus frequency versus lowering cost per delivery. Where do you think there is greatest
room for upside there as you think about the trajectory.
Speaker Change: And then second question is, just stepping back a little bit, Tony, how do you think about 2025 and 2026? What are some of your goalposts for this year and how should we be thinking about it, especially as it relates to investments? Thanks a lot.
Speaker Change: Hey Shraddha, it's Ravi. Let me take the first one on the contribution margin rate. I mean, the theme for us is very consistent, which is, A, we are not operating the business towards a specific margin percentage. We always think about operating the business towards more EBITDA dollars, more profit dollars.
Speaker Change: And if you look at the theme that has been consistent for the last couple years, we've continued to scale that business, continued to increase the overall density that ultimately is driving the profitability that you're seeing in the business.
Speaker Change: But more specifically, when you think about our international business, let me give you a couple of stats about what we're seeing in the business today. The business is growing. It's growing quite nicely. They're growing substantially faster than peers.
Twenty twenty four is more compared to twenty twenty three.
Speaker Change: and I think about you know where the business could get to again think about it right like we are still early in our journey, we're still very early in terms of penetration, we are not in all the cities that
Speaker Change: you know in all the countries that we operate in. Our goal is to continue to scale the business which ultimately is going to drive efficiency which will continue to lead to more gross profit in the system and we are very pleased you know with the performance of the business so far.
Speaker Change: I'll add a little to the first question and then I'll take your second one on the next couple of years. I think one of the things that we've learned in building any of our businesses is that
Speaker Change: it really is the combined sum or cumulative compounding effect of a lot of small things.
Speaker Change: And so, you know, when you ask a question, whether it's about margin or top line or product improvements, I wish it was as simple as to say, oh, there's one area that has way more room to run than some other areas.
Speaker Change: What we've actually found is that there's room to run almost everywhere and when you think about, you know, how
Speaker Change: We've been able to both grow our top line as well as significantly improve our bottom line, as well as increase the amount of reinvestment in building this business.
Speaker Change: What you see is really, you know, the effect of having invested successfully in scale.
having positive margins.
Speaker Change: and when you multiply those two things together, you just get increasing ability to reinvest. And now you just have to make really good investments, which is.
you know, comes to your second question.
Speaker Change: around the next couple of years. The investment philosophy, when I think about the next couple of years, really hasn't changed. It continues to be...
We only want to invest when we see great signs.
Speaker Change: to do so. So if it's an early stage product, it's generally signs of product market fit for each one of the audiences, making sure that we have a substantial improvement to what already exists in the market.
Speaker Change: and then having a hypothesis or a path towards monetization and building a strong cash-generating business thereafter.
Speaker Change: And so, you know, that starts with each of the five areas that we've been exploring are U.S. restaurants.
Speaker Change: area, our business internationally, our business outside of restaurants, our commerce platform, and ads. And so that's really where the focal point continues to be. I think we have a lot of work to do, as I mentioned.
Speaker Change: in an earlier question in terms of just improving the product. So that's where most of the investment dollars will go. But we're also in search of future areas of exploration.
Speaker Change: You know, when I think of local commerce, I think there's lots of problems and I think lots of ways to help grow the GDP within cities.
Speaker Change: It doesn't mean that, you know, we invest in everything, but at the same time, you know, when I see that we have a long runway in our existing areas, I get as excited about the reinvestment into doubling down there as well as in search of new areas.
Thanks, Tony. Thanks, Robbie.
Speaker Change: And your next question comes from the line of Deepak Mathian from Cantor Fitzgerald. Your line is open.
Deepak Mathian: Great. Tony, maybe I'll ask an Autonomous Weekly question for you.
Deepak Mathian: Obviously, the current cost structure of AVs does not make delivery a primary use case, but in a world where in the next five to ten years, as personal vehicles sort of become increasingly autonomous and maybe can't pick up food by themselves, how are you thinking about the potential opportunities and risks for Dash? And how are you preparing for an AV world?
Speaker Change: And then second question, maybe for Ravi. Can you give an update on Volt? What are you seeing in some of the fast-growing markets? Where does Volt stand with respect to the, you know, new verticals product build-out and penetration kind of in early 2025 in some of these key markets? Thank you very much.
Ravi: Yeah, I'll start on autonomy, Deepak. So, I mean, autonomy, I think, is super exciting. I think it's one of the two big megatrends that's happening right now in technology. The obvious other one is what's happening in the world of LLMs.
Ravi: You know, I think autonomy has come a long way. I think a lot of us certainly working in the field probably either hoped for or expected this to have come sooner, but I think you're seeing just a lot of exciting, you know, existence, proof points of what's to come. You're right to say that.
Ravi: You know, a lot of people are still trying to figure out the total cost of operations and the way I think about this is, you know, first and foremost, I would articulate that the problem for autonomous delivery is actually quite different from the problem for robo taxis.
Ravi: Obviously, in the case of robo-taxis, you have the passenger who can solve the first and last 10 feet problem, where they can enter and exit the vehicle for the vehicle, so to speak.
Ravi: That is quite helpful in solving that problem. Obviously, with passengers, you're going to have to travel farther. There's life at risk, and so you're going to need
Ravi: you know, more expensive hardware, you're going to have to travel farther distances, and you're going to have to carry, you know, more capacity. That's, you know, very different when you're talking about some of the item deliveries that, you know, we partake in. It's an area of exploration that we've now
Ravi: studied for years and have worked on. We don't have anything to announce at the moment, but we're quite excited about all of the challenges. We do think the problem statement is quite different, and I think that it's as important to both build technology that addresses the specific use cases within delivery, as well as understand how the technology and operations must be married in order to achieve the cost profile that you're, you know, asking about in your questions.
such that it makes sense for everybody.
Speaker Change: Deepak, on your second point on world, look, I mean, the international business overall, including world.
Speaker Change: at a very strong quarter, as well as, in fact, 2024 has been a very strong year. I mentioned on an earlier question that Shweta talked about, which is we're growing faster than peers. In fact, we're growing substantially faster. We're gaining share in virtually every country that we operate in.
Speaker Change: If I look at the entire portfolio, I mean, users are growing. We reached an all-time high in terms of our international MAUs, as well as the order frequency continues to grow. That's a combination of us trying to improve the selection, trying to improve quality, as well as continuing to drive affordability.
Speaker Change: We launched that roughly about two years ago. That business is growing. It's scaling quite nicely. When I look at the slope of that curve compared to DashPass in its early years, it's growing faster than DashPass.
Speaker Change: And the portfolio of category expansion is also continuing to grow quite nicely.
Speaker Change: There are several countries where, you know, new verticals and grocery penetration.
Speaker Change: in the international portfolio is actually higher than what we're seeing in the U.S. So, overall, when I look at the business, I mean, it's strong growth. The unit economics have improved. We're really pleased, you know, with the performance of the business, you know, both Q4 as well as full year 2024.
Great, thank you both.
Speaker Change: And your next question comes from the line of Michael Morton from Moffitt-Nathanson. Please state, I'm sorry, please state your question.
Hi there. Thanks for the question. One for Tony.
One for Robbie. Robbie, in the
Speaker Change: Prior to 10Q, you called out international markets utilizing NOLs for the first time.
Speaker Change: I was wondering if you could talk a bit more maybe about some of the markets that are seeing this inflection in profitability and then how far some other international markets could be behind those ones, utilizing the NOL. So just curious on the curve there.
Speaker Change: For Tony, there's a lot of companies rolling out agents and assistants, that's no secret. And when it comes to e-commerce, there's a thought...
Speaker Change: that as you could be changing the traditional search funnel, it's an opportunity to integrate local inventory more seamless into the consumer shopping experience.
Speaker Change: So, would love to hear how you're thinking about this opportunity and exploring potential partnerships in providing the infrastructure for these model and, I would say, upcoming search operators. Thanks, guys.
Speaker Change: Yeah, Mike, I'll take the first one. I mean, you know, when we think about international, right, I mean, I'm thinking about view overall.
portfolio as a whole.
Speaker Change: As we think about that, right, like there's the overall portfolio is gross profit positive.
Speaker Change: I talked about earlier that there's countries in there which are contribution margin positive from a core restaurants perspective.
Speaker Change: The portfolio looks, you know, similar to what we've done in the U.S. right? This country is where we feel very good about the contribution margin. They're approaching, you know, levels that, you know, we're very positive about. We're using some of those profits to continue to invest, you know, behind some of the other markets.
Speaker Change: And if your question specifically is around tax, I would expect, you know, that to be, you know, somewhat volatile as we think about the rest of the year, just given the level of profitability that we have in the international markets. We don't expect to be, you know, major, you know, cash, you know, taxpayers this year.
Speaker Change: Hey Michael, on the second question around AI agents, I mean I definitely agree with the premise that there's going to be a lot of AI agents working on our behalf and you know doing multiple tasks and jobs. The way I kind of see this for DoorDash is you know really two things. I think one is
You know
Speaker Change: We have to first and foremost make sure that we master the physical world.
Speaker Change: Right, that's an area where LLMs and AI agents don't necessarily play a significant of a role. They're an interface in some ways to the physical world, but they certainly don't solve the tasks in the physical world, such as providing the logistics infrastructure, understanding how to do it at the highest quality, the lowest cost, with the greatest accuracy.
the greatest use of this technology.
with all of the data that we have.
Speaker Change: You know, with billions of orders and over 100 million customers every year and the graph that we've built, you know, both for food and items.
Speaker Change: at a local level, I think there's a great opportunity for much better personalization.
Speaker Change: I think that there's much better opportunity to, you know, virtually improve every part of our operations with LLMs, both via the use of agents as well as in other ways with LLMs.
Speaker Change: And so I, and then, you know, obviously to state the obvious.
with a program as exciting and as penetrating as DashPass.
Speaker Change: I think that that will be another way in which we add great value, in addition to the improved personalization as you think about how these technologies interface. But I think there's two different jobs. I think job number one is we have to make sure that we continue to master the physical world. And then job number two is that we have to take advantage of the assets that we bring to bear and then make use of the technology, especially something as quickly changing as LLMs.
so that we can offer customers the best experience.
Thanks so much, guys.
Speaker Change: Your next question comes from the line of Bernie McKernan from Needham and Company. Your line is open.
Speaker Change: headwinds with you know in one cue is like leap year California fires FX but just wanted to see kind of maybe core versus non-core as well anything underlying going on. Thank you.
Speaker Change: I'll take both of these. I mean, look, I mean, Q4 was a strong quarter for us. We are very pleased with the performance of the business.
Speaker Change: you know, what we're seeing in the business, right? I mean, if you just pull back and look at 2024, restaurants, you know, continue to grow at a very nice pace, growing double digits. And more importantly, what we saw in the year was stable as well as consistent growth throughout the quarters.
Speaker Change: Both new verticals as well as international growing much faster than the restaurant business
Speaker Change: We talked about the fact that, you know, we have over 42 million monthly active users. That number is growing at a double-digit rate. Order frequency continues to be at an all-time high. Dashpath had a strong year as well, right? If you put all of this together, that's what's driving the growth that you're seeing, you know, in Q4.
Speaker Change: Yeah, as we talk about Q1, I mean, look, we're really pleased with the performance of the business. We are happy with, you know...
Speaker Change: where the business is trending as well as the guidance that we have given. As you think about sort of like the comp, right, I mean through one of last year there was a extra day. There's also you know some impact from FX which is roughly about you know one percent on a year-over-year growth basis.
Speaker Change: but you know our business continues to do well we continue to be overall very pleased with the performance of the business and more importantly as I look at the rest of the year right very confident with the output for the full year as well.
Great, thank you.
Speaker Change: Your next question comes from the line of Nikhil Devani from Bernstein. Your line is open.
Nikhil Devani: Hi there, thanks for taking my question. I have two on the US New Verticals, please.
So first
Nikhil Devani: How much repeat buying behavior do you see with these newer categories? And I appreciate that aggregate cohort level metrics are probably more important, but it would be helpful to understand if you see repeat engagement or if demand is more episodic in nature.
Nikhil Devani: So how should we think about the scale that you need to get there? And when you think long term about what that eventual operating profit per order looks like, how does that compare in your minds to restaurant delivery? I'm sure it varies a lot by category, but any commentary you can provide there would be helpful.
Speaker Change: I mean, Nikhil, I'll take both of you, right? I mean, if you think about new verticals, right? Very strong year, actually. I mean, we are the fastest growing in the US. We've gained share in new verticals through the year.
Speaker Change: You know what you're seeing in the behavior is consumers are continuing to utilize new verticals. They're ordering from all categories
Speaker Change: And one of the pieces that we had very early on was mouths that ordered from both restaurants as well as New Verticals, they continue to increase their engagement on the overall platform.
Speaker Change: That's showing up, you know, very nicely in the early data. And I think both things, right? The number of miles that use new verticals is growing, the order frequency is growing, and more importantly, they're spending more with us on a, you know, monthly basis.
Speaker Change: the overall spend per mile per month that continues to go up. Which just goes to show you that the selection that we've added, the quality of the product, all of that is something that consumers love and we're continuing to focus on that.
Speaker Change: And your second question around profitability, I mean a couple things briefly, right? When we think about profitability, we're thinking about overall dollars that are flowing through the system. You're not thinking about it on a...
Speaker Change: margin percentage basis that continues to be the case for new verticals. When I look at the progress that we've made, I mean, 24 was a good year.
Speaker Change: The unit economics have improved in 24 compared to 23. I feel very good about where we are. What we're focused on right now is scale because I think we have an opportunity to build a very large business here. I mean look ultimately the goal is to drive overall free cash flow dollars higher in the system and grocery as well as new verticals is going to be a great area of growth as well as
Speaker Change: overall profit dollar driver for us, you know, as we think about over the next, you know, several years.
Thanks, Ravi.
Speaker Change: And your next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is open.
Eric Sheridan: Thanks so much for taking the question. Maybe building on the last question, I just want to go a little bit deeper in the state of the grocery side of the business, what were the key learnings of the last year that unlocked elements of either user growth, frequency, or supply? And when you think about the array of supply or frequency looking out over 2025 that isn't in your ecosystem, what do you see as some of the key investments to potentially unlock that potential and how does that inform against your strategic priorities? Thanks so much.
Eric Sheridan: Hey Eric, it's Tony. I can take this one. I mean, I guess in short, a lot of this is just making a lot of product improvements.
Speaker Change: I think that the state of play of where grocery delivery is in the U.S., or globally, is still quite nascent. I mean, if you look at the penetration levels of where it is compared to other categories of e-commerce and delivery, it is still quite lagging.
Speaker Change: And I think there's several reasons, but the, you know, the short version of this is that, you know, customers today are asked to pay a premium, but they don't always receive the items that they order.
That's not a great proposition.
Speaker Change: And so there's a lot of work that we're just doing to improve each one of these vectors, you know, and
Speaker Change: you know, everything from adding more SKUs to our catalog, understanding, you know, exactly where items are and how do we make sure that we deliver with perfect accuracy.
Speaker Change: making sure that we can increase the affordability of the products, making sure that we have the matching, we're matching the right type of dashers who want to do grocery deliveries with actual grocery orders.
Speaker Change: working together with brochures and other retail partners to make sure that all of this ecosystem
It's set up for perfect delivery quality.
Speaker Change: There's just a lot of different small things. I mean, if you looked at the list, it would probably be like a project list of like hundreds or something like this. So there isn't any one thing. I think the key learning is that
Speaker Change: you know, it would be one that there still remains a lot of product improvement left. We're really satisfied with what we've done in 24 and in the years prior, but there's a long way to go.
Speaker Change: Two customers who started by building a relationship with us in grocery of buying small top-up orders for the middle-of-the-week run are now buying larger baskets, and we are now serving all of their use cases. This is kind of the point Rob you made to an earlier question about how the spend is growing for each recurring customer.
Speaker Change: And three, this I think dabbles a bit to another part of your question.
Speaker Change: which is that, you know, more and more, you know, grocers
Speaker Change: very incremental to what they see through their own channels as well as with other partners and so
Speaker Change: I think all of these things have been very strong indicators that we're on the right path, but as I mentioned, I think kind of the main one still, you know, in terms of our focus is we just have to keep working on the product. We feel, again, really good about the progress we've made, but we still feel like we're super early in terms of what grocery delivery should look like.
Great, thank you.
Speaker Change: Your next question comes from the line of Jason Helstein from Oppenheimer. Your line is open.
Thanks, if I could ask two questions.
Jason Helstein: Just general thoughts on DashPass. I appreciate you sharing the growth rate and the numbers.
Bye.
Jason Helstein: I guess, how do you think about the growth from here and...
any catalyst to potentially accelerate the growth.
Jason Helstein: And then second, I think the math on GOV per MAU was up 6% in 24, I think it was up 8% in 23 if our math is right. Just maybe talk about the factors that would be impacting this, whether U.S., non-U.S., restaurant, non-restaurant. Thank you.
Maybe I'll start with the.
Jason Helstein: the first one on DashPass, and Ravi, you can take the second one. So with respect to DashPass, I think it's a pretty straightforward playbook. You know, I think, you know, to start, we have over 100 million customers who order with us annually, but when you look at DashPass and Volt+,
Jason Helstein: we're only in the tens of millions, right? And so we have a large fraction of our customer base within our own ecosystem that are not subscribers.
Jason Helstein: So that's the first thing we have to go and solve, I think, before trying to solve other problems. And so, okay, how do we solve that?
Jason Helstein: Well, I think it's really by making the product better and making it more obvious why joining as a subscriber is better than not joining as a subscriber. But, you know, it's all of the commentary I've made earlier about improving the selection.
Making sure that there are more
Jason Helstein: exclusive benefits for subscribers, making sure that the quality is perfect, making sure that customer support is improving. All of these things are going to help the ecosystem want to be more frequent users of our service. And when someone is a greater frequency user of our service,
Jason Helstein: then they actually, I think, would be more willing to consider a membership program. And so that's where the focus really is. I don't think that we have to do anything unnatural, you know, to see growth in our subscriber programs. We feel really good about where we're at, and we just have to keep going.
Speaker Change: It isn't your second point. I mean, you know, I appreciate the math that you're trying to do, but looking at the blended number is not really indicative of, you know, sort of like what are you seeing from an underlying trends perspective, right? For us, when we think about this business, it's a cohorted business.
Speaker Change: We're still acquiring new users with a pretty healthy clip. And usually what you see in the business is when new users join, they have a lower order frequency before they graduate on to ordering more on the platform.
Speaker Change: The real way to think about it is looking at it on a cohorted basis, and I look at the underlying cohorts, right, where there's retention, which is, you know, doing really well, retention continues to improve, but it's order frequency that continues to improve. And the second dimension you should look at is look at the various different lines of business.
Speaker Change: When I look at the restaurant business, I mean, the growth is strong. Users are still continuing to grow. They're ordering more with us.
Speaker Change: Number two, even on new verticals to an earlier question, right, like I talked about the fact that users are growing as well as their order frequency continues to grow. The second thing I would look at is truly to look at the health of the business, you look at the older cohorts.
Speaker Change: The older cohorts continue to be very strong and they continue to increase their engagement as well as order frequency over time. And that just tells me that, you know, the underlying cohort strength is strong both for new as well as the existing cohorts.
And does that complete your questions?
Yeah, thank you.
Speaker Change: Your next question comes from the line of Ken Goralski from Wells Fargo. Your line is open.
Ken Goralski: Thank you very much. Two, if I may, please. First, on advertising, Ulysses is the fifth area where you can build a great business.
Ken Goralski: Could you speak, please, to the roadmap for the next 12 to 24 months?
Ken Goralski: Do you feel you have the advertising product and the overall product experience ready to aggressively scale ads?
Speaker Change: And the second question is more on Dasher supply. Could you just talk about, you know, one bigger picture, how you see the Dasher supply environment and how you think it may evolve throughout the year? And then second, Daryl, there.
Speaker Change: Are you seeing a segmentation of kind of use cases we're, you know, seeing and reading about Instacart and Uber beginning to differentiate between delivery, in-store, and kind of pick-and-pack? Thank you very much.
Ken Goralski: Hey, Ken. I can start. I mean, I think there were, I think, a few questions in there. I think the first question was around ads.
Ken Goralski: I mean, yeah, I mean, ads had a great year. I mean, in terms of, you know, what we worked on, I mean, it's always two sets of products. One set of products for consumers and one set of products for advertisers, right?
Ken Goralski: And it's because when you build advertising, you're constantly trying to solve the set of simultaneous equations where you're balancing
Ken Goralski: How do you achieve the highest return on ad spend for the advertisers? And then the least amount of degradation, ideally no degradation, for consumers.
Speaker Change: And so, I think there's a distinction between what you're saying, which is like, there's an assumption you made in your question that you would aggressively scale if you're ready to scale. And I would challenge that by saying, it's important to make sure that an advertising business follows a healthy marketplace.
Ken Goralski: and that an advertising business in and of itself is quite a short-term pursuit.
Ken Goralski: And so the way we think about it is, well, we got to keep making sure that our ads are more and more relevant. We have to make sure that there are more and more units so that, you know, they can solve different types of problems for advertisers.
Ken Goralski: Seen or Working with I think these are all kind of like are for the course But I think the most important thing of getting the product. Right is making sure that we can balance
Ken Goralski: the needs of the advertiser with the needs of the consumer. Because, again, the way I think about this is that a healthy marketplace always precedes and trumps an advertising business.
Ken Goralski: With respect to Dasher Supply, Dasher Supply looks really good. We've had...
Ken Goralski: You know, very strong supply on the road. Obviously, there's been some challenging
Ken Goralski: circumstances with weather in different parts of the world, as well as unfortunately different natural disasters that have also occurred. But outside of those anomalies, dasher supply continues to look really, really healthy.
And I'm sorry, what was your last question about it?
Yeah, I was just...
talking about differentiating supply versus core delivery versus
Ken Goralski: So what we're seeing some more differentiation versus the pick and pack and it kind of the in-store versus delivery. I got it. Okay. I got it. Yeah. Yeah. Okay. That's helpful. I didn't know the two are connected. So we do see different preferences for different dashers and careers around the world. One of the benefits of starting with the highest frequency.
delivery of restaurant food.
Ken Goralski: As well as just the breadth of coverage that we offer where you know, there's a lot more restaurants There are other types of stores out there We we effectively have dashers everywhere and we have you know, the largest
Ken Goralski: fleet out there. And so a lot of this is just self-selection. That's kind of what we see. And it's a learning journey. Some dashers prefer one type of delivery one week, but then they'll try another type of delivery and they may actually add to their preferences.
Ken Goralski: So it's just something that we kind of continue to work on and continue to learn the different preferences. I think the most important thing is to remember the flexibility of the network where the number one feature is that you have, you know, 90% of dashers.
Ken Goralski: driving fewer than 10 hours a week. And so, in some ways, what we're trying to do is we're trying to construct the maximum flexible set of opportunities for dashers. And so, as we add more categories, as we add more different types of tasks into our network, that's...
that should help in that direction.
Thanks, Tony.
Speaker Change: And your next question comes from the line of Yusef Squali from Truist Securities. Your line is open.
Yusef Squali: Awesome. Thank you very much. So, just as a follow-up to the ads question,
Speaker Change: Tony, can you talk a little bit about the importance of DSPs on the platform? Last quarter you signed a deal with the trade desk. How significant is that relationship to you and maybe other DSPs on the platform?
Speaker Change: And then, and this may be related, maybe not. Can you talk, the take rate was sequentially flat about 13.5, I think the first time in a while. Anything to read into that? How much of the take rate was driven by advertising and maybe platform revenues in the quarter? Maybe that's for Ravi. Thank you.
Speaker Change: Yeah, I'll start the first part on on ads. I think all of these things are all par for the course, right, in terms of the partnerships, and if you think about what it is, right, the first thing we did with ads when we started three years ago was we first built them for restaurants.
Speaker Change: And within restaurants, you have two different kinds of advertisers, if you will. You have small and medium businesses.
Speaker Change: And then you have enterprise businesses, some of which are larger and some which are smaller, but some of whom have franchisees, some of whom have no franchisees.
Speaker Change: And then, you know, we moved to CDG as we progressed, especially in our work into new verticals.
Speaker Change: And, you know, now we have the product portfolio really to serve anyone.
Speaker Change: And now we're doing this globally as well. And so that's kind of where we're at. We're now ready, as you mentioned, we announced a partner and we'll likely have more partnerships where we'll just kind of keep.
Speaker Change: Solving for what I think advertisers are somewhat accustomed to, right? We understand that this is a really important ecosystem. There are a lot of different partners that existing merchants and advertisers work with. And I think that'll just be part for the course of building out that roadmap.
Speaker Change: And just on the second point, right, I mean, the take rate in terms of Q4, the impact was largely seasonal due to Dash for Pay. Look, I mean, Q4 is a great quarter for us in terms of growth.
Speaker Change: We've seen this in historic years as well, so we lean into dasher pay in order to support the growth.
Speaker Change: That's largely what you're seeing in terms of the Q4 take rate, but more importantly, right, just to pull back, I mean, again, important to reiterate, you know, how we operate the business. We are not operating the business towards a specific margin percentage. Our goal has always been to continue to increase overall profit dollars.
Speaker Change: And the way we think about the business is generating unit economic efficiency is extremely important for us. And when we generate the efficiency, we try to reinvest that back in the business with a constraint of A, growing retention and B, growing order frequency, because that drives scale and scale drives profitability in the business.
Speaker Change: And we are investing flexibly, you know, up and down the P&L. And that's been the philosophy that we've operated, you know, for the last, you know, several years. And it's going to continue to be the case going forward as well.
That's great. Okay. Thank you both. That's helpful.
Speaker Change: And your next question comes from the line of Brian Nowak from Morgan Stanley. Your line is open.
Brian Nowak: Hey guys, thanks for taking my questions. Maybe two. The first one, I'd love to sort of dig into a little bit of the prioritization changes year-on-year. Tony, can you sort of talk to us about how your 25 budgeting and investment priorities or areas of capital allocation
Brian Nowak: changed versus the start of 24? I'm trying to sort of think through where are you sort of investing more or less year-on-year just to sort of continue to maximize your multi-year free cash flow, dollar growth, and frequency.
Brian Nowak: And then the second one, maybe a little bit of housekeeping, but just so we all don't get over our skis. How should we think about the pace of the buyback and sort of the cash balance you're targeting? What is sort of the regulator on the pace of the buyback going forward? Thanks.
Brian Nowak: Yeah, I can start on on maybe the prioritization question and and Robbie if you want to take the buyback question Um, I guess in short Brian not much has changed. I would say 25 versus 24. I mean
Brian Nowak: You know, I wish that an infinite amount of progress can happen in 12 months, but things usually take a lot longer than
Brian Nowak: than I would hope and that's certainly been my experience so far and I think what I do see though is that I see continued product market fit improvements effectively everywhere and so whenever I see that I'll just continue to double down.
Brian Nowak: So I think it's hard to see these things year to year. I mean, even if you looked, you know, intellectually, honestly, there are 24 results or the Q4 results.
Brian Nowak: I mean, most of those things were baked a long time ago, right, because they were a product sum of the decisions and prior prioritization actions taken, you know, leading up to it. And the reason why I'm proud of our twenty four results is.
Brian Nowak: probably a reflection of the work that we started in 22 or 23 or something like this.
Brian Nowak: And that's kind of how I view 25, you know, and and so
Brian Nowak: I continue to see great reason to invest in each one of our areas. I mean, we have a stable and strong growth in the U.S. restaurants area, which
Brian Nowak: is our oldest area of exploration, but I continue to think that there's a lot more room to go there. Obviously, we have very strong...
Brian Nowak: candidates for investment both overseas as well as outside of restaurants.
Brian Nowak: Commerce platform continues to do well. I think, you know, commerce platform right now, we're really only addressing a couple of problems with first-party delivery and first-party ordering. But obviously, if you think about how do you become a digital powerhouse, you're gonna have to do more than that.
Brian Nowak: And then there's the ads, you know, business, which has done amazing.
but I
Kind of expected that
Brian Nowak: Again, I think that a healthy ads business follows a healthy marketplace, and I think our teams have executed really well and have followed a pretty clear line there. And so, I think in each one of those areas, I kind of see very similar areas of investment year on year. I think for me, it's actually thinking about, well,
Brian Nowak: what other problems can we solve and making sure that, you know, we're taking enough risk and working creatively enough with our customers so that we can, you know, be more and more useful.
Speaker Change: Hey Brian, on the second point on buyback, I mean look, I mean I think it's important to reiterate how we think about capital allocation. Our philosophy around that has not changed.
Speaker Change: The way we think about it has been very consistent, which is anytime we invest every dollar we put to work, we expect to generate a meaningful amount of return. That's been the strategy we employed and continues to be the case.
Speaker Change: I look on the buyback piece, right? I mean we're pretty happy with the results we've generated over the last couple years. We've generated over two billion dollars in terms of shareholder value. We've been opportunistic and our goal is to drive returns over a longer period of time and we continue to be opportunistic and conservative going forward as well.
Speaker Change: And this does conclude our Q&A session, and we will be concluding today's conference call. We do thank everyone for your participation and for joining, and you may now disconnect. Have a great day, everyone.