Q1 2025 DoorDash Inc Earnings Call
Speaker Change: Hello, and welcome to the DoorDash Q1 2025 Ernst Conference call. I would now like to turn the call over to Wes Twig, Invest Relations, for Mr. Twig, the FOISORS.
Wes Twigg: All right, thanks Dustin. Good afternoon everyone and thanks for joining us for Q1 2025 earnings call.
Speaker Change: I'm very pleased to be joined today by a co-founder, chair and CEO , Tony Xu and CFO , Ravi Inukonda.
Speaker Change: We'll be making forward-looking statements today on today's call, including without limitation, our expectations for a business, financial position, operating performance, profitability, our guidance, strategies, capital allocation approach, and the broader economic environment. We'll be making forward-looking statements today on today's call,
Speaker Change: Overlooking statements are subject to risks and uncertainties that could cause actual results to different materially from those described. Many of these uncertainties are described in our FAC filings, including our most recent form, 10K and 10Qs.
Speaker Change: 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.
Speaker Change: 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, maybe found in our earnings release, which is available on our investor relations website at ir.doordash.com
Speaker Change: These non-GAAP measures should be considered in addition to our gap results and are not intended to be a substitute for our gap results.
Speaker Change: As a special note, by now you should have seen our formal offer to purchase delivery at 180 fence per share. A rationale for the offer, intentions and other offer related details are available
Speaker Change: We understand there will be additional questions for now we are unable to provide details beyond what is available in that document.
Speaker Change: We may also make forward-looking statements regarding both Deliveroo and Seven Rooms during today's call. These statements are also subject to the risks and uncertainties that I mentioned earlier and are described in our SEC filing.
Speaker Change: Finally, this call is being audio- webcasted on our Investor Relations website. The 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.
Thank you.
Speaker Change: If you'd like to ask a question, please press star and the number one on your telephone keypad. Again, there's star and the number one on your telephone keypad.
Speaker Change: With the first question, this comes from the line of Zgutta Jury from Wolf Research.
The line's open.
Zahra Tajiri: Thank you for taking my questions. Let me try two please.
on International Competitive Landscape. [inaudible]
Could you please talk about now with DoorDash Walt and-
Zahra Tajiri: Deliveroo, what they combined share is at the stand in your...
in your 40 markets, and then Helfast is the...
Zahra Tajiri: European market growing from your vantage point, and is it fair to assume delivers unit economics and retention rates are as attractive as I remember when you acquired Volt one of the reasons was you know the unit economics and retention rates as you saw them so could you please comment for [inaudible]
Deliveroo as well, and then my second question is...
Zahra Tajiri: on the tariff impactiff, prices were to increase through the year you kind of dushed on it in your release.
Zahra Tajiri: How are you positioning yourself for the rest of the year in terms of what you could do as it relates to pricing but whether it's price parity, loyal to integrations, discounts, anything that you can talk about, that'd be great. Thanks a lot.
Zahra Tajiri: Hey Shweta, it's Tony. I'll take both. You know, on the first question, we are excited. You know, I think in many ways this is business as usual for us where we're adding and investing behind success in each one of our five business lines.
Unknown Speaker
Zahra Tajiri: Specifically with respect to Deliveroo, you know, that really is adding obviously to our international business. We've had, you know, a strong track record now in teaming up with Volts for over three years where we're, you know, leading in the majority of our markets with a playbook that we believe in. [inaudible]
Zahra Tajiri: And, you know, when I think about the possible combination, you know, should the deal close, what I really see is adding more scale to the same continent, in this case Europe .
Zahra Tajiri: and being able to lay the foundation for introducing all of the local commerce products that we are building.
Um...
Zahra Tajiri: I can't get into all the details obviously beyond that, but hopefully that gives you a high level view of what we believe the investment opportunity is. And I think that if we do a great job in terms of.
Zahra Tajiri: Investing wisely into the partnership as well as, you know, what the scale economies can produce. I believe that I'll even unlock even greater profit pools for us, especially given in some of the markets that deliver plays in to allow us to invest even further in the future. [inaudible]
Zahra Tajiri: With respect to the second question, which I believe was on tariffs. [inaudible]
Um...
Speaker Change: You know, right now we're not seeing any effects, obviously, as you know, a lot of the tariffs have...
Speaker Change: Kevin Pause, and we haven't seen any changes in consumer behavior even if there are changes in consumer sentiment. You know, I've always believed in it and I think we saw this even as far as whether it was during
Speaker Change: Things returning back to normal after COVID-19 or peak inflation in 21 and 22. I think what you really saw was that
Food or getting convenience? [inaudible]
Delivered.
really is the most frequent form. [inaudible]
Um...
Speaker Change: of Spending Consumption, and food really is the most resilient category.
Speaker Change: We continue to believe that, we continue to see signs of that. Obviously, we're going to focus on what we can control. Most of what that means is...
We've always been trying to increase.
Speaker Change: The selection that we offer, both of merchants as well as items, we are continuing to invest behind our affordability initiatives as well as our quality and service initiatives.
Transcription by CastingWords
Thanks, Tony.
Thank you.
Speaker Change: Our next question comes from the line of Deepak Mathivanan from Kenneth Fitzgerald. The line's open.
Speaker Change: Great. Thanks for taking the questions. One for Tony and one for Ravi. Tony, historically, you've been somewhat hesitant to make big acquisitions. You've done to this quarter. Has the philosophy on how you generally think about M&As now changed at all? What are maybe some of the other areas you think M&As could help improve DoorDash?
Speaker Change: And then one for Ravi, on Grocery, specifically, can you discuss on the factors that's accelerating the spend per customer? You see in kind of the use case brought on out into larger baskets, maybe from weekly runs or monthly fee bills, anything you're specifically doing to drive this behavior. Thank you so much.
Deepak Mahavanan: Hey Deepak, yeah, on the first question that the short answer is no.
Speaker Change: Some of these announcements aren't or can't be you know perfectly forecasted but what I would say is it really is business as usual. I mean and again I guess just as a refresher. [inaudible]
Speaker Change: You know, for us, when we look at something like M&A, you know, the first thing obviously we consider is whether or not this increases.
Speaker Change: The available market or the address will market in front of us, or whether or not it adds to our perspective fully out.
Speaker Change: And second, whether or not we have a proven track record.
in operating in that particular area. Yeah.
Speaker Change: which includes both the management bandwidth but also the question around. [inaudible]
Speaker Change: The deal were to close. We would operate in about 30 countries in Europe , 45 globally, 30 in Europe , and I think at that angle to the same place.
Speaker Change: and also giving us a football in strong, profitable markets that will allow us to continue to introduce more of those products and hopefully have the biggest positive impact to the entire European local economy.
Speaker Change: In the case of Seven Rooms, it's really about adding to our platform business. So our commerce platform started in 2016 when we introduced DoorDash Drive. Later on we introduced DoorDash Storefront, so we went from...
Speaker Change: Logistics of the Service to Online Ordering of the Service, and with something...
Speaker Change: Like several rooms, and especially what we hear all the time from merchants, is this desire to understand everything that's actually happening about their guests and inside their dining rooms as well as their other channels.
Speaker Change: And so really you can almost view this as marketing as a service and adding more intelligence into what restaurant owners can do in order to build their strong direct relationships with guests.
Deepak Mahavanan: Deepak on the second one, let me broaden it out and talk about the performance of the overall new vertical business, right when I look at the performance of
New Verticals in Q1, I mean it was very strong.
continues to grow, we increase the number of MEUs. [inaudible]
Deepak Mahavanan: Q4, we talked about the fact that what a quarter of our MEUs are ordering grocery as well as restaurants, that number continues to increase [inaudible]
Deepak Mahavanan: What you're seeing on the platform is, as the cohorts continue to habituate, they're ordering more with us. They're using us for more use cases. And truly the key differentiator is we've added more selection. Today when I look at the top 20 grossers, we have majority of them on the platform. We've extended that we've continued to add more grossers, you know, even in the regional markets. [inaudible]
Deepak Mahavanan: Through the quality of the product, it continues to get better. I mean, look at the product today versus about a year ago. The quality of the product and what we hear from customers and consumers, it continues to be a good. [inaudible]
Deepak Mahavanan: That's obviously driving order volume share when I look at the share again year over year that's been meaningful. Thank you very much.
Deepak Mahavanan: Like we wrote in the letter last quarter, like we expect to be volume share leaders, you know, the course of the next year. Thank you very much.
Deepak Mahavanan: And even when I look at the overall margin performance, I mean, it's very promising. I mean, margins have continued to improve.
Deepak Mahavanan: Netnet, the key thing for us is what we are seeing is we are focused on scale and as we are continuing to drive improvements in the product that is driving improvement in retention order frequency which is increasing the scale of that business.
Great, thanks Tony, thanks, Ravi [inaudible]
Speaker Change: Thank you. Our next question comes from the line of Nikhil Devnani from Bernstein, lines open.
Hi, thank you so much for taking the question.
Speaker Change: I wanted to ask on EBITDA in light of the M&A announcements. I know it's quite early to be talking about 20-26, but I guess in recent quarters there's been pretty consistent GOV growth, pretty consistent EBITDA improvement.
Speaker Change: In your mind when you think about the acquisitions of Deliveroo and Seven Rooms [inaudible]
Speaker Change: I think they could open the door to further investment in new markets or new products which is a good thing long term but when you think about the quantum of investment required and you anticipate spending to accelerate these businesses, I mean, does it materially change your perspective on how earnings, the earnings power for DoorDash in 2025 and 2026?
Thank you
Speaker Change: Ridiculous, Ravi, I mean, I'll take that, right? I mean, let me, you know, broaden that question, right, Nikhil? I mean, talk about the performance of the business. Look, when you look at the performance of the business, the business is doing really well. [inaudible]
Speaker Change: The extremely pleased with the performance of the business, not just in Q1, but over the course of the last several quarters, right? The formula for us has always been grow the business while continuing to increase overall profit dollars. I'm sorry, I'm sorry
Speaker Change: If you look at the EBITDA profit dollar growth in Q1, as well as the Q2 guide that we've given, very pleased with the Euro be your growth.
Speaker Change: For us, the philosophy has always been investing behind strength. You've heard us say this before, right? Our goal is to improve unit economics, take that and continue to drive improvements in retention and order frequency, which ultimately drives scale, and that scale drives profitability in the business. That is not going to change, right? Nothing about how we operate the business is going to change.
Speaker Change: and in terms of how we operate together with Deliveroo, that formula will continue to be the case.
Speaker Change: We're trying to drive duration of profit-dollar growth over a long period of time, and when we think about investment, the key formula we think about is, is it going to generate a healthy amount of IRR, a strong return, and as long as we feel comfortable with that, our goal is to continue to invest to drive scale.
Thank you.
Speaker Change: Our next question comes from the line of Youssef Squally from Tourist Trades.
The lines are open.
Speaker Change: Good morning. Thank you for taking a question. So can you expand a little bit more on the affordability and the <expletive> hasn't?
Speaker Change: Mick Schiff that caused Matt Rebnew margins to be down quarter on quarter. [inaudible]
Speaker Change: and what will drive it back higher? I think in the release you talked about.
Speaker Change: The guidance for you to, for it to flip back higher, you're on your app quarter on quarter. And then maybe Tony again on the liveroo, liveroo's growth in margins have been much lower than DoorDashes. Are there any structural issues in Europe maybe the liveroo's competitive position, etc.?
Speaker Change: That makes these margins structurally lower, and they're a chance for you guys, I know it's early, but they're a chance for you guys to kind of get those margins more in line with yours over time. Thanks a lot.
Speaker Change: Hey Youssef, let me take the first one right on Net Avenue margin, take it itself. I mean, just a broader point Youssef, I mean, just to clarify, our goal has not been to optimize margin percentage, we're trying to grow profit dollars.
Speaker Change: We've always been focused on driving overall EBITDA profit dollars up and you've seen that in the business, right? Whether you look at Q1, whether you look at the last few quarters, I mean that's what's visible in the business. [inaudible]
Speaker Change: You know, that said, when I look at the take rate, there's a few factors. I mean, there's some natural seasonality in the business. You've seen that in Q1 of last year as well.
Speaker Change: The second point I would make is look I mean our goal is to improve unit economics and invest that back in the business. We found some specific initiatives you know both around affordability as well as selection that we invested back in Q1 that drove not just the GOV growth but the order growth which we feel very good about. [inaudible]
Speaker Change: Third, I will look at in the business scale now you're at the point where you're trying to see all of our categories to go [inaudible]
Speaker Change: So the impact of makeshift is visible from a take rate perspective when you look at the overall business.
Speaker Change: So you put all that together, that's what impacted the take rate in you one.
Speaker Change: But if you're thinking about it, Youssef from a modeling perspective, I would expect you to take it to be higher than Q1?
Speaker Change: and the second half take it to be higher than the first half. And your question around, you know, what are the key factors that are driving? Right? One is, we talked about seasonality, Q1, we lean into Dasher Supply that gets better as we go through the rest of the year, primarily because Q1 is a strong growth portal for us. Q1, the first half take it to be higher than the first half take it to be higher than the first half.
Speaker Change: Two unit economics will continue to improve as we go through the rest of the year and that will continue to be a tailwind from a take rate perspective as business continues to grow. That will also be a tailwind.
Speaker Change: Knight Knight, I mean, they feel good about where the overall business is and our focus continues to be to drive the strong, you know, geo we grow that you're seeing in the business as well as overall a little bit our dollar production. [inaudible]
Transcription by CastingWords
Speaker Change: And in regards to your second question, it's actually a similar story in terms of how we think about things, which is really how do we maximize long-term profit dollars versus looking at union margins?
Unknown Speaker
Speaker Change: And again, obviously I'll be limited in terms of what I'll be able to say about Deliveroo, but with respect to how to think about it or a mental model, why we might be able to actually generate more profit dollars in the long run.
Speaker Change: And you're really adding more scale to the same geography in this case.
You're up, and we believe that...
Speaker Change: If we can do that and, you know, take some of the lessons that we've learned in operating across other European countries as well as other parts of the world and bring it into the markets where delivery operates.
Speaker Change: We believe not only can we increase the scale of the business [inaudible]
Speaker Change: But that if we do it in a disciplined way that we have done historically across all of DoorDash's initiatives that we can actually improve the underlying profit potential as well, which will allow us to even have more opportunities to invest should those be good investment opportunities.
Speaker Change: I think one of the important things to remember always about DoorDashes, our capital allocation strategy has never changed. We only invest when we see something is actually working. For a startup project or for something
Speaker Change: You know, earlier stage, a lot that starts with finding product market fit, finding great retention and frequency of use.
Speaker Change: Building a product that is ten times better than what's currently available. [inaudible]
Speaker Change: For later stage initiatives, a lot of it is looking at scaling the unit economics, improving those unit economics, reinvesting it back to give customers more value, and then ultimately generating and maximizing long term profit dollars.
Transcription by CastingWords
Great. Thank you both and good luck.
Thank you.
Speaker Change: Our next question comes from the line of Michael Morton, from the fat Nathanson.
The lines are open.
Michael Morton: Good morning, everybody. Thank you for the question. Can we follow up Robby on the net revenue margin commentary and...
Speaker Change: I would assume a lot of the affordability is coming in grocery and I would love to know what type of behavior
Speaker Change: You're looking to drive in that, you have to bring new grocery orders, a new user, or is it to increase frequency, and then...
Speaker Change: Is there any, like, under the hood? Is there any changes in competitive intensity? You're seeing in the grocery market that is maybe driving some of the affordability pushed?
Speaker Change: And then one for Tony, to the extent you can talk about European food delivery due to limitations with the delivery room.
Speaker Change: Seems like it's consolidating, wondering over the next several years, do you see any step changes in competitive intensity in those markets and how you maybe see the concentration playing out? Thanks guys.
Speaker Change: Ravi, I'll take the first one right on a photo and take great. I mean, look, I mean, Mike, the goal for us has always been to reinvest back in the business, right? That's always been the number one goal as long as the investments makes sense.
Speaker Change: We invest in driving selection, you know quality and affordability and you know depending on you know what opportunities we find that changes. [inaudible]
Speaker Change: According on where we are in the cycle. This quarter, I mean it was around specific affordability initiatives. I would say dash pass has been a key affordability lever for us. [inaudible]
Speaker Change: Well, look at the performance of DashPath, I mean, DashPath are a really strong quarter, all time high comes a number of subscribers, the number of users grow, or frequency continues to grow. You see that in the growth of DashPath itself, when you look at the growth in DashPath in Q1, it accelerated, you know, compared to the prior quarter. [inaudible]
Overall, you know, what you're trying to do is ultimately...
Speaker Change: Bringing efficiencies back in the pockets of consumers to ultimately drive more order volume and you're doing that across both restaurants as well as grocery in the street.
Speaker Change: I mean, your second point around, is it driving MAUs and order frequency? I mean, I think it's a combination of both, right? For us, it's two sides of the same coin. I think we are seeing more users come back and order more with us, both across restaurants as well as grocery.
Speaker Change: I am from a competitive dynamics perspective, nothing really has changed, I am going to look at the...
Speaker Change: Sher and Q1 compared to last year, we continue to gain Sher.
Speaker Change: Morton Quater, and as we wrote in the letter last time, our expectation is that we'll be order volume share leaders, you know, the course of the next year.
Speaker Change: Yeah, I mean, I would say some more things that, you know, both of your questions, which is that, you know...
Speaker Change: We don't really focus on the competitive intensity. It takes something like affordability. Customers are always going to want greater affordability, more selection, better service, higher quality.
Speaker Change: And that's, you know, something that we've been investing in since day one of the companies, something we'll continue to invest in, irrespective of, you know, external factors and we've continued to see, you know, gains across the board.
Speaker Change: And, you know, that's something that I kind of view with respect to the European landscape. I mean, I think you know that it's always been a competitive market, regardless where we play weather in the United States.
you're up.
Speaker Change: and other countries. And, you know, I think what I can say is that, you know, this at the end of the day is a scale business, and it's also a business about at least for us always doing better for customers.
Speaker Change: and always introducing, you know, more local commerce products because we think we're in the early ascending skill of connecting every local business to every local consumer.
Speaker Change: Michael, I would add really like when you think about us talking about investment is to make the underlying product better because ultimately that's what's driving the scale leading to the profit dollar production that you're seeing in the business, right? Whether it's the organic portion of the business or even some of the organic things that you're talking about. Thank you very much.
Speaker Change: It gives us an opportunity to invest more ultimately to drive more profit dollar production. That's the key formula that we try to use when we think about all of our lines of business.
Thanks so much, guys.
Speaker Change: Thank you. Our next question comes from the line of Andrew Boone from the Citibus. The line's open.
Speaker Change: Thanks much for taking the question. I wanted to go back to take great as the turret with Phil's marketing.
Speaker Change: Take a step down, employing more promotions and sales marketing, also showed less leverage in one cue. Can we just step back and talk about the efficiency in which you guys are driving demand? Is there incremental pressure there or is there anything else you guys are seeing? And then Tony and the press release you talked about.
Speaker Change: Dash Paths of Bulbing and Adding More Value. Can you just speak to your vision for Dash Paths and how you see that evolving over the next couple years? Thanks much.
Speaker Change: Sure, I mean, Andrew, I'll take the item, the sales and marketing, right? Let me start with sales and marketing. I mean, I would not rate too much into it, right?
Speaker Change: We lean into Dasha Acquisition, we've done that last year, we've seen that year over year [inaudible]
This is very seasonal for us in the fact that...
Speaker Change: Both Q4, Q1, tend to be really good from a growth perspective and really need to supply to ensure that
You know, we can drive a strong quality.
Speaker Change: You know, that said, when I look at the sales and marketing line over the last couple years, I mean, very pleased with the leverage that we've driven, right? When I look at the product improvements that we made, whether it's on the consumer side or the dasherside, all of that is driving the efficiency gains.
Speaker Change: And look at the list of features that we have yet to implement. Feel pretty comfortable that there's still a lot of room for us to continue to drive leverage from an overall sales and marketing perspective.
Speaker Change: I will go back to the take rate, right? I mean, like I said, if you're trying to model it, you know, and what I would say is the second half take rate is going to be higher and what's going to drive that is, again, the business is going to grow, volume in second half is going to be higher than the volume in the first half. [inaudible]
Speaker Change: Unit Economics are going to continue to increase. There is seasonality in the business which you've seen last year as well. Look, 2025 is going to be no different than 24 or 23, we've executed against 24, 23 just like we said we would and 25 is going to be exactly the same. [inaudible]
Speaker Change: The focus continues to be, again, like I said, overall EBITDA dollar production and when I look at that in Q1 or the Q2 guide that we've given, when I compare that on a year over your basis, we feel pretty good about that. . . .
Speaker Change: With respect to the second question on DASHPASS, I mean, DASHPASS is the membership program or your membership program to the physical world and that's kind of how we view it.
Speaker Change: Obviously, it starts with the highest form of consumption, but we believe that if we can maximize the number of ways in which we connect local businesses to local consumers, there would be no other program in which you would have more utility from. [inaudible]
Speaker Change: So that's really the ultimate goal for DASHPASS. Primarily, the focus is on making sure that we can make the product more useful. If we can connect local businesses and local consumers in more ways, if we can improve
Speaker Change: The service offering of the products we currently have as well as build new products in order to achieve that objective, then we believe that dash pass has the potential to be the membership program in which you would derive the most utility from.
Thank you
James Sandler, Andrew Hargreaves, Tony Xu
Speaker Change: Thank you. Our next question comes from the line of Ken Gawrelski from Wells Fargo. The line is open.
Speaker Change: Thank you, good morning. If I could come back to the questions around Deliveroo and Europe , and I know you can only speak to these at a high level, but
Ken Gavrowski: Could you just talk a little bit more about entering into some of these markets in a number two or number three position? I understand it, it increases the addressable market for you in Europe , but
Ken Gavrowski: You know, a UK consumer is different than a Norwegian consumer, and
Ken Gavrowski: and they don't care about the restaurant supply in Norway. So help us understand the approach to these markets.
Speaker Change: Not being in a leadership position currently. How are you thinking about that and maybe even the investment profile of those markets relative to the growth today? And maybe we'll just hold it there.
Transcription by CastingWords
Sure, I can start. Look. Over.
The
Speaker Change: A few things to make sure that we see eye to eye on context. The first thing I would say is that
Speaker Change: The most important thing to profit production or the ability to generate profit is actually scale, less so your relative positioning.
Speaker Change: And I think you actually have to get to a lower level detail to understand this.
Speaker Change: And in terms of what we see, both in terms of our own operations, whether it's in the US, in Europe , in other places, as well as what we've seen in Deliveroo, we think there's strong ability to generate great investment or terms. Otherwise, we wouldn't be doing this. [inaudible]
Um...
Speaker Change: and that takes a lower level of study and analysis which we've done.
Speaker Change: You know, can't really comment on it at this point. That's really the key. And, you know, back to the other comment I made earlier.
In addition to having the founding date in which we can...
Add scale to our investments in Europe .
Speaker Change: We also have the possibility to introduce new products to the market. We think that the combination of...
Speaker Change: of both of those activities is what allows us to have the opportunity to generate great investment returns. I mean, we've done this with both in which we partnered, you know, three years ago at this point and have seen that and we believe a similar story can play out here.
Transcript by Rev.com Page of
Okay, thank you very much.
John Colantuoni, John Colantuoni, John Colantuoni
Speaker Change: Thank you. Our next question comes from the line of Doug Anderson, G.P. Morton. They're on the open.
Speaker Change: It's fair to take the question. Really good progress in grocery and you talk about a quarter of users purchasing across restaurants and grocery. What do you think is required to exceed the in-store experience going forward? What kinds of innovations and improvements? Thanks.
Transcription by CastingWords
Speaker Change: I appreciate it, Doug. I mean, look, the team's done a remarkable job getting us to this point, and I think our numbers kind of speak for themselves in terms of the performance, but you're right in saying that there's still a long ways to go before we can actually build a product that is ten times better than the current leading product, which is shopping inside of a grocery store yourself. [inaudible]
Um, um,
Speaker Change: There's a lot of things that have to be done, and I mean, it's not necessarily one dimension in which we get judged, but making sure that we can get you exactly what you ordered, making sure that those products are affordable, making sure that the products are delivered with high accuracy and quality of service.
Speaker Change: and then obviously making sure that the customer's support experience is excellent, especially if something goes wrong. I mean, there are investments in all of those areas required in order to have a chance at being able to...
to match the physical shopping experience.
Speaker Change: You know, that said, I actually believe, and these were hypotheses four or five years ago, but we're starting to see evidence that there are opportunities in which the online experience
Speaker Change: who can actually beat the offline shopping experience. [inaudible]
Speaker Change: I'll give you one example. I mean, you see this, for instance, with our double-dash product where it's hard, right, even when you're shopping offline, even when you're in the store, even when you're in the intense of, you know, thinking about all of your shopping needs.
that you may forget things. [inaudible]
Speaker Change: And as a result, when you have products like Double Dash where you can shop for multiple stores on the same go, that's a pretty cool experience where it makes it even easier to be able to shop the entire catalog from the city.
Speaker Change: Now, we got a lot of work to do to be able to actually allow you to shop from every single catalog in the city. We're working on that. But I do think that at some point there's the potential in which the online shopping experience can even exceed the offline shopping experience. But, you know, we're still in the work of just getting the basics, right? We feel like, you know, the biggest form of competition is always the customer expectation. We've certainly have done a lot better than when we got started four or five years ago, but we got a long ways to go. [inaudible]
Speaker Change: That I'll just try a couple of points. Like you talked about the fact that, you know, over a quarter for users, that number continues to grow. And if you think about it, we have a strategic advantage because we have tens of millions of consumers that are active on the platform, whereas when we expose consumers to gross you whether it's we are double dash or other product interfaces. [inaudible]
Speaker Change: That number continues to grow, which is ultimately driving the retention as well as the growth that you're seeing in the business. [inaudible]
Thank you both.
Speaker Change: Thank you. Our next question comes from the line of Mark Mahaney from Evercourt. The line's open.
Mark Mahaney: Okay, thanks. Let me ask you a question on cash levels and then on the seven rooms acquisition. So just talk about what you think is kind of a
Mark Mahaney: Minimum level of cash you want to run the business with going forward, you're obviously putting out, I don't know, four billion and something in cash for these two acquisitions, given where you are now, so just talk about your. [inaudible]
Mark Mahaney: What are the right comfort levels in terms of the cash balance that you need or want to carry? And then on the seven rooms acquisition, it's not a huge pivot, but it is a pivot or it's an extension of your offerings and just talk about how much more I think it's marketing as a service. I think you mentioned in there. You could do that with a lot of. [inaudible]
Mark Mahaney: Customers, beyond just restaurants. So how far do you think you can extend seven rooms or that idea to the rest of your customer base? I guess how much of a push do you want to make behind offering marketing as a service? Thank you.
Speaker Change: Mark, I'll take the first one on cash, right? I mean, the way we think about minimum cash is roughly from a working capital perspective, roughly about a billion dollars or anything on top of that, you know, our goal has been to invest back in the business. [inaudible]
Speaker Change: To ultimately try to generate long-term free cash for share. And what you're seeing in the business is the business is free cash flow generative. So I view on capital allocation in general is not changed. [inaudible]
Speaker Change: There's good opportunities for us to invest to ultimately drive the long-term production of more profit dollars. We are happy to do that. But the key for us is it has to meet sort of our IRR thresholds.
Speaker Change: and Mark on the second question, and you're absolutely right, I think you know one of the hardest things about running
DoorDash is that that, um...
Speaker Change: There's so much to do when you want to connect every local business to every local consumer. There's a gap component to that answer or objective. There's also a breadth. [inaudible]
Component of that. [inaudible]
Speaker Change: and I mean, take for example just restaurant delivery, which is probably our longest chapter, almost 12 years long at this point.
Speaker Change: Even after generating what we have produced in a market, take for example the United States, we are still single digit percentages of the restaurant industry when it comes to sales.
Speaker Change: We're proud of the results, but at the same time, I think even something as old for us as restaurant delivery still has a long runway ahead of it.
Speaker Change: When it comes to our DoorDash Commerce platform, I think we're even earlier in that journey where most of it has been focused on restaurants, whether it's DoorDash Driver, Storefront, when you add seven rooms into the mix, still focused on restaurants.
Speaker Change: You know, a breath component, if you will. But building a business I found a lot of it is about sequencing, making sure that we have the right amount of focus.
Speaker Change: but also increasing our ability to walk into gum at the same time. [inaudible]
Speaker Change: So that's what we're doing, but I mean, again, you know, everything that we're announcing today, you know, to me really is business as usual and only something that we're investing in because we're seeing success in the five business lines that we have.
Thank you.
Speaker Change: Thank you. Alright, the question comes from the line of Brian Nowak from Moden Sandler. The line is open.
Brian Novak: Thanks, David, my questions. I have two, one big picture and one Excel question, so that the big picture one, Tony, they kind of go back to your last answer about sequencing and prioritization.
with Deliveroo, you're attempting to buy a business where...
75% of the GMV is essentially a market laggard, arguably.
Brian Novak: Can you give us some examples of what you've learned with Bolt or other European countries to sort of give you excitement or where you see opportunities for delivery to execute better than it is right now than it has historically? Absolutely.
Speaker Change: And then the second one on the Excel question, CapEx was up quite a bit in the quarter. What's driving the increase in CapEx? And how should we think about CapEx for the rest of the year? Thanks.
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Brian Novak: Yeah, I mean, I guess I'd say a couple of things, Brian , you know, first, I think it's important to understand.
Speaker Change: You know, where profit pools are and also where, you know, market chairs move because sometimes it's easy to look at a country at the aggregate level and not understand that and what you know. [inaudible]
Speaker Change: What I would say is that, you know, Deliveroo has done an amazing job building, you know, leading positions in the strongest, in the strongest proper pool, you know, places within Western Europe .
Speaker Change: Which may suggest that they've concentrated their efforts in a different way than other players and allow them to set up in a way in which if they had extra firepower, they can actually take a leading position.
Speaker Change: You know, the other thing we've learned, and this comes more to our relationship with Vult [inaudible]
Speaker Change: is that you're absolutely right that we can exchange lessons learned. I mean, we've brought along a lot of the products that we built at DoorDash over to Volt, and we've seen quite a lot of improvement from that exchange of learnings, and also the other way as well by the way.
Speaker Change: So, I think, you know, only until we had a proof point internally where we saw that we can actually...
Speaker Change: Both improve, I think, the offering in the market so that we can make the biggest difference to the audiences in that market, as well as knowing how to do it from a management bandwidth perspective. Did we get comfortable to actually increase our investment levels internationally?
Speaker Change: Ben, I'll take the, you know, CapEx one, like, first, this two points, one is...
Speaker Change: We've done a refresh of tablets for some of our merchants because we're trying to improve the hardware experience, the software experience.
Speaker Change: So, ultimately, we think that drives, you know, merchant satisfaction. We are seeing an impact of that.
Speaker Change: You know, I talked about the fact that we are making investments from an autonomous perspective. You are starting to see some impact of that as well. And to your point around, you know, what the rest of the year looks like, you should think of it in terms of the overall DNA guidance that we've given. Similar level, you know, sort of what you would expect in Q2 for the rest of the year. [inaudible]
Thank you both.
Speaker Change: Thank you. Our next question comes from the line of Ron Joseph from City. The line's open.
Ron Josie: Great, thanks for taking the question. Maybe just another question on Dash Pass, you're filming. I know you've gotten a few, but in a letter, you talked about Extending the value prop of Dash Pass in one cue and more things to come. So I just wanted to maybe
Ron Josie: Get more insights on how the value prop continues to grow and how that's driving just accelerating growth on dashback. And then just more tactically speaking, I think we saw in New York recently the city council raised delivery cap fees and wondering, you know, I know we've talked about New York and the impact quite a bit since the pandemic, but we love your thoughts on that, particularly with the seven rooms acquisition. Thank you.
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Ron Josie: You know, with respect to dash paths, the main focus continues to be the same, which is to keep improving the products such that people want to use DoorDash more.
Ron Josie: And it sounds really basic, but it's actually, you know, I think the, it's been the North Star from day one and it continues to be we want people to keep using it and increase the consumer surplus, if you will, that consumers or that subscriber see from using the service more often.
with respect to the second issue in New York. [inaudible]
Ron Josie: You know, I think that's something that we're always in discussions with cities about, you know, our our take has always been that
Ron Josie: A lot of the policies, especially in cities like New York.
Ron Josie: Not only sometimes are questionable from a legal perspective, but they almost always do the opposite of what they're intended to do.
Ron Josie: which is they actually farm the number of opportunities for dashers. They lower the sales for small medium and large businesses within that city. And they exclude consumers because of the higher prices that usually get passed on as a result of these fees. This is the end of the year.
So we're working with the city, you know, to...
Uh, that-
to see if we can enact some common sense policies.
Ron Josie: Sometimes, you know, we get very productive outcomes, other times we face, you know, headwinds, but over the long run, you know, we're really optimistic in finding common sense ways to work with common sense elected officials. [inaudible]
Okay, thank you.
Speaker Change: Thank you. Our next question comes from the line of Mark Zgutowicz from the benchmark company, Colanne's open.
Mark Dutovic: Thank you. I was just hoping we could take a step back and if you could maybe discuss how your affordability initiatives are being directed to restaurant versus grocery and domestic versus international and how your promo, promo activity in one queue compared to last quarter and year over year. Thanks.
Mark Dutovic: I mean, our affordability work is through everywhere in every category. I mean, that's because customers are always...
speaking, you know,
Mark Dutovic: More and more affordable options to busy me and that's the only thing we get just on our work on. You know we always work on the same four things. [inaudible]
Mark Dutovic: How do we improve selection? How do we increase affordability? How do we set a higher bar for the quality of service? And how do we do better in terms of customer service, especially if we get it wrong? But, you know, our affordability initiative is really...
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Thank you.
Speaker Change: Our next question comes from the line of John Colantuoni for him, Jeffie's
Unknown Speaker 1. The line is open.
Speaker Change: Thanks for taking my questions. Just wanted to ask the average order values picked up nicely in the quarter, maybe talk about the drivers of that improvement from sort of US restaurant, international restaurant and grocery and convenience.
Speaker Change: and specifically curious how basket sizes have shifted across those three businesses in the quarter, and second, just a quick one on GOB guidance. Can you just give us a little ascense for how much FX is contributing to your outlook there? Thanks.
For more information visit www.FEMA.gov
Speaker Change: Sure, John , I'll take the AOE1 first and then talk about the FX1. Look when I look at the overall average, you know, order value at the total company level, there's definitely some impact on the mixture of perspective rate.
Speaker Change: Groceries becoming a larger component of the overall business and you're starting to see that impact the overall company from an AOV perspective. Thank you.
Speaker Change: Restaurants AOV in general has been relatively stable, over the course of the last several quarters.
Speaker Change: When I think about grocery specifically, the baskets I've continued to increase.
Speaker Change: That's largely being driven by consumers getting more habituated on the platform and as they get more habituated . .
Speaker Change: to the earlier answer that I gave, they are starting to use us for all use cases, not just
Speaker Change: The top up but also the top up use case. You were starting to see increasing number of cohorts increase their spend with us over time. They're increasing both perishable as well as non perishable. [inaudible]
Speaker Change: We're also seeing the impact from an overall commerce platform which is driving, you know, volume and revenue but it does not contribute to GOV so that also impacts the OV if you're thinking about it from a modeling perspective. . .
Speaker Change: FX, when I think about the impact on GOV and Q1, roughly about a 1% impact on a year-over-year growth basis. For the second quarter we do think there's going to be some impact, but that's embedded in the guidance for both GOV as well as EBITDA that we've given.
Okay, great. Thank you.
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Speaker Change: Thank you. Next question comes from the line of Michael McGovern from Bank of America. The line's open.
Unknown Speaker
Michael Mcgovern: Hey guys, thanks for taking my question. I have two. You mentioned autonomy in terms of your uptick in CAPEX, this quarter. And I think you had some interesting announcements in your quarter about your first delivery robots in LA and also drone testing. Can you just provide an update on your efforts there in autonomy and how you view the long term opportunity? Yeah.
And then secondly, a question on regulatory. The regulatory.
Michael Mcgovern: Recently, there was a bill proposed in the Senate about independent workers getting access to portable benefits at the federal level. I think you provided portable benefits in some states. Is that driven a big impact in those states and just how do you view the possibility of that expanding more broadly? Thank you very much.
Michael Mcgovern: Yeah, I'll share, I can take both. I'll share with you on time with the question.
Michael Mcgovern: You know, we're very excited about the autonomy initiatives and also just I think the promise of what it could bring up, you know, something that we've been thinking about.
Michael Mcgovern: I'm working on about eight years now, you know, the key challenge with autonomous delivery that might be a little bit different from other autonomous efforts out there like autonomous, you know, taxis and things like this is that.
Michael Mcgovern: You really have to solve that first and last ten feet problem, putting in items and taking out items from a vehicle.
Speaker Change: Obviously, that marriage of the operations and the technology to me is really what's going to be key in unlocking the possibility of autonomous delivery in a way that is highly scalable.
Speaker Change: that increases or improves the value proposition of the product experience today.
and builds us towards the future.
Speaker Change: You know, the second thing that I would say about autonomous delivery is that, you know, it probably sounds obvious but you don't need a 4,000 pound vehicle to deliver a 1 or 2 pound item or package.
Speaker Change: And so the form factors are also very different, and they really have to match the use cases in which you're considering it. So there's lots of things that we're doing, we'll have more to share later, but we're super excited about both the progress as well as I think the partnership ecosystem that is developing as well as we bring more of this into reality. Thank you very much, everybody.
Speaker Change: You're second question on regulatory, which is around affordable benefits. It's definitely something that we're really, really excited about.
Speaker Change: You're right. We actually started this effort and we started the effort in Pennsylvania with support from Governor Shapiro.
Speaker Change: And we're talking with other states right now of taking the initiative that we brought forth in Pennsylvania.
Speaker Change: into those states, and you know we've always believed that you know I mean this is really coming directly from the dashers themselves that they want the flexibility of the work that we provide but they also want to have access to benefits which we believe in.
Speaker Change: And so that's really what you see with respect to, you know, the portable benefits initiatives. I'm more excited that we have, you know, leading states who are kind of the tip of the sphere, if you will, you know, really innovating in this area. We see momentum and excitement, now, you know, possibly at the federal level. And so these are all things, I think, moving in the right direction. And we really hope that, you know,
Speaker Change: that don't just innovate on products and build more value for customers, but we also can innovate although it may take a little bit longer as we work collectively with all the stakeholders involved to make productive changes to the legal system too, such that we can set up a world where people can choose to work freely anytime they want, anywhere they want and also have access to benefits.
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Thank you.
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Speaker Change: Thank you. Next question comes from the line of Jim Sanderson from North Coast Research. The line's open.
Speaker Change: Thanks for the question. You mentioned earlier in the call that the first quarter for DoorDash is a very strong growth quarter, so I'm wondering in this context, are there any sectors, geographies or demographic groups within the DoorDash U.S. restaurant business? [inaudible]
Speaker Change: that grew ahead of your expectations or lagged significantly below your expectations.
Jack Jim Irall, take this one, let me look.
Speaker Change: The first quarter was a good quarter from an overall restaurant growth perspective. Can I assume you're talking about only the restaurant business?
Speaker Change: But even when I take a step back and look at the performance of the business right over the last you know five or six quarters I mean the growth has been pretty stable.
Speaker Change: I think what you're seeing in the business is users continue to grow order frequency continues to grow retention has been very stable when I look at the New York cohorts versus the existing older cohorts all of the cohorts continue to perform extremely well. I mean we get over 8 million signals on a daily basis and we have a team of. [inaudible]
Speaker Change: In Analysts that look at the underlying performance and when we look at the underlying cohort health I mean it looks pretty healthy whether it's low income or high income or the new versus the existing cohorts. [inaudible]
Speaker Change: Again, a lot of that is being driven by the underlying improvements that we are making in the product. And if you think about it, even if you peel back and look at the performance of the business over the last.
Speaker Change: You know, several years. I mean, the business has continued to be very resilient. We've operated the business in a variety of demand cycles. So, we are pretty comfortable operating the business, you know, the different kinds of environments and the overall restaurant business both from a growth profitability continues to be very healthy and very strong. [inaudible]
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Thank you. That includes our question and access session.