DoorDash Order Frequency Hits New High as Delivery Demand Stays Strong

DoorDash reported stronger-than-expected results for last quarter, saying consumers spent more on the delivery of food and household essentials even as they returned to eating out and some restaurants raised prices.

Strong demand prompted DoorDash to raise its full-year guidance on the value of transactions it expects on its app. DoorDash expanded into delivering everything from groceries to alcohol during the pandemic. It is the biggest food-delivery app in the U.S.

“It’s becoming more of a utility and habit than you think,” DoorDash Chief Financial Officer Ravi Inukonda said in an interview. Order frequency, or the number of times people order from DoorDash in a month, reached a new high, surpassing pandemic peaks, he said.

Shares rose 5% in after-hours trading following the results.

While the San Francisco-based company continues to lose money, it has been trimming its losses and has reported earnings on an adjusted basis for more than two years including in the latest quarter. Startups have long pointed to this metric to signal a path to future profits. Uber Technologies, whose food-delivery unit grew slower than DoorDash’s last quarter, reported its first operating profit after recording adjusted earnings for several quarters.

How was DoorDash’s quarter?

• Revenue for three months through June 30 grew 33% from a year earlier to $2.13 billion, beating the average estimate of $2.06 billion from analysts polled by FactSet.

• The number of orders rose 25% to 532 million and the total value of transactions grew 26% to $16.47 billion. Both beat Wall Street’s projections. The value of transactions is indicative of consumer demand, while revenue refers to DoorDash’s cut from it.

• DoorDash’s net loss narrowed to $172 million from $263 million, also slightly better than what analysts had expected.

What drove the results?

• DoorDash’s acquisition of European food-delivery company Wolt helped raise its revenue, order volume and transaction value. The deal closed in June last year.

• Consumers are making up for higher restaurant prices by adding fewer items to orders, said CFO Inukonda. Still, they are ordering more frequently than ever before, raising overall spending on the app.

• DoorDash updated its app to try to simplify searching and combine food and nonfood orders. Inukonda said that many first-time users are signing up to order groceries. People who order groceries typically engage more with the app than those who only order restaurant food, he said. More than 15% of DoorDash’s consumers have ordered restaurant food and other goods on the app.

• The company got better at matching drivers with orders, improving its efficiency and worker experience, according to Inukonda. As a result, the company spent less money getting drivers to work for the platform and driver acquisition costs dipped to a new low during the quarter, he said. Uber and others have said they are seeing more workers sign up to their apps amid economic uncertainty.

What is the company projecting?

• DoorDash raised the full-year guidance on the value of transactions it expects on its app. It now expects transactions of $64.2 billion to $65.2 billion in 2023. Analysts had been expecting transactions worth around $64 billion this year.

• The company also raised its full-year guidance on adjusted earnings, a figure that excludes certain expenses. Startups often point to this measure to signal strength in their underlying operations. DoorDash expects 2023 adjusted earnings before interest, tax, depreciation and amortization of $750 million to $1.05 billion. Analysts were expecting $826 million.

Write to Preetika Rana at [email protected]