DoorDash earnings: Business expands, growth slows

That’s not to say it’s all bad for DoorDash –– while gig economy competitors like Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) have struggled to reach profitability in terms of adjusted earnings before interest, taxes, depreciation and amortization, DoorDash has been adjusted-EBITDA profitable since it went public, and it posted a figure of $47 million in Q4.

Still, both Uber and Lyft reported higher numbers when they released their own Q4 earnings last week, and they seem to have capitalized better on pandemic conditions. DoorDash’s forecast for Q1 2022 echoes that sentiment, with its projection of $0 to $50 million coming in far below Uber’s forecast of $100 million to $130 million. (Lyft’s earnings report did not include a projection.)

However, CEO Tony Xu and CFO Prabir Adarkar said in a letter to investors that “we invested aggressively in international markets and new verticals. We are encouraged by the growth we have experienced in these areas and expect to continue investing in these businesses,” suggesting that an expansion of the business could be the culprit for slowing growth.

And expanded it has: Q4 2021’s total orders of 369 million marked an all-time high for the company and an increase of 35% year-over-year, which, according to the company, was “driven by increased average order frequency, MAU growth, and growth in orders through Drive,” the company’s white label delivery solution.

That suggests that demand isn’t the issue, and in fact, it’s one of DoorDash’s calling cards at the moment.

Based on the above data, which DoorDash said comes from an unnamed third party, Xu and Adarkar explained in the letter that “we believe we have leading consumer and spend retention within the third-party food delivery logistics category in the U.S., which has contributed to strong growth in Marketplace GOV within our annual cohorts in recent years.”

Those users are also doing more with the platform. While restaurants continue to be DoorDash’s core merchant partners, the company has been adding new verticals such as alcohol delivery, ultrafast grocery and delivery of beauty products through a partnership with Ulta Beauty, among others. It also expanded internationally, acquiring European food delivery platform Wolt in November for $8.1 billion.

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According to DoorDash, 14% of MAUs placed an order in nonrestaurant verticals, with many markets seeing more than one in five MAUs placing at least one nonrestaurant order during that time. At the same time, “international orders grew substantially faster than domestic orders on a Y/Y basis in Q4,” the letter states.

Membership for DashPass, the company’s monthly subscription service, also surpassed 10 million in the quarter, signaling that it’s building a reliable customer base.

The same can be said for its driver base. In spite of tight labor conditions and the spread of the omicron variant, more than 3 million people delivered for DoorDash in Q4 2021, up from 1 million in Q4 2020 and consistent with the previous quarter. For the year, more than 6 million people delivered for the company, earning over $11 billion in total.

DoorDash drivers, whom the company refers to as Dashers, have been at the center of some controversy over the past year. Dashers are one of several groups of gig workers that have participated in strikes over what they say are unfair working conditions, going so far as to protest outside of Xu’s house, demanding better pay and tip transparency.

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Some places, like New York City, are fighting back against DoorDash and other companies’ policies around tipping, pay and driver safety, enacting new protections for food delivery drivers in recent months, such as a minimum payment per trip.

Despite the backlash from drivers and legislators, DoorDash defended the company’s policies in its letter to investors, stating, “Our data suggests dashing has become a powerful tool that helps millions of people achieve their goals.”

However, it added: “While this is gratifying, we are not resting on it. We will continue listening to Dashers and working with community leaders, policymakers, and academics to make dashing more accessible, more efficient, and more effective so that it becomes an even more attractive choice for anyone looking to earn incremental income.”

Looking ahead to 2022, DoorDash anticipates continued, albeit slowed, growth. The company also cautioned investors about the uncertainty around certain factors like the pandemic, labor shortages and inflation.

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