DASH • 10-K • FY 2023 • Positive

DoorDash Achieves Profitability Milestone as New Verticals Drive 31% Growth

February 27, 2023 • 1 min read

TL;DR

DoorDash delivered its first full year of GAAP profitability in 2023, marking a significant inflection point in its business model maturity. Revenue grew 31% YoY to $8.6B, driven by expansion beyond restaurants into convenience, grocery, and retail verticals which now represent 35% of orders. Monthly Active Users increased 13% YoY to 37M, while order frequency hit record levels at 7.8 orders per customer. The company's investment in logistics infrastructure and international expansion positions

Financial Performance Overview: Revenue surged 31% YoY to $8.6B while achieving GAAP profitability with $43M in net income, compared to a $1.4B loss in 2022. Gross profit margins expanded 280bps to 49.8% through improved logistics efficiency and higher-margin new verticals. International revenue grew 78% YoY, now representing 12% of total revenue. Contribution profit per order increased 15% to $3.15, demonstrating strong unit economics improvement and operational leverage.
Strategic Initiatives and Operational Changes: DoorDash significantly expanded its non-restaurant verticals, launching partnerships with major retailers like Levi's and Dick's Sporting Goods. The DashPass subscription program grew 20% YoY to 15M members, improving customer retention and order frequency. Investment in autonomous delivery and AI-powered dispatch optimization reduced cost per delivery by 8%. International expansion accelerated with the successful integration of Wolt and entry into 15 new markets.
Market Position and Competitive Dynamics: U.S. market share in food delivery increased to 65% from 59% YoY, widening the gap with competitors. New verticals expanded the company's TAM by $250B. Customer retention improved with 12-month retention rates reaching 85% for DashPass subscribers. The company faces increasing competition from quick-commerce startups and integrated retail offerings, but maintains advantages in logistics density and merchant relationships.
Operational Efficiency and Profitability: Operating leverage improved significantly with operating margins turning positive at 0.5%. Cost per order decreased 8% YoY through AI-powered batching and routing optimizations. Marketing efficiency improved with CAC declining 12% YoY to $15. Dasher retention increased 15%, reducing onboarding costs. The company maintained strong unit economics while expanding into lower-margin categories through technology and scale advantages.
Growth Catalysts and Material Risks: Key growth drivers include international expansion, B2B offerings through DoorDash for Work, and deeper penetration of non-restaurant verticals. Advertising revenue grew 120% YoY, representing a high-margin growth vector. Primary risks include potential labor regulation changes, increasing competition in quick-commerce, and merchant pushback on take rates. The company's diversification strategy and strong balance sheet ($4.2B cash) provide buffers against market volatility.

Revenue

$8.6B ( YoY, QoQ) with international now of total

↑ +31%

Rd Spend

$1.2B ( YoY) representing of revenue

↑ +25%

Net Income

$43M (vs -$1.4B YoY) first full year of GAAP profitability

Gross Margin

(+280bps YoY) driven by logistics efficiency

↑ 49.8%

Free Cash Flow

$1.1B ( YoY) with FCF margin

↑ +175%

Operating Margin

0.5% (+510bps YoY) first positive annual result

Growth Indicators

37M MAUs ( YoY)

↑ +13%

Order Frequency ↑7.8 orders per customer (+15% YoY)

Retention Metrics ↑85% 12-month retention for DashPass subscribers

Key Risks

Labor regulation changes could increase costs by 20-30%
Increasing competition in quick-commerce with well-funded new entrants
Merchant take rate pressure in core restaurant business
International expansion execution risks

Key Opportunities

Non-restaurant vertical expansion adding $250B to TAM
International markets at early penetration stages
Advertising platform with 120% YoY growth
B2B expansion through DoorDash for Work

Bottom Line

DoorDash's 2023 performance marks a pivotal transition from growth-at-all-costs to sustainable profitability while maintaining strong topline expansion. The company's strategic evolution beyond restaurant delivery has created a more resilient business model with multiple growth vectors. Key success factors include improved unit economics, successful international expansion, and technology-driven efficiency gains. While regulatory risks persist, the company's operational adaptability and strong market position suggest continued momentum. Critical metrics to watch include non-restaurant vertical growth, international expansion progress, and regulatory developments around worker classification.