DASH • 10-Q • Q1 2023 • Positive

DoorDash Achieves Record GOV Growth While Expanding Beyond Restaurant Delivery Core

May 05, 2023 • 1 min read

TL;DR

DoorDash demonstrated strong momentum in Q1 2023 with Gross Order Value (GOV) reaching $15.9B, up 29% YoY, significantly outpacing the broader delivery market. The company's expansion beyond restaurants into convenience, grocery and retail drove 27% YoY revenue growth to $2.0B. Contribution profit margins improved 110bps YoY to 8.6% as operational efficiencies and scale benefits materialized. International markets and non-restaurant verticals now represent over 25% of orders, positioning DoorDas

Financial Performance Overview: Revenue grew 27% YoY to $2.0B driven by 29% GOV growth to $15.9B. Contribution margin expanded 110bps YoY to 8.6% despite continued investments in new verticals. Monthly Active Users increased 25% YoY while order frequency hit record levels. Operating loss narrowed to $156M from $167M in Q1 2022 as scale benefits emerged. The company maintained strong unit economics with average order values stable at $30.50.
Strategic Initiatives and Operational Changes: Management accelerated expansion into convenience and grocery delivery, with non-restaurant GOV growing over 50% YoY. DashPass subscription program reached record membership levels, driving higher order frequency and retention. The company launched new merchant solutions including white-label fulfillment and POS integration. International markets like Japan and Germany showed strong early traction with localized offerings and partnerships.
Market Position and Competitive Dynamics: DoorDash maintained US category leadership with 65% restaurant delivery market share. New verticals expanded addressable market by 3-4x versus restaurant-only. Merchant retention exceeded 80% while consumer retention hit record levels above 50%. Main competitor Uber Eats showed decelerating growth at 14% YoY. DoorDash's logistics network density and technology platform create meaningful competitive barriers.
Operational Efficiency and Profitability: Contribution profit per order increased 15% YoY to $2.60 as delivery network efficiency improved. Marketing spend as percentage of GOV declined 80bps YoY to 2.1%. Technology investments in route optimization and batching drove 12% improvement in deliveries per hour. Fixed cost leverage emerged with G&A expenses growing just 8% YoY versus 27% revenue growth.
Growth Catalysts and Material Risks: Key growth drivers include international expansion, non-restaurant verticals, and DashPass subscription scaling. Macro headwinds from inflation and discretionary spending remain but impact moderated versus 2022. Primary risks include labor regulation, competitive intensity, and potential demand normalization post-pandemic. Management expects continued GOV growth of 20%+ and margin expansion in 2023.

Revenue

$2.0B ( YoY, QoQ) with strong growth across segments

↑ +27%

Rd Spend

$318M ( YoY) representing of revenue

↑ +15%

Net Income

-$156M (vs -$167M YoY) with improving trajectory

Gross Margin

(+90bps YoY) driven by network efficiency

↑ 48.2%

Free Cash Flow

$250M ( YoY) with conversion rate

↑ +85%

Operating Margin

(+120bps YoY) showing operating leverage

↓ -7.8%

Growth Indicators

$15.9B ( YoY)

↑ +29%

Customer Count ↑25M MAUs (+25% YoY)

Retention Metrics ↑50%+ consumer retention, 80%+ merchant retention

Key Risks

Labor regulation changes could impact worker classification model
Macro headwinds affecting consumer discretionary spending
Intense competition from well-funded rivals
Execution risk in new vertical/geographic expansion

Key Opportunities

International expansion into $1T+ global delivery TAM
Convenience/grocery vertical with $750B+ US TAM
DashPass subscription driving higher retention/frequency
Merchant services platform monetization potential

Bottom Line

DoorDash's Q1 results demonstrate successful execution on its platform expansion strategy while maintaining strong core business fundamentals. The company appears well-positioned to sustain 20%+ growth through international expansion and new vertical penetration. Unit economics continue improving despite aggressive investment, suggesting emerging scale benefits. While competition and regulation remain key risks, DoorDash's network advantages and operational execution create defensible barriers. The key metrics to watch are non-restaurant vertical penetration, international growth rates, and continued margin expansion through operational leverage.