DASH • 10-Q • Q1 2024 • Positive

DoorDash Accelerates Growth and Margins as International Markets Drive Expansion

May 01, 2024 • 1 min read

TL;DR

DoorDash delivered exceptional Q1 2024 performance with revenue growing 31% YoY to $2.4B, driven by international expansion and non-restaurant verticals. Marketplace GOV increased 28% YoY to $16.4B while adjusted EBITDA grew 112% YoY to $276M. Operating leverage improved significantly with adjusted EBITDA margin expanding 470bps YoY to 11.5%. International markets now contribute over 15% of total GOV, suggesting successful geographic diversification. These results indicate DoorDash's platform st

Financial Performance Overview: Revenue accelerated to 31% YoY growth while demonstrating strong operating leverage. Marketplace GOV of $16.4B (+28% YoY) was driven by 17% order growth and higher average order value. Adjusted EBITDA margin expanded 470bps YoY to 11.5%, reflecting improved unit economics and scale benefits. International revenue grew >100% YoY for the fourth consecutive quarter. The company maintained strong liquidity with $4.0B in cash and marketable securities.
Strategic Initiatives and Operational Changes: DoorDash expanded its non-restaurant marketplace with grocery and retail now representing over 14% of GOV. The company launched new merchant solutions including DoorDash Credit Card and POS integration capabilities. International expansion accelerated with entry into new German markets and deeper penetration in existing countries. Management highlighted improved courier efficiency and reduced consumer promotions as key margin drivers, while maintaining investment in growth initiatives.
Market Position and Competitive Dynamics: US market share remained stable at approximately 65% in restaurant delivery despite competitive pressure. Monthly Active Users grew 24% YoY while retention rates improved across cohorts. International markets showed strong product-market fit with Japan and Germany exceeding early adoption expectations. The company's multi-vertical strategy creates competitive moats through network effects and shared infrastructure, though grocery competition remains intense.
Operational Efficiency and Profitability: Contribution margin improved 280bps YoY to 7.8% driven by courier network optimization and reduced consumer promotions. Platform costs per order declined 12% YoY through improved routing algorithms and batch efficiency. Sales & marketing as a percentage of revenue decreased 150bps YoY while maintaining growth, demonstrating marketing efficiency. Management expects continued margin expansion through operational leverage and technology improvements.
Growth Catalysts and Material Risks: Key growth drivers include international expansion, non-restaurant vertical penetration, and merchant solution adoption. Macro headwinds from consumer spending and labor market changes pose near-term risks. Regulatory challenges around worker classification remain material, particularly in key markets. Investment in automation and efficiency initiatives expected to drive long-term margin improvement while maintaining competitive position.

Revenue

$2.4B ( YoY, QoQ) with accelerating growth rate

↑ +31%

Rd Spend

$218M ( YoY) representing of revenue

↑ +25%

Net Income

-$162M (improved from -$192M YoY) with path to profitability

Gross Margin

(+180bps YoY) driven by improved efficiency

↑ 48.2%

Free Cash Flow

$369M ( YoY) with margin

↑ +156%

Operating Margin

(improved from YoY)

↓ -6.8%

Growth Indicators

32M Monthly Active Users ( YoY)

↑ +24%

Marketplace Gov ↑$16.4B (+28% YoY)

Retention Metrics ↑Improved across all cohorts YoY

Key Risks

Worker classification regulation could increase labor costs by 20-30%
Intense grocery delivery competition may require increased promotional spending
International expansion execution risks in new markets
Cybersecurity and data privacy compliance costs increasing

Key Opportunities

International markets represent >$200B TAM with current low penetration
Non-restaurant verticals could double addressable market
Merchant solutions provide high-margin revenue diversification
Automation and AI could drive significant efficiency improvements

Bottom Line

DoorDash's Q1 results demonstrate successful execution of its platform strategy while maintaining strong unit economics. The combination of international growth, vertical expansion, and operational efficiency suggests sustainable long-term growth potential. Key metrics to watch include international GOV contribution, non-restaurant vertical penetration, and adjusted EBITDA margin progression. Management's balanced approach to growth and profitability positions the company well for continued success, though regulatory and competitive risks require ongoing attention.