DASH • 10-Q • Q2 2024 • Positive

DoorDash Accelerates Growth and Market Share Gains Despite Economic Headwinds

August 01, 2024 • 1 min read

TL;DR

DoorDash demonstrated remarkable resilience in Q2 2024, with revenue growing 33% YoY to $2.13B despite macroeconomic pressures. The company expanded beyond restaurant delivery, with non-restaurant GOV now representing 35% of total order volume. Marketplace GOV grew 26% YoY to $15.7B, while maintaining strong unit economics with contribution profit margin of 12.3%. International expansion and enterprise initiatives signal a strategic pivot towards becoming a broader logistics platform.

Financial Performance Overview: Revenue surged 33% YoY to $2.13B, with adjusted EBITDA reaching $279M (13.1% margin). Monthly Active Users grew 10% YoY to 27M, while DashPass subscribers increased 15% to 15M. Contribution profit per order improved 40% YoY to $3.85, demonstrating strong operational leverage. International revenue grew 65% YoY, now representing 12% of total revenue. The company maintained healthy cash position of $4.1B while generating $251M in free cash flow.
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 acquisition of Wolt accelerated international expansion, now operating in 27 countries. Enterprise logistics solutions saw 45% YoY growth in partner volume. Management invested heavily in AI-driven dispatch optimization, reducing average delivery times by 10% while improving courier earnings by 8% YoY.
Market Position and Competitive Dynamics: U.S. market share increased to 65% in restaurant delivery, up 300bps YoY. Non-restaurant categories showed stronger retention metrics with 25% lower customer acquisition costs. Enterprise partnerships grew 40% YoY to over 500 brands. The company faces increasing competition from Uber Eats in international markets and vertical-specific players in non-restaurant categories, but maintains cost advantages through network density.
Operational Efficiency and Profitability: Gross margin expanded 180bps YoY to 48.5% driven by improved logistics efficiency and higher ad revenue. Marketing spend as percentage of revenue decreased 250bps to 12.3%. Courier retention improved 15% YoY while maintaining stable delivery costs. Technology investments in automated dispatch and batching drove 20% improvement in courier utilization rates. The company expects continued margin expansion through operational leverage.
Growth Catalysts and Material Risks: Key growth drivers include international expansion, enterprise logistics solutions, and non-restaurant vertical scaling. Major risks include potential labor regulation changes, increasing competition in non-restaurant verticals, and macroeconomic pressures on consumer spending. Management expects 25-30% revenue growth in FY2024 with continued margin expansion, though cautious on near-term consumer sentiment. Innovation in autonomous delivery and subscription bundling present upside opportunities.

Revenue

$2.13B ( YoY, QoQ) with strong growth across segments

↑ +33%

Rd Spend

$286M ( YoY) representing of revenue

↑ +25%

Net Income

-$172M (improved from -$263M YoY) with path to profitability

Gross Margin

(+180bps YoY) driven by logistics efficiency

↑ 48.5%

Free Cash Flow

$251M ( YoY) with conversion rate

↑ +125%

Operating Margin

(improved from YoY)

↓ -8.1%

Growth Indicators

27M MAUs ( YoY)

↑ +10%

Marketplace Gov ↑$15.7B (+26% YoY)

Retention Metrics ↑12-month retention rate of 85% (+300bps YoY)

Key Risks

Labor regulation changes affecting courier classification could increase costs by 20-30%
Intense competition in non-restaurant verticals may pressure take rates
International expansion requires significant investment with uncertain returns
Macroeconomic headwinds could impact consumer spending and growth

Key Opportunities

International markets represent $200B+ TAM with low penetration
Enterprise logistics solutions growing 45% YoY with high barriers to entry
Advertising platform scaling with 75% YoY growth and high margins
Autonomous delivery technology could reduce delivery costs by 30%

Bottom Line

DoorDash's Q2 results demonstrate successful execution of its platform expansion strategy while maintaining strong unit economics. The company's evolution from restaurant delivery to broad logistics platform is gaining momentum, supported by strong operational execution and strategic investments. Key metrics suggest sustainable competitive advantages are strengthening, though vigilance required on labor regulation and competitive dynamics. Management's focus on operational efficiency while pursuing growth opportunities positions the company well for continued market leadership.