Doordash predicts profit growth as orders increase
Doordash shares jumped Friday morning after an optimistic earnings report that showed resilient demand for pricey takeout even amid a cost-of-living squeeze. The company also said its president would be stepping down as part of a slate of executive changes.
Doordash is anticipating adjusted earnings before interest, tax, depreciation and amortization of $120 million to $170 million in the first quarter, the San Francisco-based company said Thursday in a statement. The midpoint of that range exceeds the $129.7 million Wall Street estimated. The company sees order values of $15.1 billion to $15.5 billion, beating expectations for $14.6 billion.
Consumers are spending on food delivery even though inflation is squeezing budgets and the economic outlook has soured — Uber last week reported delivery bookings that beat analysts’ estimates.
The prospect for improving profit at Doordash may be a bright spot for investors who have pared their earnings outlook for tech companies while revenue growth slows. The company also announced a $750 million stock buyback program, a step other technology companies like Meta Platforms have
taken to boost share prices.
“Our results are evidence of our strong execution and proof that customers continue to return to the platform despite the macroeconomic challenges we’re seeing with inflation,” Chief Financial Officer Prabir Adarkar said in an interview.
The shares rose 6.2 percent in premarket trading on Friday. Doordash shares have risen almost 40 percent this year after tumbling 67 percent in 2022.
Adarkar will replace president
and Chief Operating Officer Christopher Payne when he departs the company on March 1. A former Amazon.com veteran, Payne spent seven years at Doordash and had most recently been responsible for expansion into new delivery services.
The reins of CFO will be handed to Ravi Inukonda, vice president of finance and strategy.
Doordash commands 65 percent of food-delivery sales in the U.S., according to Bloomberg
Second Measure. Sales have slowed since the pandemic-era boom and the company has expanded into new services like grocery, alcohol and retail delivery to retain customers and attract new ones.
In these newer delivery categories, Adarkar said Doordash is “seeing robust signs of progress,” while revenue broadly rose 40 percent in the fourth quarter to $1.8 billion, in line with what analysts projected.
The expansion efforts have come at a cost. Doordash’s net losses have ballooned over the past year and reached $642 million at the end of December. The company slashed 6 percent of its workforce in an acknowledgment it ramped up head count too quickly during the pandemic.
Expansion outside of the U.S. will be a key driver of growth, said CFRA analyst Angelo Zino. Doordash acquired Finnish food-delivery start-up Wolt in 2021 to grow its global footprint, and so far this seems to be paying off.
Orders at Wolt rose 50 percent in the fourth quarter, though the revenue figures weren’t specified.
Order growth was 20 percent at Doordash excluding the division, and across the whole platform the value of orders grew 29 percent to $14.4 billion, higher than the $13.8 billion Wall Street expected.
Doordash’s subscription service, Dashpass has helped increase customer retention and boost basket sizes and reached 15 million members at the end of 2022. By comparison, Uber’s competing subscription, Uber One, had 12 million.
“We are hard pressed to think the company will substantially ease up on investments given the growth opportunities that lie ahead, especially internationally,” Zino said.