DoorDash surges more than 30% on record-high order numbers
DoorDash soared as much as 39% in extended trading after the company reported a record number of people ordered from the food-delivery app in the fourth quarter, showing that pandemic eating habits are sticking despite Covid-19's fading threat.
Customers placed 369 million orders in the period, representing a 35% increase from a year earlier. People were also ordering more often and the value of those orders increased 36% to $11.2 billion. Wall Street expected $10.6 billion.
“There was a lot of skepticism about whether people were going to keep using this product with reopenings and we're exiting the year with a record number of users,” Chief Financial Officer Prabir Adarkar said in an interview. “The benefit of convenience is enduring.”
The pandemic supercharged consumers' affinity for takeout when coronavirus lockdowns cut back indoor dining and was a boon for San Francisco-based DoorDash, which went public in 2020 on the back of triple-digit growth in its core fooddelivery business. DoorDash, which comprises 58% of the U.S. food-delivery sales, has parlayed its success into other categories like convenience-store items and groceries, elevating its ambitions to becoming a logistics giant.
Revenue rose 34% in the fourth quarter to $1.3 billion, the San Francisco-based company said Wednesday in a statement. That was in line with analysts' average projection of $1.29 billion, according to data compiled by Bloomberg.
But DoorDash also cautioned investors that “significant uncertainty remains around several factors, including: the ongoing Covid pandemic and the impact of labor shortages, inflation, and other macroeconomic factors,” the company said in a letter to shareholders.
To help hedge any slowdown in delivery demand, DoorDash has “aggressively” invested in expanding its global footprint and services which contributed to lower-than-expected adjusted earnings before interest, tax, depreciation and amortization of $47 million. Analysts had forecast $73.8 million. “We're focused on maximizing scale,” Adarkar said. “We're using profits from the core U.S. restaurant business to grow new areas.”
In November, DoorDash acquired Finnish food-delivery company Wolt Enterprises Oy for about $8.1 billion, its biggest purchase ever, in a bid to boost business outside the U.S. International orders grew “substantially faster” than domestic ones in the fourth quarter, DoorDash said.
The company projected gross order value of $11.4 billion to $11.8 billion in the current quarter, based on continued growth in the U.S. restaurant marketplace as well as investment in new categories and international markets.
Though consumer demand for meal-delivery has remained largely resilient, competition in the sector has intensified, and bolstering orders in nonfood categories are key to sustain growth, according to Bloomberg Intelligence analyst Mandeep Singh. DoorDash launched an ultrafast grocery delivery pilot in December to tap into the instant-commerce boom made popular by startups like Gopuff, Gorillas Technologies GmbH and Getir. The number of users placing an order in non-restaurant services has been steadily growing and reached 14% in December, Adakar said.
The results suggest that the “company's expansion into new delivery verticals is aiding its volume growth and traction with its DashPass subscription offering,” said Bloomberg Intelligence analyst Mandeep Singh.
DashPass reached more than 10 million users at the end of 2021, the company said. Membership services have gained traction as a way to boost customer retention and increase basket sizes with competitors like Uber Technologies Inc. and Instacart Inc. launching products of their own.
DoorDash has seen its stock decline 61% from a November high of $245.97. The shares closed at $94.89 in New York on Wednesday.