In this weekly article, we highlight a company that reported earnings outside analyst expectations, emphasizing what the beat or miss says about consumer demand and economic activity.
Takeaways
- DoorDash's profits beat expectations as orders grew at a double-digit pace and the company attracted more users to its platform.
- DoorDash posted a net loss of just $75 million, or 19 cents per share, less than half of the 40 cents per share expected by analysts.
- The strong revenue increases reflect healthy consumer spending in the states -United States, as DoorDash users continued to spend on delivery and takeout despite continued high inflation.
- DoorDash's profits were also boosted by its non-restaurant grocery and alcohol delivery business.
Food delivery company DoorDash (DASH) reported earnings that far beat analysts' expectations, as orders grew at a double-digit pace and the company attracted more users to its site . platform, reflecting strong consumer spending and a willingness to pay for convenience.
DoorDash posted a net loss of just $75 million, or 19 cents per share, less than half the 40 cents per share loss analysts expected. For comparison, DoorDash posted a net loss of almost $296 million during the same period last year.
DoorDash shares are up about 22% since reporting earnings after markets closed Wednesday. They have jumped about 90% so far this year, although they are still down more than 55% from their all-time highs reached in August 2021, about nine months after the #39;DoorDash IPO.
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What's new? Do I drive DoorDash?
The short answer: American consumers.
The strong income gains reflect healthy consumer spending in the United States, as DoorDash users continued to spend on delivery and takeout despite continued high inflation. Although DoorDash has expanded overseas to countries like Canada, Australia and New Zealand, about 93% of its revenue still comes from the United States, as of last quarter.
Approximately 543 million orders have were spent on the DoorDash app and website in the third quarter, up 24% from the same quarter last year. And it’s not just about people ordering food from restaurants.
“We have more than 100,000 stores on the platform which are located outside of restaurants. And when you look outside of restaurants and into the convenience, grocery or liquor segments, almost half of the new customers entering the industry in the United States come to DoorDash first, ” ; DoorDash CEO Tony Xu said during the earnings call.
Instacart (CART) works with 1,400 retailers across in over 80,000 locations. With 65% market share, DoorDash is the largest restaurant food delivery company as of September 2023, according to a Bloomberg Second Measure analysis. UberEats (UBER) accounts for 23% of the food delivery market, while Grubhub's share is only 9%.
Not only are more and more people ordering DoorDash, they also spend more money. Marketplace gross order value (GOV), or the dollar value of all purchases on the platform, also increased 24% from a year ago. This contributed to an annual revenue increase of 27%, totaling $2.16 billion.
Even if the It could be argued that a higher gross order value could be due to companies passing on higher costs to customers. According to DoorDash's own estimates, 80% of customers in the United States are ordering more or as much as in 2022.
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