DoorDash's outlook is sinking its stock. But one analyst says it typically forecasts conservatively.

By Bill Peters

Food-delivery company says it has increased delivery speed and quality

Food-delivery company DoorDash Inc. on Wednesday reported a worse-than-expected first-quarter loss amid signs of a slight slowdown in growth for its large U.S. restaurant business, and it offered a second-quarter forecast for a key demand metric that was just shy of estimates.

DoorDash (DASH) reported a first-quarter net loss of $25 million, or 6 cents a share, compared with a loss of $162 million, or 41 cents a share, in the same quarter last year. Analysts polled by FactSet expected DoorDash to lose 3 cents a share during the quarter.

Revenue, however, climbed 23% year over year to $2.51 billion. That was above estimates for $2.45 billion.

Gross order value - or the total dollar value of orders made on DoorDash - rose 21% to $19.2 billion. That was higher than expectations for $18.84 billion. However, the company noted that year-over-year growth in that metric for its large U.S. restaurant segment "decelerated slightly" when compared with the fourth quarter.

The company forecast second-quarter gross order value of $19 billion to $19.4 billion. The midpoint of that forecast was just below FactSet estimates for $19.22 billion.

Shares fell about 15% after hours on Wednesday.

"While the company has historically been conservative with its guidance, Q2 guidance for GOV just in line with expectations and guidance for adjusted Ebitda below consensus (at the midpoint of the range) has likely caused investors some concern and could be the explanation for the negative stock reaction after the print," Matthew Goodman, senior research analyst at the analytics firm M Science, said in an email.

DoorDash has tried to grow sales by expanding its delivery offerings from restaurants to grocery stores and other retailers as it works to embed itself more deeply in local economies. The delivery platform also said it had improved its logistics infrastructure and delivery speeds during the first quarter, and said it had tried to improve delivery speeds.

But it also faces competition from larger rivals. Some cities, meanwhile, are trying to boost pay for delivery drivers working in an often low-paying gig economy.

DoorDash, in its earnings materials on Wednesday, said that efforts to raise pay for delivery workers in New York and Seattle were "increasing costs to consumers, reducing sales to merchants, and providing less work to fewer people." However, it said those cities represented only a sliver of total orders, reducing them by less than 1% in the first quarter.

Shares slid after DoorDash's last round of results. But some analysts noted that expectations were high following a long run higher for the company's stock. Shares have risen sharply over the past 12 months.

The company last month announced a partnership allowing people to use the DoorDash app to buy and get products shipped from Lowe's Cos. (LOW), the delivery app's first home-improvement retail partner.

DoorDash has also tried to expand the way it delivers, and last month it launched a partnership with Wing, a drone-delivery service that is part of Alphabet Inc. (GOOGL) (GOOG). Under that partnership, select customers in Christiansburg, Va., can order some menu items from Wendy's (WEN) via DoorDash and have them shipped via drone.

DoorDash has also allowed shoppers using SNAP, a government food-assistance program, to buy food at a wider selection of grocery stores, including at Walgreens (WBA).

However, it faces competition with Uber Technologies Inc. (UBER) and Instacart (CART), as well as one of the biggest competitors a company can have: Amazon.com Inc. (AMZN), which last month introduced a grocery-delivery service for Prime members and customers using EBT, the electronic benefits transfer system that allows SNAP users to buy food.

Amazon Chief Executive Andy Jassy, during that company's first-quarter earnings call on Tuesday, said he was "optimistic" about the online retailer's grocery business, which includes Whole Foods and Amazon Fresh. And he said he believed the company had some "building blocks" in place to change how people split up their grocery orders.

-Bill Peters

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05-01-24 1832ET

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