DoorDash Earnings: A Solid Network Effect Continues to Propel Order Volume; Shares Attractive

A solid network effect continued to propel narrow-moat DoorDash DASH during the first quarter, with gross order value increasing 27% from the prior year (17% adjusted for the Wolt acquisition) to $15.9 billion, stronger than the $15.1 billion-$15.5 billion target that management had set in mid-February. Management also increased its GOV forecast for the full year to $63 billion-$64.5 billion from $60 billion-$63 billion, implying growth of 19% at the midpoint versus 15% previously. The firm continues to post steady gains in the core U.S. restaurant category while pushing rapidly into a variety of new categories and markets. We are maintaining our $155 fair value estimate and believe the shares remain attractive.

The firm’s 12.8% take rate was an improvement from 12.6% during the prior quarter and 11.8% the year before, again driven by lower refunds and credits and improving logistics efficiency, which indicates enhancement in the quality of service and continuing strong demand from consumers. Total revenue of $2.0 billion was up 40% year over year.

DoorDash reported a GAAP operating loss of $171 million, nearly identical to the year before. Adjusted EBITDA, which excludes restructuring charges and stock-based compensation in addition to depreciation and amortization, came in at $204 million (1.3% of GOV) versus $54 million (0.4%) the year before, primarily reflecting the improvement in take rate. The firm continues to make investments in sales and marketing (up 20% year over year) and R&D (up 56%) to build the user base and improve the customer experience.

DoorDash also generated $428 million of free cash flow during the quarter versus $252 million last year and $604 million for all of 2022. The firm has completed $500 million of its $750 million share repurchase authorization, which it expects will limit share dilution to 1% for the full year.