DoorDash Inc. 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.
(Bloomberg) — DoorDash Inc. 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 Technologies Inc. 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 Inc. 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% in premarket trading on Friday. DoorDash shares have risen almost 40% this year after tumbling 67% in 2022.
Adarkar will replace president and Chief Operating Officer Christopher Payne when he departs the company on March 1. A former Amazon.com Inc. 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% of food-delivery sales in the US, 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% in the fourth quarter to $1.8 billion, in line with what analysts had 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% of its workforce in an acknowledgment it ramped up headcount too quickly during the pandemic.
Expansion outside of the US will be a key driver of growth, said CFRA analyst Angelo Zino. DoorDash acquired Finnish food-delivery startup Wolt in 2021 to grow its global footprint, and so far this seems to be paying off. Orders at Wolt rose 50% in the fourth quarter, though the revenue figures weren’t specified. Order growth was 20% at DoorDash excluding the division, and across the whole platform the value of orders grew 29% 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.
Adjusted Ebitda was $117 million in the fourth quarter, the highest in the company’s history, beating estimates for $108.6 million.
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