DoorDash (DASH) Sprints Higher As Better-Than-Expected Results Ease Inflation-Related Concerns
3:08 pm Friday, August 05th, 2022
DoorDash (DASH) may be far removed from its triple-digit growth days during the height of the pandemic, but its Q2 results and outlook highlight the staying power of its food delivery app — even in a highly inflationary environment. DASH’s first quarter with Finland-based food delivery company Wolt under its belt (acquisition closed on June 1) was better-than-expected across a variety of metrics. Total orders climbed by 23% to 426 mln, fueling a 30% jump in revenue to $1.61 bln. Both of those figures exceeded analysts’ estimates. Likewise, Marketplace GOV (gross order value) grew by 25% yr/yr to $13.1 bln, topping the company’s guidance of $12.1-$12.5 bln.
After UBER reported Q2 results earlier this week, including adjusted EBITDA of $99 mln for its delivery unit, DASH posted adjusted EBITDA of $103 mln. That number not only exceeded its guidance of $0-$100 mln, but it also would have been higher by $25 mln if not for the addition of Wolt. In fact, excluding Wolt, the company registered its highest adjusted EBITDA in its history.
In addition to nudging its FY22 Marketplace GOV guidance higher to $51.0-$53.0 bln from $49.0-$51.0 bln, DASH also raised the low end of its adjusted EBITDA guidance, forecasting adjusted EBITDA of $200-$500 mln versus its prior forecast of $0-$500 mln.
The improved profitability outlook is especially encouraging because it includes two full quarters of results from Wolt. Profitability is not on the near-term horizon for Wolt, but DASH is confident that it will ultimately become profitable.
This positive view is based on Wolt’s strong order frequency and retention metrics, along with its robust Marketplace GOV growth, which was over 50% this quarter to $288 mln.
Worries that inflation and an associated slowdown in discretionary spending will significantly diminish DASH’s growth were eased by the company’s solid Q2 report. DASH’s growth rates are actually set to ramp up as Wolt expands DASH’s presence in Europe, increasing its global addressable market to more than 300 mln households. To investors’ delight, DASH expects to be even more profitable on an adjusted EBITDA basis this year than it originally anticipated, even as it brings Wolt’s operations into the fold.
