Q4 2024 Earnings Summary
- Significant Growth Potential with Low Current Penetration: DoorDash remains at a single-digit percentage of the U.S. restaurant industry sales, indicating a vast opportunity for expansion in its core market. Internationally, this penetration is even smaller, and with plans to enter more geographies and improve products in current markets, there's substantial room for growth.
- Rapid Expansion in New Verticals with Increasing User Engagement: The company's new verticals are the fastest growing in the U.S., gaining market share throughout the year. Monthly Active Users (MAUs) using new verticals are growing, with increasing order frequency and higher monthly spend per user, demonstrating strong consumer adoption and engagement.
- Growth of Subscription Services and Advertising Business as New Revenue Streams: DashPass and Wolt+ subscription services are expanding, with significant potential to convert more of the over 100 million annual customers who are not yet subscribers. The advertising business had a great year, adding a new revenue stream while being carefully scaled to maintain marketplace health.
- DoorDash is prioritizing scale over profitability in its new verticals and international markets, potentially impacting margins in the short term. For instance, when discussing U.S. new verticals, the executive stated: "What we're focused on right now is scale because I think we have an opportunity to build a very large business here... We're thinking about overall dollars that are flowing through the system, you're not thinking about it on a margin percentage basis."
- DoorDash acknowledges significant challenges in its grocery delivery segment, which is still nascent and requires substantial product improvements. Tony Xu noted that "Customers today are asked to pay a premium, but they don't always receive the items that they order. That's not a great proposition... There's a lot of work that we're just doing to improve each one of these factors."
- Growth in Gross Order Value (GOV) per Monthly Active User (MAU) is slowing down. The GOV per MAU was up 6% in '24 compared to 8% in '23. When questioned about the factors impacting this slowdown, the executive pointed out that "Looking at the blended number is not really indicative... The real way to think about it is looking at it on a cohorted basis."
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
yoy growth | Q1 2025 | no prior guidance | impacted by ~1% headwind | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Advertising business | Recognized as a consistent growth driver in Q1–Q3, contributing to revenue and margin. Focused on ROAS, expanding to CPG advertisers, and scaling ad offerings. | Emphasized as a strong and growing area, balancing return on ad spend with marketplace health, adding more ad units, and improving relevance. | Recurring; positive sentiment remains strong, expected to be a key driver of future growth. |
International expansion | Seen as high potential with margin variability; gross profit positive, but at different stages of development across countries (Q1–Q3). | Optimism about expansion remains, with some regions already contribution margin positive and others funded by mature markets. | Recurring; sentiment stays optimistic, acknowledging ongoing investment and profitability variance. |
Growth in new verticals (including grocery) | Touted in Q1–Q3 as a major engagement driver, increasing order frequency but sometimes impacting near-term profitability. Partnerships in grocery and other categories highlighted. | Continued user adoption in grocery and new categories; focus on total free cash flow over margins; no explicit mention of near-term profitability impact. | Recurring; remains a growth avenue with strong consumer uptake, potential long-term profit driver. |
Subscription services (DashPass, Wolt+) | Featured prominently in Q1 with record subscriber growth, minimally referenced in Q2/Q3 (though DashPass reported record highs in Q3). | Discussed as tens of millions of subscribers vs. over 100 million annual users; aim to improve product and convert more users to subscription. | Re-emerged in Q4 after limited emphasis in Q2/Q3; viewed as a strategic focus area for user retention. |
Regulatory changes | Cited in Q1 as a challenge (Seattle, NYC), with expected cost reductions mentioned in Q2, minimal detail in Q3. | No mention in Q4. | No longer mentioned; previously noted as a cost headwind, now absent from discussions. |
Slowing Gross Order Value per MAU | No mention in Q1–Q3. | Introduced as a new concern in Q4. Company attributes slowdown to cohort mix, emphasizing improving order frequency in older cohorts. | New topic in Q4; sentiment is guarded, but executives cite strong cohort health despite blended metric. |
Focus on scale over margin expansion | Q1–Q3 emphasize investing in growth (international, new verticals) over short-term margin optimization; aim is to drive long-term EBITDA and free cash flow. | Continues to highlight EBITDA dollar growth vs. percentage focus, scaling across geographies and verticals to increase density and efficiency. | Consistent; underscores long-term scale strategy and reinvestments for sustainable profitability. |
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Investment Outlook and Goals
Q: What are your goals for 2025 and 2026 investments?
A: Tony Xu stated that their investment philosophy remains consistent; they will continue to invest where they see strong signs of product-market fit and a clear path to monetization. The focus is on improving their product across five key areas: U.S. restaurants, international business, non-restaurant categories, commerce platform, and ads. He emphasized the importance of doubling down on existing areas with long runways and searching for new opportunities. -
Q4 Strength and Q1 Outlook
Q: Why was Q4 so strong, and thoughts on Q1 deceleration?
A: Ravi Inukonda explained that Q4 experienced strong growth driven by double-digit increases in the restaurant segment and even faster growth in new verticals and international markets. They reached over 42 million monthly active users, growing at a double-digit rate, with order frequency at an all-time high. For Q1, expected headwinds include an extra day in the prior year's Q1 and a roughly 1% impact from FX. Overall, they are confident in their full-year outlook. -
International Contribution Margins
Q: Where is the greatest upside in international margins?
A: Ravi noted that the international portfolio is gross profit positive and continues to scale. They're focusing on increasing overall density and efficiency to drive profitability. He emphasized they operate the business towards generating more EBITDA dollars rather than targeting specific margin percentages. -
Profitability of New Verticals
Q: How is U.S. new verticals progressing toward profitability?
A: Ravi reported that new verticals had a strong year, with users and order frequency increasing. Unit economics improved in '24 compared to '23, and the focus is on scaling the business to capture a significant growth opportunity. He anticipates grocery and new verticals to be substantial profit drivers over the next several years. -
Advertising Business Roadmap
Q: Is the ads product ready to scale aggressively?
A: Tony Xu stated that while ads had a great year, they prioritize balancing advertiser needs with consumer experience. They aim to build a healthy marketplace before aggressively scaling advertising. Efforts are focused on improving ad relevance and developing tools like reporting to meet advertiser expectations. -
Grocery Business Key Learnings
Q: What unlocked growth in grocery, and future investments?
A: Tony Xu highlighted that continuous product improvements were key. By adding more SKUs, increasing accuracy, enhancing affordability, and collaborating closely with grocers, they improved the customer experience. Customers are now placing larger basket orders, and grocers view the business as incremental. The main focus remains on further product enhancement. -
Autonomous Vehicles Opportunity
Q: How are you preparing for an AV world?
A: Tony Xu described autonomy as exciting but noted that autonomous delivery presents different challenges than robotaxis. DoorDash has studied autonomy for years but has nothing to announce currently. He believes integrating technology with operations is crucial to achieve cost-effective autonomous delivery. -
DashPass Growth Prospects
Q: How do you see DashPass growth from here?
A: Tony Xu sees significant opportunity as only tens of millions of their over 100 million annual customers are subscribers. They aim to enhance the product by improving selection, offering exclusive benefits, and boosting quality and support to encourage more frequent use and subscriptions. -
AI Agents and Partnerships
Q: Thoughts on integrating AI agents and local inventory?
A: Tony Xu agreed that AI agents will be influential and sees two priorities. First, mastering the physical world through superior logistics remains essential. Second, leveraging technologies like LLMs to improve personalization and operations, given their vast data from billions of orders, offers significant potential. -
Capital Allocation and Buybacks
Q: How should we think about the pace of buybacks?
A: Ravi stated their capital allocation philosophy hasn't changed; they expect meaningful returns for every dollar invested. They have generated over $2 billion in shareholder value through buybacks and will continue to be opportunistic and conservative.