DoorDash continues to dominate food and convenience delivery. Despite major investments in expanding the business into categories like grocery and alcohol, as well as into new countries, the third-party delivery app’s revenue continued to grow as it posted all-time highs in marketplace gross order value (GOV), monthly active users (MAUs), average order frequency and users of DashPass, its delivery subscription offering.
Shares of DoorDash (NYSE: DASH) were up around 7% in early post-market trading on Thursday.
DoorDash’s Q1 2022 revenue of $1.46 billion was a 35% increase year-over-year, topping analyst consensus estimates by around $80 million. It also improved on the previous quarter’s revenue of around $1.3 billion despite the reopenings of restaurants and other stores as Americans’ pandemic concerns begin to subside.
For the second consecutive quarter, DoorDash posted record highs in MAUs and DashPass users, though it didn’t include the exact numbers for either category. For reference, the company recorded around 25 million MAUs and over 10 million DashPass members last quarter.
According to market research firm YipitData, that’s propelled DoorDash’s market share among the big three delivery apps — DoorDash, Uber Eats and Grubhub — to a staggering 57%, just a shade below its 59% share in Q4 2021.
The company credited growing DashPass membership for spurring another quarterly high. According to DoorDash, the average customer placed more orders this quarter than in any other in the company’s history. At the same time, marketplace GOV hit an all-time high of $12.4 billion, and the platform grew total order volume by 23% year-over-year to 404 million.
DoorDash also said that it added more new customers in Q1 2022 than it has since the first quarter of 2021, signaling that its expanded platform has some real staying power. CEO Tony Xu placed particular emphasis on the company’s success growing its third-party convenience vertical.
“We have now iterated and invested in the third-party convenience category for approximately two years and we continue to see positive signals around product-market fit and unit economic potential,” he said in a letter to investors. “Consumer engagement in the category continued improving in Q1, with a Q/Q increase in MAU and order frequency, and we expect the category to generate positive variable profit in the second half of this year.”
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In a deviation from his normal formatting, Xu took time in Q1 2022’s letter to highlight DoorDash’s investment process. He explained that the company’s strategy is to take cash generated from its core U.S. restaurant marketplace and reinvest it in new verticals.
While restaurants have long been DoorDash’s calling card, the platform has been adding services like alcohol delivery, ultrafast grocery, and delivery of beauty products, flowers, gifts and pet items. It also expanded internationally, acquiring European food delivery platform Wolt in November for $8.1 billion.
The success of the U.S. restaurant marketplace has also enabled DoorDash to launch its own white-label logistics service, DoorDash Drive, and an online ordering solution called Storefront.
Xu emphasized that because DoorDash’s core business also acts as an engine for new investments, the company will continue to invest heavily in its growth. He also noted that the company’s marketplace penetration in nonrestaurant verticals and outside the U.S. is still low, implying that there’s plenty of room for growth in those categories.
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DoorDash told investors that its supply of Dashers, the company’s term for its couriers, remained healthy throughout the quarter despite a reduction in Dasher incentives. Xu credited the removal of incentives as the key to the company’s revenue growth outpacing its marketplace GOV growth year-over-year.
Looking ahead, DoorDash is cautiously optimistic. It expects marketplace GOV in Q2 to fall between $12.1 billion and $12.5 billion, placing it close to Q1’s record high. The company also raised its full-year marketplace GOV projection to between $49 billion and $51 billion, up from previous expectations of $48 billion to $50 billion.
DoorDash said that it anticipates MAUs and average order frequency to continue to grow while it invests in new categories and international markets. It also told investors to be wary of a few potential headwinds that could impact the platform, including inflation, rising interest rates and gas prices, labor shortages, and other factors relating to Covid-19.
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