DoorDash, Inc. Q1 FY2025 earnings call

Tony discussed the acquisition of Deliveroo, seeing it as adding scale to the European business and laying the foundation for local commerce products. He also emphasized continuing affordability initiatives, focusing on increasing selection, affordability, quality, and service. Ravi mentioned the strong performance of new verticals like grocery, with growth in MAUs and improving margins, and a focus on scale and driving retention/order frequency. Tony and Ravi discussed the high bar for M&A, with acquisitions like Deliveroo and SevenRooms fitting into expanding the business. They also talked about DashPass, focusing on improving the product to increase consumer use and surplus, and autonomy initiatives in delivery and portable benefits for Dashers.

Q2 take rate is expected to be higher than Q1, with the second half take rate higher than the first half. The focus remains on driving GOV growth and EBITDA dollar production. Capital allocation is focused on investments that meet IRR thresholds, with the business aiming to generate long-term free cash flow per share.

Uncertainties related to forward-looking statements as outlined in SEC filings. Potential impact of tariffs, though not currently affecting consumer behavior. Regulatory issues in cities like New York, which could harm Dashers, businesses, and consumers through higher prices and limited opportunities.

Q: On just international competitive landscape, could you please talk about now with DoorDash Wolt and Deliveroo what the combined share is as it stands in your 40 markets? And then how fast is the European market growing from your vantage point? And is it fair to assume Deliveroos unit economics and retention rates are as attractive?

A: Tony said it's business as usual adding and investing in success across business lines. With Deliveroo, it adds scale to Europe and lays foundation for local commerce products. European market growth is positive, but details on combined share not specified. On Deliveroo's unit economics and retention, he couldn't get into details but saw investment opportunity.

Q: Historically, you've been somewhat hesitant to make big acquisitions you've done to this quarter. Has the philosophy on how you generally think about M&A has now changed at all? What are maybe some of the other areas you think M&A could help improve DoorDash?

A: Tony said the bar continues to remain high for M&A. In the case of Deliveroo, it's about continuing expansion across Europe. For SevenRooms, it's about adding to the platform business, moving from logistics as a service to online ordering as a service and adding marketing as a service capabilities.

Q: I wanted to ask on EBITDA in light of the M&A announcements. I know it's quite early to be talking about 2026. But I guess in recent quarters, they have been pretty consistent GOV growth, pretty consistent EBITDA improvement. In your mind when you think about the acquisitions of Deliveroo and SevenRooms, does this change any of that in terms of the earnings algorithm?

A: Ravi said the business is doing well, with focus on grow the business while increasing overall profit dollars. The philosophy of investing behind strength to improve unit economics, drive retention and order frequency, and ultimately profitability won't change. The formula for operating with Deliveroo will continue to be the case.

Q: Can you expand a little bit more on the affordability initiative and mix shift that caused net revenue margins to be down quarter-on-quarter? And what will drive it back higher?

A: Ravi said there's natural seasonality and investments in affordability and selection in Q1 that impacted take rate. Q2 take rate is expected to be higher than Q1, with second half take rate higher than first half. Key factors include seasonality improving, unit economics continuing to improve, and business growth being a tailwind.

Q: Can we follow up, Ravi, on the net revenue margin commentary. And I would assume a lot of the affordability is coming in grocery. And I would like to know what type of behavior you're looking to drive in that? Is that to bring new grocery orders are for the new users? Or is it to increase frequency?

A: Ravi said the goal is to reinvest in the business, with affordability initiatives driving both new orders and increased frequency. The focus is on generating efficiency and driving more order volume across restaurants and grocery.

Q: Thanks for taking the question. Really good progress in grocery, and you talked about quarter of users purchasing across restaurants and grocery. What do you think is required to exceed the in-store experience going forward? What kinds of innovations and improvements?

A: Tony said the team has done well, but there's still work to do. Investments are needed in ensuring products are exactly ordered, affordable, delivered with accuracy and quality, and customer support is excellent to match the in-store experience.

Q: If I could come back to the questions around Deliveroo and Europe. And I know you can only speak to these at a high level. But could you just talk a little bit more about entering into some of these markets in a number two or number three position. I understand increasing the addressable market for you in Europe. But UK consumer is different than a Norwegian consumer and they don't care about the restaurant supply in Norway. So help us understand your -- the approach to these markets not being in a leadership position currently. How you're thinking about that and maybe even the investment profile of those markets relative to the growth today?

A: Tony said the most important thing to profit production is scale, not relative positioning. They see strong ability to generate investment returns in these markets, with the combination of adding scale and introducing new products allowing for great returns, similar to the Wolt partnership.

Q: Thanks for taking the question. Maybe just another question on DashPass. I know you've gotten a few, but in the letter, you talked about extending the value prop of DashPass in 1Q and more things to come. So, I just wanted to maybe get more insights on how the value prop continues to grow and how that's driving just accelerating growth on DashPass.

A: Tony said the main focus is to keep improving the DashPass product to get people to use DoorDash more, increasing consumer surplus for subscribers.

Q: I was just hoping we could take a step back and if you could maybe discuss how your affordability initiatives are being directed to restaurant versus grocery and domestic versus international? And how your promo activity in 1Q compared to last quarter and year-over-year?

A: Tony said affordability initiatives tackle every geography and category because customers always seek more affordable options, and it's about continuously building value into products and reinvesting in customers.