DoorDash(DASH) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a year-on-year increase in core DoorDash gross margin, excluding Wolt, driven by improvements in costs as a percentage of gross order value (GOV) and credits and refunds, although consolidated gross margin declined due to a mix shift towards Wolt [7] - The DashPass subscriber count increased from 10 million at the end of 2021 to over 15 million at the end of 2022, indicating consistent growth despite competitive pressures [17][29] - The U.S. convenience and grocery business grew approximately 60% year-on-year in Q4, while the U.S. grocery business saw a remarkable 100% year-on-year growth [21] Business Line Data and Key Metrics Changes - The new verticals, including package pickup, are showing early demand trends that suggest they may lower the time-sensitive nature faced in core restaurant deliveries, with unit economics improving compared to prior new verticals [10][14] - The contribution profit of the core U.S. restaurant business has consistently improved over the past few years, despite challenges such as post-COVID reopening and regulatory impacts [25] Market Data and Key Metrics Changes - The Wolt business grew 50% on a constant currency basis, significantly outpacing its European peers, indicating strong market performance [45] - The company has gained share in the majority of its international markets, reflecting successful expansion efforts [57] Company Strategy and Development Direction - The company aims to maximize long-term profit dollars through strategic capital allocation, focusing on building categories beyond restaurants and enhancing operations globally [42][56] - Investments are being directed towards improving unit economics and operational efficiency, particularly in the third-party grocery business, which achieved breakeven on a variable profit basis in 2022 [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of consumer metrics and the potential for continued growth, despite uncertainties in the macroeconomic environment [96][97] - The company is focused on improving affordability for customers, with initiatives aimed at reducing transaction costs and enhancing service value [134] Other Important Information - The company is actively working on leveraging AI and machine learning to enhance logistics and customer support, which is expected to drive efficiency gains [104] - The management acknowledged the need for ongoing improvements in product quality to enhance retention and reduce fulfillment costs [116] Q&A Session Summary Question: What are the largest areas of incremental investments planned for 2023? - Management highlighted investments in building out new categories and international operations, particularly in the Wolt business, which is growing rapidly [42][45] Question: How is the DashPass subscriber growth tracking? - The DashPass subscriber growth has been consistent, with the program seeing significant adoption driven by selection, price, and quality [48][80] Question: What is the impact of potential regulations in markets like New York City? - Management indicated that the impact from regulatory costs has been factored into the EBITDA guidance, with operational levers available to maintain profitability [60] Question: How is the company addressing affordability for customers? - The company has reduced transaction costs for consumers by about 8% and is focused on making services more affordable while enhancing value [115][134] Question: What is the outlook for new restaurant and merchant signups? - The company continues to see growth in selection on the platform, with a focus on onboarding new restaurants and non-restaurant partners [76][90]