DoorDash reported its first earnings report as a public company, providing a glimpse into how the food delivery company fared during Covid-19.
DoorDash lost $ 312 million in the fourth quarter, more than doubling its loss in the same period last year. But its full-year loss has declined, from $ 667 million in 2019 to $ 461 million. Revenue more than tripled to $ 970 million in the quarter and $ 2.9 billion in the year, due to demand for delivery during the pandemic.
But the pandemic momentum for DoorDash’s business is expected to wane later this year. “We expect markets to start opening up soon,” said the company in its earnings report. “As this happens, we expect declines in consumer engagement and average order values, although the exact amount remains unclear.”
DoorDash’s shares fell more than 5% in the after-hours trading session after the company’s launch at the end of the regular trading session.
The number of DashPass customers is unknown, but it is growing
Most of DoorDash’s business comes from restaurants, but is expanding into other categories, such as groceries and convenience stores. It is also launching new services, such as building restaurant websites or providing personalized delivery services for orders placed on a restaurant’s own website. These offers will become “more critical” after Covid, DoorDash CEO Tony Xu said in the conference call.
The company did not disclose the number of DashPass customers, who pay a subscription fee to receive free delivery per order. But subscribers, who tend to be more loyal customers, accounted for a larger share of total orders in the fourth quarter than in the past two quarters, the company said.
DoorDash has become the largest food delivery service in the US in part because it has focused from the outset on capturing suburban markets, where delivery orders tend to be higher than in large cities. But, like other food delivery companies, DoorDash remains unprofitable.
Food delivery fees, Prop 22
While food delivery has been a lifeline for restaurants, many have struggled with high fees – even large chains like McDonald’s have indicated that prices are too high. In response, cities from San Francisco to Jersey City have limited fees to help small businesses.
But in California, a potentially big earning pressure for DoorDash disappeared with the approval of Proposition 22 in November. The electoral measure exempts concert companies like DoorDash, Uber, Lyft and Instacart from offering expensive benefits to employees, such as paid leave and minimum wage, for concert workers in California. But the companies agreed to start offering a limited package of benefits to drivers. Regarding whether Proposal 22 fees are being passed on to customers, DoorDash CFO Prabir Adarkar told investors that DoorDash is “absorbing most of the costs”.
There is still a lot of room for growth in the food supply worldwide. In October, Uber’s CEO noted that only 10% of Japan’s restaurants are on the Uber Eats platform. Xu said that a long-term goal for DoorDash, which also operates in Canada and Australia, is to become a “global company”.