Thanks, Mandy. Good afternoon, everybody, and thanks for joining us on our Q4 2023 earnings call. I'm very pleased today to be joined by Co-Founder Chair and CEO, Tony Xu; and CFO, Ravi Inukonda. We'll be making forward-looking statements during today's call, including our expectations for our business financial position, operating performance, our guidance, strategies, capital allocation approach and the broader economic environment. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described. Many of these uncertainties are described in our SEC filings, including Form 10-Ks and 10-Qs. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update any forward-looking statements, except as required by law. During this call, we will discuss certain non-GAAP financial measures. Information regarding our non-GAAP financial measures, including a reconciliation to the most directly comparable GAAP financial measures may be found in our earnings release, which is available on our IR website. These non-GAAP measures should be considered in addition to our GAAP results and are not intended to be a substitute for our GAAP results. Finally, this call is being audio webcasted on our IR website. An audio replay of the call will be available on our website shortly after the call ends. Mandy, we'll pass it back to you, and we can take our first question.

The floor is now open for questions. Our first question comes from Michael Morton with Moffett Nathanson. Please go ahead.

Hi, good evening. Thanks for the question. First one for Tony. And then a second one for Ravi. Tony, I would love to hear your thoughts on what you think the future structure of the grocery market looks like. As order density increases on a store level, some industry participants think you might see more growth in the merchant-picked model and also like consumers demand more speed. That kind of plays to your advantage with the Dashers. Would love to see how you see that evolving? And then for Ravi, we get a lot of investor questions on the ability to leverage sales and marketing on a per-order basis. It seems like it might have slowed down just a tad in the fourth quarter and then looking at the forward guide. Could you talk a little bit about the opportunity to continue to leverage sales and marketing? Thank you.

Hey, Michael, it's Tony. Regarding your question on grocery, I think it really depends on what it is that you're trying to build in terms of for the customer. If you think about it, a customer is going to evaluate across several dimensions. They're going to evaluate what grocers they can order from, how good the order quality is in terms of if they order X items, do they get exactly those X items, the affordability of the service, and obviously, what happens with customer support, especially if things don't go perfectly. And so we're always judged on those dimensions, and we're always building initiatives towards that. A lot of this is still really nascent. If you think about DoorDash's entry into the grocery space, which happened about three years ago, we really started by nailing this top-up use case, where we're solving the middle of the week run and delivering the items that are consumed the most often, your berries, your dairy products, your cereals, your coffee, etc. All of that was done in concert with fantastic grocers. We're now shifting a lot of the work towards solving bigger baskets. That is just solving for a different use case for the consumer. We're also going to have to do other things, too, because when I just look at the structure of grocery, most of the behavior for consumers still happens offline where consumers are purchasing groceries inside physical stores. That tells me that we still have, as an industry, a long way to go to get a product good enough such that it can replace the offline experience. All of this is going to be done in concert with grocers. Again, it's this kind of continuum where we want to make sure that we can solve for more than just one dimension. Speed is one of those things, but there are going to be other factors that we have to get right as well.

Hey, Michael, on the second point on sales and marketing, right? I'll break it into two parts. First, we'll talk about the Q3 to Q4 and then talk about the forward-looking, what we expect in 2024. Q3 to Q4, we did generate leverage on consumer acquisition. The change that you're seeing is largely related to Dasher acquisition. That was purely to support the higher growth we saw in as well as, as you know, there's some seasonal effect from a Dasher acquisition cost in Q4 in order for us to be able to continue to supply to the volumes we had in Q4. As I look at it, right, when I think about overall leverage from a sales and marketing perspective, two frameworks here. One is we are trying to maximize payback periods, and our goal is to continue to be within the payback period. You're not looking at the absolute level of dollar investment. We're still within the payback periods on the consumer side. We are still acquiring a healthy level of consumers. Over half of the new consumers in the U.S. today start their journey with DoorDash, so that's going to be a continued way for us to drive growth. On the second one, when I think about overall leverage, it purely starts from product. What we've done in the last year or so is we continue to drive improvements in the product, whether it's on the Dasher side or the consumer side that ultimately improves retention. As retention goes up, you'll start to see benefits from an overall sales and marketing perspective also. So when I look at 2024, we do expect to generate leverage from an overall sales and marketing perspective.

Thank you.

Our next question comes from the line of Nikhil Devani with Bernstein. Please go ahead.

Hi there. Thanks for taking the question. I had a couple, please, on the '24 outlook. So first off, on the GOV guidance, it looks like you're calling for a few points of deceleration, Q4 into Q1 and then for the year more broadly. So could you please talk about what you might be seeing in the business that's driving that outlook? Is that a reflection of the core U.S. marketplace in restaurants or a trend that you're consistently seeing across segments? And then for my second question, on the EBITDA outlook for the year, I think the letter mentioned a ramp in margins in the back half of '24. So is this something you can call out, Ravi, on maybe specific investments that you might be leaning harder into in the first half? Just wondering what drives the comfort and visibility into more meaningful margin improvement in the back half of the year? Thank you.

Yeah, Nikhil, I'll take both of those, right? On the first one on the growth point, I mean, just to back up a minute, right, our goal is to grow as fast as we can within the disciplined parameters that we've set for ourselves. I mean, look, we've been public for three years now. We've driven consistently strong growth every single quarter. What you're seeing in the business is even at our scale, if you look at our overall MAUs, they're growing at a double-digit rate. We've hit $37 million, which is an all-time record for us. Even order frequency continues to grow. When I look at the opportunity either on the users or the order frequency side, the users that are active on the platform are still a small portion of everybody who's used the app at least once in the last year. That just goes to show you the breadth of the opportunity ahead of us. Similarly, on the order frequency side, I mean, the blended order frequency is still very low compared to the number of usable movements we have, especially if you think about all the categories that we are adding in the business. What you're seeing in the business is that we are continuing to drive selection as we're making the product more affordable as the quality continues to increase. You're seeing that strength come through, whether it's retention or order frequency, both are continuing to grow. Our goal is as long as we continue to make the product better, I'm very confident that we're going to be able to drive strong growth across restaurants, new verticals as well as international. And to the second point around EBITDA, again, look, Nikhil, I mean, we've been very pleased with the performance of the business. We've scaled profitability quite nicely if you look at it over the last couple of years. What you saw in '23 is a few things, right? We have generated volume improvements throughout the course of the year. We have driven unit economic improvements across all major lines of business. When you put those two together, you saw the second half EBITDA being higher than the first EBITDA, which is very similar to what we saw in the prior year in '22 as well. When I look at '24, I would expect the trend to be very similar, where the second half EBITDA is going to be higher than the first half EBITDA. More importantly, our philosophy is we're going to operate the business with the same level of rigor and discipline with the goal being trying to drive durable growth and at the same time, improve the profitability of the business. To the specific factors around first half versus the second half, we are investing in the first half. The investments we're seeing strength in restaurants, we're seeing strength in new verticals, we're seeing strengthening in our national business. You can see that in the results, both from a growth and profitability perspective. I do expect those investments to generate leverage in the second half. Secondly, if you have volume continuing to scale, plus the unit economics continuing to improve, you're going to see more of the EBITDA in the second half versus the first half. Even from a margin perspective, I would expect the second half margin to be higher than the first half as well as the full year. But just to pull back a minute, right, I'm very pleased with the full-year guide for EBITDA because, a, we are driving margin improvement; and b, we are driving overall profitability improvement quite considerably.

Thanks, Ravi.

Our next question comes from the line of Deepak Mathivanan with Wolfe Research. Please go ahead.

Great. Thanks for taking the question. Tony, I wanted to see if you can elaborate on the key areas of investments inside international and new verticals, maybe in terms of countries and products. As you kind of scale these efforts, how should we think about the contribution margin curve of these initiatives versus what you saw in maybe the core restaurant business or even the convenience business over the last three to four years? And then maybe one for Ravi. On 4Q EBITDA, I know you don't always aim to beat the high end of the guidance consistently. Did you observe any sort of change in the margin trajectory of the business? Or anything you would call out as maybe one or two initiatives that drove investments higher during the quarter, perhaps in the last couple of months? Thanks so much.

Hey, Deepak, it's Tony. I'll address the first question about our investments in international markets and new verticals. We are broadly investing internationally with a consistent approach focused on achieving product market fit and identifying efficient growth strategies. In some markets, our main focus is on establishing product market fit, while in most, we are concentrating on scaling our operations. There are newer markets in our portfolio, and overall, our consumer and merchant penetration remains relatively low, especially compared to what we've achieved in the U.S. However, there is significant potential for growth. Our goal is to be efficient and disciplined in our investments, whether we are enhancing product market fit or successfully scaling and witnessing improvements in growth retention and unit economics. Regarding new verticals, we've seen ongoing strength for another quarter, with accelerated growth against a larger base for three consecutive quarters. This growth is fueled by our investments in grocery, convenience, DashMarts, and retail, resulting in better growth, retention, and unit economics across all key investment lines. We have numerous initiatives underway that would require much more time to discuss in detail, but all are aimed at enhancing our product selection, service quality, affordability, and customer support.

Hey, Deepak, it's Ravi. I'll extend Tony's start on the first question, and then I'll take the second question, right? To your point around margins across the investment areas. What we're seeing in the business is really strong performance, not just across growth, but when I look at the unit economics, there's been a material step function change improvement, both on the new vertical side as well as the international side. To your specific question on the contribution margin, if I look at the basket of our overall international business, there are several countries where the core restaurant business is actually contribution margin positive and still has a lot of runway for both growth and improvement in the margin structure. Your second point, Deepak, around Q4. Again, I mean the performance was great, right? Like nothing specific that we would call out. What you're seeing is volume continuing to grow. In fact, new verticals, the volume actually accelerated in Q4 compared to Q3. Grocery was a bright spot where grocery volume also accelerated in Q4 compared to Q3. International volume continues to be very strong, and we're also seeing unit economic improvement. That's basically what drove the performance both on the top line as well as the bottom line in Q4.

Thanks so much.

Our next question comes from the line of Bernard McTernan with Needham & Company. Please go ahead.

Thank you for taking questions. To begin with the New York City minimum wage, I noticed you implemented some price increases. How do you expect this to affect the first quarter and the year? Additionally, if I’m not mistaken, it seems you added 5 million DashPass subscribers in 2022 and 3 million in 2023. Looking ahead to the next year or two, how large do you anticipate DashPass could become? Also, could you share any insights on the early benefits of Wolt+ and its impact on the subscriber base?

Sure, Bernie, it's Tony. I'll start and feel free to chime in, Ravi. First question is on regulation. By and large, the way we see the landscape is fairly similar to how we've seen it every year in the 10 years that we've been building DoorDash, which is that most governments we work with want to actually work with us and want to work with business. They understand that in order for something like DoorDash to work, it has to work for all audiences. We're always trying to keep the most affordable prices for consumers. We want to maximize sales for local businesses, and we want to offer the most number of work opportunities for Dashers. The vast, vast majority of places that we operate in work this way. There are a handful of markets, one of which you called out, New York City, that takes policies to the extreme and has had some adverse impacts against its wishes, which is whenever you see regulation enter the way it does in a place like New York City, what you see is costs rise for the overall system. Less accessibility for consumers, lower sales for local businesses, and fewer work opportunities for Dashers. We largely expect that the vast majority of cities will be fairly central in terms of how they think about working together with companies like ours. But there are a handful of markets in which have taken extreme policies. We don't expect that to change much in terms of the financial impact, all of that is reflected in our guidance. I think your second question was around DashPass. I mean, DashPass had a great year. It was a record year in terms of its membership as well as the order frequency that we saw with DashPass subscribers. This includes Wolt+ as well. Internationally, we actually saw the members for DashPass and Wolt+ double in the quarter. We're certainly seeing quite a lot of strength there. The way I think about it is, there's 100 possible use cases per month for every consumer in terms of the categories and their consumption, whether that's eating or buying in retail. Even for our best customers and certainly for the average subscriber, we're just a fraction of those use cases. So when I think about the runway, I think it's quite far. If we can serve every use case for local commerce, I think the subscriber base would be fairly healthy.

Hey, Bernie, it's Ravi. I'll just add to Tony's point around New York City. As you can see from the Q1 EBITDA guide, we are absorbing some of the regulatory costs in Q1. I do expect that to ramp down as we ramp up efficiency as well as we take other actions in the marketplace. To your second point around impact on volume, again, it's a small portion of the overall volume in the business. I would expect the impact on volume to be very minimal.

Our next question comes from the line of Andrew Boone with JMP Securities. Please go ahead.

Thanks so much for taking my questions. I wanted to go back to the investments in international new verticals and better understand tactically what you guys are doing. Is the investment around improving selection? Is it on the consumer DASH, or such? Just help us understand more directly what exactly it is that you're doing? And then in the press release, you called out increased first-party distribution costs for COGS. Can you just talk about where you are with DashMarts and their progress towards profitability overall? Thanks so much.

Hey, Andrew, I think you pretty much answered the question yourself, which is we're investing in all the dimensions in which a consumer judges us. We're adding selection to the platform. We've launched a lot of awesome retailers over 2023. Even this year, we launched with Ahold most recently here in the U.S. We're certainly helping to improve the affordability of the service, and there's lots of work to do there. We are working on improving the quality of the service. I think the hardest challenge that every grocer faces, both physically or digitally in terms of sales, is knowing how much inventory they have on the shelves. That is one of the biggest reasons why sometimes consumers prefer to go shop inside stores. Customer support is always something that we're trying to get better. When I look internationally, it's similar, but it's across more categories. It's not just new verticals or retail; it's also across the restaurant sector. We're just at an earlier stage in terms of the penetration levels. We have a lot more places we have to launch, as well as a lot more restaurants and retailers we have to sign up. We have a lot more work to do in terms of launching our subscription programs in those countries. They've seen great adoption thus far, but we're very early in terms of the launch. We always have to make sure that we can make the product better.

Yeah, Andrew, I'll take the second question around DashMart. Look, we're really happy with where the footprint is. We've expanded the footprint a couple of years ago, just to ensure we have volume density across all the markets that we operate in. Today, our focus continues to be driving same-store sales growth by better merchandising, and we continue to improve the overall product market fit. When you look at the performance of the business, we're really pleased. It's doing well compared to plan. Our goal is to continue to improve both the volume in that business as well as continuing to drive unit economic improvement, where we've seen material improvement compared to last year. As I look at 2024, our priority is to continue to keep the existing footprint while increasing volume and driving unit economics in that business.

Thank you.

Our next question comes from the line of Brian Novak with Morgan Stanley. Please go ahead.

Hey, thanks for taking my question. I have two. The first one, Tony, on sort of prioritization of investments. I know you're very data-driven. And so when you look at the grocery and new verticals, you talked in the letter about adding more merchants, more seamless ordering experiences, execution, pricing. When you study the data, what is holding back adoption or driving churn or any of the negatives you don't want to see? Where are the pinch points you really want to solve first to try to continue to drive strong grocery adoption in 2024? And the second one, Ravi, to go back to one of your earlier answers, we talked about a step change function on new vertical unit economics. Just any color on which areas of the business in the blocking attack kind of drove that step change improvement in unit economics in the year? Thanks.

Hey, Brian, with respect to all of the barriers to adoption, I think there are a few, but I would start by saying that things in general are going pretty well. I mean, we have over 20% of customers ordering in the non-restaurants category for the first time. We're now north of 100,000 plus stores outside of restaurants that are on our platform, which we estimate to be the largest in North America. More and more grocers and retailers are coming inbound, and similarly, more and more consumers are shopping for the first time in the grocery category on DoorDash, even ahead of restaurants. I think there's a lot of goodness to see, and if you think about what that's centered on, that's really been centered on the fact we launched with this top-up use case, which we effectively had to invent. People knew DoorDash as a place to get lunch and dinner very quickly. We launched this product where you can get your middle of the week run done as fast as possible. When you run out of eggs, cereal, or your berries, that usually isn't a fulfilling trip to go inside a physical store yourself, but something you want done quickly. That's something we've solved pretty well. At the same time, I think there are barriers. If you look at the industry, digital sales or e-commerce penetration of grocery is still among the lowest, if not the lowest, across all categories of e-commerce. Many reasons affect this. First, how do you make sure you can get exactly what a customer wants delivered to their home? A challenge that grocers have, whether through their physical stores or their online channels, is not knowing how much inventory they actually carry. There are barriers around affordability. Customers expect to pay similar to what they pay in store when they get something delivered. Selection is something we're just working towards. It's happening rapidly and consistently where three years ago, when we launched our service, we were working with a couple dozen retailers, now that's in the hundreds with hundreds of thousands of stores. That remains a challenge. I think the final thing is it will take a bit of time. Most people in the country or in the world know that DoorDash and Wolt has a place to get lunch or dinner delivered. It takes time to get everyone to understand they can get groceries delivered. We've made a priority bet on grocery, and I think it's paid off well. We see it every day in the numbers in terms of growth, retention as well as improvements in unit economics, but it's a long way to go. We're three years into where we went from zero to multibillion, which we're excited about, but it's just the beginning.

Hey, Brian. On the second one, in terms of the step function change and improvement in unit economics, I'll start off by saying, like in these businesses that we operate, one of the more important things is scale. Ultimately, scale drives volume growth, which drives efficiency in the business. If you combine that with the overall platform density we have, whether it's quality, where we're able to accrue benefits across the platform on improvements in credits and refunds, or the Dasher side efficiency. All of that is driving the improvements you're seeing in unit economic improvement across both restaurants and all parts of the new verticals portfolio. There are many parts of the P&L that we are driving efficiency across the board. The second dimension I would give you is when you think about the portfolio and break it apart. Third-party convenience, we've talked about that was unit economic breakeven several quarters ago. That business has continued to grow as well as improve in overall unit economics. We're seeing something very similar in growth, where overall unit economics have continued to improve. Look, I realize there's a question of whether these businesses are going to be profitable for us. But when I look at the data, I have no doubt that all parts of our new vertical business will be profitable over time. Again, it's important to remember we're still early in the journey. We see great signals across growth in volume. You saw that in Q4, where the business accelerated, as well as growth in unit economics. Our goal is to continue to invest as long as that strength continues because that will ultimately drive cash flow generation in the business.

Great. Thank you, both.

Our next question comes from the line of James Lee with Mizuho Securities. Please go ahead.

Great. Thanks for taking my questions. My question is mostly on grocery business. And maybe, Tony, can you lay out the plan or how you plan to expand the supply of grocers going forward? What does that process entail? Do you need to hire more salespeople? Maybe system integration to retailers? Also, give a sense at what point can you get to the same size as your largest competitor? Thanks.

Hey, James, I would say that getting the supply of grocers onto the platform has not been an issue for us. It's actually gone really well and really quickly. If you asked me three years ago, would we be north of 100,000 stores in North America from close to zero? I'm not sure. If you ask me whether we would have over 20% of customers ordering outside of restaurants, I'm not sure. And I think if you ask me if these things would continue to grow as quickly as they have, I’m also not sure. One of the reasons why it's been fairly straightforward for onboarding these grocers is that they see DoorDash as the largest local commerce base of users shopping with the greatest frequency, which means it's highly incremental. They've seen that with each grocer we work with; we conduct incrementality tests that continue to show that DoorDash just adds more sales for them and also, frankly, solves new use cases they previously had not seen.

Right. Tony, I can add on here. I think last time you talked about in terms of grocery in the app, you tried to improve the user experience, make it more seamless. That will help you to improve the fill rate and substitution rate. Any update on that specifically?

Yeah, it's gone really well. The results kind of speak for themselves. We now acquire more customers than any other platform who shop in the convenience or grocery or alcohol segments. I think we cited in Q3 that our grocery business is growing triple digits, which when you compare to peers suggests that we're outpacing by many multiples.

Our next question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.

I would like to ask about DashPass and Wolt+ members. As you consider the future growth of that program, it serves as an effective tool for customer retention and engagement. What steps can be taken to further boost the adoption of DashPass? Is it increasing features and functionality, offering more competitive or lower pricing? What factors could lead to that subscriber base doubling in just a couple of years? What do you see as the most interesting missing features currently?

Hey, Mark, it's Tony. I think there are a few things here with respect to membership adoption. The first is just making sure that members are aware of the savings they are actually receiving. If you think about DoorDash, we have within our ecosystem, hundreds of millions of customers who've ordered with us. But as you saw, we wrote in our shareholder letter that we have 37 million monthly active customers. There is a large base that we need to meet where they are in terms of their usage behavior and then make them aware of the possible savings they could be receiving. So I think thing number one, job number one, is really making sure we can make all customers within the DoorDash and Wolt ecosystem understand the savings that they would be receiving. Job number two is always increasing the value that members receive, and that's something we're always working towards, and we'll add more and more benefits over time.

Our next question comes from the line of Doug Anmuth with JPMorgan. Please go ahead.

Thanks so much for taking my question. Tony, you highlighted 7 million Dashers in '23. It was good to see some of the details from the 4Q Dasher survey. Can you just talk to us about current Dasher supply levels and how you're feeling about Dasher satisfaction and also individual Dasher earnings trajectory? Then a second question on anything you'd call out in terms of generative AI benefits thus far in the business around efficiency or anything on the new product side? Thanks.

Sure. Your first question, Doug, I believe, was on Dasher supply. It has been the healthiest we've seen. This is something we called out in the letter, where it really is precisely because of the number one feature we offer in the DoorDash platform, which is flexibility. There are such high levels of engagement, right? We have 7 million plus Dashers who earned over $15 billion in the year, and these Dashers on average only Dash about four hours a week; 90% of them Dash fewer than 10 hours a week. The vast majority, north of 80% of them have other full-time work. This really is a complementarity to what they already do. That's one of the reasons you're seeing those metrics. Satisfaction is high, engagement is at all-time highs, and it's been easier and easier for us to supply the roads. That doesn't mean we don't have work to do, by the way. We have a lot of work to make sure that the friction to use the app is a lot easier and to create more earnings opportunities for Dashers. We launched some new payment models for Dashers for the first time in 2023 in a while. There’s a lot of work to optimize, innovate, and create new services for Dashers. On the second question, which was about generative AI and the benefits we’ve seen. We’ve been working with a lot of these large language models for probably a couple of years at this point. They serve some benefits in areas where there is structured information that can be digested into these models. This helps to solve a lot of repetitive manual work, and we’ve seen efficiency gains there. We do our best to play with the newest technologies. A lot of the time, the question I ask is how technology is a tool. We have to ensure we understand the job to be done and apply the correct tool.

Great. Thank you, Tony.

Our next question comes from the line of Brad Erickson with RBC Capital Markets. Please go ahead.

Yeah, thanks. I guess first for Tony, when you think about adding value to DashPass that you talked about a minute ago. Do you ever think about partnering with anyone in an adjacent or even different end market, for example? Or would that added value be more likely homegrown? Would you say?

Hey, Brad, yeah, on your question on DashPass and benefits of whether those benefits can come through partnerships or build within. There’s a portfolio of bets here, but it really starts within understanding our own ecosystem. We are fortunate to have the largest local commerce space of customers in which we can offer these benefits. When you think about the depth of use cases as well as the breadth of use cases, there really isn’t any category larger than eating and retail. Job number one is making sure we do a great job with what we have. If it makes sense to have partnerships, we’ll consider those, but job number one is realizing how big the opportunity we have within our ecosystem is and building the best products for our customers.

I'll take the second one on the overall investment level. Look, we are not trying to optimize the business for an overall quantum of investment dollars. When you're thinking about operating the business, our goal is to maximize long-term free cash flow per share. We’re seeing strong performance across both new verticals and international. In fact, I mentioned in an earlier question to both Brian and Deepak, volume is continuing to accelerate in the second half for our new verticals business. Our international business is continuing to grow. Combined with that, we see improvements in unit economics as we drive efficiency across the P&L. When you put both those together, that’s a strong signal both from a product market fit and a profitability perspective. As long as we continue to see that strength and we can drive growth efficiently, we will continue to invest behind that because that’s a driver for long-term free cash flow generation, and both of those I am very confident will contribute to profitability of the entire business for us.

Got it. Thank you.

Our next question comes from the line of Ken Gawrelski with Wells Fargo. Please go ahead.

Thank you very much. Two, if I may. First, on the regulatory side, I believe most of the Wolt markets are currently independent contractor model with the exception of Germany. It seems like the EU platform work directive is going to be published any day. Do you expect to have to reclassify Wolt workers in Europe? The second is based on the capital return side, based on the '24 EBITDA guidance and the renewed share purchase authorization, I was hoping maybe you could update us on your medium-term thoughts about capital returns. You talked about maximizing free cash flow per share. I know you talked a lot about what you're doing on the numerator. Can you talk a little bit more about the denominator there? Thank you.

Hey, Ken, I can start. This is Tony. Ravi, feel free to follow. Regarding your first question about regulation in the EU and the platform workers directive, this is an ongoing effort that regulators are developing. The good news is that they are collaborating with the industry, and we anticipate a very positive outcome for everyone involved. In response to an earlier question about regulation, there are only a few cities globally— not just in the EU or the U.S.— where governments seem unwilling to engage productively with companies. In most instances, governments are eager to collaborate with businesses. It makes sense to want to boost the local economy's GDP, create job opportunities, increase sales for local businesses, and enhance consumer access. Every government understands that this benefits their constituents. We observe this trend in the EU and many other parts of the world.

We have a few additional points to mention. We have provided guidance regarding stock-based compensation and the share count. Our focus is on leveraging stock-based compensation because it represents a real cost to the business. We were able to leverage it last year and anticipate continuing to do so. Regarding the overall share count, the RSU issuance indicates that we expect the total RSUs to decrease, as stock-based compensation can be a lagging indicator in some respects.

Hey, guys. Thanks for taking my questions. I have two. First, I want to ask about the partner commission rate, which you mentioned is down year-over-year. I'm curious, as you build out all of these new features for partners, you have under 1% churn for restaurants, as you mentioned. Is that rate going down just a function of signing up a lot of new merchants, and what is your expectation long term for your partner commission rate? Secondly, I was just wondering if you could talk a bit about the advertising business. When you mentioned in your full-year guidance about net revenue margin going up in the second half of the year potentially, does the advertising business contribute significantly to that? So, thank you.

Sure. Hey, Mike, I’ll start and feel free to add in here, Ravi. On the first question, which I believe is around partner commissions, we're always trying to maximize the value we bring every single partner. We're fortunate that we've generated lots of sales on behalf of these merchants. We've spent over $40 billion on R&D, sales, and marketing team spend over the past few years in helping achieve that level of sales, which, I think, would be very difficult for these merchants to replicate on their own. That’s why you see that churn number is low and continues to get lower. For us, we’re making sure we're always delivering more value to these customers so we can continue to grow together. I believe there's a long runway ahead before every physical merchant can truly argue and compete on their own in the digital economy. We've done a nice job in our first decade to help the restaurant category get there, but I think we have a lot more work to do, certainly within restaurants, and I think we're just getting started outside of restaurants. I think your second question was around ads. The ads business has gone really well. It's not something probably we’ve talked about that much, but it’s certainly grown, I think, commensurately to the size of the business we’re at. For us, again, the key operating tenet here is that a healthy ads business, in which it delivers best-in-class industry returns for advertisers as well as continues to allow us to have the best consumer experience, is one in which we have a healthy and growing marketplace. That’s what allows for a healthy ads business.

Hey, Mike, I'll take your question around the net revenue margin. I broaden that just to give you a little bit more context on how I expect the margins to scale through the rest of the year, across both revenue and gross margin. I would expect that to increase as we go through the rest of the year. To your point, advertising is contributing to that. In addition to that, I expect us to drive leverage from an overall Dasher cost perspective. We consistently work on quality. We're consistently improving efficiency we have on discounts and promotions. Again, you should expect to drive improvements across the P&L, which will ultimately drive both revenue and gross margin, which will also flow through from a contribution and EBITDA margin perspective in the second half of the year compared to the first half of the year.

Ladies and gentlemen, this concludes today's call. You may now disconnect.