Thank you for standing by. My name is John, and I’ll be your conference operator for today. At this time, I would like to welcome everyone to the DoorDash Second Quarter 2024 Earnings Call. I would now like to introduce and welcome Mr. Andy Hargreaves, VP of Investor Relations to begin the call. Andy, the floor is yours.

Thanks, John. Good afternoon, everyone. And thanks for joining us for our Q2 2024 earnings call. Very pleased to be joined today 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 our Form 10-Ks and 10-Qs. We 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 also discuss certain non-GAAP financial measures. Information regarding our non-GAAP financial measures, including a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures, may be found in our earnings release, which is available on our Investor Relations 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 Investor Relations website, and an audio replay of the call will be available on the same website shortly after the call ends. John, I’ll pass it back to you and we can take the first question.

Thank you. The first question comes from Nikhil Devnani from Bernstein. Please go ahead.

Hi, thanks for taking my question. I wanted to ask about your overall demand perspective. There's a lot of discussion about declining restaurant demand. Your outlook indicates some slowdown, but it still appears quite strong. To what extent are you noticing changes in behavior or a decline in that area? Additionally, how would you describe the new customer acquisition process for the U.S. restaurant market? There's a common belief that all customers were acquired during the pandemic, but what do you observe regarding new customer adoption of this service today, and how do you view our position in terms of growth? Thank you.

Hey, Nikhil. It’s Tony. I’ll address both of those, and feel free to add, Ravi. We're experiencing very strong demand from consumers, so we're not facing some of the challenges you might be reading about elsewhere. There are a few reasons for this. First, we’re still in the early stages of the shift towards digital and the overall omnichannel experiences that every restaurant and retailer is engaged in, and we're fortunate to be part of the growing sector. For instance, if you look at digital sales, they are increasing not only on our DoorDash marketplace but also on our first-party platform as we support many restaurant and retailer websites for ordering and their delivery services. While some restaurants may be experiencing traffic declines, their digital channels are seeing significant growth, far outpacing their overall growth, and we see similar trends. However, we remain at a low single-digit penetration in restaurants and even lower outside of restaurants, indicating substantial potential for future growth. Secondly, our product is continually improving. If you examine our cohort behavior regarding retention or order frequency, these metrics are as strong as or stronger than those of our pandemic cohorts for every group since then. This illustrates the hard work of our team. We already offer a leading selection and are extending that advantage. Our logistics network provides the best quality and lowest costs in many areas of the U.S., not just for restaurants, but for retail as well. This network is becoming more accurate and efficient. We are also enhancing our affordability initiatives; for example, DashPass has reached an all-time high in subscriber numbers. Many consumers resonate with us across all aspects of their experience. Finally, we are broadening the range of use cases on DoorDash. We're seeing remarkable growth, much faster than the industry average, both in the U.S. and globally, for restaurants and beyond. Increasingly, we’re attracting customers for non-restaurant purposes. Regarding new customers, we acquire more than anyone else; for instance, we capture more than half of all new customers entering the restaurant sector, and about one in every two outside of restaurants. In local commerce, we attract more new customers than anyone. Regarding the saturation of new customers, while we have tens of millions of customers each month, many multiples of that order with us every year. So even within our own ecosystem, whether they are new customers or returning occasional users, there is significant growth potential. We are acquiring new customers, especially in restaurants and other categories, while also engaging those who may only participate in our platform sporadically but are increasingly becoming more active.

So, Nikhil, just to add a couple of points to what Tony talked about, right? The demand on the platform continues to be very strong. When we look at the underlying cohorts, they’re very strong. The recent cohorts are actually as strong as any of the older cohorts that we’ve seen. Even for the core restaurant business, when I look at the growth rate in GOV on a year-over-year basis, the growth in Q2 is very consistent with what we saw in Q1. Even from a linearity perspective, the business actually grew faster in June compared to April. Tony talked about some of this, but DashPass had a really strong quarter, all-time high in terms of subscribers, order frequency continues to be at an all-time high. So, the underlying cohort strength is actually very strong and the demand continues to be very strong across the board for us.

Thank you, both.

The next question comes from the line of Ross Sandler from Barclays. Please go ahead.

Hey, guys. First one on the take rate, it’s up quarter-on-quarter, year-on-year, the revenue take rate. And in the letter, you talked about reducing consumer fees, and you just mentioned DashPass growing a lot faster than overall. So, could you talk about, like, what’s driving that? Are you seeing efficiencies on Dasher cost or something else like driving that take rate to go up as much as it is? And then the second one is, you also mentioned that the majority of your largest international markets have better retention than the U.S. Could you just give us a little bit more color on what’s driving that? Is that kind of the breadth of offering or levels of competition or something else? That’s all. Thanks a lot.

Hey, Ross. I’ll take the first one. Tony, feel free to jump in on the second one. But in terms of take rate perspective, Ross, let me break out what’s going on with revenue. If you think about revenue, there are a few different components. You have the ad business, which is growing really fast. You have a platform business, which is also growing really fast. Both of those are driving the improvement you’re seeing in both revenue growth as well as take rate. At the same time, you also have cost lines, whether it’s Dasher or quality. The team has done a great job of improving that compared to last year, boosting improvements in efficiency. For us, the goal has always been to continue to drive improvements from an efficiency perspective. But at the same time, we’re also going to continue to find opportunities to reinvest that back in growth. As I look ahead from a take rate perspective, I do expect us to improve and grow our ad business, as well as our platform business. Even on the cost line, there’s still a lot of opportunity for us to continue to drive improvements in efficiency. At the same time, we’re going to try to find good opportunities where we can drive investments in retention or the frequency while continuing to improve the overall take rate in the business.

And Ross, on the second question about international markets and just the retention and frequency levels there. I mean, it’s really a story of two things. One is, well, we started with a very robust set of fundamentals and foundation, right? I mean, this really was the key investment thesis behind teaming up with Wolt. I mean, when we were looking internationally in terms of expansion opportunities, one of the things, perhaps, the top thing that got us most excited about teaming up with Wolt was the fact that they had leading retention and frequency in every market that they competed in. And that’s a combination of a few things. But at the end of the day, it comes down to offering the best combination of inputs for customers, the best selection, the best quality of service in terms of delivery quality, the best affordability, and the best support. The second thing I would say is that since teaming up with Wolt, which closed in 2021, it’s been a couple of years now. We’ve added some of the lessons that we’ve learned at DoorDash, lessons in making improvements to each one of these inputs. And that combination, I think, is what you see that’s driving the growth and virtually taking share gains in every market that we play in.

The next question comes from the line of Michael Morton from MoffettNathanson. Please go ahead.

Hi, guys. Thanks for the question. If we could maybe do two, one on international, following up on some of the comments Tony just made and then maybe a quick one on groceries. Tony, I love hearing more about the retention aspects for international, but like you talked about in the press release today, two full years with Wolt. Love to learn some more just beyond the retention aspects. Some key takeaways after running this business for two full years on what it takes for the best performance in these international markets. Is it market structure, market share, consumer spending capabilities? And then how that might dictate your plans to grow in new countries and/or maybe exit certain markets where you don’t like the industry structure? And then just a quick one on CPG advertising, some learnings and differences you’ve picked up compared to your restaurant advertising business would be great? Thank you.

Sure. Regarding the first question about international lessons learned, there's no single solution for operating these types of businesses, but the narrative is quite similar across nearly all markets. While each market presents unique challenges and dynamics, ultimately, success hinges on who can provide the best service for customers, couriers, and merchants. It's important to keep this in mind, as it may seem straightforward, but it is crucial, especially given the constant competition in our industry. Winning by developing the best product, measured by the highest retention and frequency rates, has always been our standard, and one that our customers expect. We've been fortunate to meet or exceed this standard better than competitors in all the markets we engage with, but there's still much room for improvement. Many markets, especially outside of the United States, are significantly underpenetrated, not just regarding the restaurant sector but in nearly all areas. This indicates that we have a long way to go in addressing local commerce needs for our customers. Concerning CPG, we've experienced a rapid learning curve. There has been considerable interest from top CPG advertisers since we introduced the largest local commerce platform that offers ads, which occurred three years ago. They recognize this platform has the highest frequency, membership base, and cross-selling potential for local commerce. Their inquiry often is about when we will open the platform to connect with new customers. However, we must also consider that a robust advertising business relies on a healthy marketplace, not the other way around. A growing marketplace is essential for sustainable advertising growth. Thus, we follow two guiding principles: provide an exceptional consumer experience without sacrificing quality and deliver the best returns for advertisers, whether they are small or large restaurants or CPGs. Moving into our third year, we're making significant strides in establishing a balanced portfolio. Initially, we focused on advertising for restaurants, which was a natural step given our prior activities. Now that we've successfully developed advertising for CPGs, the goal is to expand responsibly while maintaining a balance between consumer satisfaction and advertiser returns.

Hey, Mike. It’s Ravi. Just to add a couple of points that Tony talked about on the international side. Again, the formula for us, like Tony mentioned, is largely similar. We’re seeing strength in retention. We’re seeing strength in order frequency, as well as gross profit. Last call, I talked about the fact that the entire international portfolio is gross profit positive, and it has continued to improve. For us, what’s important is we want to drive scale. Scale drives efficiency in the business. We’ve done that in the U.S., and it’s the same formula we’re using in the international market as well.

Thank you.

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

Great. Thanks so much for taking my questions. You mentioned in the press release better frequency for new verticals. Can you help us better understand that for drivers and then where are you seeing better frequency? And then a question really on ramping new merchants. We’ve noticed that incentives are larger. As we think about you guys normalizing on selection, can you just help us understand the size of the investment it takes to bring new merchants onto the platform? Thanks so much.

I can take the first part of the question. I mean - Andrew, I guess, in general, I mean, we see order frequency increases both within restaurants and incrementally on top of that from new verticals. It depends a lot on the geography and which new selection that has been onboarded or so how strong the selection density is within a market. For example, obviously, we’ve been very strong in grocery and in convenience. That’s been a big focus for us for years. And we’re excited, actually, just this morning, we announced an update to our partnership with Chase, which now makes us Chase’s exclusive partner in both restaurant delivery and grocery delivery for all of their cardholders. And so, I think you’re seeing the appreciation of our performance not just by consumers, but also by other large companies out there that are trying to tap into a very valuable base of customers, a lot of whom are coming to us for grocery and for these new verticals. But there are examples where we just launched recently, for example, with Ulta Beauty. So as we’ve launched health and beauty, some customers come to us for the first time, whether it’s to Ulta, to Sephora, to other health and beauty merchants for the first time, or Lowe’s in the home improvement category. So, it’s not coming from one area. As we add more categories, we see more order frequency growth.

Yeah. Andrew, I’ll take the second one. Maybe just a couple of points on the first one that Tony mentioned. Our goal is to drive overall order frequency up. We’re not trying to drive just the restaurant order frequency up or the new verticals order frequency up. In fact, looking at the order frequency in a blended basis is not how we think about the business. It’s truly a cohorted business. When I look at the cohorts, even the age cohorts, they’re engaging better with us. Their order frequency is going up, partly because the product has gotten better. You have more categories. Delivery times have gotten better. The entire order frequency continues to go up. The newer cohorts are actually joining at better order frequency than many of the older cohorts. Andrew, second point on selection investment. I mean, look, I mean, our goal is to continue to drive selection higher. It’s a core part of our strategy. We are adding selection in restaurants. We are definitely adding more selection on the grocery side, as well as international. The way we think about it is, as long as we are driving incremental GOV, as long as the conversion is continuing to increase, we’re going to continue to drive selection higher. And you’re seeing that strength being reflected in not just the demand, but the underlying cohorts of the business as well.

Thank you.

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

Thanks. I just have two here. One, on the incremental flow-through of EBITDA, so relative to GOV, it looks like it picked up a quarter-over-quarter maybe a couple hundred basis points. Can you call out any drivers of the difference there, if you can? And then second, in a bigger picture, Ravi just talked about the improving unit economics on the gross margin side across all parts of the business. So, it kind of seems like that should roughly rhyme with EBITDA expansion over time. What are any other considerations as to why that would not be the case, if you could? Thank you.

Yeah. Let me take the first one, and I’ll get into the second one. On the EBITDA upside that we saw in Q2, there are two factors, right? One, you saw us continue to drive higher growth. GOV came in better than expectations. The overall business is gross profit positive, so you’re seeing that flow through to the bottom line. Two, you also have improvements in unit economics, gross profit across most major lines of business. You’re seeing that impact the overall business as well. From a philosophy perspective, Brad, I mean, I think, I want to be clear. Our goal is to grow as fast as we can by being inside of the range from an EBITDA perspective. I would expect that to be the case going forward in Q3 as well. But longer term, let me break the business apart, right? On the restaurant side, we’ve done a great job of improving the contribution margin in H1 despite absorbing some of the regulatory costs. There’s still a lot of opportunity for us to continue to drive margin higher there. It’s not going to be at the same clip as we’ve done over the last couple of years. New verticals, as well as international are still early. We’re seeing good growth. We’re seeing good opportunities to continue to invest there. But these businesses are not truly optimized for efficiency. As we continue to drive efficiency higher across the P&L, I would expect margins to continue to improve. More importantly for us, the formula has always been to invest behind retention, order frequency, as well as continued improvement in gross profit. We have seen that in the business. If we find good areas to continue to drive investment, we’re going to do that. Our goal is to drive GOV growth while being disciplined from an overall investment perspective.

Got it. That’s great. Thank you.

The next question comes from the line of Bernie McTernan from Needham. Please go ahead.

Thank you. I would like to focus on international. Tony, you mentioned the shareholder ladder and how your international goals are still much higher than your current achievements. Does this mean you are considering entering more countries, exploring new categories, or introducing different products? Additionally, do you feel you have the appropriate asset mix to reach those goals?

Yeah. Hey, Bernie. I mean, I guess, to add to some of the comments I made previously, we have a good foundation to build from in all of our markets. That’s how we start. And if you don’t have that, it’s difficult to solve every local commerce problem. For us, that obviously starts with the restaurant business, which, whether it’s internationally or here in the U.S., we have leading retention and frequency, which is a great place to build upon. And we’ve added quite a lot of categories into all of our markets actually, and those are growing really, really nicely. But when I look outside of the U.S., I would say that the vast majority, virtually every country outside the U.S. for us, is still behind what we think the penetration levels ought to be if we actually brought all of the products that we have in market here in the U.S. overseas. We’re not there yet, right? We have a great house in which the structure is very, very good. We’re growing many folds faster than our peers. We’re doing a nice job of launching new products that we’ve built from the DoorDash side to all of our markets. But on the flip side, I would say that the levels there are still not where they ought to be. We’ve got a long ways to go on getting restaurant selection where it needs to be. We’re off to a fantastic start outside of restaurants, especially given that retail, I would say, is a little less developed on a comparative basis when you look outside of the U.S. versus, say, the retail industry within the U.S. And then when I look at the five businesses that we have, as well as other businesses that we’re incubating, I think the potential to bring this globally to be the largest local commerce platform in any country, I think, that remains just a very, very large opportunity for many years of growth.

Makes sense. Thanks, Tony.

The next question comes from the line of Michael McGovern from Bank of America. Please go ahead.

Hey, guys. Thanks for taking my question. I wanted to ask, again, a little bit about the restaurant menu inflation. Is there any dynamic underlying the AOV number that is basically suggesting that there is some level of food inflation and maybe having some offsetting, things like drive that are making AOV not increase? And then also just quickly, I want to see if you comment on regulatory with Prop 22 being upheld in California and are you still seeing any impact in New York City and Seattle from regulatory changes there? Thank you.

Hey, Mike. I’ll take the first one. Tony will take the second one on regulatory. On the first one, I mean, look, inflation has not had a big impact on our business. If you think about it, like when inflation first peaked about a year ago, we saw fewer items per order. But overall, we’ve also driven consumer fees down. So I look at overall, even the restaurant business from an AOV perspective, it’s relatively flat year on year. So we’re not seeing any impact on that. And I’m pretty pleased with the progress we’ve made on overall affordability, which is continuing to drive the growth that you’re seeing in the business.

Yeah. The second question with respect to regulatory, it’s actually pretty much the same story that I think we’ve communicated ever since doing the first earnings call. And really, it reflects even what we thought 10 years ago when we started forecasting what might be true in regulatory, in particular on the labor piece across the world, which is I think in the majority of the world, the overwhelming majority, most jurisdictions want to actually support us in giving Dashers what they want, which is the flexibility of a work opportunity that’s never existed before and also protections that we believe they deserve. I mean, to your point or the premise of the question, you’re right. I mean, it’s good to see that lawmakers most recently upheld Prop 22 here in California. We expect that. We expected that not just because we’re right on the wall, but because we think it’s the right thing to do. It’s actually giving users in this case, the Dasher, the driver, exactly what they’re looking for. I always have to remind people that over 90% of Dashers do fewer than 10 hours a week on the platform. The average Dasher does 3 to 4 hours a week. The overwhelming majority, over 80%, 85% of Dashers actually have full-time jobs. So they’re specifically telling us, we do not want to be told what hours to work or where to work them. And so we see that most governments, lawmakers around the world, certainly here in the U.S. as well, actually want to do right by the Dasher and actually support us in what we want to do for workers. I also hope whether it’s this election cycle or future election cycles, whether it’s here in the U.S. or around the world, that things will moderate a bit in terms of temperature and that this can be something that we as a company, as well as other companies in the space can work productively with any government to actually achieve what Dashers want. And I don’t know, Ravi, did you want to comment on New York or Seattle or any…

Yeah. Maybe on New York and Seattle. I talked about the fact in the last call that we did take a meaningful amount of impact on EBITDA from the regulatory cost in Q1. That did come down in Q2, just like I said it would. A lot of that is being driven by the underlying improvements we’ve made in product to drive efficiency higher. I do expect those costs to continue to reduce as we go through the rest of the year. Look, I mean, our goal in philosophy has always been any market that we operate in to want to run with sustainable unit economics, and that’s going to be true for these markets as well. It’s not going to be a step function change. It’s going to be a gradual change. We really like what we’re seeing in the business from an overall efficiency improvement perspective for those markets.

Got it. Thank you.

The next question comes from the line of Ron Josey from Citi. Please go ahead.

Great. Thank you for taking the question. Can you hear me okay?

Yeah. Go ahead, Ron.

Oh! Great. Perfect. I wanted to follow up on our earlier discussion about the improvements in efficiency. The press release mentioned reducing order defect rates and merchant churn while also lowering fees. I’m curious if these lower fees mean you are passing along the savings and seeing the benefits of increased efficiency, resulting in higher order rates. How is this dynamic contributing to improving top-line growth? Thank you.

Yeah. Hey, Ron. It’s Tony. I mean, look, we’re always trying to do one thing, right? Which is to move fees in one direction. I don’t think I’ve ever spoken to a consumer who’s asked us to raise prices. And so we are always trying to lower the fees and pass them on. And there are various ways in which you can do this. We’re obviously trying to be more affordable. We’re trying to increase and widen the selection lead that we have. We are trying to improve the quality of our logistics system. We believe we have the best one, but it doesn’t mean that it’s perfect. And so we have to get more accurate. We have to get faster. We have to be better about finding every product in the physical world, especially now that a lot of what we do is outside of restaurants and inventory remains a challenge for every physical retailer. And so there’s a lot of work to do. We’re not yet satisfied with where we are on all of the dimensions. We appreciate and tremendously respect all of the efforts that our teams have done in terms of building the best product, in terms of having category-leading retention and frequency. We’re not there yet. In the eyes of the consumer, we can still be more affordable. We can still have better selection. We can still have better quality and better support. So we’re working on all of those things.

And Ron, just to add to that, the way we think about investing is, our goal is to grow as fast as we can while trying to be within the discipline parameters. What you’re seeing in the business is restaurant growth has been very strong. We’re continuing to drive margins there higher. You’re seeing very similar dynamics in both new verticals, as well as international. But not just the growth, but overall improvement in profitability has been higher. For us, whenever we think about a dollar of efficiency, the next step we think about is that back in the business because you want to drive order rates higher, you want to drive scale higher. The scale ultimately drives efficiency. And that’s the consistent cycle that we’ve been on, and nothing has changed in regards to how we operate the business.

Thank you, Tony. Thank you, Ravi.

The next question comes from the line of Lee Horowitz from Deutsche Bank. Please go ahead.

Great. Thanks for the questions. In the past, you’ve called out fixed OpEx as a percentage of GOV for 2024 that’s expected to be stable. I guess, is that still the operating assumption that we should be thinking about for this year? And then sort of looking beyond this year, how are you thinking about sort of your ability to drive leverage on a go-forward basis as you digest sort of an admittedly small step in fixed OpEx? And then maybe just on the advertising business, I guess looking out to next year, you guys will have stacked up some really nice growth within your grocery business, which I assume would open up the eyes of some of your CPG ad partners. Would you expect sort of CPG ad participation in the advertising product, perhaps, lag some of the volume growth, as we’ve heard from some of your competitors in this space? Thanks so much.

Hey, Lee. I’ll take the one on OpEx. Tony will take the second one. Look, I mean, our goal is not just to grow strongly in 2024, but our goal is to continue to drive strong growth for many years to come. For us, the key there is to continue to innovate on the product side. What we’re seeing in the business is that we continue to invest behind the product. You’re seeing improvements in retention. You’re seeing improvements in order frequency. I mentioned earlier, the 2023 and the 2024 cohorts are as strong as any of the older cohorts we’ve seen. Our philosophy has always been to invest behind the strength that we’re seeing in the business. We are investing; we’re adding resources in select areas, mostly on the engineering and the product side. And I think the benefits of that from an overall growth, as well as an efficiency perspective. As I think about OpEx, I would expect OpEx roughly to be at the same level on a percentage of GOV basis for the rest of the year. I mean, looking forward, our goal is to continue to scale the business and our goal is to drive leverage in OpEx, just like any other part of the P&L.

Hey, Lee. Regarding your question about the pace of CPG ad growth, we’re really pleased with what we see. Our main focus remains on ensuring that building a strong marketplace precedes building a robust ad business. If our marketplace isn’t growing sustainably and healthily without harming the consumer experience, it overshadows everything else. As you pointed out, our new verticals—such as grocery, convenience, alcohol, and other retail categories—are growing rapidly. All CPGs are customers, and the key question is how quickly we can tap into that spending. I believe there’s no urgency to rush this process; moving too quickly can lead to significant mistakes. As long as we continue to have the largest audience with high levels of engagement and retention, we will always be attractive to CPG advertisers, who are keen on achieving the best returns. This often comes from marketplaces that not only have size but also high activity and growth rates. So, it’s about finding the right balance. Our CPG ad business is experiencing substantial growth, and I’m very satisfied with the team’s performance. However, when it comes to pacing, I view it more as a sequence—prioritizing the health of the marketplace before focusing on monetization.

Helpful. Thank you.

The next question comes from the line of Shweta Khajuria from Wolfe Research. Please go ahead.

Thank you for taking my question. Let me try two, please. One is on advertising growth. So could you talk about your current ad tech stack and where you are in terms of your product and where you think there is opportunity to continue to grow and gain greater share? That is whether you’re talking about attribution or you’re targeting capabilities or telling CPGs that we can get you incremental customers that you can’t find elsewhere, whatever that is, where are you today and where’s the opportunity? And second is on competitive dynamics. Through the quarter, there was a lot of talk about perhaps you potentially losing share. It clearly doesn’t sound like you are. Could you talk about whether you’re seeing greater competitive intensity in suburban markets in the U.S. and what you’re seeing in international markets? Thanks a lot.

Sure. I can address both questions, and Ravi can add if needed. Regarding the first question about our ad tech stack, it’s a relatively new business that is growing very quickly. If it were an independent entity, its performance would likely be well-received. However, I believe it’s important to avoid rushing things. Even with rapid growth, we are not at a disadvantage compared to our competitors, but that doesn't mean we should push too hard. There’s still significant room for growth. Initially, our ad stack was primarily developed for restaurants, which makes sense given our background. However, DoorDash has evolved; we now operate across five business lines in over 30 countries. Therefore, we need to adapt the stack to accommodate larger restaurants and CPG advertisers across various sectors, not just in food but in all of retail. We have a clear and extensive roadmap ahead. What I find promising is that the advertisers are ready to engage, as long as we continue to provide them with top returns, which we believe come from having a leading marketplace in terms of users and engagement. I’m confident that everything else will follow naturally. We are optimistic about this growth, but there’s still more to achieve. As for the second question, honestly, we haven't noticed significant changes in the competitive landscape. While there may be a lot of activity, there's little real progress. I think most of it is just noise. Whether we look at new customer acquisition or existing customer behavior, consumers still seem to prefer DoorDash. This reflects that, despite all the activity, the true measure of any marketplace or consumer product is its ability to retain customers and encourage frequent use, which cannot be manipulated easily. Ultimately, success hinges on providing the best mix of selection, quality, pricing, and support, and we currently excel in this area. As long as we maintain our lead in product quality, I feel confident about our position, regardless of the competitive activity. It has always been competitive, and I expect it will remain that way. However, regarding actual happenings in suburban or urban markets, not much has really changed.

Hey, Shweta. It’s Ravi. Just to add to…

... the first point on ads, right? Like, I mean, we’re still very early in our journey, like Tony talked about, right? Like, you’re seeing the impact of ads on both revenue, as well as EBITDA, but the majority of the ad revenue is in the U.S. It’s mostly focused on restaurants at this point, still early from a CPG, as well as an international perspective. We’re holding our teams, you know, with the constraint on conversion as well as merchant relies, as long as those continue to be best-in-class, we’re going to continue to improve the overall ad business.

The next question comes from the line of John Colantuoni from Jefferies. Please go ahead.

Thank you for taking my questions. You added tens of thousands of new merchants to the U.S. marketplace. I’m interested in how that additional supply compares between the restaurant delivery business and other verticals. I understand this is just one of many investments you're making to enhance the consumer offering, but could you provide insights on how much more potential there is for expanding supply over time? Additionally, can you quantify the impact of the changes made in New York and Seattle on GOV and EBITDA in the second quarter? Thank you.

Hey, John. It’s Tony. I’ll take the first one on adding selection, and maybe, Ravi, you can take the second one. On adding selection, I mean, it’s really everywhere, John. I mean, there is no one category we’re particularly targeting. I mean, we are trying to represent every city in a digital way, which means unless we have every breathing merchant that is alive in the city, we don’t have great selection. And so that’s really true. I mean, if you even were to drive out from any city center, our selection probably wanes as you go further out. And so I think we’ve got a long ways to go. And don’t forget also with restaurants, there are always new restaurants coming in. One interesting fact about the restaurant industry, and this is true in every country, is that the total number of restaurants every year almost always exceeds the previous year, but it’s not necessarily the same set of restaurants. And that’s because restaurants come and go, and so there’s always a ton of work to do there. So the room to run on restaurants is almost this perennial kind of body of work. And then with retail, I mean, we’re just getting started. And so I think we have a long ways to go in terms of adding selection.

John, on New York and Seattle, from an overall GOV perspective, I mean, the combination of both of those markets doesn’t make up a large portion from an overall company perspective. So the impact from GOV and volume from an overall company perspective has been small. Individual markets we’re seeing some elasticity, but not to impact the overall total company growth rate. From an EBITDA perspective, I mean, look, Q1, I mentioned that we did take a meaningful amount of impact on EBITDA from the regulatory cost in Q1. That cost did come down in Q2, just like I said it would. A lot of that is being driven by improvements we’ve made on the product on the efficiency side. As we go through the rest of the year, I do expect the cost impact from an EBITDA perspective to go down. This was part of the reasoning I mentioned, causing H3 to be higher than H1, where we’re seeing impact from regulatory costs continue to reduce, as well as the volume continues to grow, as well as the gross profit for the various lines of business continue to grow as we go through the rest of the year.

Thanks so much.

The next question comes from the line of Mark Zgutowicz from The Benchmark Company. Please go ahead.

Thank you. Maybe switching gears a little bit, talking about price parity, obviously, an important topic. Doesn’t seem to get much progression, though, and I’m curious if you are close to any initiatives that might incentivize grocers to get there, possibly, like, prioritize ad placement, maybe what some of the puts and takes are there? And then maybe flipping the ad expansion discussion on its head. I’m curious where you have seen, maybe in certain verticals or environments, degradation in app engagement or order frequency as a result of increased ad load? Thanks.

Mark, it’s Tony. I’ll address both of those, and Ravi can add as well. Regarding price parity, it’s a significant issue for affordability. We always strive to make our products and services more accessible, whether that’s in restaurants, grocery, or convenience. There’s no straightforward answer to your question, as we continually work to align our business model and incentives to provide the most affordable service. This always comes alongside various other factors; we can't simply focus on one aspect in isolation. We need to ensure that inventory is available and that any substitutions made for unavailable items meet customer expectations. Many elements must align for what you’re discussing. Price is certainly a key factor in our evaluation, but there are numerous other components that interact with one another. As we improve efficiencies in our logistics, for instance, it benefits us, and eliminating unnecessary costs allows us to support other initiatives. There’s a lot happening, and there’s no quick solution to your question. However, it remains a fundamental aspect of our operation. As for your second question, you’re right that ads can negatively affect the consumer experience. That's why I emphasize the importance of understanding what drives what. A healthy marketplace supports an ad business, not the other way around. We have been cautious to ensure we protect the consumer experience. We haven’t observed much degradation, partly due to how we are structuring the system. We take pride in our ad business, which would be impressive on its own. However, we must ensure we maintain an engaged and large audience in local commerce, making it easier for everything else from an advertising standpoint.

That’s helpful. Thank you.

Ladies and gentlemen, this concludes today’s Q&A session and today’s conference call. You may now disconnect. Thank you for your participation.