Thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the DoorDash Q4 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. I'll now turn the call over to Wes Twigg. Wes, the floor is now yours.

Good afternoon, everyone, and thanks for joining us for our Q4 2024 earnings call. I'm 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, without limitation, our expectations for our business, financial position, operating performance, profitability, 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 most recent Form 10-K and 10-Qs. You should not rely on our forward-looking statements as predictions of future events or performance. 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 of such non-GAAP measures to the most directly comparable GAAP financial 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. An audio replay of the call will be available on our website shortly after the call ends. Operator, I'll pass it back to you and we can take our first question.

Great. And your first question comes from the line of Ross Sandler from Barclays. Your line is open.

Hey guys, Tony, thanks for the letter. All with some great new interesting stats in there. So I wanted to start with some of these new penetration stats. So you're basically saying the funnel has an 800 million person TAM and that your active shoppers are about 100 million and that these active shoppers order about 7 million times per day. So I guess the question is, what's the bigger opportunity to increase the 7% frequency or the 12% penetration? And what does the most penetrated market look like for these stats? Like what's the north star on either frequency or penetration, which kind of move hand-in-hand? Thanks a lot.

Hey Ross. Yes, I'll start and feel free if you want to add anything, Ravi. I think when I step back and look at the opportunity in front of us, I couldn't be more excited or bullish about both what we have been working on and what is to come. It's in part because of what you're talking about, which is the long runway in all of the areas where we've explored. If you took our oldest area of exploration, U.S. restaurants, we would be the most penetrated in terms of usage of our products, yet we're still single-digit percentages of the U.S. restaurant industry sales. Globally, that number would be even smaller. And then obviously, if you consider including the retail categories or first-party channels that we also support across every category, we are still in the early stages of penetration. So the answer really includes both penetration and frequency. On the penetration side, a lot of this involves entering more geographies and launching our services in areas we currently serve but don't yet have a perfect product. We also focus on effectively serving the cohorts that we already have. Over the years, we've learned that it's quite challenging to keep improving our product, but it's vital to our success. This is a primary focus of mine, ensuring that we enhance selection, improve product quality regarding accuracy, speed, and reliability, offer more affordable options globally, and enhance customer support. I see no end to addressing each of these vectors. This principle applies even more strongly to newer areas we're exploring. When I think about grocery or retail and our commerce platform, we are still in the early days of building a product that we are proud of, and ultimately, this endeavor should drive behavioral change.

And does that complete your question?

Yes, thank you.

Okay, perfect. Your next question comes from the line of Shweta Khajuria from Wolfe Research. Your line is open.

Thanks a lot for taking my questions. Let me try two, please. Could you please talk about contribution profit margins, especially in your international markets, when we think about efficiency gains in logistics versus retention improvement versus frequency versus lowering cost per delivery? Where do you think there is the greatest room for upside as you think about the trajectory? And then second question is, just stepping back a little, Tony, how do you think about 2025 and 2026? What are some of your goal posts for this year and how should we be thinking about it, especially as it relates to investments? Thanks a lot.

Hey Shweta. It's Ravi. Let me take the first one on the contribution margin. The theme for us is very consistent. We are not operating the business towards a specific margin percentage. We always think about operating the business towards more EBITDA dollars and more profit dollars. If you look at the theme that has been consistent for the last couple of years, we've continued to scale that business and continue to increase the overall density that drives profitability. Specifically, when you think about our international business, let me give you some stats about what we're seeing. The business is growing quite nicely and substantially faster than peers. Regarding profitability, I've discussed in prior calls that the international portfolio is gross profit positive, and that continues to be the case. We're seeing improvements in 2024 compared to 2023. I'm excited about where the business is headed, but we are still in the early stages of our journey. Our goal is to continue scaling, which will eventually lead to more efficiencies and more gross profit in the system. We’re pleased with the performance so far.

Hey Shweta. Yes, I'll add a little to the first question and then take your second one on the next couple of years. One thing we've learned in building any of our businesses is that it's really the combined sum or cumulative compounding effect of many small factors. So when you asked about margin or top-line or product improvements, I wish it were simpler to say there’s one area that has way more room to run than others. What we've actually found is that there is room to improve almost everywhere. When you look at our ability to grow our top line and significantly improve our bottom line while increasing reinvestment in the business, you see the effects of having invested successfully in scale and having positive margins. As for the investment philosophy for the next couple of years, it remains unchanged. We only want to invest when we see great signs to do so. If it's an early-stage product, we seek signs of product market fit, ensuring substantial improvements to existing market offerings and identifying a clear path towards monetization and a strong cash-generating business thereafter. This applies to all five areas we've been exploring: our U.S. restaurants area, our international business, our business outside restaurants, our commerce platform, and our ads. That will be the focus. We have a lot of work to do in improving the product as mentioned earlier, and that’s where most investment will go. However, we also search for future exploratory areas, especially in local commerce, where there are abundant problems and ways to help grow the GDP within cities.

Thanks, Tony. Thanks, Ravi.

And your next question comes from the line of Deepak Mathivanan from Cantor Fitzgerald. Your line is open.

Great. Tony, maybe I'll ask an autonomous vehicle question for you. Obviously the current cost structure of AVs does not make delivery a primary use case, but in a world where personal vehicles become increasingly autonomous and may be able to pick up food by themselves? How are you thinking about the potential opportunities and risks for Dash? And how are you preparing for an AV world? And then second question maybe for Ravi, can you give an update on Wolt? What are you seeing in some of the fast-growing markets? Where does Wolt stand with respect to the new verticals product build-out and penetration and early 2025 in these key markets? Thank you very much.

Yes, I'll start on autonomy, Deepak. I think autonomy is super exciting. It's one of the two major trends in technology now, with the other being LLMs. Autonomy has made significant progress, and while many of us hoped for quicker developments in the field, exciting evidence of future potential is emerging. You're right in saying that many are still assessing the total cost of operations. I view the challenge for autonomous delivery as distinct from that faced by Robotaxis. While Robotaxis have passengers who can easily enter and exit the vehicle, autonomous delivery requires different considerations. We’ve been studying this area for years and have worked on it. Currently, we have nothing to announce, but we're quite excited about the challenges ahead. It’s essential to build technology that specifically addresses delivery use cases, while also understanding how technology and operations must intertwine to achieve the desired cost structure.

Hey Deepak, regarding Wolt. The international business, including Wolt, had a very strong quarter, as has 2024 overall. I mentioned earlier that we're growing faster than our peers. We're gaining share virtually in every market we operate in. I've seen the portfolio grow, and we hit an all-time high in terms of our international monthly active users, with order frequency also improving. This is due to our ongoing efforts to enhance selection and quality while driving affordability. Wolt+, which we launched about two years ago, is scaling nicely, and when comparing its growth trajectory to DashPass in its early years, Wolt+ is performing even better. Additionally, we've seen new verticals and grocery penetration in some international markets exceed what we see in the U.S. All in all, I’m thrilled with the strong growth and improved unit economics we’re witnessing.

Great. Thank you both.

And your next question comes from the line of Michael Morton from Moffett Nathanson. Please state your question.

Hi there. Thanks for the question. One for Tony and one for Ravi. Ravi, in the prior 10-Q, you called out international markets utilizing NOLs for the first time. I was wondering if you could talk a bit more about some of the markets that are seeing this inflection in profitability? And then how far behind some of the other international markets could be compared to those utilizing the NOL? Just curious about the curve there. For Tony, there are many companies rolling out agents and assistants; it's no secret. When it comes to e-commerce, there's a thought that as you could be changing the traditional search funnel, it's an opportunity to integrate local inventory more seamlessly into the consumer shopping experience. I would love to hear how you're thinking about this opportunity and exploring potential partnerships in providing the infrastructure for these models and upcoming search operators? Thanks, guys.

Yes, Mike, I'll take the first one. When we think about international, I consider the overall portfolio as a whole. The entire portfolio is gross profit positive. I've mentioned earlier that several countries within that portfolio are contribution margin positive from a restaurant perspective. The portfolio looks similar to what we've done in the U.S. There are countries where we feel confident about their positive contribution margins, and we're using some of those profits to continue investing in other markets. If your question is specifically about taxes, I expect that to be somewhat volatile for the rest of the year, considering the level of profitability we have in international markets. However, we do not expect major tax liabilities this year.

Hey Michael, regarding your question about AI agents, I agree with your premise that numerous AI agents will be working on our behalf and performing various tasks. For DoorDash, I see this in two lights. First, we need to master the physical world. LLMs and AI agents don't play a significant role there. They serve as an interface but don't address challenges in logistics infrastructure or accuracy. So, ensuring operational excellence is our primary focus. Secondly, it's essential to leverage these technologies, particularly as costs decrease rapidly with the proliferation of open-source models. With billions of orders and over 100 million customers annually, we have significant data to enhance personalization and overall operations using LLMs, both via agents and other technologies. Furthermore, with a program as exciting as DashPass, we're eager to add value in these areas.

Thanks so much, guys.

Your next question comes from the line of Bernie McTernan from Needham & Company. Your line is open.

Great. Thanks for taking the questions. Just want to touch on bookings, so the acceleration in Q4 bookings. What made Q4 so strong? Any trends to point to, whether it's restaurant or non-restaurant? And then on the guidance thoughts on the deceleration in Q1, I think there might be some headwinds like leap year, California fires, FX. Just wanted to see any underlying factors there, core versus non-core as well. Thank you.

Hey, Bernie. I’ll take both of these. Q4 was a strong growth quarter for us. We're very pleased with the business performance. Looking at 2024, restaurants continue to grow at a nice pace, seeing double-digit growth. More significantly, we noticed stable and consistent growth across the quarters, with new verticals and our international business growing much faster than the restaurant sector. We mentioned earlier that we have over 42 million monthly active users, and that figure is rising at a double-digit rate. Orders are at an all-time high, and DashPass had a successful year. Overall, these factors contributed to the growth seen in Q4. Regarding Q1, we're pleased with our business's progress and satisfied with the guidance we've set. Considering last year's comparison, we have an extra day, and you're correct that there's an FX impact of about 1% on year-over-year growth. However, our business continues to perform well, and I'm very confident in our full-year outlook.

Great, thank you. And your next question comes from the line of Nikhil Devnani from Bernstein. Your line is open.

Hi there, thanks for taking my question. I have two on the U.S. new verticals, please. First, how much repeat buying behavior do you see with these newer categories? I appreciate that aggregate cohort metrics are probably more important, but it would be helpful to understand if you see repeat engagement or if demand is more episodic in nature. Second, the letter talks about continued progress towards strong profitability in U.S. new verticals. How should we think about the scale needed to achieve that? When considering what operating profit per order looks like, how does it compare to restaurant delivery? I understand it varies a lot by category, but any commentary would be helpful. Thank you.

I mean, Nikhil, I'll address both. If you consider new verticals, we're seeing significant growth; we're the fastest growing in the U.S. Throughout the year, we've gained market share in these new verticals. Consumer behavior shows that they increasingly utilize new verticals, ordering from various categories. Early on, we noticed that customers tended to order from both restaurants and new verticals, enhancing their engagement across the platform. The data indicates that users are increasing miles spent on new verticals, order frequency is rising, and monthly spending is also growing. This growth demonstrates that our selection and product quality resonate with consumers' needs, and we focus on that. Regarding profitability, we're primarily focused on total dollars flowing through the system, rather than operating on a margin percentage basis. Our progress in 2024 compared to 2023 is promising, and I feel confident about our current position. Our main focus is on scale, as we see immense potential to build a large business here. Ultimately, our goal is to increase overall free cash flow in the system. Grocery and new verticals will be significant areas of growth and profit drivers for us in the coming years.

Thanks, Ravi.

And your next question comes from the line of Eric Sheridan from Goldman Sachs. Your line is open.

Thanks so much for taking the question. Maybe building on the last question, I just want to go a little bit deeper in the state of the grocery side of the business. What were the key learnings of the last year that unlocked elements of user growth, frequency, or supply? When considering the supply or frequency moving into 2025, what key investments do you envision to potentially unlock that potential, and how does that influence your strategic priorities? Thanks so much.

Hey, Eric, it's Tony. I can take this one. In short, a lot of this revolves around product improvements. The current state of grocery delivery in the U.S. and globally is still quite in its infancy. When comparing its penetration to other sectors of e-commerce and delivery, it lags considerably. Various factors contribute to this, but the crux of the matter is customers are often required to pay a premium without receiving the exact items they ordered, which isn’t a favorable proposition. To enhance this situation, we are focused on several initiatives: expanding our catalog, ensuring accurate delivery, improving product affordability, effectively matching Dashers with grocery orders, and collaborating with grocers and retail partners to ensure an optimal delivery experience. These are varied and numerous improvements, many of which could fill a long project list. The key takeaway is that substantial product improvement is still needed. We are satisfied with our progress in 2024 and in previous years, but we recognize we have a long way to go. Customers who begin by ordering casual groceries are now buying larger baskets, and we’re meeting all their diverse needs. Additionally, grocers increasingly recognize that our customer base provides crucial incremental business. All these factors tell us we’re on the right path, but as noted, our main goal remains ongoing product enhancement. We're proud of the progress but aware that grocery delivery has much room for growth.

Great, thank you.

Your next question comes from the line of Jason Helfstein from Oppenheimer. Your line is open.

Thanks. If I could ask two questions. Just general thoughts on DashPass, I appreciate you sharing the growth rate and the numbers. How do you think about growth from here and any catalysts to potentially accelerate that growth? And then second question: I think the GOV per MAU was up 6% in 2024; I think it was up 8% in 2023. Could you discuss the factors impacting this, whether in the U.S. or non-U.S., restaurant or non-restaurant?

I will start with DashPass, and Ravi, you can take the second question. Regarding DashPass, we have over 100 million customers who order with us annually, but DashPass and Wolt+ are only in the tens of millions. There's a significant number of our customer base within our ecosystem who are not subscribers yet, which is our primary focus to resolve before looking at more extensive issues. We aim to improve the product, ensuring clear reasons for customers to subscribe. Enhancing selection, providing exclusive benefits to subscribers, guaranteeing quality, and improving customer support will drive user frequency, making the membership program more appealing. We've been able to grow our subscriber base organically without needing artificial stimuli, and we feel confident about our trajectory simply by continuing to enhance the core user experience.

Jason, in regard to your second point, the blended growth number doesn't effectively capture the underlying trends. Our business operates on a cohort basis. We continually acquire new users at a healthy rate, but new users tend to have lower order frequencies initially before they gain traction over time. For a real indication of the business's health, we should look at underlying cohorts. Our retention rate continues to improve, and order frequency is on the rise. If we focus on specific lines of business, the restaurant sector is still growing, and we are witnessing increased orders. Furthermore, in new verticals, user engagement and frequencies are also on the rise. We also see strength in older cohorts, which continue to enhance their engagement and order frequency. All of this demonstrates the robust health of both new and existing cohorts.

And does that complete your questions?

Yes, thank you.

And your next question comes from the line of Ken Gawrelski from Wells Fargo. Your line is open.

Thank you very much. Two, if I may please. First, on advertising, you list it as the fifth area where you can build a great business. Could you speak to the roadmap for the next 12 to 24 months? Do you believe you have the advertising product and overall experience ready to aggressively scale ads? Then my second question is about Dasher supply. Could you discuss one big-picture view of the Dasher supply landscape and how you think it may evolve throughout the year? Are you segmenting use cases into in-store, delivery, and pick and pack?

Hey, Ken. I'll start. The advertising sector has seen great progress in the past year. We view it as two distinct sets of products - one for consumers and one for advertisers. Advertising inherently involves balancing how we deliver the best returns on ad spend for advertisers while minimizing, ideally eliminating any negative experience for consumers. While we aim to scale quickly, it's essential to emphasize that a successful advertising venture relies on a healthy marketplace. The path forward involves refining our ads to improve relevance, increasing unit volumes, enhancing reporting, and integrating with other platforms that advertisers expect. Building a solid foundation for both parties is crucial as we advance in this sector. Concerning Dasher supply, we are experiencing a robust supply presence on the road. Despite challenges with weather in some regions and unfortunate natural disasters, Dasher supply remains strong. There is indeed a noticeable segmentation in preferences among Dashers and couriers globally. Starting with our frequency delivery from restaurants gives us broad coverage and means we have Dashers everywhere. This facilitates self-selection in the types of deliveries they choose.

Thank you very much.

And your next question comes from the line of Youssef Squali from Truist Securities. Your line is open.

Awesome. Thank you very much. Just as a follow-up to the ads question, Tony, can you talk a bit about the importance of DSPs on the platform? Last quarter, you signed a deal with The Trade Desk. How significant is that relationship to you, and are there other DSPs you’re considering? Then, if possible, could you provide an update on the take rate, which was flat at about 13.5%—the first time in a while? Is there anything to read into this, how much of the take rate was driven by advertising, and could you touch on platform revenues in the quarter? Perhaps for Ravi.

Yes, I’ll tackle the first part on ads. These efforts are foundational to our growth and to partnerships with companies like The Trade Desk. Our advertising start two years ago primarily served restaurants, but we're now prepared to cater to a broader clientele globally, including smaller businesses and large enterprises. In response to advertiser needs, we’ve worked diligently to refine our product offering and will continue expanding our partnerships in this sphere.

On your second question regarding the take rate in Q4, the trend primarily reflected seasonal adjustments, particularly relating to Dasher Pay during the holiday quarter. Historically, Q4 presents unique growth opportunities, leading us to strategically lean into Dasher Pay to facilitate growth. This primarily caused the flatlining of the take rate we observed. Importantly, our overarching goal remains to boost overall profit dollars rather than focusing singularly on margin percentages. To achieve this, we emphasize generating economic efficiencies, which we reinvest in the business, all while maintaining our goals of growing both retention and order frequency.

That's great. Thank you both, that felt cool.

And your next question comes from the line of Brian Nowak from Morgan Stanley. Your line is open.

Great. Hey guys, thanks for taking my questions. Maybe two, the first one, could we explore prioritization changes year-on-year? Tony, can you discuss how your ‘25 budgeting and investment priorities have changed compared to the start of ‘24? I’m trying to understand where you're investing more or less to maximize multi-year free cash flow and growth. The second question, more about housekeeping: How should we view the pace of the buyback, the cash balance, and what regulatory constraints might influence the buyback speed moving forward?

Yes, Brian, I’ll begin with the prioritization question. Quite honestly, not much has changed from ‘25 to ‘24. I wish we could achieve significant progress in a single year, but these initiatives usually unfold over extended periods. What I am noticing is the continued improvement in product-market fit across the board, encouraging greater investment in all areas. Much of the success we celebrate in ‘24 reflects decisions and prioritizations initiated years earlier, and I see no reason to deviate significantly from this path. I still view extensive opportunities for investment in all sectors, and as I reflect on our ongoing work across U.S. restaurants, international businesses, and our ads segment, I feel overwhelmingly positive about our continued inputs.

On the buyback aspect, our capital allocation philosophy has been consistent. Each dollar invested is measured against expected returns, which have yielded over $2 billion in shareholder value over the past few years. We take an opportunistic approach to share buybacks, balancing between being conservative and seizing favorable opportunities as they arise.

And this does conclude our Q&A session. We will also be concluding today's conference call. We thank everyone for your participation and for joining, and you may now disconnect. Have a great day, everyone.