Thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the DoorDash 3rd Quarter 2025 Earnings Call. All lines have in place on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question again, press the star 1. I would now like to turn the conference over to Mr. Weston Twink. You may begin.

Thanks, Desiree. Good afternoon, everyone, and thanks for joining us for our Q3 2025 earnings call. I'm pleased to be joined today by co-founder, chair, and CEO, Tony Hsu, and CFO, Ravi Anaconda. We'll be making forward-looking statements during today's call, including without limitation, our expectations for our business, financial position, operating performance, and profitability, sustainability, our guidance, strategies, capital allocation, and investment approach, our plans and expectations regarding the integration and benefits from our acquisitions, our expectations regarding new product and service initiatives, including our economist delivery platform, as well as expectations regarding platform safety, our global technology platform, 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 at ir.doldas.com. 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.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question please press star one on your telephone keypad to raise your hand and join a queue if you would like to rejoin your question simply press star one again if you are called upon to ask your question and are listening via speakerphone on your device please pick up your handset to ensure that your phone is not on mute when asking your question we do request for today's session that you please limit to one question and one follow-up question only thank you and our Your first question comes from the line of Deepak Mativanan with Cantor Fitzgerald. Your line is open.

Hey guys, thanks for taking the question. Two-part question on the several hundred millions of incremental investments for 2026. First, how much of this is towards tech platform initiatives versus perhaps more direct product and expansion efforts that tend to have a very defined near-term payback? And then the second part is, can you expand on the tech platform efforts? Are you sort of essentially rewriting the tech for AI development, or is it more about, you know, integrating AI tools with additional token expenses into the service? And, you know, in addition to sort of opportunity for accelerating the product development, do you also see any potential for cost savings from these efforts over time? Thank you so much.

Hey, Devak, it's Tony. Yeah, I can maybe start on both questions, and, you know, Ravi, feel free to add. Yeah, look, on the first question of, you know, where are we spending, we're primarily investing in three areas, and kind of, you know, the second part of your question kind of feeds into the first part. So, the first major area is, you know, building a new global tech platform. And so, this is an effort that's been underway for a couple years now, but it's coming to ahead where we're actually making the majority of those investments in 2026. And what is its purpose? Well, there's several reasons of what we're trying to accomplish. The first thing we're trying to accomplish is we're trying to build a single global tech stack where when we launch one experiment, the experiments that actually make it to our customers can be shipped at the same time across all of our markets and all of our audiences. Today, that doesn't work that way as we have three companies at DoorDash on the restaurant delivery or marketplace front with Deliveroo, Volt, and DoorDash. In the new world, we'll actually be able to have one feature go live to all audiences, whereas today that one feature would pretty much have to get shipped three times, which is very inefficient in how we do that. Another goal of the tech platform is to, like you said in your setup, to make it AI native. And so there will be lots of tooling there where, you know, I may have mentioned this in a previous call before where, you know, if we were starting a company over again today, I think we would write software pretty differently from how we used to do it. And so there's a lot of work, you know, in order to architect, you know, how we set up the architecture so we can manage both agent workflows as well as how you would deploy software, test software, write software, what the role of the engineer is in that new paradigm. All of that is getting constructed as part of this work. Yeah, and I do actually think that at the tail end of this work, you'll see on a go-forward basis not only will we ship faster and, you know, ship improvements across the board globally will actually be more efficient and will have freed up engineering capacity to do a lot more work. And so that will allow us to, you know, not only have a better cost structure, but really, you know, just be able to do a better job in, you know, solving the next problem for customers. So the first area of spend is in building our tech platform. The second area is investing in new products. And so, we announced probably, well, several launches in our Dash Forward product event, which happened at the end of September. And we're really excited about them. You know, a lot of times when you're, you know, building a company, what you're really doing is you're starting with lots of experiments. Some of those experiments make it into products. Some of those products then can be graduated into commercialization where you're trying to test whether or not you have a good business. And then some of those candidates then ultimately yield, you know, big businesses that generate, you know, the cash flows to allow you to invest in the next set of products and experiments. And, you know, I think we're really fortunate at DoorDash in a couple of ways. One, in the area of local commerce, there's just a lot of different problems. And the other way in which we're lucky is that, you know, a lot of the experiments, many of these have been running for years, are now coming ready for more investment. And so, we're very excited to be investing behind them. We announced, for example, a lot of work on in-store and building several products there with going out, reservations, and our CRM platform behind seven rooms. We talked about DoorDash DOT, which is the customized purpose-built for delivery autonomous vehicle, the first in the world to drive on the road, sidewalk, and bike lanes in order to make that happen. We talked about Dashboard Fulfillment Services, where we're creating an ability for any retailer to offer same-hour or same-day delivery with near-perfect accuracy. So these are some examples of the new products that we're talking about. But if you think about it, in each case, we're running the business exactly as we always have, where, you know, the goal is we want to make sure that we always can solve the most number of problems for our customers in the highest quality ways. and we manage, you know, our projects carefully to milestones. And as, you know, they deliver upon each milestone, we throw them into businesses and we continue to invest behind them.

I think, you know, our track record in investing in the areas that we currently have operating, whether it's, you know, U.S. restaurants, U.S. team verticals, the international business, our commerce platform, our ads business, have suggested that we've had some success in repeating this playbook and we're doing this now you know for future growth yeah Deepak I mean just to add to you know what uh Tony talked about right like look our core businesses continue to do really well I mean you're seeing that come through in terms of the numbers where if you're thinking about it from a growth perspective growth accelerated for the fourth straight quarter overall unit economics are improving across the business as well as the profit dollars continue to increase this is giving us the ability to reinvest back in the business if you think about our operating philosophy when the gov is coming in ahead of expectations when the unit economics are improving our philosophy has always been to reinvest back in the business if you're looking at the results today it's a combination of these decisions that we've taken you know the course of the last decade that philosophy and how we are operating is not changing look we're very disciplined in terms of how we operate we're thinking in terms of irr all of the investments that we talked about we think they're going to extend the duration of growth as well as drive strong IRRs for us. And if you're thinking about 26, what I would say is that the EBITDA margin for the existing business, including the investment, think of that as the overall business excluding delivery. I would expect those margins to be up slightly compared to 2025. Hopefully, that should give you a sense of how we're thinking about investing. I mean, look, the business is growing. The business is growing exceedingly, exceeding our expectations. And our goal is to continue to reinvest and we are very excited about the investment.

Very helpful. Thank you so much.

Our next question comes from the line of Shwita Kajuria with Wolf Research. Your line is open.

Thank you for taking my questions. Could I please try two? First one is also on investments. Could you please talk about where you're planning to invest as it relates to Deliveroo? What your goals are for the first year in terms of order of business and strategic focus areas? And then the second one is on automation. Could you please talk about where you are in terms of expanding your robots and your third-party partnerships, and how do you think about scaling it and deploying that opportunities over the next year or maybe one to three years?

Yeah, Shredita, I'll start. And, you know, Ravi, feel free to add. You know, the first question is about investing and delivery. This is kind of similar to, you know, what I said about our general investing philosophy Kind of what Ravi said about, you know, why we feel like now is the right time to, you know, continue to invest for the long run, which is whenever we see, it starts with making sure that we can build the best-in-class product experience, you know, measured in terms of the retention, the frequency of use, and the engagement from the audiences. We think that we found a business actually in better shape than we had expected with Deliveroo, and we think that there's actually a lot of opportunity to add to the foundation that they already have and make continued product improvements so that it will achieve the best-in-class metrics along those dimensions. I think if we can do that, you know, and at the same time improve, you know, the unit economics, I think that that's what will allow us, you know, to generate the greatest service for our audiences and also the greatest, you know, long-term business and returns for all of our shareholders. And so, the first order of business really is making sure that we continue to invest in the product, make those improvements. And then, you know, of course, over time, you'll see cost efficiencies come out of the business because we'll be combining two European teams on the same continent. But, you know, I think the first order of business continues to be adding to the strong foundation that the product has and making sure that we can make it best in class, given the learnings that we've had with Volt and DoorDash, and then grow from there. On the second question around autonomy, the way that, you know, we're thinking about this is really pragmatic. And I think the most important thing is understanding that the vision for autonomy is really going to be a multimodal world where you're going to see different fulfillment methods. Some of those fulfillment methods will happen with dashers. Some of them will happen with vehicles on land. Some of them will happen with vehicles in the air. Some of them will happen with vehicles built by DoorDash. Some of them will be fulfilled by vehicles built in partnerships. And really what's important is DoorDash has the luxury to create our own autonomous delivery platform where, depending on whatever the use case is or whatever the customer need is, we can solve it with the highest quality, the lowest cost, and the best service. And that's really the goal. And so we'll be fairly pragmatic on how we do this. So a lot of it will be testing within one market, getting that right, figuring out the go-to-market motion because, you know, there's many parts you kind of have to get right, everything from the manufacturing when it comes to making these products in-house to partnerships to integrating the hardware and the software to making sure you get the repair and the teleop, you know, operations correct to making sure that you work well with city governments. um there's a lot of things you kind of have to get right and so you know for us 26 will be the year where we're ready to commercialize some of these efforts but i think this is going to take a while this is not something that's going to happen overnight um it does require you know making investments up front because sometimes these decisions um you know are required up front and you don't really get the product until later um but for us um we're pretty excited about um What we see as the potential, we also, you know, are very, very excited about this autonomous delivery platform where we're going to be able to inject whatever the right fulfillment method is in order to give the best service.

Thank you. Your point around Deliveroo, look, I mean, we're very excited, you know, with the partnership with Deliveroo. Look, I'll rewind us back to the DLTCs that we have, right? This gives us the ability for us to operate in a really large, attractive market where we could deploy our operational playbook, our product playbook to drive, you know, operational rigor. If you think about it, the focus for us is what we're learning is there's an opportunity for us to continue to improve product. There's an opportunity for us to improve the consumer experience. To your point around, you know, the focus, that's what we are focused on. Why is that important is because it drives scale by improving retention and order frequency, which will drive more gross profit dollars. That's honestly how we operate DoorDash. That's honestly how we operate world, delivery is going to be no different for us. What we see in the business is from an EBITDA perspective, look, we're very comfortable with the profit generation of the business. It is in line with what we underwrote when we did the deal, which assumes some level of investment. Now what you're seeing in the business is the growth is exceeding our expectations. The business is growing double digits, which is giving us confidence to invest back in the business. The focus for us continues to be investing behind the team, investing behind product, which will ultimately drive your long-term free cash flow generation in that business.

Thanks, Rebe. That's helpful. Next question comes from the line of Ross Sandler with Barclays. Your line is open.

Hey, guys. Glad to be back on the call. I guess just following up on just the broader consolidation that we've seen from you guys and from process acquiring JET, how do you see the overall landscape in Europe evolving next year on the back of all of this? And, Ravi, it sounds like you're investing in Deliveroo to grow a little bit faster. I assume that the $200 million of EBITDA is reflecting that investment and the platform consolidation investment that Tony just talked about a few questions ago would be kind of a separate thing, not included in, you know, reducing Deliveroo's run rate from what it was before to this 200 based on some kind of, like, allocation of that platform investment. Just any clarity on that minutiae would be helpful. Thank you.

Yeah, hey, Ross. Look, on the first question on the European landscape, I think we have a great opportunity to be the leading local commerce platform there. And, you know, I think a lot of the confidence of what inspired us to pursue the Deliveroo acquisition really came, you know, a couple years ago after gaining confidence in working with Volt. You know, the first test for us is whether or not we can actually take some of the lessons, you know, that we've learned at DoorDash and also combine them with the lessons that Volt has learned in building their markets to see if we can create, you know, the best-in-class product. And I think when you look at, you know, our growth rates, which continue to exceed those of our peers, as well as, you know, just the retention and frequency levels and how they're progressing nicely, as well as, you know, the unit economics improving at the same instance to all-time highs, we gain further confidence that we could kind of take on the next project. And that really is kind of how Deliveroo came into the puzzle. So when you add up, you know, our presence in Europe, you know, you're talking about a presence in over 20 countries and with the strongest position in the cities with the biggest profit pools. And so I think there's a lot of strong foundation to build from. And so, in general, what I see is, you know, can we solve, you know, the most local commerce products in Europe the way that we're trying to do that in the States and in other countries? And, you know, so far, as I mentioned, you know, we've been fortunate where some of the experiments that we've been running for a while now are now coming into fruition into becoming real products. And we're starting to invest behind those products, which is, you know, some of the investment, you know, commentary that we outlined in the letter. And that will, you know, translate over to Europe as well.

Hey, Ross, to the second point, yeah. I mean, the $200 million, think of that as the contribution from Deliveroo to the, you know, overall EBITDA. And think of that as the investments that I talked about earlier, right? It's investments that we're making behind product. It's investments in selection quality as well as people.

So you should think of that as the contribution of Deliveroo EBITDA. thank you next question comes from the line of josh back with raymond james your line is open yeah thank you so much um for taking the question you know what is kind of go back to the tech platform that you've been building in the background curious kind of what you've learned thus far and kind of why this moment in time was the right you know moment to inflect upwards you know, there's a lot of external changes in the AI stack. The international scale of the business is obviously very different. Robotics is having breakthroughs. So I'm just kind of curious if there was, you know, maybe a smaller list of items that drove this step up. And then with respect to the integration, you know, I think in some cases they can be messy. You have obviously a lot of consumer, merchant, dasher, ecosystem, you know, how do you minimize the disruption and kind of keep the strength? It sounds like the root business maybe is kind of in the double digit range, so it seems to be in a pretty good spot. How do you maintain that throughout the integration? Thank you.

Yeah, I can take that. I guess with respect to the tech platform, I think this was something that always was um in our heads when we're thinking about um you know the the acquisition of some of the companies that we're talking about right i mean like in you know by and large these companies um you know perform the same service in each of the geographies now there are a lot of obviously local differences but by and large the service themselves are the same and and and and i think that's one of the things that um you know screams that we should be um building a single tech platform to actually make sure that all of the products are under the same data models, the same architecture, the same UX. But when you're doing that, especially when you have like a change as big as AI happening externally, you obviously have to take that into consideration. So I think some of these things kind of came together in the 24 time period where it was exceedingly obvious like what the right thing to do is and then now you just have to go and do it um and that's kind of you know the work that we've started here in 25 it'll really take shape in 26 which is you know again a large part of the investments um obviously those investments will come off but like but but that's you know the timing of that really makes sense for us on the integration of root i mean you're you're you're absolutely right i mean we we obviously you know, one of the reasons why we're incurring extra costs is because we are making extra tech investments to make sure that, you know, Roo can continue to perform well on its own, even as we're building the single tech stack. And so, as a result, when you have these, you know, added investments, that's what explains it. But that's also how you protect, you know, the experience and the service that, you know, the Roo customers get to see even as you're building, you know, this new foundation.

It's super helpful.

Next question comes from the line of Jason Helstein with OpenHiber. Your line is open.

Thanks for taking the question. Just one follow-up. How should we think about advertising broadly? I mean, it obviously comes in at a high incremental margin. there's flow through versus reinvestment. So just how are you thinking about, we should think about how that flows through. And then second, there's been some questions, a report floating around about kind of documented workers and the government kind of cracking down on documented workers. And, you know, certain reports, like, talked about what percentage, just any caller you can have about how you manage making sure that you don't have undocumented workers on the platform and how you manage through that and any exposure there.

I can take both of those questions, Jason, and, you know, feel free to add in here, Ravi. Look, on ads, I mean, we're pretty excited about the ads business, right? I mean, it was the fastest business, ads business in history to get to a billion dollars of annualized revenues. And it's also a business where we have, you know, extra budgets wanting to spend more on the Dash, you know, platform than we kind of give ad space to. And that's because, you know, when I think about the ads business, I think the reminder I always give to our teams and that I would say again here is that you kind of have to solve for all of your audiences. on the one hand, you obviously have to maximize the return on ad spend for advertisers. On the other hand, you have to make sure that you are not degrading the consumer experience. And that's hard to do. There are real conflicts and real tensions and real trade-offs and negative consequences, I think, if you get that incorrect. And that's why I've always believed the right order to sequence things is to first build a very healthy marketplace. And then the monetization opportunities, including ads, will follow. And they have. I mean, look at our business. I mean, we've continued to grow faster at bigger scale for many quarters in a row now. And you're seeing the bottom line contribution margins and EBITDA margins grow in the same instance. And so I think all of that is suggesting that, you know, I think we have the right tradeoff, and we just have to make sure that we have the discipline to maintain it. On the second question, I mean, Dasher supply has never been healthier. It's always been, you know, something that's obviously, you know, very top of mind for us, which is making sure that we get correct, you know, all of the Dasher authenticity pieces. There's a lot of work that goes into it. It's something that we've been investing into for many years now and will continue to. We've seen no challenges to our Dasher funnel or supply, irrespective of whatever reports that there might be out there.

And it continues to be something that we've upheld the highest standards and something where you know it's it's it's we've we've always done it the right way I guess Jason just on your point on the ad business right just to clarify I mean I think the ad business is growing is growing quite nicely we don't differentiate that from like hey are we thinking about it just purely from a flow through perspective because for us every dollar that we generate our goal is to reinvest back in the business at healthy rates that applies for improvements in unit economics or applies for you know, dollars that we generate from ads. We think of, you know, efficiencies that we could generate so that we can put that back in the business. But net net ads business is growing and it's growing quite nicely.

Next question comes from the line of Michael Morton with Moffat Nathanson. Your line is open.

Hey guys, thanks for the question. I guess maybe one for Ravi to start. If I'm just doing like quick math here, looking at your guide and kind of what it means for the core business it seems like this incremental step up cost could maybe be like a hundred million a quarter um if you feel free to correct me on that and then if tony highlighted the buckets where the spending is going and sorry it's a stupid question but from the outside looking in just understanding maybe like where the the platform development's been like how that hockey sticks so much if it's something that's been going on for several years. And then what I found interesting was the Dashmark Fulfillment Services comment he made. And I was just looking for any more details if you're really stepping on the gas there. And if this is like maybe part of a partnership with some of like the, I'd just say large AI platforms where maybe you work local commerce more into these e-commerce searches? And is there more costs involved as you build out Dashlink? Anything there would be really helpful. Thank you.

Yeah, Mike, I'll take the first one. I think to your point around, I mean, look, you know, we are still early in terms of, you know, how we're thinking about planning. We'll give more precision as we give quarterly guidance. What I would say is if you're thinking about 2026, to the earlier point, you know, what I made to Deepak is, I would think of margin for the existing business, including the investment area. So, think of that as the existing business plus investment, excluding delivery. I would expect the margins to be up slightly compared to 2025. Hopefully, that should give you a sense of how we're thinking about, you know, margins as well as investment into 26.

Yeah, Mike, I guess what I'd add to, you know, some of your other questions is, you know, first, you know, the reason why the tech investments go up in 26 is because that's when they're actually happening right like the way if you think about how would you build new software the first thing you would do is you first have to architect it right and so you're not actually really doing much on actual coding but like for instance but once you're ready to code what do you have to do well okay well one thing you have to do is you have to spin up some cloud instances and if you're going to maintain multiple stacks as you're building a new one you're going to you know incur extra you know kind of temporary um you know cloud instances right and so that's one of the reasons why you know the costs go up and it that's um so it's just basically like when you're actually ready to deploy the software and actually get everything onto the same tech stack that's that's what's adding to the the kind of temporal costs um with respect to dasher fulfillment services it's less about working with, you know, AI companies, although, and more on how we work with our existing, you know, retail partnerships, right? So what is Dasher Fulfillment Services? Well, the goal is we want to, you know, one of the challenges in delivering from just third party stores is that not every store, and most stores actually, I would argue, do not know their inventory. And this is for a whole host of reasons. And even though we believe we have leading accuracy in the quality of delivery when it comes to any category, including those outside of the restaurant category, it's still not good enough because it's not perfect. And therefore, why would a customer pay a premium to get not what they order or to get a substitute of what they order. But if we could manage the inventory systems ourselves and actually run the fulfillment setup end-to-end from the warehousing to the inventory to the fulfillment, we get almost near-perfect accuracy. Okay, so how do you translate that and do it for every retailer, especially retailers who may not have, you know, the density of stores or the coverage in the country so that they can offer something like same hour or same day delivery? Well, I think what that would argue is you can literally turn every physical retailer into an omni-channel player. Now, that's going to take time, and this is one where it takes time to set up supply chains with retailers, to test the right markets, so on and so forth. But what we're very excited about is that, you know, the quality is best in class. Now what we're doing is we're adding selection that's never been made available to customers before and bringing it close to where they are so that these retailers can offer same-day delivery. And that combination is now happening.

Thank you.

Next question comes from the line of Andrew Boone with Citizens. Your line is open.

Thanks so much for taking the question. I wanted to ask about new verticals. You guys talked about the fact that unit economics are still negative. Can you talk to us about the path and maybe the visibility that you have to break even? What are the key kind of operational things you guys need to do to get there? And then in terms of just U.S. kind of growth overall, now gross ads were higher year-to-date versus 2024. Can you guys just talk about the opportunity of where you guys are finding new users?

I know we've talked about this on past calls, but can you just revisit what what pockets you guys unlock in there thanks so much yeah i mean let me start uh look i mean uh talk about the overall performance of the new vertical business right like look new verticals had a really strong quarter the business is going really fast but the fastest growing we believe you know we are leaders in terms of order volume share ahead of our expectations remember if you recall q4 of last year we talked about the fact that a quarter of our users order from new verticals, that numbers continue to grow quite nicely. Miles have increased, order frequency is increasing, the overall basket size continues to increase, which just tells us that consumers like the product, the usage of the product is continuing to go up. On the unit economics front, just to be clear, right, the unit economics continue to improve. They've improved sequentially, Q on Q, as well as year on year. We're very comfortable with the unit economics are. We are comfortable on what it needs to get to to be breakeven. Look, a lot of that is going come from scale as well as continued improvements whether it's you know quality of the product that we continue to improve what we're focused on right now is scaling the business we think there is an opportunity for us to continue to improve the product as long as we continue to improve the product this is going to be a large business for us which will drive you know more free cash flow generation in the future yeah and your second question um with respect to the u.s strength i mean you're absolutely right i mean we're thrilled with the performance of the u.s marketplace i mean four quarters in a row of increasing strength on a bigger base especially at the scale that we're talking about, you know, certainly is something that we're very proud of.

There's no one thing. I mean, a lot of the, you know, a lot of the performance that you're seeing today really were the result of actions probably, you know, initiated three years ago, where, you know, it's this continued maniacal focus on improving the inputs of the experience. You know, how do we improve the selection, the quality, the affordability, the service levels? And when you do that, and that's because, you know, the most difficult thing that we always compete against are increasing consumer expectations. You talked in your question about, you know, why are we seeing increasing, you know, monthly active user penetrations, or perhaps why are we ahead of schedule on some of these forecasts? It's because we're delighting each cohort of customers, right? And each new cohort of customers obviously have a higher expectation bar than the previous cohorts. And if you can, you know, keep delighting the new customer cohorts where we are still the leader in, you know, acquiring new customers, whether it's in the restaurant category, in the grocery category, in any retail category, well, then you're also delighting all of your existing customers. And so you kind of have this, you know, boat that lifts all of your, you know, cohorts. And that's because of product improvements.

And, you know, but a lot of this stuff started probably three years ago. and now we're making investments into things that we hopefully will have an impact three years from today and andrew when you look at the underlying cohorts right the demand on the underlying cohorts continues to be very strong both amaze are growing order frequency is growing even subscription both in the us as well as international had a record quarter in terms of dash plus subscribers as well as world plus subscribers what we see in the business is you know even existing cohorts sports that are quite old they're also continuing to engage with us even more all of this goes back to look at improvements in product improvement in selection as well as quality that we've been continuing to work on not just in the last quarter right over the last several years thank you next question comes from the line of Nikhil Devnani with Bernstein your line is open

hi there thanks for taking the question I had a clarification on the investment commentary is the bulk of this spend fixed cost investment that you get leverage on as you compound the top line? Or is it a step up in variable costs as well? And then on new verticals, beyond grocery and convenience, which categories of the retail or local commerce opportunity do you feel are showing the most promise from a demand perspective that becomes the next big category for DoorDash going forward? Thank you.

Yeah, Nikhil, I think the first one on the spend and investment areas, I mean, you know, our goal is we are spending, you know, up and down the P&L. Some of that is going to come through in terms of cost of sales. Some of that is going to sit within sales and marketing as well as some of that is going to sit within R&D and OPEX. Look, the areas that we're investing behind are we're trying to increase and scale our autonomous program, obviously doing it in a very disciplined manner. We're growing our software business. Both our digital ordering as well as our seven rooms business falls under that. They're starting to generate revenue. That's going to continue to increase. And finally, some of the tech stack work that we're doing, which we you talked about, that's going to hit, you know, across the P&L. So you should think of that as, A, some of that is going to drive leverage as we go through, as we scale the business.

Hey, Nikhil, on your second question with respect to, you know, which categories are we seeing growth? We're actually seeing growth quite a lot across a lot of categories outside of, multiple categories outside of grocery, convenience, and alcohol. And, you know, And it tends to be somewhat probably what you may expect, you know, that that comes with time of the year. You know, for example, you know, pets is a category that's kind of a all season, you know, category. As we head towards the holidays here in the U.S., you see, you know, categories like electronics really spike in terms of, you know, the gifting use case. we've seen you know growth in health and beauty home improvement has been a very big surprise to us seeing you know growth where and when we're delivering believe it or not thousands of pounds of mulch you know per day I guess that more happened you know maybe in the summertime period again so some of this has to do with when customers need different things but I think what's really interesting even without just looking at the performance of these categories is just actually looking at where things are going, like the trend and the trajectory and, you know, the input metrics, you know, such as the searches, you know, for different types of products. And we're effectively, you know, becoming the everything inside your city store. And as a result, you know, we're seeing growth across the board. And so sometimes some of these new customers are coming in. You know, we talked a little bit earlier about MAU growth or monthly active user growth. You know, they're coming in for the first time outside of the restaurant category. And then what you see happening is then they'll shop in the restaurant and then, you know, back and forth. And, you know, this is what we've always believed could be the case where if you start with the highest frequency category of restaurant food, which is where we're, you know, the leader, you just get the most shots on goal. And then now we're also the leader in terms of, you know, transactions outside of restaurants, both in, you know, grocery convenience, as well as the categories outside of that, then you really get this, you know, multi-shopping behavior across the board. And if you can, you know, do that the most number of times, which I believe, you know, is what we're on track to do, you'll create the most valuable membership program, which is DashPass.

Thank you both.

Next question comes from the line of Lloyd Wamsley with Mizzuil. Your line is open.

Great. Thanks for taking the question. I wanted to go back to the Dash Mart Fulfillment Services and just better understand the plan there in terms of integrating all this 3P inventory, especially on the grocery side. Is this going to require a lot of build out of new facilities, or do you just sort of take control, pick and pack inside some of the partner facilities? And then as we think about the timeline of that, and it seems like this could be a really big and attractive area of investment, is this something where 26 is sort of continuing to experiment on this, and maybe you scale it more in 27, just like anything more you can help us understand, like how that will work and the timeline around that would be Yeah.

Hey, Lloyd. Yeah. On Dashboard Film Services, we're obviously super excited and we share your optimism that this could be a very attractive area of investment. I think the short version of this, it really depends on the retailer we work with. Right. Some retailers, you know, have different goals. For example, some retailers may want to launch new geographies. Some other retailers may want to densify existing geographies. Other retailers may want to, you know, find attractive uses for less productive existing square footage inside their existing stores. I mean, there's a whole host of different goals, and this is why the question is a little bit hard to answer. There is no one-size-fits-all solution, I guess is what I'm trying to say. And so as a result, I think what's most important is you have to build different capabilities and be flexible. What we're stubborn on is we're stubborn on building the best possible experience where you're bringing in selection that's never been made available to customers before, right? If you think about it, there's, you know, roughly speaking in, you know, in cities, there's like tens of millions of items out there. And today, you know, only a single digit percentage of them are being delivered through DoorDash. And if you compare that to it, but DoorDash almost already carries the most amount of inventory, you know, for same hour delivery. I just think there's a massive headway and runway in front of us in terms of how much more of that inventory we can bring and fulfill on behalf of customers and bring everything inside the city. Now, this, though, is not our inventory, right? This is the key challenge. It's a retailer's inventory. And the challenge is, well, one, like, you know, does the inventory exist? And that's one of the reasons why we're building Dashmar fulfillment centers as services, because sometimes the inventory can exist and it happens to be inside stores, but other times it doesn't exist or it's missing or it's in delay somewhere in the first mile or the middle mile. And so it's complicated, but the simple thing that we want to give customers is we want to give them a selection that's never been made available before to them, you know, done same day or same hour. We're bringing a new e-commerce capability to a lot of physical retailers as a result on the retail side. But, you know, the answer to your question is a little tricky because each retailer may have their own goals. And so there may not be one answer that that is the setup. And that's why we have a handful of these retailers that we're working with, and we're customizing the solution that makes the most sense for them. And of course, you know, we're making sure that's the best in class experience for consumers.

All right. Well, thank you.

Next question comes from the line of Yousef Squally with True Securities. Your line is open.

Thank you very much. So, Tony, one subcategory we're going to talk about is perishables. I wanted to just pick your brain on how you think the entry of Amazon in that space is likely to kind of impact you guys. Not even sure how big pressure was to you. I'm assuming it's small again, but maybe you can help clarify that and just how are you guys kind of positioned to kind of defend your turf. And then maybe just comment on the change in the guards, at least in some cities like New York, after the win of the Democrats last night, Mondami, and how that potentially could impact Dasher's pay, eventually Dasher's organizing, and just really not just in New York City, but in other big cities as well. Thanks a lot.

Yeah, I'll take those. Look, on the first question, look, I guess two sentences have always been true for the history of DoorDash, which is one, it's always been a competitive space, no matter which space we're talking about. And number two, DoorDash has continued to grow, and I guess now even grow faster at bigger scale. And so, you know, I guess, like, you may wonder, well, how is that possible? How can you, you know, square away some of these things? Well, I would say a few things. I would say the first thing is, you know, the market is still very not penetrated, right? If you look at something like grocery penetration, it is so low relative to something like restaurant delivery. And the reason, again, has to do with, you know, this inventory fulfillment challenge that I've talked about probably for several years now. Actually, when we launched Dash Marks in 2021, this was the original vision for Dash Mark fulfillment services, which, you know, I'm glad that we're now making come alive. But it's, you know, can we get you exactly what you order? And if you can't get, you know, customers exactly what they order, guess what? They're not going to order. And that's really the challenge, you know, I think when it comes to, you know, the grocery delivery space or the perishable delivery space, you know, with respect to, you know, retailers and, you know, folks coming in, well, I think at the end of the day, it's really about consumer choice, right? I mean, consumers, you know, DoorDash was created so that we want to give and create a world where consumers can choose from any retailer of their desire. And we believe that maximal choice versus just choosing from one or two retailers is something that is not only both good for all audiences, but it's great for cities. I mean, that's the whole point of why DoorDash exists, to connect every local business to every local consumer. And if we can do that, we're going to grow the GDP of those cities and create more jobs for everybody and make better neighborhoods and all the good stuff that you'd want to see inside the city that you live in. You know, I guess that leads me to the second question, which is around, you know, what's happening with some of, you know, the different cities and kind of, you know, recent elections and stuff. You know, my position on this has always been that, you know, governments and businesses should always work together. And that's what produces the best possible outcomes for all constituents. And, you know, and I think this, again, is where several sentences can be true at the same time, even though they sometimes come into tension. You know, I believe that, you know, all audiences, you know, deserve to be treated fairly. For example, you know, one of the hot topics in a lot of these coastal cities today, including the city where I live, San Francisco, is affordability. You know, DoorDash is probably the most aggressive on making sure that we are the most affordable platform. This is something that, you know, we've been doing since our history, and most recently, you know, we took the lead, for example, on making sure that the SNAP benefits, you know, could continue for those who needed them the most. You know, when it comes to Dasher Pay and Dasher Protections, that's something, you know, we were the first platform in 2019 in this country, in the U.S. to offer, you know, occupational accident insurance to Dashers without they're asking us to. And it's something that we've always believed in. And I think that, you know, what I found to be most productive is finding commonsensical solutions and helping politicians create commonsensical policies so that they actually get what they want. You know, I think what sometimes unfortunately gets in the way is when, you know, ideologies or biases, you know, come without even evaluating the facts or what audiences want. And I think that so long as we put what audiences want up there, I think that businesses and governments can coexist. I believe that businesses should be allowed to be for-profit companies. And I believe that audiences deserve to be served.

That's great. Thanks, Tony. That's helpful.

Next question comes from the line of Justine Post with Bank of America. Your line is open.

Great. Thanks for taking my question. I don't think you've really had a chance to outline synergies with Deliveroo on the, maybe on the order and the top line side revenues.

I would love for you to talk about that if you can, and then maybe talk a little bit about the take rate differences in the accounting that would be helpful thank you sure just in uh you know i'll take uh both of those and look i mean you know the focus for us like i said on the earlier question about delivery right the focus for is always on day one is to continue to improve the product it's to continue to improve the consumer experience you know why is that important is because that drives scale and the combination of scale and improvement in unit economics drives more gross profit dollars right for us the philosophy is to improve the product to improve the overall gross profit dollars that's what we are focused on from a day one perspective look i mean obviously part of the deal pieces was was you know to have cost synergies we operate a global platform we think there's going to be synergies largely from scale as well as cost redundancy some of that is going to take some time we are excited about a the partnership as well as what we're seeing in the business your second point around you know some of the accounting differences the way i would think about it is from an ebitda perspective you should assume roughly an eight to ten million u.s dollar impact or an expense to EBITDA as you're thinking about modeling, going from, you know, root definition of EBITDA to the donor definition of EBITDA.

Thank you.

Next question comes from the line of Lee Horowitz with Deutsche Bank. Your line is open.

Great. Thanks so much. I guess going back to investments, I guess, how should we be thinking about the payback period? I mean, a lot of talk about, you know, taking time and path dependency and spinning up an environment. So it sounds like, you know, payback periods are perhaps getting extended relative to your typical investment plan. Is there anything in this new bucket of investments that is perhaps more of the traditional quicker payback periods that is part of your typical playbook? And then maybe relatedly, retail obviously sounds like a big and compelling greenfield opportunity for you guys. Any way to contextualize how much of this new investment plan may be specifically targeted at this vertical and driving faster growth outcomes there. Thanks so much.

Yeah, I can take both, Lee, and feel free, Robbie, to add in here. On the payback period, nothing has changed. You know, our bar for payback periods is still the same, you know, and that's true whether we're taking on something in a completely new domain, you know, like Dashboard Fulfillment Services or Autonomy or our tech stack, for example. um it it it's just that we're taking on more projects now right and and like i said you know it's very hard to kind of forecast the progression of which experiments you ran you know many years ago to now which experiments have actually you know now earned their privilege of getting more investment and and and so it's just you know more projects have have found product market fit in our portfolio you know that i believe will you know achieve our our investment philosophy which is to maximize long-term free cash flow per share. So, the payback period and kind of the methodology in which how we think about capital allocation has not changed. On retail, I think this probably is similar to maybe a previous, you know, question about it. We are seeing a lot of growth in retail right now. And I think it's kind of similar to, you know, where, but, but, but, but from a product perspective, I think, you know, we, we DoorDash are kind of in retail today where we DoorDash were in grocery, maybe in 2021 or something like that, or 2020 or the tail end of 2020. So we're just very early on the actual product experience itself. And that's why it's super encouraging. It actually means that, the real reason why we think there's a massive opportunity in retail is because consumers are actually pulling us in. You see this not just in the buying behavior, which is great, but you also see this in the search behavior. You see this in what we talk about with retailers as well. A lot of what DoorDash does is kind of two-sided. We have a consumer business, which maybe most people know us for, but we also have a commerce platform, which, you know, and already we've created two of the most successful B2B products out there with, you know, DoorDash Drive and DoorDash Storefront. Obviously, we're adding seven rooms to the mix, which is really in the restaurant category, but in the retail category, you know, we get a lot of requests to help there because I think, you know, these retailers, you know, recognize that we have a large audience, a large consumer base that we can certainly bring. But we also have capabilities that we can bring, right? And Dashboard Fulfillment Services is now part of the capability offering. Online ordering and fulfillment with Drive always have been there. So, as you kind of think about this, DoorDash is a two-sided player in the retail realm where obviously there's the consumer front, but there's also the B2B front with retailers.

Yeah, Lee, on the payback period, right? Like, look nothing is really changing about how we operate the business right like look when we think about investments and payback i think of it in terms of two dimensions one is it is it ultimately improving retention order frequency the other one is is it driving free cash for an irr so that framework and how we operate that discipline is not changing let me give you an example right like we start with small levels of investment as we find product market fit we continue to increase the level of investment look at our new vertical business where we've increased our unit economics year over year look at our overall international business that's close to being you know contribution profit big even that just goes to show you the discipline of us being operators in how we operate the business as you think about the investment areas look i'm in the software side the payback period is going to be shorter but our goal is to continue to invest because that's going to drive revenue whereas if you think about our tech stack all of that is going to increase our tech feature development velocity which ultimately is going to help us release features faster which is going to drive you know retention and unit economics right That's the distinction we have as we think about our investment areas. But the core philosophy and discipline in how we are operating the business, that is not changing.

Helpful caller. Thank you.

Next question comes from the line of Justin Patterson with KeyBank. Your line is open.

Great. Thanks for taking the question. This is Miles Chukubiak on for Justin. I'd like to start with one on grocery. Just curious if you're seeing, you know, you had some nice grocer ads during the quarter. curious if you're seeing any increase uh from grocers to to move a bit faster on the delivery side uh and coming to the platform and then one just on going out or or dining in-person dining um so you had the going out launch and some seven room stuff uh launched during the quarter so curious if you could just expand on you know how you view that dining out experience fitting within the DoorDash ecosystem and the opportunity there. Thank you.

Sure. Hey, Miles, it's Tony. I'll start and feel free to add in here, Ravi. Look, on the first question with grocery, you're right. I mean, we're super excited about, you know, all the selection that we're adding, you know, including Kroger, who he announced in the recent quarter. I think the short version of this is we've never been in a better position in grocery. And we're also adding across the board, not just the top grocers in terms of kind of the national scale players, but also the local grocers and really across the board. I think every grocer is recognizing that DoorDash is now the leader in order volume in this category and the leader in acquiring new customers. And so this is something that, you know, I think, you know, people understand. And as a result, you know, it's become more habitual that way. I also think it's interesting that, you know, some of these grocers kind of similar to the comment I made earlier about retail are starting to ask us to help with other things. And so I think there's an interesting, there's always this kind of two-sided opportunity for us really on the, certainly on the consumer front, but also B2B. um with respect to going out uh you're right um you know going out has been an experiment that we've been running uh for a while and we kind of shipped um you know more recently um in some select markets and and it's going you know really well i mean i i think um this kind of goes to maybe some commentary i forget whether it's four earnings calls ago or five where you know we talked about there's more than one way to connect every local business and every local consumer Today, I know we're known predominantly as bring everything to you, whether you're at home, you're in the office or wherever you are. But there's no reason why we can't bring you to everything. And again, the goal of the company is to connect every local business with every local consumer. You know, on the consumer front, we obviously have, you know, the largest audience with the most number of, you know, kind of frequency, not just in terms of buying, but also just in opening the app and the searches and everything else that they take action on in the product. But we also have quite a lot of information with merchants because of our B2B, you know, commerce platform. A lot of these merchants are increasingly, you know, asking us to help them, you know, from, you know, not just online ordering, we have hundreds of thousands of those businesses, but, you know, analytics and marketing solutions. And I think with the addition of a product like Seven Rooms, we can really democratize this ability that, you know, I think a lot of tech companies have and give it to every small, medium, and large restaurant to be able to understand all of their guests and really allow the restaurants, you know, to maximize whatever might be the best thing to maximize for them at that moment in time. Sometimes it's going to be driving new customers. Other times it's going to be driving adoption of a new product. And that's really what, you know, the point of going out is. It's really to introduce customers to restaurants that they, you know, maybe never tried before or add an occasion to build increasing loyalty to an existing restaurant that they do have a relationship with. But, you know, today, DoorDash effectively, you know, has a lot of order frequency on bringing things to you. And we have almost no order frequency on having you go to a store. But we believe that can change. That's helpful. Thank you.

And our last question comes from the line of Ron Josie with Citi. Your line is open.

That's great. Thanks for taking the question. You know, going back to Roo really quick, understood the investments needed here. and the acquisition literally closed, what, around four weeks ago. But we'd love to hear what you all think or have learned thus far on ways to improve the product and the consumer experience as we think about these investments. And then I believe it was mentioned in the letter of the press release that unit economics were flat quarter to quarter for U.S. restaurants. I'm just wondering if that's a change of trajectory or anything to call out there. Thank you.

Yeah, I can start, Ron, and maybe, Robbie, if you want to take the unit economics question. On Roo, I think there's a lot that we can do. And I think that's mostly because, you know, DoorDash has ran just a lot of experiments, you know, at this point, you know, tens of thousands of experiments. And as you can probably guess, the vast majority of those experiments fail and never make it to you as a customer. But we have, you know, taken a lot of these, you know, lessons that have done well and brought them over to Volt, for example. And we think that there's a lot of experiments that Volt has ran, too, that can be portable to Roo in addition to those that would come from DoorDash. And so there's no, like, one thing. I think that, like, you know, I probably bore you with, you know, the list of features that I would be talking about. But this really is the same answer to the question of how is it possible that the DoorDash marketplace, the U.S. marketplace, that is, can continue to grow faster at higher volumes and, you know, increase, you know, our penetration with users. And it's because there is no one thing. There is, you know, thousands of small things that add up in terms of how we deliver on the selection, the quality, the affordability, and the service. And so it would be a collection of things that we've already identified, and we're excited to ship them.

Hey, Ron, on the second point around yours, I mean, look, the business is doing well. We talked about the fact that the business is growing. Unit economics are still progressing quite nicely. The quarter-to-quarter is, you know, moving parts. But overall, I mean, really excited about, you know, what you're seeing from a unit economics perspective. I think a few years ago, we talked about the fact that the incremental margins over the last eight-quarter average was above 7%. That still continues to be the case. I mean, this business is growing at a larger scale, accelerating, as well as the unit economics continue to progress quite nicely. So we're really pleased with how the restaurant business is doing in the U.S.

Thank you, Tony. Thank you, Ravi. No problem.

Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining, and you may now disconnect. You