Earnings Call Transcript - DASH Q3 2025

Operator, Operator

Ladies and gentlemen, thank you for standing by. My name is Desiray, and I will be your conference operator today. At this time, I would like to welcome everyone to the DoorDash Third Quarter 2025 Earnings Call. I would now like to turn the conference over to Mr. Weston Twigg. You may begin.

Weston Twigg, Executive

All right. Thanks, Desiray. 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 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 and profitability, 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 autonomous 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.doordash.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.

Operator, Operator

And our first question comes from Deepak Mathivanan with Cantor Fitzgerald.

Deepak Mathivanan, Analyst

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 integrating AI tools with additional token expenses into the service? And 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?

Tony Xu, CEO

Yes, I can start by addressing both questions, and Ravi can add if needed. Regarding our spending priorities, we are primarily focused on three areas, and the second part of your question relates to the first. The first major focus is on developing a new global tech platform. This initiative has been underway for a couple of years and will see the bulk of our investments in 2026. The goal is to establish a single global tech stack that allows us to launch experiments and have them reach our customers simultaneously across all markets and audiences. Currently, we operate with three separate entities in restaurant delivery: DoorDash, Deliveroo, and Wolt. Our new tech platform will enable us to deploy a feature once for all audiences, rather than shipping it three times, which is inefficient. Another objective of the tech platform is to make it AI-native. We will be incorporating tools to modernize how we develop software, aiming to enhance the way we manage agent workflows, deploy, test, and write software, and redefine the engineer's role in this new landscape. As we complete this project, we expect to improve our speed of delivery and overall efficiency, freeing up engineering resources for additional projects. This will enhance our cost structure and enable us to better address customer needs. The second area of investment is in new products. We recently announced several launches in our dashboard product events at the end of September, and we are excited about these developments. Building a company often involves experimenting with various ideas, some of which become products, and a select few evolve into substantial businesses that generate the cash flow necessary for further investments in new initiatives. We are fortunate at DoorDash, particularly in the realm of local commerce, where numerous challenges exist. Many experiments that have been in progress for years are now ready for more investment. For instance, we have made significant advancements in in-store offerings, reservations, and our CRM platform with SevenRooms. We also introduced DoorDash Dot, an autonomous delivery vehicle designed for use on roads, sidewalks, and bike lanes, along with DashMart Fulfillment Services, which enables retailers to provide same-hour or same-day delivery with high accuracy. In every case, we run our business with the goal of solving the maximum number of customer problems with high quality while managing projects against milestones. As we meet each milestone, we develop them into businesses and continue to invest. Our history of successful investments in areas such as U.S. restaurants, new verticals, international operations, our commerce platform, and advertising suggests that we are effectively applying this strategy for future growth.

Ravi Inukonda, CFO

Yes, Deepak, to add to what Tony mentioned, our core business is performing very well. You can see this reflected in the numbers, as growth has accelerated for the fourth consecutive quarter. The overall unit economics are improving throughout the business, and profit dollars continue to rise. This allows us to reinvest back into the business. Our operating philosophy has always been to reinvest when the GOV exceeds expectations and unit economics improve. The results we see today are the outcome of decisions we’ve made over the past decade, and our approach remains unchanged. We are disciplined in how we operate and focus on internal rate of return. All the investments we discussed are expected to extend our growth duration and provide strong returns. In terms of 2026, I anticipate that the EBITDA margin for the existing business, excluding Deliveroo, will be slightly higher compared to 2025. This should give you an idea of our investment strategy. Overall, the business is growing and surpassing our expectations, and our objective is to continue investing, which we are very excited about.

Operator, Operator

Our next question comes from the line of Shweta Khajuria with Wolfe Research.

Shweta Khajuria, Analyst

Could you please discuss your investment plans related to Deliveroo, specifically your goals for the first year regarding order of business and strategic focus areas? Additionally, could you share your current status on expanding your robots and third-party partnerships? How do you envision scaling and deploying these opportunities over the next year or in a timeframe of one to three years?

Tony Xu, CEO

Yes, I'll start and feel free to add. The first question is about investing in Deliveroo. This aligns with our general investing philosophy and our belief that now is the right time to invest for the long term. It begins with ensuring that we can build the best-in-class product experience, which we measure through retention, usage frequency, and audience engagement. We have found Deliveroo to be in better shape than we anticipated and see a significant opportunity to enhance their existing foundation and implement further product improvements to achieve top-tier metrics. If we can accomplish this while also improving the unit economics, it will enable us to provide excellent service to our audiences and generate strong long-term results and returns for our shareholders. Therefore, our primary focus is on continuing to invest in the product and making necessary improvements. Over time, we expect to realize cost efficiencies as we combine two European teams on the same continent. The initial goal remains to strengthen the product's foundation, applying the insights we've gained from Wolt and DoorDash to enhance its class-leading quality. On the second question regarding autonomy, our approach is quite pragmatic. The vision for autonomy involves a multimodal world with various fulfillment methods. Some deliveries will be executed by Dashers, while others will utilize land or air vehicles, some developed by DoorDash and others through partnerships. The key point is that DoorDash has the capability to develop its own autonomous delivery platform, allowing us to address customer needs with the best quality, lowest costs, and highest service. We will adopt a practical approach, testing in one market to ensure we have the right go-to-market strategy. Achieving this requires attention to many details, from in-house manufacturing to partnerships, integrating hardware and software, and collaborating with city governments. There’s much to manage, and we anticipate that 2026 will be the year when we can commercialize some of these initiatives. However, this process will take time and necessitates upfront investments since decisions often need to be made before seeing product results. We are genuinely excited about the potential we see in this autonomous delivery platform and its ability to incorporate the most effective fulfillment methods to provide the best service.

Ravi Inukonda, CFO

We are very excited about our partnership with Deliveroo. It aligns with our strategy to operate in large, attractive markets where we can implement our operational and product playbooks to enhance our operations. Our primary focus is on improving our product and consumer experience. This is crucial because it helps us scale by increasing retention and order frequency, ultimately leading to more gross profit. Our approach with DoorDash and Wolt will be the same with Deliveroo. From an EBITDA standpoint, we are confident in the profit generation of the business, which meets our initial expectations that included some investment. Currently, we are seeing growth that exceeds our forecasts, with double-digit increases that give us the confidence to reinvest in the company. Our ongoing focus is on investing in our team and product development, which will support long-term free cash flow generation.

Operator, Operator

Next question comes from the line of Ross Sandler with Barclays.

Ross Sandler, Analyst

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 Prosus 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 reducing Deliveroo's run rate from what it was before to this $200 million based on some kind of allocation of that platform investment. Just any clarity on that, that minutia would be helpful.

Tony Xu, CEO

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 I think a lot of the confidence of what inspired us to pursue the Deliveroo acquisition really came a couple of years ago after gaining confidence in working with Wolt. The first test for us was whether or not we can actually take some of the lessons that we've learned at DoorDash and also combine them with the lessons that Wolt has learned in building their markets, to see if we can create the best-in-class product. And I think when you look at our growth rates, which continue to exceed those of our peers as well as just the retention and frequency levels and how they're progressing nicely, as well as the unit economics improving at the same instance to all-time highs, we gained 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 our presence in Europe, you're talking about 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 can we solve the most local commerce products in Europe the way that we're trying to do that in the States and in other countries. And so far, as I mentioned, 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 some of the investment commentary that we outlined in the letter. And that will translate over to Europe as well.

Ravi Inukonda, CFO

Ross, to the second point, yes, I mean, the $200 million, think of that as the contribution from Deliveroo to the 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 is investments in selection, quality as well as people. You should think of that as the contribution of Deliveroo EBITDA.

Operator, Operator

Next question comes from the line of Josh Beck with Raymond James.

Josh Beck, Analyst

I wanted to kind of go back to the tech platform that you've been building in the background. I'm curious kind of what you've learned thus far and kind of why this moment in time was the right moment to inflect upwards. 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 maybe a smaller list of items that drove the step up. And then with respect to the integration, I think in some cases, they can be messy. You have obviously a lot of consumer-merchant-Dasher ecosystem. How do you minimize the disruption and kind of keep the strength? It sounds like the Roo 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?

Tony Xu, CEO

Yes, I can address that. Regarding the tech platform, this was always in our minds when considering the acquisition of certain companies. Generally, these companies offer similar services across different regions. While there are certainly local variations, the core services remain consistent. This highlights the importance of creating a unified platform to ensure that all products align under the same data models, architecture, and user experience. However, with the significant changes brought by advancements in AI, those factors must be taken into account. During the '24 timeframe, it became clear what actions were necessary, and now we must execute those plans, which we have started to implement in '25. The full realization of these efforts will occur in '26, representing a major part of our investments. These investments will yield future benefits, and the timing aligns well with our strategy. Regarding the integration of Roo, you’ve made an important point. One reason we're incurring additional costs is that we are making extra technology investments to ensure Roo continues to operate effectively on its own while we develop a unified tech stack. Consequently, these additional expenditures are necessary to maintain the quality of experience and service for Roo's customers during this transition to the new foundation.

Operator, Operator

Next question comes from the line of Jason Helfstein with Oppenheimer.

Jason Helfstein, Analyst

Just one and a 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 how 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 undocumented workers and certain reports like talked about what percentage. Just any color 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?

Tony Xu, CEO

Sure. I can address both of those questions, Jason, and Ravi can chime in as well. We're really excited about our ads business, which has quickly reached $1 billion in annualized revenues, making it the fastest in history to do so. We have advertisers eager to spend more on the Dash platform than we currently have ad space available. It's important to consider our audience as we develop this business. On one hand, we need to maximize the return on ad investment for advertisers, and on the other hand, we must ensure that the consumer experience remains high quality. Balancing these aspects is challenging and involves navigating potential conflicts and trade-offs. Therefore, I believe it's essential to first build a strong marketplace before focusing on monetization opportunities, including ads, which will naturally follow. Our business has demonstrated this, as we've consistently grown at a larger scale over many quarters, and our bottom-line contribution and EBITDA margins have also improved. I believe we have struck the right balance, and we must remain disciplined in maintaining it. Regarding the second question, our Dasher supply has never been stronger. We prioritize ensuring the authenticity of our Dashers and have invested in this area for many years. Despite any outside reports, we haven't faced challenges in our Dasher supply. We uphold the highest standards in this regard and have always approached it correctly.

Ravi Inukonda, CFO

And Jason, just on your point on the ad business, right, just to clarify, I mean, I think the ads business is growing. It's growing quite nicely. We don't differentiate that from, okay, 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 dollars that we generate from ads. We think of 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.

Operator, Operator

Next question comes from the line of Michael Morton with MoffettNathanson.

Michael Morton, Analyst

I have a question for Ravi to start. Based on your guidance and its implications for the core business, it seems that the incremental increase in costs could be around $100 million per quarter. Please feel free to correct me if I'm wrong. Tony pointed out the areas where the spending is going, and I have a question regarding the platform development expenses and why they seem to have increased significantly despite being an ongoing effort for several years. Additionally, I found the comment about DashMart Fulfillment Services intriguing. I would like to know if you are ramping up efforts in that area and whether this involves partnerships with major AI platforms to integrate local commerce into e-commerce searches. Also, is there an increase in costs as you expand DashLink? Any insights on this would be appreciated.

Ravi Inukonda, CFO

Yes, Mike, I'll take the first one. I think we are still early in terms of how we're planning. We'll provide more precision as we give quarterly guidance. Regarding 2026, I would suggest considering margins for the existing business, which includes our investment areas, excluding Deliveroo. I expect margins to be slightly up compared to 2025. Hopefully, that gives you an idea of how we view margins and investments into 2026.

Tony Xu, CEO

Yes, Mike, I'd like to add to your earlier questions. The increase in tech investments in '26 is because that's when the actual work is taking place. Initially, when building new software, you start with the architecture and not much coding happens at that stage. Once coding begins, you need to spin up cloud instances for development. If you're managing multiple stacks while creating a new one, you'll incur additional temporary cloud costs. This is why expenses rise. When you're ready to deploy the software and unify everything under the same tech stack, it contributes to temporary costs. Regarding DashMart Fulfillment Services, the focus is less on collaboration with AI companies and more on enhancing our partnerships with existing retailers. The challenge we face with third-party stores is that most don't have an accurate inventory system for various reasons. Despite our strong delivery accuracy across different categories, it remains imperfect. Customers won’t pay a premium for orders they didn’t receive or for unsuitable substitutes. If we controlled the inventory systems and handled the entire fulfillment process—from warehousing to delivery—we could achieve nearly perfect accuracy. The challenge is to replicate this for every retailer, especially those without many stores or coverage for same-day delivery. However, I believe we can transform any physical retailer into an omni-channel player. This will take time, as it involves setting up supply chains and testing markets, but we are excited about the high quality we offer. We are also expanding the selection of products available to customers, allowing retailers to provide same-day delivery, and that integration is underway.

Operator, Operator

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

Andrew Boone, Analyst

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 breakeven? What are the key kind of operational things do you guys need to do to get there? And then in terms of just U.S. kind of growth overall, now gross adds 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 pockets you guys unlock in there?

Ravi Inukonda, CFO

Yes, Andrew, let me start. Look, I mean, talk about the overall performance of the new vertical business, right? Like look, new verticals had a really strong quarter. The business is growing really fast. We're the fastest growing. We believe 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 one-fourth of our users order from new verticals. That number has continued 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 then continues to go up. On the unit economics front, just to be clear, I mean, unit economics continue to improve. They've improved sequentially quarter-on-quarter as well as year-on-year. We're very comfortable where the unit economics are. We are comfortable on what it needs to get to breakeven. Look, a lot of that is going to come from scale as well as continued improvements, whether it's 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 more free cash flow generation in the future.

Tony Xu, CEO

Yes. Regarding the strength in the U.S. market, we are very pleased with its performance. We have seen four consecutive quarters of growth from a larger base, which is something we take pride in. The current performance is largely the result of actions we began three years ago, focusing on enhancing the experience by improving selection, quality, affordability, and service levels. We face the challenge of rising consumer expectations. The increase in monthly active users and our ahead-of-schedule forecasts can be attributed to our success in satisfying each group of customers, who have progressively higher expectations. By consistently delighting new customers across various categories, such as restaurants and groceries, we also enhance the experience of our existing customers. This synergy elevates all customer groups and is tied to product improvements that started three years ago, along with ongoing investments that we hope will yield results three years from now.

Ravi Inukonda, CFO

And Andrew, when you look at the underlying cohorts, right, the demand on the underlying cohorts continues to be very strong. Both MAUs are growing. Order frequency is growing. Even subscription, both in the U.S. as well as international, had a record quarter in terms of DashPass subscribers as well as Wolt+ subscribers. What we see in the business is even existing cohorts, cohorts that are quite old, they're also continuing to engage with us even more. All of this goes back to, look, I mean, 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.

Operator, Operator

Next question comes from the line of Nikhil Devnani with Bernstein.

Nikhil Devnani, Analyst

I had a clarification on the investment commentary. Is the bulk of the 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?

Ravi Inukonda, CFO

Yes, Nikhil, I'll address the first question. Regarding spending and investment, our objective is to increase our expenditures across the profit and loss statement. This will reflect in the cost of sales and also within sales and marketing, as well as in research and development and operating expenses. We are focusing our investments on scaling our autonomous program in a disciplined way. We are also expanding our software business, which includes our digital ordering and SevenRooms operations, both of which are starting to generate revenue and will continue to grow. Additionally, the work we are doing on our technology infrastructure will impact the profit and loss statement as well. You should consider that some of this will contribute to operational leverage as we scale the business.

Tony Xu, CEO

Nikhil, regarding your second question about growth categories, we are experiencing significant growth across various categories beyond grocery, convenience, and alcohol. This pattern aligns with seasonal trends. For instance, the pet category remains steady throughout the year, while categories like electronics see a surge as we approach the holidays in the U.S. Health and beauty products have also shown growth. Home improvement has been unexpectedly strong, with us delivering thousands of pounds of mulch daily, particularly during the summer. The demand often fluctuates based on customers' seasonal needs. What’s particularly notable is not just the performance of these categories, but the overall trends and trajectories, including metrics like product search interest. We are effectively becoming your go-to store within the city, resulting in growth across various segments. Some new customers are initially coming for the first time outside the restaurant category, and we’ve noticed they also shop in restaurants frequently as they navigate back and forth. This reflects our belief that starting with the high-frequency restaurant food category, where we lead, allows for increased opportunities. We are now also leading in transactions outside restaurants, in grocery and convenience, which fosters cross-shopping behavior. If we can maximize these interactions, which I believe we are on track to do, we will create the most valuable membership program, DashPass.

Operator, Operator

Next question comes from the line of Lloyd Walmsley with Mizuho.

Lloyd Walmsley, Analyst

I wanted to revisit the DashMart Fulfillment Services and gain a clearer understanding of the plan for integrating third-party inventory, particularly in the grocery segment. Will this necessitate significant construction of new facilities, or will you manage operations by picking and packing within some partner facilities? Additionally, considering the potential of this investment area, is it expected that 2026 will focus on experimentation, with scaling potentially occurring in 2027? Any further insights on how this will operate and the associated timeline would be very helpful.

Tony Xu, CEO

Yes, we're really excited about DashMart Fulfillment Services and share your optimism that this could be a significant investment opportunity. The key factor here is the retailer we collaborate with, as their goals can vary. Some retailers may be looking to expand into new regions, while others might want to intensify their presence in existing areas or optimize less productive space within their stores. This variety in objectives makes it challenging to provide a straightforward answer, as there isn't a universal solution. Therefore, it's crucial to develop various capabilities and remain adaptable. Our primary focus is on creating the best experience possible by offering a selection that hasn't been available to customers before. In urban areas alone, there are millions of items, but only a small percentage of them are currently delivered through DoorDash. Despite already having a significant inventory for same-hour delivery, there's still considerable potential for us to increase the inventory we can provide and deliver efficiently. However, it's essential to note that this inventory belongs to the retailers, which poses a challenge: determining whether the inventory is available or if there are delays in the supply chain. We're working on building DashMart Fulfillment Centers to address this, as sometimes inventory may be in stores but not accessible, or it could be delayed elsewhere in the supply chain. Our goal is to provide customers with access to previously unavailable selections, delivered on the same day or even within the hour. This initiative introduces new e-commerce capabilities for many physical retailers. However, the response to your question is complex since each retailer has unique goals, which means there may not be a single solution that fits all. We are committed to delivering a best-in-class experience for consumers.

Operator, Operator

Next question comes from the line of Youssef Squali with Truist Securities.

Youssef Squali, Analyst

Tony, one subcategory we did 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 perishables is 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, Mamdani, and how that potentially could impact Dashers pay, eventually Dashers organizing and just really not just in New York City but in other big cities as well?

Tony Xu, CEO

Sure, I'll address those questions. Regarding the first question, it's important to note that DoorDash has always operated in a competitive environment, but we are seeing significant growth, even at a larger scale. You might wonder how this is possible. The reality is that the market is still not fully penetrated. For instance, grocery delivery remains much less developed compared to restaurant delivery. This is largely due to challenges in inventory fulfillment, which we have been working on for several years. When we launched DashMart in 2021, our goal was to ensure that we could deliver exactly what customers order. If we fail at that, customers won't place orders. This challenge is prevalent in grocery and perishable delivery. When it comes to competition with retailers, the core of our mission is to provide consumers with choice. DoorDash was established to create an environment where consumers can select from a wide array of retailers. We believe that offering maximum choice is beneficial for all parties involved and enhances local economies. Our goal is to connect every local business with every local consumer so that we can contribute to the growth of their cities, create more jobs, and foster better neighborhoods. Moving to your second question on recent changes in cities and elections, I believe that collaboration between governments and businesses leads to the best outcomes for everyone. Multiple perspectives can coexist, even if they sometimes conflict. Fair treatment of all groups is essential. One of the main issues in many coastal cities, including San Francisco, is affordability. DoorDash strives to be an affordable platform, and we've taken steps like ensuring SNAP benefits continue for those in need. In terms of Dasher pay and protection, we were the first platform in the U.S. to offer occupational accident insurance to Dashers without them needing to request it, which reflects our commitment to their well-being. I find that the most effective approach is to find practical solutions and assist politicians in crafting sensible policies that meet the needs of their constituents. Unfortunately, sometimes biases or ideologies can cloud judgment and hinder discussion of the facts or what the public truly wants. I believe that as long as we focus on serving the needs of the audience, businesses and governments can find a way to coexist. I support businesses being for-profit entities, while also ensuring that audiences receive the services they deserve.

Operator, Operator

Next question comes from the line of Justin Post with Bank of America.

Justin Post, Analyst

I don't think you've had a chance to discuss the synergies with Deliveroo, perhaps regarding the order and revenue side. I would appreciate it if you could elaborate on that. Additionally, it would be helpful to discuss the differences in the take rate accounting.

Ravi Inukonda, CFO

Sure, Justin, I'll address both of those points. Our primary focus, as I mentioned earlier regarding Deliveroo, is to continuously enhance our product and consumer experience. This is crucial because it leads to greater scale, and the combination of scale and improved unit economics results in increased gross profit dollars. Our philosophy centers on enhancing the product and overall gross profit. That remains our focus from day one. Additionally, part of our strategy involves achieving cost synergies. We operate on a global platform and anticipate synergies largely due to scale and reduced costs, although this may take some time. We are enthusiastic about the partnership and the positive developments in the business. Regarding your second question about accounting differences, I would suggest considering an impact of approximately USD 8 million to USD 10 million or an expense to EBITDA when transitioning from Roo's definition of EBITDA to DoorDash's definition.

Operator, Operator

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

Lee Horowitz, Analyst

I guess going back to investments. I guess, how should we be thinking about the payback period? I mean a lot of talk about taking time, past dependency and spinning up an environment. So it sounds like payback periods are perhaps getting extended relative to your typical investment plans. 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?

Tony Xu, CEO

Yes, I can address both points. On the payback period, our expectations remain unchanged. Our criteria for payback period is consistent, whether we're exploring new areas like DashMart Fulfillment Services or advancements in our technology. We're simply undertaking more projects now. It’s difficult to predict how past experiments have progressed compared to those that are currently justifying additional investment. More projects have found market fit within our portfolio that align with our investment strategy, which aims to maximize long-term free cash flow per share. Therefore, our payback period expectations and our approach to capital allocation remain the same. Regarding retail, we are experiencing significant growth. From a product standpoint, DoorDash's position in retail resembles where we were in grocery back in 2021 or late 2020; we are still in the early stages of product development. This is encouraging because it indicates that consumer demand is driving us forward. This is evident not only in purchasing behavior but also in search habits. Our operations involve both consumers and businesses; we are known for our consumer business but also have a strong B2B commerce platform. We've developed successful products like DoorDash Drive and DoorDash Storefront, and we're now incorporating SevenRooms for the restaurant sector. In retail, we receive numerous requests for assistance as retailers see our potential to reach a large audience and leverage our capabilities. DashMart Fulfillment Services is now part of our offerings, with online ordering and fulfillment through Drive already established. Thus, DoorDash operates as a dual-sided player in retail, encompassing both consumer and B2B aspects.

Ravi Inukonda, CFO

Yes, Lee, on the payback period, right, like, look, nothing is really changing about how we operate the business, right? Look, when we think about investments in payback, I think of it in terms of two dimensions. One is, is it ultimately improving retention order frequency? The other one is, is it driving free cash flow and IRR. So that framework and how we operate, that discipline is not changing. Let me give you an example, right? 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 verticals business where we've increased our unit economics year-over-year. Look at our overall international business. That's close to being contribution profit breakeven. 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 mean, 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 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.

Operator, Operator

Next question comes from the line of Justin Patterson with KeyBanc.

Miles Jakubiak, Analyst

This is Miles Jakubiak filling in for Justin. I'd like to start with a question about grocery. I'm interested to know if you're noticing any acceleration from grocers in adopting delivery services and joining the platform, especially after the good additions you made during the quarter. Additionally, I'd like to ask about the dine-in experience. I saw that you launched Going Out and some initiatives with SevenRooms during the quarter, so could you elaborate on how you see the dining out experience integrating with the DoorDash ecosystem and the potential opportunities there?

Tony Xu, CEO

Sure, Miles, it's Tony. I'll begin, and Ravi can chime in as well. Regarding the grocery question, you're right; we are very excited about the selection we're adding, including Kroger, which we announced last quarter. In short, we are in the best position we've ever been in grocery. We are expanding our offerings, not just with leading national retailers but also with local grocers. Every grocer is realizing that DoorDash is the leader in order volume in this space and in acquiring new customers, and I think people are starting to notice this. Consequently, using DoorDash has become more habitual. Interestingly, some grocers are beginning to ask us for assistance with additional services, similar to my earlier comment about retail. This represents a two-sided opportunity for us, both on the consumer side and in B2B. As for Going Out, it's been an experiment we've been working on for some time, recently launching it in certain markets, and it's performing well. This connects to earlier discussions about the different ways we can link local businesses and consumers. While we are primarily known for delivering items to you, there’s no reason we can’t also facilitate visits to various locations. Our goal is to connect every local business with local consumers. On the consumer side, we have the largest audience with high engagement, not just in purchasing but also in app usage and searches. Additionally, we have substantial data on merchants due to our B2B commerce platform. Many of these merchants are asking for our assistance, not just in online ordering, which involves hundreds of thousands of businesses, but also in analytics and marketing solutions. With products like SevenRooms, we can empower small, medium, and large restaurants to better understand their guests and optimize their offerings. Sometimes that means attracting new customers, while other times it could involve promoting a new product. The purpose of Going Out is to introduce customers to restaurants they may not have tried before or to enhance loyalty to restaurants they already frequent. Currently, DoorDash has a high frequency of orders for delivery, but we have virtually no frequency for store visits, although we believe that can change.

Operator, Operator

And our last question comes from the line of Ron Josey with Citi.

Ronald Josey, Analyst

That's great. Going back to Roo really quick. Understood the investments needed here and the acquisition literally closed, what, around four weeks ago. But would love to hear what you all think or 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 or the press release that unit economics were flat quarter-to-quarter for U.S. restaurants. I'm just wondering if that's a change in trajectory or anything to call out there.

Tony Xu, CEO

Yes, I can begin with Roo. Perhaps Ravi can address the unit economics question. Regarding Roo, there's considerable potential for improvement, thanks to DoorDash's extensive experience conducting numerous experiments. Although most of these experiments do not succeed or reach customers, we have extracted valuable insights from those that performed well and applied them to Wolt, for instance. We also believe that Wolt's experiments can be beneficial for Roo in addition to learnings from DoorDash. There isn't a single solution; rather, there are countless small factors that contribute to the ongoing growth of the DoorDash marketplace in the U.S., enhancing user penetration. It's a combination of many elements that collectively improve selection, quality, affordability, and service. We're eager to implement the various improvements we've identified.

Ravi Inukonda, CFO

Ron, on the second point around U.S. restaurants, 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. Quarter-to-quarter, there's moving parts. But overall, I mean, really excited about what you’re seeing from a unit economic perspective. I think a few years ago, we talked about the fact that the incremental margins over the last eight quarters averaged above 7%. That still continues to be the case. I mean this business is growing at 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.

Operator, Operator

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