Earnings Call Transcript - DASH Q4 2025

Operator, Operator

Hello, everyone. Thank you for joining us and welcome to the DoorDash Q4 2025 Earnings Call. I will now hand the call over to Weston Twigg. Please proceed.

Weston Twigg, Co-Founder, Chair

All right. Thanks, Elizabeth. Good afternoon, everyone, and thanks for joining us for our Q4 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, profitability, our guidance, strategies, capital allocation approach and the broader economic environment. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described. Many of these uncertainties are described in our SEC filings, including our most recent Form 10-K and 10-Q. You should not rely on 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. A 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. Operator, I'll pass it back to you, and we can take our first question.

Operator, Operator

Your first question comes from the line of Shweta Khajuria with Wolfe Research.

Shweta Khajuria, Analyst

Let me try 2, please. One is on competitive intensity globally and specifically in Europe, if you're seeing anything different, and if so, it hasn't been rising. And then second is on investments. This may be for Ravi, how should we be thinking, there's a lot of maybe debate that's going on in terms of the level of investments not only in 2026, but to the degree that it may continue into 2027, especially as it relates to tech replatform. So could you please, Ravi, help us think through how we should think about it? Is it a one-time in '26 or should we expect some elevated level of spend in '27 too because it could bleed into next year?

Tony Xu, CEO

Shweta, I'll start by talking about Europe. Overall, we feel really great about our position in Europe. We're the leading player in many of the countries in that continent. And we're off to a really great start with our Deliveroo acquisition. With respect to Deliveroo, we are growing much faster at the same profit contribution that we expected before the acquisition. We're gaining share in its largest markets. We're doing the same on the Wolt side. And so when I overall look at our business outside of the U.S., what I see is faster growth than what we see in the U.S., which, by the way, the U.S. had 2 of the fastest-growing quarters in 2025 in the last 4 years. So to trump that is actually quite impressive. And we're continuing to improve our unit economics across the board. So I feel really strong about our position overseas.

Ravi Inukonda, CFO

Shweta, on your second point, right, I'll make a couple of points. One, my expectation for the full year EBITDA for '26 has not changed since the last call. The way I think about it is 2026 EBITDA margin is going to be up slightly compared to 2025, excluding ROO and ROO to produce about $200 million of EBITDA, like we said. So that remains very consistent. Look, as we're thinking about investing, there's 3 major parts of investing that we called out. The quantum of investment dollars is also very similar to what I had expected at the time of the last call. One of the major areas of spend, as you called out, is our global tech stack. Look, we're happy with the progress. We're making good progress there. There are components of that spend that are redundant, especially as we take on the cost of running both tech stacks in parallel. Majority of that should be in '26, some of that will be in '27, which will come off, but that's a smaller component of the overall spend. The other two areas are both autonomy as well as merchant services. We are expanding both of those areas; we are investing. We like what we are seeing there. And in fact, I mean, if we continue to make more progress from a customer benefit perspective, our goal is to continue to invest more. Look, I mean, our goal has always been to maximize long-term free cash flow. We believe these investments are the right investments, especially as we think about becoming the operating system for local commerce. As we make more progress, we'll continue to invest behind them because ultimately, they lead to more areas where we can invest behind as well as improve overall free cash flow generation.

Operator, Operator

Your next question comes from the line of Michael Morton with MoffettNathanson.

Michael Morton, Analyst

Maybe one for Tony to start. In the press release, you talked about investing to support growth in longer distance and higher effort deliveries. I was wondering if you could provide some more details on what type of deliveries those are related to? And just following up on that, like Dash has made a lot of investments in DashMart and DashLink. And Tony, I'd love to hear maybe if it's related to that longer distant investment, but how you see the e-commerce landscape evolving? Do you expect to see local inventory worked more into the kind of consumer shopping experiences? And anything around that would be great. And then maybe a quick one for Ravi. I love the commentary on the inflection in unit economics for your new verticals business. Could you speak a little bit about some of the drivers of that improvement? Is it scale and also maybe less investment requirement? Anything in that would be great too.

Tony Xu, CEO

Yes, I'll start. On the question with respect to Dashers and the evolution around what DoorDash is doing in the world of commerce, I mean, I think Ravi kind of touched nicely about this on the previous question about how we're building the operating system for local commerce. And so I'll maybe take a couple of minutes to expand upon that a little bit, and then I'll answer directly to your question about how Dashers and frankly, some of our other audiences play into this broader ecosystem. When I think about like what is going to be required in order to allow all the small, medium and large physical businesses to become omnichannel businesses and compete against 1 or 2 large behemoths. It's going to require software. It's going to require warehousing and physical infrastructure. It's going to require the lowest cost of delivery at the highest quality, and it's going to require amazing software. And if you think about a lot of what we announced actually in 2025 at our Dashboard product event in September as well as the investments we're making into '26, I think they line up nicely to give you a view of what we're building. So if you think about it, we're starting by obviously building software for every small, medium, and large physical business, whether that means helping them and adding them into the DoorDash app. One of the things that we've been seeing is just continued growth across all categories at DoorDash. Now around 30% of customers are ordering outside of the restaurant category, especially as we broaden our reach into grocery, retail, where we've become the leading third-party transaction platform in the U.S., and we're growing very, very fast outside of the U.S. as well in that dimension. So we're bringing software in that dimension. We're bringing software also in the dimension of all of the B2B products we're shipping, where we're helping businesses offer delivery through their own channels. We're helping businesses also stand up their own e-commerce solutions. We're building warehouses to bring inventory closer to where consumers live. So we announced DashMart Fulfillment Services last September. We're very excited to be partnering with companies like Kroger or CVS to really offer the highest possible quality, the perfect inventory accuracy at the lowest cost and the fastest speeds. So that they can compete and offer same hour, same-day delivery against their peers. That's something that we're doing. And we're also investing in how to do this in the future, right? And that's really our investment into autonomous vehicles where we announced DoorDash Dot as well as some other projects that we're working on in order to make sure that no physical business will be at a disadvantage when it comes to offering the best possible delivery experience at the lowest possible cost. So when you think about how Dashers kind of fit into the system, one of the things that has to be true and that is true, I mean it's been happening throughout last year, the years before, and obviously, this year and into the future is that Dashers will have more choice in terms of the types of orders they can take on. And that's why one of the investments we're making this year is actually directly into Dashers so that as they do more types of grocery retail orders, which can travel longer distances, which are usually more complicated because there's a shopping nature involved, although not always. But because of the greater complexity, we want to make sure that the pay models reflect that. We want to make sure that the app experience actually reflects that. And there's a lot that we're also doing in cataloging all of the physical information that exists nowhere on the Internet that we're also partnering with Dashers to do as well. So there's a lot of things that we're building, but we're building all of the fundamental building blocks at the end of the day to enable local commerce. So that for consumers, they can get anything inside the city delivered to them at the best possible experience at the lowest possible price.

Ravi Inukonda, CFO

Michael, on your broader question around new verticals, right, our retail and grocery business, maybe I'll zoom out and just talk about the performance and what we're seeing in that business. Look, I mean, new verticals had a really strong quarter as well as the year. We are the fastest growing in the U.S. as it relates to third-party peers. Look, today, Tony mentioned the fact that 30% of our MAUs in the U.S. order from categories outside of restaurants. And our focus has always been how do you get that 30% to be 100% over time. And what we're seeing is that we improve selection as we are investing behind making the product better, whether it's quality, affordability, more and more of our MAUs continue to order from categories outside of restaurants. In fact, the number of new consumers that join and start their journey with new verticals is also improving on a year-over-year basis. At the same time, we've been focused on improving the efficiency of the business. And look, when I look at the profitability, I mean, the team has made really good progress in unit economics year-over-year. I expect our entire retail and grocery business to be unit economic positive in the second half of the year. And look, when I look at that, I mean, it's just continued execution, right? It's a combination of steady progress that we're going to make over a bunch of different fundamentals, whether it's scale, density, continue to improve the efficiency on the logistics side, basket sizes are getting larger. There's no one thing, which is a step function change. It's continued execution, finding basis points, largely how we operate our entire business and our primary focus continues to be, hey, how do you actually get the business to scale. You know exactly what we need to do on the unit economic side. How do we get 100% of our MAUs to use grocery and retail. That's the real focus that we've had as a team.

Operator, Operator

Your next question comes from the line of Nikhil Devnani with Bernstein.

Nikhil Devnani, Analyst

Tony, I wanted to ask about agentic commerce and your long-term outlook. Currently, Dash has strong direct relationships with consumers, and even with the present landscape of AI chatbot experiences, that remains solid. There's ongoing discussion about how this might change in an agentic future where search, discovery, and transaction processes become more automated. You might still be involved in transactions, but the economic aspects could shift. How do you view DoorDash's positioning for that future as consumer behavior changes? Are you considering integration with third parties, or does it make more sense to invest further in your own vertical solutions? Perhaps you have a different perspective on the potential of AI. I’m interested in your thoughts on this.

Tony Xu, CEO

Certainly. I think it's a great question. When it comes to new technology, whether it's autonomous vehicles or agentic commerce and their interaction with large language models, I always consider how well it fulfills the complete job for the customer. This perspective guides my approach to these issues. To illustrate this, I’d like to reflect on some historical examples that may shed light on your question and then relate them to the present and future. When I think of outstanding products, like chat assistants or agentic commerce protocols, I see them as modern equivalents of major top-of-funnel channels, such as Google. For instance, during the 2010s, we observed that companies like Amazon gained a significant share of product search from traditional search engines because they effectively addressed the entire customer journey. Purchasing an item is just one task; reading reviews, tracking packages, returning items, and other aspects of customer support also contribute to the complete experience. Over that decade, it was clear that companies like Amazon excelled in product search. Another relevant example is Google Food Ordering, which was launched around 2016, allowing restaurants to offer delivery directly through Google Maps and other platforms. While they generated significant traffic for these restaurants, the frequency of usage and retention of that channel fell short compared to services like DoorDash. This discrepancy arises because numerous factors can affect the physical delivery process, such as late drivers, missing items, or substitutions that need to be made. Ultimately, the end-to-end experience will determine where customers choose to shop. Wherever customers repeatedly return, advertisers will follow with their budgets and interest. In light of this historical context, I believe DoorDash is well-positioned. We are focused on solving the complete job for customers by ensuring their items are delivered in the right condition and on time consistently. That’s a challenging task, requiring us to accurately map the physical world and gather proprietary data. We also need to excel in operations and effectively utilize all customer information for personalization. When we combine all these elements, I am confident we will be the best option for meeting customers' complete needs. As long as we maintain that position, we will draw in audiences and the advertising revenue that follows. Regarding our collaborations with AI systems, I see them as channel partners, and I am curious to see how much traffic they can generate, similar to how companies like Facebook and Google have historically supported DoorDash.

Operator, Operator

Your next question comes from the line of Deepak Mathivanan with Cantor Fitzgerald.

Deepak Mathivanan, Analyst

Tony, can you discuss the strategy for the autonomous delivery platform? How do you envision this platform evolving over the next two to three years, especially regarding first-party efforts with Dot and potential third-party partnerships? And Ravi, could you explain why the improvement in unit economics within the core U.S. restaurant business is expected to be lower this year compared to previous years? Is this due to slower advertising growth, a moderation in efficiency gains, or perhaps reinvestments? Please provide more details on that.

Tony Xu, CEO

Yes. Deepak, on autonomy you're absolutely right that the autonomous delivery platform is probably the most valuable part of what we're building. Because the way I kind of view it is that in the future, there will be a collection of different vehicles, a fleet of different vehicles, both by land and by air, some of which we'll build inside our four walls and others of which we will partner. And I think the most important part is actually playing the orchestration of all of the activity and movement and the handoffs. Because it's not going to be immediately or at least not immediately obvious to me that autonomous vehicles are going to perform every single type of delivery. There are certain times where you're going to see handoffs between Dashers and AVs. At other times, you're going to see AVs perform deliveries that Dashers don't want to do. At other times, you're going to see Dashers perform deliveries that AVs are not well equipped to do. And so it's really the goal for '26 then is really to figure out what are all of these different use cases. Where can we apply the most pragmatic business impact and customer impact immediately. We're doing that right now in a couple of different markets. So we actually have real live deliveries happening right now with AVs and we're very excited about the future.

Ravi Inukonda, CFO

Deepak, on the U.S. restaurant point, maybe I'll give you like a slightly broader answer. Look when I look at the performance of the U.S. restaurant business, it continues to be quite strong. In fact, in Q4, the contribution margin for the U.S. restaurant business was up on a year-over-year basis. And I do expect us to continue to improve margins in 2026. When I look at the last few years, I mean, growth has been quite strong. In fact, in '25 the restaurant business grew faster at a larger scale compared to 2024. And even when I look at the efficiency that we've driven over the last 3 or 4 years, it's been quite good. We've driven improvements in margin. Dasher costs have become more efficient. C&R has become more efficient. We've driven leverage in sales and marketing, like you called out, ads is becoming a larger portion of the overall business. And we're still continuing to invest behind that business, whether it's selection, quality, affordability. As I look ahead, I do expect us to continue to improve margins, albeit it will be at a lower pace compared to prior years. Some of that is going to come from DashPass. As you know, DashPass had a record year as well as a record quarter. DashPass is going to have an impact on margin. But look, overall, the ROI is strong because profit dollar production is going to be high. Largely because it's very simple, subscribers retain more, they order more, which means that they produce more gross profit dollars. Look, our focus has always been on overall profit dollar production, which continues to be quite strong. And when I look at the top line and the bottom line of the restaurant business, both continue to be very healthy.

Operator, Operator

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

Youssef Squali, Analyst

Great. Maybe, Tony, just a question on competition again. But maybe from a grocery and perishables perspective. So as Amazon is doubling down on those categories, can you maybe talk a little bit about what you're seeing in terms of your growth within that category in Q4? And have you seen any changes in the competitive landscape so far? And then, Ravi, on the headwinds to Q1 margins, can you just help us kind of quantify the impact of the higher Dashers costs. And I know there's a seasonal effect there, but is it more seasonal this year than in prior years or is just normal seasonality?

Tony Xu, CEO

Yes, Youssef, on the first question regarding grocery. In short, no, we haven't seen an impact on our growth. In fact, we continued very high growth rates kind of as fast as we've seen in the grocery sector, not just in Q4, but also for this year as well. And I think if you think about perhaps why we continue to see fast growth. I think there are a few points. The first thing I would say is, if you think about what we're trying to create, we're trying to create a world in which there's the maximal amount of choice for what customers can get delivered. And that includes all of the grocers. There's a reason why there exist tens of thousands of supermarkets in the U.S., not just because it's a large geography; it's because the average customer does buy from a couple of different places when it comes to their groceries, whether it's buying from place A for their meat and fish, place B for their produce, place C for their pantry items, place D for some specialty items, et cetera. And I think DoorDash is a place in which you can get all of this at the best possible price and the highest quality of delivery. And so that's, I think, our angle at it where we think that in the future, so long as you believe that customers are going to want choice, and I think that can be well reasoned when you just look at the landscape of grocery and how there exists so many grocers out there, which indicates that I think, consumers prefer choice, then that will continue to be very strong interest in the DoorDash product. And then especially if you add some of the capabilities that we're adding where we're adding fulfillment services with DashMart Fulfillment Services, where we're increasing the quality and doing that for every single grocer. So that they have the capability to compete against companies like Amazon. I think that just bolsters the product offering.

Ravi Inukonda, CFO

Youssef, on your second point, I think, it was on Q1 EBITDA as well as Dashers. Look, I mean, I think there's a couple of factors in Q1. One, it's just phasing of investment, which is somewhat unique this year in the sense that we are investing in ROO. Some of that investment is front-loaded. I expect Q1 EBITDA from ROO to be about $25 million lower than Q4, but the full year number is still $200 million, which stays very consistent. The second part is there was an impact because of the winter storms in January; that's roughly about $20 million. And finally, to your point, Dashers has been very seasonal, right? Like we saw seasonal impact of Dashers in Q1 every single year over the last several years, 2023, '24, '25. '26, I would expect it to be very similar. But your second point around your broader Dasher. I mean, Dasher trends are fairly consistent with what we've seen in years prior when I look at Dashers cost as a percentage of GOV, we generated leverage in Q4 on a year-over-year basis and I expect us to continue to generate some leverage in Q1 as well when I look at it as a percentage of GOV on a year-over-year basis.

Operator, Operator

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

Josh Beck, Analyst

Yes, I wanted to ask, I know it's only been maybe about 5 months since you've closed Deliveroo. Have there been any standout learnings when you think about the loyalty program or the fulfillment network or merchant terms? Just anything that has really jumped out to you as an opportunity area to lean in towards and then on the platform modernization, I know, it's arguably very early there as well. But anything you can update us on in terms of maybe some of the efficiencies that you're expecting to gain and maybe how that could either accelerate velocity or maybe free up investments elsewhere? Just would really like updates on those topics.

Tony Xu, CEO

Sure. Josh, it's Tony. I'll take a shot at both questions, and feel free to jump in, Ravi. Regarding Deliveroo, I think it's been a fantastic start. The numbers and performance speak for themselves; when you're growing faster within the same budget and see more potential for growth, that's always a positive sign. I agree that there are numerous opportunities for improvement that we've identified. We should be able to implement many of these this quarter, as it's really about small adjustments that collectively make a difference. There's rarely one major issue; usually, it's a combination of many minor elements that can lead to either success or failure in meeting customer expectations. We see opportunities generally across the board and are making improvements daily. We've already gained benefits from lessons learned while building DoorDash and from acquiring Wolt, which we've applied to Deliveroo to enhance services for all users. On the tech platform question, you're right in your observation that our current setup is not optimal. We are operating on three different tech platforms for essentially similar businesses, which slows us down. To launch one feature, we have to make three separate adaptations in slightly different processes, which doesn't make sense. Therefore, we are making a significant investment to improve our shipping efficiency and tackle these inefficiencies while being more effective globally. I believe this will allow us to achieve both goals through this tech platform. We've actually already seen positive results over the past four months working with Deliveroo. When we introduce something that has been successful for us in the U.S. or in another region like Wolt to Deliveroo, it has had an immediate positive effect on the customer base. We recognize hundreds of such opportunities through our work on the platform, and moving everyone to a single tech stack should benefit all customers across different segments.

Operator, Operator

Your next question comes from the line of Eric Sheridan with Goldman Sachs.

Eric Sheridan, Analyst

With respect to DashPass, how does that fit within your broader strategic priorities? And when you think about growth investments in the business in terms of incenting DashPass adoption more broadly across your markets? And then in terms of DashPass adoption, how do you think about that as a potential stimulant for order frequency when you think about cohort evolution looking out over the next 12 to 18 months?

Tony Xu, CEO

DashPass is essential to our business. We initiated this program at the end of 2017, made significant improvements in 2018, and it has remained a key component of our customer relationships. Its growth has been remarkable, not only in the metrics we've shared but also in the new benefits we're delivering to our customers. Our aim with DashPass is to keep expanding the number of benefits we provide, and there is still much to explore. A lot of recent benefits have come from our expansion into non-restaurant categories, where we maintain the same DashPass fee while increasing value with discounted pricing for more complex deliveries in retail and grocery, as well as greater discounts on essential items. We also see considerable potential in our in-store business, which we introduced in 2025 during the September dashboard product event. This initiative aims to drive traffic into restaurants, leveraging our 56 million monthly active users, or over 100 million annual customers, by providing them with exclusive access or value they would not receive otherwise. The DashPass ecosystem has significant growth potential ahead. Currently, the average DashPass customer interacts with us a couple of times a week, but when considering the typical number of eating occasions, which ranges from 20 to 25, along with shopping occasions related to food, the total exceeds those figures. Therefore, we believe we are currently only tapping into a small percentage of DashPass's potential. There is much work to be done to increase the frequency of use, and that begins with introducing more use cases to enhance value.

Operator, Operator

Your next question comes from the line of Ross Sandler with Barclays.

Ross Sandler, Analyst

Yes. I just wanted to have two. Can we get an update on the Storefront software business and how SevenRooms and kind of the CRM part of it might be kind of accelerating the efforts on that side? And then back to the replatforming, you guys have done a nice job of laying out how all these components are coming together. Just a question on timing. So clearly, this will benefit both like speed of new features being rolled out and potentially expanding products or geos. When we kind of see the benefits starting to show up? Is this going to be like a continuous thing in '26 onwards? Or is it more kind of like after this year? Just any thoughts on the timing?

Tony Xu, CEO

Yes. I can start. So on the first question with respect to Storefront and software in general. It's going really well. I mean, if you look at the integration of SevenRooms, that also has been a relatively newer project for us, about 6 months in partnership with the SevenRooms team. And already, we've been able to tremendously speed up their work. I mean, they're now adding venues 50% faster post-acquisition than before we partnered with them. And if you think about like if we step back and think about the thesis, it's kind of proving the thesis that if you can add the best-in-class CRM software with the largest demand generator platform, which is DoorDash, it is a really valuable asset for these restauranteurs who really want to build more regular customers and have that direct relationship. That is also true for the Storefront products, which is less about in-room dining or in-store dining and much more about the takeaway product. But especially as we expand kind of the merchant cohort in which SevenRooms currently addresses, SevenRooms is kind of serving the higher end kind of cohort of restaurants. But as we simplify the features to be able to address a larger segment, that's where Storefront and SevenRooms really can team up to both serve a restaurant's four-wall business as well as their business outside their premises. Your second question on the timing of the tech stack. Look, I wish that the tech stack were already here. But the truth is you'll see a majority of the tech stack work completed this year. That's at least my expectation. And I think with respect to the benefits, you don't have to wait all at once. In fact, we're already seeing benefits from the work we're doing with the global tech stack in all of our different geographies in which we're shipping features from one market that are working into a different market. So that's already happening. That's in fact, one way in which you can test whether or not the value of the tech stack actually has any positive value to customers. And so we're seeing that. But yes, we expect the majority of the work to be done this year.

Operator, Operator

Your next question comes from the line of Ken Gawrelski with Wells Fargo.

Kenneth Gawrelski, Analyst

First, could you provide some insight into the cohort data that gives you confidence in continued strong core U.S. restaurant growth? How do later adopters behave differently than the earlier ones? Secondly, I want to follow up on Ross's point. Looking ahead to 2027, it may be early to discuss it, and we appreciate the information on the 2026 quarters. However, do you have any initial thoughts on the balance between investments and margins after 2026? How do you see incremental margins after 2026 compared to historical trends?

Ravi Inukonda, CFO

Sure. Again, I'll take the first one too. Look, when I look at the performance of the U.S. restaurant digital, like I said in the earlier question, '25 grew faster than '24 at a larger scale. I should tell you the health of the underlying cohorts. MAUs continue to be quite strong. In fact, we hit an all-time high in terms of MAUs and order frequency continues to be quite strong. When I look at the engagement of new consumers that still join, I mean, that continues to be quite strong. And the other thing that you're seeing is, I mean, subscription continues to be a big driver of growth for us, both Q4 as well as '25, we added a record number of subscribers. What you're seeing in the business is as the product continues to get better, there's more people that habituate, they graduate towards subscription. Subscription, they retain more, they order more as well as they try new categories. So overall, when I look at the mature cohorts as well as the newer cohorts, the engagement level in the U.S. business continues to be strong, not just across restaurants, but even our new verticals business. And I think your second question, Ken was just sort of incremental margins. Look, I mean we're not guiding the business towards incremental margins. We're not operating the business towards incremental margins. Our focus has always been on overall profit dollar production. But just to frame your thinking in terms of overall tech stack and what the impact there is. Look, there's a couple of costs in there. One is some redundancy in cost as we try to run both tech stacks in parallel. Majority of that spend will be in '26, some will be in '27. But that will come off. And you should expect that to be a smaller component. But the biggest value driver for us like we touched on earlier is going to be velocity of feature development; you're going to become more efficient as developers work on the same tech stack across all 3 platforms. And you should see the impact of that from an underlying cohort perspective as well as overall growth in the business.

Operator, Operator

Your next question comes from the line of Bernie McTernan with Needham.

Bernard McTernan, Analyst

Just wanted to follow up on the discussion on AVs. Do you think the use case for delivery AVs will be broader than robotaxis and mobility, meaning that at least for the foreseeable future, robotaxis are expected only to be in dense cities? Is there a use case for delivery AVs in the suburbs? And then as we're asking follow-up questions on the financial guidance, in the press release talked about EBITDA a lot higher in the second half of the year. I would say that's probably typical to normal seasonal trends that we see within the business. Just any additional color you could provide would be helpful.

Tony Xu, CEO

Yes. Bernie, it's Tony. I'll take the first question on AVs. I mean the short answer is absolutely. Yes, of course, we think that the delivery vehicles will be able to address both suburbs and city centers. In fact, if you look at actually Dot, it was constructed in a purposeful way to actually serve many of the suburbs. And that's true in its form factor, that's true in how we think about integrating it into the autonomous delivery platform in terms of which assignments it ought to receive versus which assignments it should not receive. That's also true for all of our projects for our drone projects, too, which cover, I would say, even beyond suburbs, but even more rural regions where the distances traveled are much farther and you can go a lot faster in the air sometimes than you can go on land.

Ravi Inukonda, CFO

Bernie, regarding your second question, my expectations for the full year remain unchanged from the last call. I anticipate a slight increase in the full year margin compared to '25, with ROO being around $200 million. You are correct that our EBITDA curve typically shows higher results in the second half than in the first half. This is just the nature of our business. As the year progresses, volume increases and unit economics improve, leading to greater gross profit dollars later in the year, resulting in the second half outperforming the first half. We have consistently delivered on this in '23, '24, and '25, and '26 will be no different. There are a couple of notable changes this time. One is the investment in ROO, which is somewhat front-loaded and impacts Q1; however, I expect ROO EBITDA to grow as we move through the year. The other aspect is that the rate of profitability expansion for our new verticals and international business, excluding ROO, appears to be accelerating compared to previous years. I especially anticipate our new verticals becoming gross profit positive and the international business, excluding ROO, achieving contribution profit positivity in the second half. All of these factors contribute to the expected shape of the EBITDA curve, where the second half will exceed the first half.

Operator, Operator

Your next question comes from the line of Andrew Boone with Citizens Bank.

Andrew Boone, Analyst

Ravi, I wanted to stay on costs and the intensity of investments. If I look at R&D and G&A, it's 211 basis points of GOV. We've talked about kind of that 2% target historically. Should we expect GOV to kind of grow when we just grow into this higher fixed cost? Or how do we think about the fixed cost component of the business on a go-forward basis? And then going to grocery, is there any detail that you can provide us in terms of the graduation of customers into the Sunday Shop? Can you talk about just the evolution of customers and whether you're starting to capture larger baskets?

Ravi Inukonda, CFO

Yes, Andrew, I'll take the first one, right. Look, when I look at OpEx in Q4, I think that's probably what you're asking about as well. There's inclusion of ROO. So you should take that into consideration. When I look at 2026, I would expect OpEx to be roughly about 2% of GOV that we talked about. Look, we're being very disciplined. We're investing in areas where we're improving the product to ultimately drive both scale as well as profitability. You're seeing that in terms of the overall growth as well as the profit dollar production. Look, I mean, our goal is to continue to generate leverage, right? Like OpEx, I think of it as the cost of doing business, and our goal is to continue to generate leverage on it just like any other part of the P&L.

Tony Xu, CEO

Andrew, on the second question with respect to grocery, yes, is the short answer. We are seeing the evolution of customer behavior both now incorporating kind of the middle of the week run, which is kind of how DoorDash started 5 years ago in the grocery category to now the larger baskets that happen on the weekends here in the U.S. In other parts of the world, it has a slightly different behavior, but we do see both behaviors now where people use us for both kind of the quick runs as well as the stock-up use cases. You see this, in fact, happening faster and faster with each successive cohort and you see each existing cohort actually increasing their spend and their overall share of wallet when it comes to grocery with us.

Operator, Operator

Your next question comes from the line of Lloyd Walmsley with Mizuho.

Lloyd Walmsley, Analyst

Was just wondering if beyond the first quarter guidance you can help us with just how to think about a framework for GOV growth for the balance of the year. I appreciate the comments on the EBITDA cadence, but anything you can help us out with on GOV growth?

Ravi Inukonda, CFO

Yes. Look, I mean, I think a couple of things, right? Like one, growth in the business continues to be quite strong. And we are seeing that from both existing consumers as well as new consumers where MAU growth continues to be strong, order frequency continues to be strong. Like I said in one of the earlier questions, I mean, DashPass had a record year as well as continues to drive overall growth. For us, the way I think about it is as long as we are continuing to improve the product, the underlying cohorts are responding, as you can see from engagement as well as sort of retention and for us, I feel pretty good about the overall growth, not just in Q1 but for the rest of the year as well.

Operator, Operator

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

Lee Horowitz, Analyst

Maybe building on an earlier one. 2026 is obviously a big year for investments in sort of the software and services stack for your merchants. I guess looking beyond this year, where do you see sort of the natural adjacencies that you can build on top of once you've sort of rolled out this new software service stack for your merchants that will drive more value to both your merchants and the consumers in the coming years.

Tony Xu, CEO

I can start. The short version of this is that 2026, in many ways, is a setup year for building a new company that is now a global entity operating in over 40 geographies. We're doing the same thing but need to consider different countries and markets, each at varying stages of maturity when it comes to the products we've launched. There are various factors to consider. Many of the adjacencies you mentioned can be derived from what we're offering at DoorDash. We have different missions, one of which is to bring everything within the city. A significant part of our work is expanding beyond just restaurants. We've shown our capability in categories like grocery and convenience, and we're just starting to explore other retail categories. There's considerable work to be done in this area. A big part of our strategy also involves building fulfillment services, allowing retailers to forward deploy inventory so they can offer same-hour and same-day delivery to compete with larger companies. We need to invest in autonomous technologies to provide high quality and low-cost solutions. Another mission is to develop software that enables these companies to operate as omnichannel businesses. We touched on this during the call with mentions of Storefront and SevenRooms, as well as our DoorDash Drive delivery service. We need to develop additional services that help physical businesses evolve into fully digital entities. This connects to our third mission of driving in-store traffic to merchants. We're starting with restaurants through two product offerings aimed at helping customers discover new dining options and providing reservations at top restaurants partnering with SevenRooms. There's a lot of work to be done in these areas. Overall, I see three significant missions ahead that will guide us in building an operating system for local commerce, ultimately connecting consumers and merchants in new ways. If we can execute this effectively across different geographies, it presents a very exciting future for DoorDash.

Operator, Operator

Your next question comes from the line of Justin Patterson with KeyBanc.

Justin Patterson, Analyst

On the advertising side, it seems you have made significant progress with Symbiosis. I would like to know more about how you are developing the ad product this year and some key statistics you are focusing on to attract more grocery and retail advertising dollars. Additionally, although this isn't related to replatforming, we have noticed that many companies are benefiting from agentic coding. I am curious to know what efficiencies, if any, you are experiencing from that and how it may align with the wider replatforming efforts.

Tony Xu, CEO

Yes, Justin, this is Tony. I'll address both your questions. Our Ad business is experiencing rapid growth, which I should have highlighted when discussing DoorDash's record year in 2025. Ads played a significant role in that success, as it directly reflects the growth from our marketplace. Symbiosis is off to a great start as well, with the number of advertisers doubling and their spending tripling. The results speak for themselves. Regarding our roadmap this year, there is much discussion in the ecosystem about agents and agentic commerce. One of the key developments we launched last year is our Smart Campaigns product, which enables restaurants to run ROI-positive ad campaigns on their behalf. This has become one of our fastest-growing offerings for restaurants. While we are earlier in the grocery and retail space, this presents substantial opportunities for us since our advertising efforts have primarily focused on restaurants so far. As for coding agents, this topic is evolving rapidly. The pace of change has been remarkable, and we observe over 90 percent daily active usage among our engineers for these coding agents, enhancing their productivity. The challenge now is determining the right environment to maintain that productivity gain, which is what we and many others are working to understand.

Operator, Operator

Your next question comes from the line of Justin Post with BofA.

Justin Post, Analyst

In the release, you talked about unit economics of grocery retail going positive in the second half. What's enabling that? Is that scale? Or are you seeing new efficiencies on that front? And then thinking long term, how do you think about grocery retail bottom line profitability relative to U.S. restaurant?

Ravi Inukonda, CFO

Justin, I mentioned this earlier. Overall, new verticals are performing well. We have made significant improvements in unit economics. There’s nothing major that we need to tackle; it’s about continued execution in enhancing logistics efficiency and product quality. We're observing larger basket sizes from both existing and mature cohorts. It's about ongoing execution, identifying areas for efficiency along the P&L, and improving the product, which will ultimately lead us to be gross profit positive in the second half of the year. Our long-term goal remains how to increase the percentage of our monthly active users who order from various categories of restaurants closer to 100%. If we can enhance the product quality, I believe this will evolve into a substantial business, generating strong free cash flow for us in the long run.

Operator, Operator

Your next question comes from the line of Mark Mahaney with Evercore ISI.

Mark Stephen Mahaney, Analyst

I was going to ask a question about Deliveroo. You mentioned that you accelerated the year-over-year growth in total orders for Deliveroo in the December quarter, which was faster than I expected. Can you explain how you achieved that? Also, do you see other factors that suggest you can continue to increase those orders?

Tony Xu, CEO

Yes, Mark, it's Tony. The short answer is that we recently implemented improvements to the product. There wasn't just one specific factor responsible for this. I've learned that while it may seem straightforward to consistently deliver a burrito on time and in expected condition, in reality, it's much more challenging. It's about continuously addressing issues as they arise. One of the highlights has been the collaboration with the Deliveroo team, which has been excellent. I'm proud of how well our teams have worked together to meet rising customer expectations. However, we still have a lot of work ahead of us. While we've made a strong start and I'm proud of our team's efforts, I see many opportunities for further enhancements. A significant part of our efforts involve fixing known issues while also incorporating successful strategies from other areas of our business. We recognize that there are many more opportunities to pursue.

Operator, Operator

Thank you, everyone. This concludes today's Q&A due to the time, and this also concludes today's call. Thank you for attending. You may now disconnect. Goodbye.