Yahoo Finance DoorDash's (NYSE:DASH) Q2 Sales Top Estimates, Stock Jumps 13.6%
On-demand food delivery service DoorDash (NYSE:DASH) reported results ahead of analysts' expectations in Q2 CY2024, with revenue up 23.3% year on year to $2.63 billion. It made a GAAP loss of $0.38 per share, improving from its loss of $0.44 per share in the same quarter last year.
Is now the time to buy DoorDash? Find out in our full research report.
DoorDash (DASH) Q2 CY2024 Highlights:
Revenue: $2.63 billion vs analyst estimates of $2.54 billion (3.6% beat)
Adj EBITDA: $430 million vs analyst estimates of $392 million (9.7% beat)
EPS: -$0.38 vs analyst estimates of -$0.09 (-$0.29 miss)
Adj EBITDA guidance for Q3: $505 million vs analyst estimates of $451.5 million (11.8% beat)
Gross Margin (GAAP): 47.3%, up from 46.8% in the same quarter last year
Free Cash Flow of $451 million, similar to the previous quarter
Orders: 635 million, up 103 million year on year
Market Capitalization: $45.28 billion
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NYSE:DASH) operates an on-demand food delivery platform.
Gig Economy
The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.
Sales Growth
DoorDash's revenue growth over the last three years has been very strong, averaging 32.6% annually. This quarter, DoorDash beat analysts' estimates and reported decent 23.3% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 16.5% over the next 12 months.
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Usage Growth
As a gig economy marketplace, DoorDash generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, DoorDash's service requests, a key performance metric for the company, grew 24% annually to 635 million. This is strong growth for a consumer internet company.
In Q2, DoorDash added 103 million service requests, translating into 19.4% year-on-year growth.
Revenue Per Request
Average revenue per request (ARPR) is a critical metric to track for consumer internet businesses like DoorDash because it measures how much the company earns in transaction fees from each request. This number also informs us about DoorDash's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
DoorDash's ARPR growth has been decent over the last two years, averaging 5.5%. The company's ability to increase prices while constantly growing its service requests demonstrates the value of its platform. This quarter, ARPR grew 3.3% year on year to $4.14 per request.
Key Takeaways from DoorDash's Q2 Results
It was great to see DoorDash increase its number of requests this quarter. We were also glad its revenue outperformed Wall Street's estimates. The icing on the cake was adjusted EBITDA that crushed expectations and guidance for next quarter's adjusted EBITDA that did the same. Overall, this quarter was great, and shareholders should feel optimistic. The stock traded up 13.6% to $122.99 immediately following the results.
DoorDash may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
