August 15, 2022
DoorDash allays inflation concerns with record delivery orders

Major US food delivery app DoorDash shrugged off inflation concerns as it posted record-high order numbers in the second quarter and raised its growth targets for the rest of the year.

Shares of the company jumped up to 20 per cent in after-hours trading after earnings exceeded Wall Street’s expectations and gave an encouraging look.

The results capped a strong week for the US gig economy sector, with shares of Uber and Lyft also rising.

DoorDash told investors that total order value this year – the total cost of all orders – is expected to be between $51bn and $53bn, up from its previous guidance of $49bn to $51bn.

Total revenue rose 30 percent year-on-year to $1.6 billion in the April-June period, compared to $1.5 billion estimated by analysts, according to data from S&P Capital IQ.

DoorDash said the strong adoption of its $9.99-per-month DashPass subscription plan, which reduces some fees when placing orders, has allayed inflation concerns with customers.

The revenue for the first time included the proceeds of Volt, the Finnish delivery company that it acquired late last year in a deal worth €7bn.

DoorDash suffered more losses than Wall Street expected. It lost $263mn in the quarter, compared to analysts’ estimate of $150mn. This attributed the increase in headcount to the cost of stock-based compensation.

Uber was trading up more than 37 percent since the start of the week on Thursday, offering its investors a similarly upbeat outlook during its earnings call on Tuesday. The company said it has entered a “new phase” after posting its first quarter of positive free cash flow.

Uber and DoorDash told investors that demand for food delivery remained strong, allaying fears of a sharp drop after coronavirus pandemic restrictions were eased when people started going to restaurants more often or cutting spending.

DoorDash’s gross order value for the quarter was at an all-time high, rising 25 percent year-on-year to $13.1 billion. Gross bookings for Uber Eats were $13.9 billion, up 7 percent in 2021.

On Thursday, shares of rideshare conglomerate Lyft rose 3 percent after hours after better than expected adjusted gains. It said its cost cuts, including the hiring freeze, had helped it reach adjusted earnings before interest, taxes, depreciation and amortization of $79.1mn, compared to the $17.3mn expected by analysts. The amount, which also discounts stock-based compensation and insurance costs, was the highest ever. Lyft’s net loss for the quarter was $377.2mn, compared to $251.9mn a year ago.

Lyft said its average earnings per rider — $49.89 — was its second highest, due to increased travel and longer trips. There were 19.9 million riders in the quarter, up 16 percent from the same period last year. It said it expected an uptick in visits in the current quarter, partly due to the start of the school year.

“It’s clear that consumer transportation is a good long-term business with a massive addressable market,” said Logan Green, Lyft’s co-founder and CEO. However, it forecast slower revenue growth for this year compared to 2021 and warned of an increase in insurance costs.

All three companies posted strong growth in their workforce. Unlike earlier in the year, when drivers returning to the gig economy platform need to invest heavily in additional incentives, they benefit from pressure on household incomes.

Lyft said it had 25 percent more drivers on its platform than a year ago, and the average pick-up time was within 1-2 minutes of pre-Covid levels.

Uber said it now has 5 million drivers on its rideshare and delivery platform, up 30 percent from last year.

DoorDash did not disclose its active driver numbers, but said it has seen “higher organic acquisitions of Dashers.”

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