DoorDash, Inc. 2022 Q2 Form 10-Q Summary
Business Context and Reporting Period
DoorDash operates local commerce marketplaces connecting merchants, consumers, and delivery contractors. Its DoorDash Marketplace operated in four countries, while Wolt operated in 23 countries. The company also offered Drive, Storefront, Bbot, DashPass, and Wolt+.
This unaudited filing covers the three and six months ended June 30, 2022, with comparisons to the same periods in 2021. DoorDash completed its acquisition of Wolt on May 31, 2022 and acquired Bbot on March 1, 2022.
Financial and Operating Metrics
| Metric | Q2 2021 | Q2 2022 | Change |
|---|---|---|---|
| Total Orders | 345 million | 426 million | 23% |
| Marketplace GOV | $10.5 billion | $13.1 billion | 25% |
| Revenue | $1.236 billion | $1.608 billion | 30% |
| GAAP gross profit | $657 million | $686 million | 4% |
| GAAP gross margin | 53.2% | 42.7% | Down 10.5 percentage points |
| GAAP net loss | $(102) million | $(263) million | Loss increased |
| Net margin | (8.3)% | (16.4)% | Down 8.1 percentage points |
| Adjusted EBITDA | $113 million | $103 million | Down 9% |
| Adjusted EBITDA margin | 9.1% | 6.4% | Down 2.7 percentage points |
| Contribution Profit | $290 million | $381 million | 31% |
| Contribution margin as a percentage of Marketplace GOV | 2.8% | 2.9% | Up 0.1 percentage points |
For the six months ended June 30, 2022, revenue was $3.064 billion, GAAP gross profit was $1.348 billion, GAAP net loss was $430 million, Adjusted EBITDA was $157 million, and operating cash flow was $145 million. Six-month revenue increased 32% from $2.313 billion, while net loss increased from $212 million and operating cash flow declined from $418 million.
Q2 cost of revenue increased 59% to $880 million, research and development increased 105% to $205 million, and general and administrative expense increased 36% to $294 million. Sales and marketing declined 1% to $421 million. Stock-based compensation increased to $231 million in Q2 and $360 million for the first six months.
Cash, cash equivalents, and marketable securities totaled approximately $4.5 billion at June 30, 2022, consisting of $2.727 billion of cash and cash equivalents, $1.272 billion of short-term marketable securities, and $495 million of long-term marketable securities. Funds held at payment processors were $246 million.
The company had no borrowings under its $400 million unsecured revolving credit facility, which matures in August 2025. It had $130 million of letters of credit outstanding, including $99 million issued under the facility. DoorDash reported compliance with its covenants.
Material Changes Versus the Prior Comparable Period
- Growth in orders and Marketplace GOV drove higher revenue, with revenue growth exceeding Marketplace GOV growth primarily because of improved Dasher supply.
- Gross margin declined materially as cost of revenue grew faster than revenue, reflecting higher order-management and platform costs, increased insurance reserves, and first-party distribution costs.
- Adjusted EBITDA declined despite revenue growth because of higher adjusted cost of revenue, research and development, and general and administrative expenses.
- Research and development spending increased primarily because of higher headcount and personnel costs, while sales and marketing benefited from lower advertising spending.
- Wolt contributed $32 million of revenue and a $45 million net loss for June 2022 only. The transaction included approximately $2.842 billion of consideration, primarily DoorDash stock, and added $1.993 billion of preliminary goodwill and $772 million of acquired intangible assets.
- Q2 included $44 million of Wolt-related transaction costs, $15 million of certain legal, tax, and regulatory costs, and $3 million of restructuring charges in the Adjusted EBITDA reconciliation.
- The company paid the remaining amounts under the $100 million Marko settlement concerning Dasher classification claims during Q2.
Guidance, Outlook, Commentary, and Risks
The filing does not provide a clear numerical revenue, EBITDA, or order-volume outlook for future periods. Management stated that existing liquidity and available revolving-credit capacity should be sufficient for working-capital and capital-expenditure needs for at least the next 12 months and beyond, while cautioning that continued investments, acquisitions, and operating losses could require additional capital.
Management expects growth rates to decline from the elevated levels experienced during the peak of the COVID-19 pandemic. It also expects continued investment in platform expansion, international markets, new categories, and Wolt integration.
- Independent-contractor classification remains a significant contingency. The San Francisco District Attorney action could result in a loss, but the possible range was not estimable. Proposition 22 remained in effect pending appeal despite an adverse lower-court ruling.
- DoorDash faces regulatory, tax, pricing-control, consumer-protection, privacy, cybersecurity, intellectual-property, personal-injury, and payment-processing risks across multiple jurisdictions.
- Inflation, higher fuel and labor costs, supply-chain disruption, reduced discretionary spending, competition, and foreign-exchange movements could pressure order volume, Dasher costs, and margins.
- Wolt integration creates operational, regulatory, international, employee-retention, and potential restructuring risks.
- At June 30, 2022, unrecognized stock-based compensation totaled approximately $2.881 billion, including $234 million associated with the CEO Performance Award, creating substantial future expense and potential dilution.
- The company authorized a $400 million share-repurchase program in May 2022. No shares were repurchased during Q2; however, by August 5, 2022, the company had repurchased 5.5 million shares for approximately $395 million cumulatively.
- A Canadian retail joint venture formed July 1, 2022 carries an aggregate three-year capital commitment of approximately $69 million. The accounting impact was still under assessment.
Most Important Facts for Investors to Verify
- Whether order and Marketplace GOV growth can continue while gross margin and Adjusted EBITDA margin recover from Q2 levels.
- The pace and cost of Wolt integration, including final purchase-accounting adjustments and acquired-intangible amortization.
- Potential financial and operational effects of Dasher reclassification proceedings, Proposition 22 litigation, and related regulatory developments.
- Whether operating cash flow remains positive as net losses, capitalized software spending, acquisitions, and share repurchases continue.
- The effect of approximately $2.881 billion of remaining stock-based compensation on future expenses, dilution, and cash tax-withholding requirements.
- Exposure to price controls, competition, inflation, foreign exchange, cybersecurity incidents, and indirect-tax assessments.
- Future liquidity after the completed share repurchases and any additional acquisition or international-investment commitments.