DoorDash, Inc. 2021 Form 10-K Summary
Business Context and Reporting Period
DoorDash filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The company operates a logistics and technology platform connecting merchants, consumers, and independent-contractor Dashers. Its principal businesses are the Marketplace and Platform Services, including Drive and Storefront. DoorDash operated in the United States, Canada, Australia, Japan, and Germany, and had more than 8,600 employees at year-end.
The filing is an annual report rather than a standalone fourth-quarter filing; the source provides full-year 2021 results and selected balance-sheet information as of December 31, 2021.
Key Financial and Operating Metrics
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $4.888 billion | $2.886 billion | Up 69% |
| Total Orders | 1.390 billion | 816 million | Up 70% |
| Marketplace GOV | $41.944 billion | $24.664 billion | Up 70% |
| Gross profit | $2.452 billion | $1.421 billion | Up 73% |
| Gross margin | 50% | 49% | Up 1 percentage point |
| Loss from operations | $452 million | $436 million | Loss increased $16 million |
| Net loss | $468 million | $461 million | Loss increased $7 million |
| Net margin | (10%) | (16%) | Improved 6 percentage points |
| Adjusted EBITDA | $289 million | $189 million | Up $100 million |
| Adjusted EBITDA margin | 6% | 7% | Down 1 percentage point |
| Contribution profit | $1.071 billion | $663 million | Up $408 million |
| Contribution margin | 22% | 23% | Down 1 percentage point |
International revenue was $11 million, compared with $11 million in 2020, while substantially all revenue continued to come from the United States. No customer represented 10% or more of revenue.
Stock-based compensation expense increased to $486 million from $322 million. The company reported $1.9 billion of unrecognized stock-based compensation expense related to outstanding equity awards at year-end, including $289 million related to the CEO Performance Award.
Cash Flow, Liquidity, Debt, and Balance Sheet
- Operating cash flow was $692 million, compared with $252 million in 2020.
- Investing cash flow was negative $2.047 billion, primarily reflecting $2.344 billion of marketable-security purchases, $409 million of non-marketable equity investments, $129 million of property and equipment purchases, and $108 million of capitalized software and website development costs.
- Financing cash flow was negative $483 million, including repayment of the convertible notes, $172 million of taxes paid for net share settlements of equity awards, and $32 million of stock-option proceeds.
- Cash, cash equivalents, and marketable securities totaled approximately $4.4 billion at year-end, including $2.5 billion of cash and cash equivalents, $1.3 billion of short-term marketable securities, and $650 million of long-term marketable securities.
- Funds held at payment processors totaled $320 million.
- The company had $400 million of available commitments under its unsecured revolving credit facility, with no borrowings outstanding and $39 million of letters of credit issued under the facility.
- The $340 million principal amount of convertible notes was repaid in February 2021 for $375 million, including accrued interest.
- Total liabilities were $2.142 billion and stockholders’ equity was $4.667 billion at December 31, 2021. Accumulated deficit was $2.081 billion.
Management stated that existing cash, cash equivalents, marketable securities, and available revolving-credit capacity were sufficient to meet anticipated working-capital and capital-expenditure needs for at least the next 12 months and beyond.
Material Changes Versus the Prior Comparable Period
- Revenue, Total Orders, and Marketplace GOV each grew approximately 69% to 70%, reflecting increased engagement from existing consumers, new consumer additions, and growth in Platform Services.
- Cost of revenue increased 71% to $2.338 billion, driven by higher order volume, Marketplace GOV, and first-party distribution costs.
- Sales and marketing expense increased 69% to $1.619 billion, principally due to $529 million of higher consumer, Dasher, and merchant advertising expense and increased personnel costs.
- Research and development expense increased 34% to $430 million, while general and administrative expense increased 43% to $797 million.
- Operating leverage improved in research and development and general and administrative expense as a percentage of revenue, but Adjusted EBITDA margin and Contribution Margin declined because of higher adjusted cost of revenue and Dasher acquisition costs.
- Operating cash flow improved substantially, but cash and securities declined from approximately $4.9 billion at year-end 2020 to approximately $4.4 billion at year-end 2021 after significant investments and the convertible-note repayment.
- DoorDash recorded $48 million of gift-card breakage revenue following a change in estimate based on accumulated redemption history.
- The company invested $409 million in non-marketable equity securities, including a $395 million investment in a European instant-grocery-delivery company.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
The filing does not provide a specific quantitative full-year 2022 revenue or earnings forecast. Management expects growth rates in revenue, Total Orders, and Marketplace GOV to decline as the effects of the COVID-19 pandemic wane and as the business matures. The proposed acquisition of Wolt was expected to close in the first half of 2022, subject to regulatory and other closing conditions, and was expected to increase both revenue and expenses. In February 2022, DoorDash also agreed to acquire a U.S. ordering and payment platform for approximately $90 million in cash.
- Wolt transaction: The proposed acquisition could require a €210 million termination fee under certain circumstances, create integration and regulatory risks, and result in stock dilution through issuance of Class A shares.
- Dasher classification: DoorDash continues to face litigation, arbitration, regulatory inquiries, and potential payroll-tax exposure concerning the classification of Dashers as independent contractors. Proposition 22 remained in effect pending appeal after an Alameda County Superior Court ruling found it unenforceable. The San Francisco District Attorney’s action presents a reasonably possible loss, but the filing states that the potential range is not estimable.
- Worker-classification settlements: A California and Massachusetts settlement received final approval in January 2022 for $100 million. Individual arbitration settlements totaling approximately $83 million, including attorneys’ fees and covering approximately 31,000 delivery providers, had been executed and paid as of December 31, 2021.
- Regulation and pricing: Price controls, limits on merchant commissions or consumer fees, privacy requirements, tax obligations, and evolving worker-protection laws could reduce margins, increase compliance costs, or lower order volumes.
- Competition: DoorDash competes with Uber Eats, Grubhub, Postmates, merchant-owned delivery operations, grocers, technology providers, and other local and international platforms. Competitors may pressure commission rates, consumer pricing, Dasher incentives, and marketing spending.
- COVID-19 and macroeconomic exposure: The company expects pandemic-related growth benefits to moderate and identified inflation, labor shortages, supply-chain disruption, higher merchant costs, and reduced discretionary consumer spending as risks.
- Cybersecurity and technology: DoorDash has experienced prior cybersecurity incidents, relies heavily on third parties including AWS and payment processors, and may face outages, data breaches, fraud, or regulatory and litigation costs.
- Insurance reserves: Retained insurance deductibles were $143 million at year-end 2021, and the filing identifies insurance-reserve estimation as a critical audit matter.
- Lease and purchase commitments: Future operating-lease payments totaled $592 million before specified deductions, and non-cancelable purchase commitments totaled $311 million, primarily for technology, onboarding, data processing, and advertising services.
- Tax attributes: Federal and state net operating-loss carryforwards were $4.125 billion and $3.265 billion, respectively, but their use may be limited by future taxable income, expirations, ownership changes, or tax-law changes.
KPMG issued an unqualified opinion on the consolidated financial statements and internal control over financial reporting. Management and KPMG concluded that internal control over financial reporting was effective as of December 31, 2021.
Most Important Facts for Investors to Verify
- Whether post-pandemic demand, order growth, and Marketplace GOV growth can remain durable as reported growth rates decelerate.
- Whether the company can convert positive operating cash flow and Adjusted EBITDA into sustained GAAP profitability after stock-based compensation, legal costs, Dasher costs, and expansion investments.
- The ultimate financial and operational impact of Dasher reclassification proceedings, Proposition 22 litigation, pricing controls, sales-tax matters, and related settlements.
- The closing status, share issuance, integration costs, regulatory approvals, and realized benefits of the Wolt acquisition.
- The effect of the $409 million strategic-investment portfolio and the $395 million grocery-delivery investment on liquidity and future returns.
- The magnitude and timing of future stock-based compensation, equity-award tax settlements, and potential dilution.
- Whether liquidity remains adequate after lease commitments, purchase commitments, acquisitions, strategic investments, and possible continuing operating losses.
- The reliability of non-GAAP measures, particularly Adjusted EBITDA and Contribution Profit, which exclude stock-based compensation and other costs that remain economically relevant to investors.