DoorDash, Inc. 2023 Q3 Form 10-Q Summary
Business Context and Reporting Period
DoorDash operates the DoorDash and Wolt local commerce marketplaces and related platform services, including Drive, Storefront, Bbot, DashPass, and Wolt+. The platforms operated in more than 25 countries. The filing covers the quarter and nine months ended September 30, 2023; financial statements are unaudited and presented under U.S. GAAP.
Key Financial and Operating Metrics
| Metric | Q3 2023 | Q3 2022 | Change |
|---|---|---|---|
| Revenue | $2.164 billion | $1.701 billion | 27% |
| Total Orders | 543 million | 439 million | 24% |
| Marketplace GOV | $16.751 billion | $13.534 billion | 24% |
| Net Revenue Margin | 12.9% | 12.6% | Up 0.3 percentage points |
| GAAP gross profit | $962 million | $714 million | 35% |
| GAAP gross margin | 44.5% | 42.0% | Up 2.5 percentage points |
| Loss from operations | $(108) million | $(308) million | Improved by $200 million |
| Net loss attributable to common stockholders | $(73) million | $(295) million | Improved by $222 million |
| Net loss per share | $(0.19) | $(0.77) | Improved by $0.58 |
| Adjusted EBITDA | $344 million | $87 million | Up $257 million |
| Contribution Profit | $640 million | $420 million | Up $220 million |
| Free Cash Flow | $324 million, as stated by management | $99 million, as stated by management | Up $225 million |
For the nine months ended September 30, 2023, revenue was $6.332 billion versus $4.765 billion, net loss was $409 million versus $726 million, loss attributable to common stockholders was $404 million versus $725 million, Adjusted EBITDA was $827 million versus $244 million, and free cash flow was $951 million versus $94 million.
Management attributed the improved revenue and margins primarily to order growth, increased consumer engagement, advertising revenue, and improved logistics efficiency. Cost of revenue increased 24% in the quarter, broadly in line with order growth, while sales and marketing increased 7%, research and development increased 11%, and general and administrative expense decreased 7%.
Cash Flow, Liquidity, Debt, and Balance Sheet
- Cash provided by operating activities was $1.188 billion for the first nine months of 2023, compared with $344 million in the prior-year period.
- Cash, cash equivalents, and restricted cash totaled $2.435 billion at September 30, 2023, compared with $2.188 billion at December 31, 2022.
- Cash, cash equivalents, and marketable securities totaled approximately $4.3 billion, including $2.344 billion of cash and cash equivalents, $1.477 billion of short-term marketable securities, and $474 million of long-term marketable securities.
- Funds held at payment processors were $385 million.
- The company had no outstanding borrowings under its $400 million unsecured revolving credit facility, which matures August 7, 2025. It had $116 million of letters of credit issued under the facility and remained in compliance with its covenants.
- The company repurchased $699 million of Class A common stock during the first nine months of 2023. The remaining approximately $51 million authorized under the program was repurchased in October 2023, completing the $750 million program.
- Accumulated deficit was $4.949 billion at September 30, 2023. Stockholders’ equity was $6.559 billion.
Material Changes Versus the Prior Comparable Period
- Revenue growth accelerated to 27% in Q3, while Total Orders and Marketplace GOV each increased 24%.
- GAAP operating and net losses narrowed substantially, although the company remained unprofitable.
- Adjusted EBITDA margin as a percentage of Marketplace GOV increased to 2.1% from 0.6%; Contribution Profit margin increased to 3.8% from 3.1%.
- Interest income increased to $40 million from $9 million in the quarter and to $101 million from $14 million for the nine-month period, primarily because of higher average interest rates on investments.
- Stock-based compensation increased to $278 million from $249 million in Q3 and to $819 million from $609 million for the nine months.
- Unrecognized stock-based compensation totaled approximately $2.2 billion at September 30, 2023, excluding or including certain awards as separately disclosed in the filing.
- Accrued expenses and other current liabilities increased to $2.774 billion from $2.332 billion at year-end, including higher insurance reserves, Dasher and merchant payables, taxes, and contract liabilities.
Guidance, Outlook, Commentary, and Unusual Items
The filing does not provide clear formal quarterly or full-year numerical guidance. Management stated that existing cash, cash equivalents, marketable securities, and available revolver capacity should be sufficient for working capital and capital expenditure needs for at least the next 12 months and beyond, while also noting that additional capital could be required to support growth, acquisitions, investments, or adverse conditions.
- A non-cancellable third-party platform service commitment of $892 million runs through May 2028.
- The company was required to maintain $465 million of insurance collateral; $335 million was outstanding through surety bonds and letters of credit at September 30, 2023, with the remaining collateral expected in 2024.
- The California Employment Development Department issued an assessment related to payroll tax liabilities for Dashers classified as independent contractors. DoorDash recorded an accrual and intends to appeal.
- The San Francisco District Attorney’s worker-classification action remains pending. A loss is reasonably possible, but the potential range is not estimable.
- California Proposition 22 was largely upheld by the Court of Appeal, but the California Supreme Court granted review in June 2023. Related worker-classification developments could increase Dasher costs, require pricing changes, or affect order volumes.
- International operations expose the company to foreign exchange, regulatory, tax, sanctions, and geopolitical risks, including risks related to Wolt’s markets near Russia and Ukraine.
- The company reported effective disclosure controls and no material changes to internal control over financial reporting during the quarter.
Most Important Facts for Investors to Verify
- Whether order and Marketplace GOV growth can continue while maintaining or expanding net revenue, gross, and contribution margins.
- How much of Adjusted EBITDA and operating cash flow depends on stock-based compensation add-backs, accrued liabilities, and other non-cash or timing-related items.
- The ultimate financial and operational impact of Dasher classification proceedings, the California EDD assessment, Proposition 22, and other labor regulations.
- The adequacy of insurance reserves and the potential exposure from personal injury, auto liability, cybersecurity, and other claims.
- The company’s ability to fund the $892 million platform commitment, insurance collateral requirements, continued investment, and possible acquisitions without reducing liquidity.
- The treatment, vesting, dilution, and future expense recognition of approximately $2.2 billion of unrecognized equity compensation.
- Whether international expansion, Wolt integration, advertising growth, and new categories generate returns sufficient to offset higher operating complexity and regulatory risk.