DoorDash, Inc. — Q1 2022 Form 10-Q Summary
Business context and reporting period
DoorDash operates a local commerce platform connecting merchants, consumers, and independent delivery providers (“Dashers”). Its offerings include the DoorDash Marketplace, Pickup, DoorDash for Work, DashPass, Drive, and Storefront. The filing covers the three months ended March 31, 2022, with comparable results for the three months ended March 31, 2021. Results are unaudited and interim results may not indicate full-year performance.
Key financial and operating metrics
| Metric | Q1 2021 | Q1 2022 | Change |
|---|---|---|---|
| Revenue | $1.077 billion | $1.456 billion | 35% increase |
| Gross profit | $493 million | $662 million | 34% increase |
| Gross margin | 46% | 45% | Down 1 percentage point |
| Loss from operations | $99 million | $173 million | Loss increased |
| Net loss | $110 million | $167 million | Loss increased |
| Net loss per share | $0.34 | $0.48 | Loss per share increased |
| Adjusted EBITDA | $43 million | $54 million | 26% increase |
| Adjusted EBITDA margin | 4% | 4% | Flat |
| Total Orders | 329 million | 404 million | 23% increase |
| Marketplace GOV | $9.913 billion | $12.353 billion | 25% increase |
| Contribution Profit | $209 million | $319 million | Increase |
| Contribution Margin | 19% | 22% | Up 3 percentage points |
Revenue growth was primarily driven by increased Marketplace GOV and order volume. Management attributed faster revenue growth than Marketplace GOV in part to improved Dasher supply. The company remained GAAP unprofitable; operating expenses grew faster than revenue, particularly research and development, general and administrative expense, and depreciation and amortization.
- Cost of revenue increased 36% to $763 million, driven by higher order management and platform costs, insurance reserves, and first-party distribution costs.
- Sales and marketing increased 24% to $414 million, including higher advertising and personnel costs.
- Research and development increased 80% to $148 million, primarily due to increased headcount.
- General and administrative expense increased 45% to $245 million, including higher sales and indirect tax liabilities and personnel costs.
- Stock-based compensation increased from $97 million to $129 million.
Cash flow, liquidity, debt, and balance sheet
| Metric | March 31, 2022 |
|---|---|
| Cash and cash equivalents | $2.243 billion |
| Short-term marketable securities | $1.353 billion |
| Long-term marketable securities | $643 million |
| Total cash, cash equivalents, and marketable securities | Approximately $4.2 billion |
| Funds held at payment processors | $293 million |
| Accumulated deficit | $2.248 billion |
| Net cash used in operating activities | $20 million |
| Net cash used in investing activities | $246 million |
| Net change in cash, cash equivalents, and restricted cash | $(260) million |
Operating cash flow declined from $166 million provided in Q1 2021 to $20 million used in Q1 2022, mainly because of working-capital movements and the higher net loss. Investing outflows included $71 million for the Bbot acquisition, $39 million for capitalized software and website development, $32 million for property and equipment, and net purchases of marketable securities.
DoorDash had no borrowings outstanding under its $400 million unsecured revolving credit facility, which matures August 7, 2025, and was in compliance with its covenants. Letters of credit outstanding totaled $80 million, including $59 million issued under the facility. The company stated that existing liquidity and available borrowings should meet 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 increased materially year over year, while contribution economics improved.
- GAAP operating and net losses widened despite higher revenue and Adjusted EBITDA.
- Operating cash flow shifted from a $166 million inflow to a $20 million outflow.
- Depreciation and amortization more than doubled to $59 million, driven largely by amortization of capitalized software and website development costs.
- Interest expense fell to zero from $12 million because the 2020 convertible notes were repaid in February 2021.
- On March 1, 2022, DoorDash acquired Bbot, Inc. for approximately $88 million, including $60 million of goodwill and $18 million of intangible assets. The acquisition was not material to reported periods.
- Unrecognized stock-based compensation totaled approximately $1.881 billion at March 31, 2022, including $262 million related to the CEO Performance Award.
Guidance, outlook, commentary, risks, and unusual items
The filing does not provide a clear numerical outlook or formal quarterly guidance. Management expects continued investment in platform development, market expansion, sales and marketing, policy initiatives, and potential acquisitions. It also expects revenue, Total Orders, and Marketplace GOV growth rates to decline over time as the effects of pandemic-related demand normalize and the business matures.
- Wolt transaction: The proposed acquisition of Wolt was expected to close in the first half of 2022, subject to regulatory and other closing conditions. Failure to complete the transaction could result in costs, disruption, and a potential termination fee of €210 million under specified circumstances.
- Worker classification: DoorDash continues to face lawsuits, arbitrations, audits, and regulatory proceedings concerning Dasher classification, pay practices, and related employment matters. The $100 million Marko settlement received final approval in January 2022 and was expected to be paid during 2022. The San Francisco District Attorney matter remains unresolved, and a possible loss is considered reasonably possible but not estimable.
- Proposition 22: Proposition 22 remained in effect while under appeal after an appellate court challenge. Compliance has increased Dasher-related costs in California and could affect fees, order volumes, and margins.
- Taxes: The company remains subject to sales, indirect, payroll, and income tax audits. It maintained a full valuation allowance on U.S. deferred tax assets and reported $71 million of unrecognized tax benefits.
- Market and operating risks: Key risks include intense competition, inflation and labor shortages affecting merchants, price controls and commission restrictions, Dasher supply and costs, cybersecurity and privacy incidents, platform outages, insurance claims, foreign exchange exposure, and changing privacy and e-commerce regulation.
- Unusual items: Q1 2022 Adjusted EBITDA excluded $24 million of certain legal, tax, and regulatory costs and $14 million of transaction-related costs. These exclusions should be considered when comparing Adjusted EBITDA with GAAP results.
Most important facts for investors to verify
- Reconcile the improvement in Total Orders, Marketplace GOV, Contribution Margin, and Adjusted EBITDA with the widening GAAP operating and net losses.
- Assess whether the shift to negative operating cash flow is temporary working-capital timing or evidence of higher ongoing cash requirements.
- Review the effect of stock-based compensation, including approximately $1.881 billion of unrecognized expense, on future earnings and share dilution.
- Monitor the Wolt acquisition’s closing, consideration, integration costs, potential dilution, and expected effect on revenue, cash flow, and profitability.
- Track worker-classification proceedings, Proposition 22 litigation, the $100 million settlement payment, and potential unrecorded exposure from the San Francisco District Attorney action.
- Evaluate the effects of price controls, Dasher compensation requirements, merchant inflation, and competitive promotions on take rate, order volume, and margins.
- Verify the company’s liquidity assumptions against continued operating losses, acquisitions, capitalized software spending, lease commitments, letters of credit, and other contingencies.