DoorDash reported its first earnings report as a public company and gave a look at how the food delivery company performed during Covid-19.
DoorDash lost $ 312 million in the fourth quarter, more than doubling its loss in the same period a year earlier. But the loss for the full year has decreased, from $ 667 million in 2019 to $ 461 million. Revenue more than tripled to $ 970 million for the quarter and $ 2.9 billion for the year, due to demand for delivery during the pandemic.
But the pandemic boost for DoorDash’s business will wane later this year. “We hope markets will start opening soon,” the company said in its earnings report. “If that happens, we expect a decline in consumer engagement and average order values, although the exact quantity remains unclear.”
DoorDash’s share fell more than 5% in after-hours trading after the company’s release at the end of the regular trading session.
The number of DashPass customers is unknown, but growing
Most of DoorDash’s business comes from restaurants, but it has expanded to other categories such as groceries and convenience stores. It also introduces new services, such as building restaurant websites or providing personalized delivery services for orders placed on the restaurant’s own website. The offers from DoorDash, Tony Xu, said that these offers would become ‘more critical’ after Covid.
The company did not disclose the number of DashPass customers paying a subscription fee to receive free delivery per order. The subscribers, who tend to be more loyal customers, accounted for a larger share of total orders in the fourth quarter than in recent quarters, the company said.
DoorDash has in part become the largest U.S. food delivery service by focusing early on conquering suburban markets, where delivery orders are usually larger than in large cities. But like other food delivery businesses, DoorDash remains unprofitable.
Food Delivery Fees, Prop 22
Although food delivery has been a lifeline for restaurants, many struggle with the high fees – even large chains like McDonald’s have indicated that prices are too high. In response, cities from San Francisco to Jersey City have limited fees to help small businesses.
But in California, a potentially huge revenue push for DoorDash disappeared with the approval of Proposition 22 in November. The ballot paper exempts gig companies such as DoorDash, Uber, Lyft and Instacart from offering costly employee benefits such as paid leave and minimum wage to gig workers in California. But the companies have agreed to start offering a limited benefit package to managers. On the question of whether Prop 22 fees are passed on to customers, DoorDash chief financial officer Prabir Adarkar told investors that DoorDash “absorbs most of the costs.”
There is still a lot of room for growth for food delivery worldwide. In October, Uber CEO noted that only 10% of Japanese restaurants are on the Uber Eats platform. Xu said a long-term goal of DoorDash, which also operates in Canada and Australia, is to become a ‘global company’.