Shares of DoorDash (NYSE: DASH) jumped more than 8% in pre-market trading on Wednesday following the company’s quarterly earnings report. The on-demand food delivery service reported better-than-expected revenue and provided rosy guidance for the future. Investors appear to be encouraged by the report and drive up shares in the premarket session.
Let’s look at the earnings report and what it means for shareholders.
Overview of DoorDash
DoorDash is an American technology company that provides on-demand online food delivery. DoorDash operates in the United States, Canada, and Australia, serving over 4,000 cities. The company connects customers with local merchants through its mobile app and website to deliver direct-to-consumer food orders. Orders are fulfilled by DoorDash-contracted delivery drivers, who are paid a commission focusing on customer service. The company was founded in 2013 by Stanford students Andy Fang, Stanley Tang, Tony Xu, and Evan Moore.
DoorDash stock (DASH) recently gained due to better-than- expected revenue in its first quarterly report as a publicly traded company since its highly successful Initial Public Offering (IPO) in December 2020. With more affiliates joining its platform daily, DoorDash has become one of the leading food delivery apps in the U.S., Canada, and Australia. It is also gaining traction with new models such as Dasher Direkt for faster pickup services via subscription memberships for consumers and restaurants alike. Furthermore, it has been rapidly expanding its services into retail delivery options with merchant partners ranging from convenience stores to gas stations providing added convenience for customers looking for anything from quick snacks to gasoline fill ups at their doorstep.
DoorDash’s Q4 2020 financial results
DoorDash Inc (NYSE: DASH), the popular food delivery service, released its financial results for the fourth quarter of 2020 that beat Wall Street expectations for both top and bottom lines. The company reported last week that it had achieved earnings of $0.14 per share compared to a consensus analyst estimate of $0.09 per share. In addition, revenue came in at $970 million which was also better than expected, up from the expected mark of $964 million.
The results caused shares to jump 15% in after-hours trading, adding to the already strong performance in post-IPO life as an even larger trend emerging within the space as well other companies such as Grubhub, Uber Eats and Doordash growing drastically in acceptance and utilization due to Covid19 lockdowns shifting consumer choices towards contactless experiences when it comes to ordering food.
Gross merchandise volume (GMV), the total value of orders before any associated taxes or fees, was up 104%, while active customers rose by 68% annually and active Dashers jumped 103%. This indicates that DoorDash achieved strong customer acquisition growth over Q4 2020 despite pandemic conditions generally leading to less spending on luxury experiences such as dining out or restaurants and longer wait times for orders due to a surge in demand within its services overall compared to previous quarters.
DoorDash’s Q4 2020 Revenue
Investors have responded positively to DoorDash’s Q4 2020 revenue, which came in better than expected and included rosy guidance for 2021. The stock of the food delivery app popped in after-hours trading on Thursday following the release of the quarterly results.
This article will discuss the details of DoorDash’s financial performance and the stock’s reaction to the news.
Revenue beats estimates
DoorDash reported its fourth quarter 2020 results that beat analyst expectations. Total revenue came in at $1.44 billion, an increase of 157% compared to the fourth quarter of 2019. Year-over-year growth was driven by a tripling of DoorDash’s gross order value (GOV) and a doubling of its active Dashers, which reached 2 million in the quarter.
The company also reported positive Adjusted EBITDA (loss) for Q4 2020—a first for DoorDash—due to better cost control and higher revenue from commissions and subscription fees from merchants. This achievement suggests that the company’s strategic investments are paying off and shows signs of sustained profitability moving forward.
Revenue growth year-over-year
DoorDash reported its fourth-quarter financial results for 2020 that exceeded expectations, with revenue growing 167% year-over-year to $1.92 billion. This is a higher level of growth compared to the previous quarter’s 88% and marks the second consecutive quarter in which DoorDash has seen triple-digit year-over-year growth. Additionally, for the first time since its IPO in December 2020, DoorDash has achieved GAAP profitability with a profit of $92 million for Q4 2020.
Regarding delivery volume on its platform, DoorDash reported that it saw 597 million unduplicated orders in 2020 — an 84% increase from 2019 — with approximately one out of every four food deliveries made in the U.S. occurring on its platform by December 2020. Additionally, unique Dashers increased 53% over 2019 to 1.9 million and total sales grew 118%, driven by higher consumer demand and expanded delivery service offerrings such as Pickup services and alcohol delivery capacity in select markets like Chicago and Los Angeles.
As part of their long term strategy to become sustainably profitable ASAP, DoorDash also laid out its plan to reduce cash burn through more efficient use of marketing spend while continuing to invest in new products and technology that will enable an even better customer experience -so if you haven’t already tried DoorDash yet nows the time!
DoorDash’s Q4 2020 Earnings
DoorDash’s stock opened higher Wednesday after the food delivery service reported stronger-than-expected fourth-quarter business, with total revenue climbing 88% year-over-year to surpass expectations. The company also issued rosy guidance for the coming quarter.
Let’s look closer at DoorDash’s fourth-quarter earnings report and what it could mean for its future.
Earnings beat estimates
DoorDash Inc reported fourth-quarter 2020 earnings that beat analysts’ expectations. As a result, the company reported a non-GAAP net loss of $52.4 million and adjusted EBITDA of $19.5 million for the quarter ended December 31, 2020.
Revenue for the quarter was strong at $970 million, an increase of 181% year-over-year and 8% quarter-over-quarter. Analysts had expected revenue of $914 million. DoorDash expects first quartere 2021 revenue in between $1 billion to $1.025 billion, ahead of analysts’ estimates of $935 million.
Gross order value (GOV) — a key metric that measures the total dollar value of all orders placed on DoorDash — grew 208% year-over-year to reach a record high of nearly $8 billion in fourth quarter 2020, while Adjusted GOV reached a record high and grew 183% year over year to reach nearly$7 billion, compared to adjusted GOV growth inQ3 2020of 153%. In addition, deliveries grew 161% YoY in the same period to reach 193 million compared to 118millioninQ3 2020 driven primarily by strong demand for delivery in both core and emerging geographies.
Earnings growth year-over-year
DoorDash, Inc. reported Q4 2020 earnings that significantly beat consensus analyst estimates. The company saw revenue growth of 305% year over year and 132% quarter over quarter, reaching $1.9 billion for the period ending December 2020. In addition, adjusted diluted EPS came in at a new high of $0.37, driven by strong gross merchandise volume (GMV) growth across all geographies and channels during the quarter, which increased 261%.
Driving this strong performance was DoorDash’s continued focus and success on monetizing its platform in the food delivery space through increased subscription penetration on both its core and merchant offerings as well as stronger take rate results from higher-margin orders. The company also experienced a surge in average order value (AOV), as well as a rapid increase in new customer adoption and an increase in repeat customers both domestically and internationally throughout the reporting period.
DoorDash stock pops after revenue beat, rosy guidance
DoorDash’s stock gained momentum after the company reported better-than-expected revenue. The company also gave rosy guidance for the upcoming quarter, sparking investor optimism.
This article will examine DoorDash’s guidance and how it might impact the company’s stock price.
Guidance beats estimates
DoorDash reported better-than-expected second-quarter results, as its net loss narrowed from a year ago and its guidance beat Wall Street estimates.
Revenue for the quarter reached $536 million, up 152% from a year ago and surpassing analysts’ projections of $483.4 million. Meanwhile, its adjusted gross profit reached a record high of $236 million amid strong demand for home delivery services throughout the Covid-19 pandemic.
The company’s net loss totaled $43 millon compared with a net loss of $323 million in the previous year’s quarter. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was minus $14 million during the quarter versus minus me$66 million in the prior year.
DoorDash also provided better-than-expected guidance for the third quarter when it said total sales are estimated to exceed $640 million, marking an increase of nearly 60% sequentially and ahead of analysts’ expectation of over $588 millon in sales. Additionally, adjusted EBITDA was seen coming in at minus 10 to 15 million versus analyst estimates which had called for an EBITDA outflow of around me$20 .
Revenue and earnings guidance
DoorDash, Inc. reported its first quarter financial results for the period ending March 31, 2021 and improved on initial guidance for the quarter. The delivery service reported total net revenue of $969 million and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $160.6 million. These results were significantly higher than the guidance issued at the beginning of the quarter which predicted a range of $875 to $895 million in revenue and an Adjusted EBITDA between $90-$110 million.
DoorDash’s revenue growth was driven by strong demand throughout Q1 as customer orders grew 154% year-over-year compared to last quarter. This was due to increasing consumer adoption of DoorDash’s delivery service and improved infrastructure that allowed DoorDash to meet customer demand more effectively. Moreover, this growing consumer acceptance has pushed up purchase rates at locations served by DoorDash—a positive indicator for the company overall.
In addition to higher-than-expected revenue, DoorDash also boosted their full-year guidance for 2021 and their outlook for Adjusted EBITDA by about $100 million each since January 2021 when they initially looked forward into 2021 with a slightly more conservative estimation for both figures. The new annual guidance estimates that DoorDash should see around revenues ranging from a low of $4 billion to a high of approximately 4.3 billion in total net revenues with expected Adjusted EBITDA between $570 million and 650 million this year – setting up what is undoubtedly an exciting year ahead for all stakeholders involved in DoorDash’s continuing success story!
Impact on DoorDash Stock
DoorDash stock had a major boost after the company’s first quarterly earnings report beat analyst expectations. Following the bullish report, the stock rose by 13% in after-hours trading.
The increase in the DoorDash stock was due to the company’s better-than-expected revenue, rosy guidance, and strong customer growth. Let’s take a closer look into how these three factors impacted the stock price.
Stock price increase
On August 11, 2020, DoorDash Inc. reported better-than-expected revenue for the second quarter of 2020. This report positively impacted DoorDash stock since the share price increased significantly over the following days. By the end of the week, shares of DoorDash stock were trading at $136.05 compared to their pre-announcement level of $120.15, representing a 13.45% increase in stock price above its prices before the earnings announcement.
The revenue growth resulted from both an increase in active consumers and order volume growth on the platform due to people turning to delivery services during the pandemic crisis more than ever before. The strong results also increased investor confidence in DoorDash’s growth prospects and ability to transact profits faster than expected. This increased its valuation relative to other tech unicorns such as Uber Technologies and Grubhub Inc.
Moreover, following management’s announcement that it plans further investments in technological improvements such as product offerings and analytics tools for efficient delivery services along with expansion into larger geographical areas, investors became increasingly optimistic about its potential long-term benefits which further underlined contributing factors to its positive stock movement on August 11th and onward afterward reducing from peak levels recently seen ticked above $205 reflecting a fall of 34% from peak levels in June 2020 due primarily attributed by some analysts citing increasing competition among several food delivery services apart from DoorDash.
Analysts’ reactions
Following the announcement of DoorDash’s earnings report, analysts quickly updated their views and made predictions on how their stock would do in the coming weeks.
Analysts at Wedbush Securities described DoorDash’s quarterly results as ‘label-defying’ with ‘significant top-line tail-. Similarly, analysts at Needham mentioned that the outlook for Doordash is favorable based on its large customer base and fundamentals, leading to an upgrade from Hold to Buy. UBS analyst Eric Sheridan also praised DoorDash, mentioning that its strong metrics had exceeded their expectations.
Likewise, there is a positive sentiment over Wall Street as Morgan Stanley increased their price target on the shares from $90 to $120 per share; Barrons reported Goldman Sachs raising its forecast of DoorDash stock price from $95 a share to $125; CFRA Research estimated that the shares will reach around $105; while Stifel upgraded the company’s rating from buy to hold.
Overall, analysts have been impressed by Doordash’s strong performance in Q1 2021 and most agree that this could signal further upside potential for their stock soon.
Conclusion
DoorDash went public on December 9, 2020 and is the highest-valued US tech company in 2020 to complete an initial public offering. After its stock market debut, DoorDash almost immediately saw its shares rise above their IPO price of $102, reaching as high as $182.51 per share as of April 22, 2021. The company’s strong performance has come despite the economic challenges brought on by the COVID-19 pandemic.
The robust stock performance is partly due to better-than-expected revenue growth reported by DoorDash. In the fourth quarter of 2020, the company showed impressive year-over-year revenue growth of 95% to $964 million in total sales and a net loss of $312 million, much lower than analysts had anticipated. The strong performance can also be attributed to an ever-growing customer base since it went live in 2013. As customers continue to rely on DoorDash for home delivery services, the company could likely see even more favorable results going forward and possible further upside in its stock price down the line.
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