DoorDash, the popular food delivery platform, has raised its earnings forecast as it sees success in new business verticals and experiences accelerated user growth. The company’s earnings report is scheduled for August 2nd, and analysts are already anticipating positive results.
The increased confidence in DoorDash’s new verticals has led to a 10% boost in the company’s 2024 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Additionally, third-party app engagement suggests that daily active user (DAU) growth has accelerated, further supporting the positive forecast for the second quarter of 2023.
Despite concerns about a softening U.S. consumer and the recent surge in DoorDash’s shares, which have risen 43% since reporting its first quarter earnings (compared to a 20% increase for the NASDAQ), the company continues to gain market share in the food delivery industry, taking customers away from competitors like Grubhub.
DoorDash’s focus on expanding into new verticals gives analysts confidence that these categories will continue to grow. Furthermore, with a healthy competitive landscape in the industry and investments in new verticals and international markets maturing, there is optimism that profitability will exceed expectations by 2024.
In the second quarter of 2023, both DoorDash and its partner Wolt experienced a 2% year-over-year growth in daily active users, a significant improvement from the previous quarter. The dining frequency of DoorDash users also remains healthy, as more customers take advantage of the DashPass program, which offers benefits and discounts.
DoorDash recently made updates to its app, highlighting grocery and retail options on the bottom navigation bar, replacing the restaurant pickup feature. This strategic move aims to accelerate demand as DoorDash expands its offerings beyond just food delivery. With over 100,000 non-restaurant merchants on the platform and successful partnerships with top U.S. grocers, the company expects increased demand due to this user experience change.
Analysts also note that DoorDash has the opportunity to generate more advertising revenue by increasing its ad load compared to competitors like Uber Eats. The rationality in the industry suggests that DoorDash can successfully expand its ad revenue and capitalize on its growing share of the domestic food ordering market.
Based on the analyst’s evaluation, DoorDash’s 2024 EBITDA is now projected to be 4% higher than consensus estimates. This increase is mainly driven by the maturation of new verticals and a 10 basis points take rate increase.
In summary, DoorDash is positioned to deliver strong financial results in its upcoming earnings report. The company’s expansion into new verticals, improved user growth, and successful strategies to capture a larger portion of the food ordering market set the stage for continued profitability and success.
