Earnings Results: DoorDash shares sink as revenue more than triples but loss more than doubles

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DoorDash Inc., the food-delivery app whose pandemic-fueled boom helped it pull off one of 2020’s biggest IPOs, said in its first earnings report since going public that its revenue more than tripled in the fourth quarter, but its net loss more than doubled.

DoorDash DASH, -5.36% shares sank more than 10% after hours Thursday after falling 5.7% in the regular session to close at $166.35 as the company’s forecasts fell shy of analyst expectations.

The San Francisco-based company reported a fourth-quarter loss of $312 million, or $2.67 a share, compared with $134 million, or $3.05 a share, in the year-ago period. For its loss, the company cited $322 million in stock-based compensation expense connected to its initial public offering. Revenue rose 226% to $970 million from $298 million in the year-ago quarter.

Analysts surveyed by FactSet had forecast a loss of 35 cents a share on revenue of $936.9 million.

For the full year, DoorDash posted a loss of $461 million, or $7.39 a share, on $2.89 billion in revenue. That’s down from its loss of $667 million in 2019. Analysts had expected a loss of 33 cents a share on $2.85 billion in revenue.

DoorDash said it had gross orders of $8.2 billion in the fourth quarter, beating analysts’ expectations of $7.82 billion.

What will happen to delivery services when the pandemic gets under control is a big question for the company. DoorDash, which started off delivering takeout from restaurants but has since branched out into grocery and convenience-store delivery, could see a drop in business when most restaurants reopen for in-person dining.

“The main unknown is what exactly does [the] competitive environment look like post-pandemic, when you don’t have customers just coming directly to you and volumes going through the roof?” said Tom White, analyst with D.A. Davidson.

The company said its outlook factors in widespread availability of the COVID-19 vaccine that would lead to a return to in-person dining.

“In our experience, consumer behavior tends to be sticky,” said DoorDash Chief Financial Officer Prabir Adarkar during the earnings call. “New habits get formed. We believe it will persist over the long run.”

But Adarkar also mentioned a possible seasonal slowdowns in the second and third quarters. That’s something that James Gellert, chief executive of Rapid Ratings, identified as a complicating factor: He said it was possible DoorDash would deal with “a decrease in app traffic as… consumers venture outdoors with warmer weather.”

DoorDash said it would not guide for revenue, but in a letter to shareholders stated that it expects first-quarter marketplace gross order volume (GOV) of $8.6 billion to $9.1 billion, with adjusted EBITDA of $0 million to $45 million, which it said will be negatively affected by its first full quarter of “operating under Proposition 22 and ongoing price controls.” Analysts expected EBITDA earnings of $71 million for the first quarter.

For 2021, DoorDash said it expects GOV of $30 billion to $33 billion, short of the $33.2 billion analysts expect, with adjusted EBITDA of $0 million to $200 million.

Adarkar said that while the company is passing off some Prop. 22 costs, it is absorbing the majority of them.

Proposition 22, a ballot measure backed by DoorDash and other gig companies, was approved by California voters in November. Under Prop. 22, the app-based platform companies continue to treat their drivers and delivery workers as independent contractors while promising them a new earnings guarantee and some benefits that fall short of full employee protections.

Asked about reports that DoorDash and other have been talking with labor unions on the worker-classification issue, Chief Executive Tony Xu said, “Whenever there are opportunities for discussion on how to maintain [delivery worker] flexibility and give proportional benefits, we’re happy to have those conversations.”

Another policy question on the minds of analysts was the effects of commission caps that have been implemented in dozens of cities DoorDash serves. As restaurants have struggled because of the pandemic, officials have lowered the commissions DoorDash and other apps can charge them for delivery. Adarkar said it is his understanding those are emergency measures, and he expects those caps to go away once in-person dining resumes.

Shares of the company have fallen 6% since they made their public debut in December, but are up nearly 25% year to date.

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