DoorDash Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nikhil Devnani - Sanford C. Bernstein & Co., LLC. - Analyst : I wanted to ask about what you're seeing from an overall demand perspective. There's a lot of talk right now about softening restaurant demand. Your outlook points to some deceleration, but still looks very healthy. So I guess to what degree are you seeing changes in behavior or softening on that front? And my follow-on to that is a bit more of the secular story here. So I mean how would you characterize the new customer funnel for the US restaurant marketplace? I think there's a common perception that all customers should have been acquired during the pandemic. But what do you see on that front in terms of how new customers are still adopting this service today? And how does that make you -- how do you think about where we are on kind of the growth curve there?

Question: Ross Sandler - Barclays plc - Analyst : First one on the take rate. It's up quarter-on-quarter, year-on-year, the revenue take rate. And in the letter, you talked about reducing consumer fees and you just mentioned DashPass growing a lot faster than overall. So could you talk about like what's driving that? Are you seeing efficiencies on cash or cost or something else like Drive causing that take rate to go up as much as it is? And then the second one is you also mentioned that the majority of your largest international markets have better retention than US. Could you just give us a little bit more color on what's driving that? Is that kind of the breadth of offering or levels of competition or something else?

Question: Michael Morton - MoffettNathanson LLC - Analyst : If we could maybe do one on international following up on some of the comments Tony just made and then maybe a quick one on grocery. Tony, I love hearing more about the retention aspects for international. But like you talked about in the press release today, two full years with Wolt. I love to learn some more just beyond the retention aspects, some key takeaways after running this business for two full years on what it takes for the best performance in these international markets. Is it market structure, market share, consumer spending capabilities? And then how that might dictate your plans to grow in new countries and/or maybe exit certain markets where you don't like the industry structure. And then just a quick one on CPG advertising, some learnings and differences you've picked up compared to your restaurant advertising business would be great.

Question: Andrew Boone - JMP Securities LLC - Analyst : You mentioned in the press release a better frequency from new verticals. Can you help us better understand that, the drivers, and then where are you seeing better frequency? And then a question really on ramping new merchants. We've noticed that incentives are kind of larger. As we think about you guys normalizing on selection, can you just help us understand the size of the investment it takes to bring new merchants onto the platform? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 9:00PM, DASH.OQ - Q2 2024 DoorDash Inc Earnings Call

Question: Brad Erickson - RBC Capital Markets - Analyst : I just have two here. One, on the incremental flow-through of EBITDA, so relative to GOV, it looks like it ticked up a bit quarter-over-quarter maybe a couple of hundred basis points. Can you call out just any drivers of the difference there, if you can? And then second, kind of bigger picture, Ravi just talked about the improving unit economics on the gross margin side across all parts of the business. So it kind of seems like that should roughly rhyme with EBITDA expansion over time. What are any other sort of considerations as to why that would not be the case, if you could? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 9:00PM, DASH.OQ - Q2 2024 DoorDash Inc Earnings Call

Question: Bernie McTernan - Needham & Company, LLC - Analyst : Great. Just wanted to stick on international. Tony, you mentioned the shareholder Lateral international ambitions remain well above what you'd be able to achieve so far. So just wanted to see, does that mean more countries, different categories or different products coming to your current? And Basically, do you have the right asset mix currently to achieve those ambitions?

Question: Michael McGovern - BofA Securities - Analyst : I want to ask again a little bit about the restaurant menu inflation. Is there any dynamic underlying the AOV number that is basically suggesting that there is some level of food inflation and maybe have some offsetting things like Drive that are making AOV not increase? And then also just quickly, I want to see if you comment on regulatory with Prop 22 being upheld in California? And are you still seeing any impact in New York City and Seattle from regulatory changes there?

Question: Ron Josey - Citigroup Inc. - Analyst : Great. So maybe a follow-up on what we were talking about earlier and all the improvements on efficiencies. The letter to -- the press release talked about reducing order defect rates and merchant churn, also lowering fees. And I'm just wondering this lowering fees, is this passing along the savings and you're sort of seeing the benefits of, call it, lowering fees more efficiency, lower fees, higher order rates. It's all coming together. I wanted to get your thoughts on just are you passing along these savings to consumers and then, therefore, seeing improving top line growth? I'm curious on that dynamic.

Question: Lee Horowitz - Deutsche Bank AG - Analyst : In the past, you've called out sort of fixed OpEx as a percentage of GOV for '24, that's expected to be stable. I guess is that still the operating assumption that we should be thinking about for this year? And then sort of looking beyond this year, how are you thinking about sort of your ability to drive leverage on a go-forward basis as you digest sort of an immediately small step in fixed OpEx? And then maybe just on the advertising business. I guess looking out to next year, you guys will have stacked up some really nice growth within your grocery business, which I assume would open up the eyes of some of your CPG ad partners. Would you expect sort of CPG ad participation in the advertising product perhaps lag some of the volume growth, as we've heard from some of your competitors in the space?

Question: Shweta Khajuria - Wolfe Research, LLC - Analyst : Let me try two, please. One is on advertising growth. So could you talk about your current adtech stack and where you are in terms of your product and where you think there is opportunity to continue to grow and gain greater share? That is whether you're talking about attribution or your targeting capabilities or telling that we can get you incremental customers that you can't find elsewhere, whatever that is, where are you today and where is the opportunity? And second is on competitive dynamics there. Through the quarter, there was a lot of talk about perhaps you potentially losing share. Clearly, it doesn't sound like you are. Could you talk about whether you're seeing greater competitive intensity in suburban markets in the US and what you're seeing in international markets?

Question: John Colantuoni - Jefferies LLC - Analyst : You added tens of thousands of new merchants to the US marketplace. I'm curious how that additional supply compare between the restaurant delivery business and new verticals. And I know that's just one of a number of investments that you're making to help drive improvements to the consumer offering. But I'm curious if you could help frame how much more room you have to continue expanding supply over time. And second question, just curious if you can quantify the impact of New York and Seattle and the changes that you made there on GOV and EBITDA in the second quarter?

Question: Mark Zgutowicz - The Benchmark Company, LLC - Analyst : Maybe switching gears a little bit, talking about price parity. Obviously an important topic, doesn't seem to get much progression though. And I'm curious if you've -- are close to any initiatives that might incentivize grocers to get there, possibly like prioritize ad placement, maybe what some of the puts and takes are there? And then maybe flipping the ad expansion discussion on its head. I'm curious where you have seen, maybe in certain verticals or environments, degradation and app engagement or order frequency as a result of increased outload.