DASH Stock Jumps 12% After Hours as GOV Hits $31.6B and Q2 Order Guidance Tops Estimates
DoorDash (DASH) beat on EPS and EBITDA with 37% GOV growth, but a revenue miss and $50 million gas relief bill take the shine off.
Quick overview
- DoorDash reported a 37% year-over-year increase in gross order value, reaching $31.6 billion, exceeding projections.
- Adjusted EBITDA rose 28% to $754 million, and EPS of $0.42 beat expectations by 6 cents.
- Despite strong growth, revenue of $4.04 billion missed the $4.14 billion forecast, primarily due to a lower take rate.
- The company faces a $50 million cost from a gas relief program for drivers, impacting EBITDA margins.
DoorDash (NASDAQ:DASH) had investors with plenty to chew on Wednesday. Gross order value increased 37% year-over-year to $31.6 billion, surpassing the $31.5 billion projection. Adjusted EBITDA was $754M, up 28% and above consensus. EPS of $0.42 beat by 6 cents. Q2 GOV forecast of $32.4-33.4B above analyst expectations Shares jumped more than 10% after hours to above $186, providing some respite for a company that was already down 26% for the year-to-date coming into the print.
DoorDash Posts Strong Q1 Earnings But Revenue Is a Miss
Revenue is the asterisk. The top line rose 33% to $4.04 billion, but missed the $4.14 billion projection, mostly due to a lower take rate, according to Evercore ISI analysts. Orders of 933 million also fell short of the 954 million predicted. Neither miss is worrying on its own, but together they mean this is not the clear beat investors would have wanted following a protracted period of underperformance.
CEO Tony Xu was unapologetic about the investment stance: “We believe these efforts will enable us to invest more efficiently, operate more effectively and drive higher levels of growth in the communities we serve.” Demand is “quite strong” and the second quarter is “off to a good start,” CFO Ravi Inukonda said.
Gas Relief Headwind Weighs on DoorDash (DASH) Stock
The driver gas relief scheme is the greatest tangible short-term danger introduced by the quarter. US fuel prices have jumped 50% since the country began combat operations in Iran in February, and DoorDash has joined other gig economy platforms in rolling out subsidies to help lessen the load on Dashers who pay their own fuel costs. The program is expected to cost more than $50 million in the second quarter alone.
Management’s objective is to fund it by shifting expenditure about, delaying some projects into the second half of the year. Inukonda made clear that if the initiative goes beyond Q2, further offsets will be needed to safeguard the bottom line. That’s a digestible hit but it is squeezing an already lean EBITDA margin as a percentage of GOV — down to 2.4% in Q1 from 2.6% a year earlier.
DoorDash’s Global Platform Gains Momentum
The international outlook is improving. Deliveroo was enjoying its fastest growth rates in four years, with monthly active users and orders rising in the UK, France and Italy, Xu told analysts. Wolt is experiencing its best market share results in all the nations where it operates. Excluding Deliveroo, organic GOV was still up 24% YoY, a respectable underlying pace that shows that the core business is not relying on acquisition math.
We set a new DashPass membership record in Q1 in the US, driven by faster sign-ups and lower turnover. The SevenRooms restaurant reservation platform is witnessing a huge uptick in new partner sign-ups, while DoorDash announced that its Reservations function is expanding to Chicago and adding locations in New York, Miami and Las Vegas. Grocery and retail GOV kept growing strong, bringing in more new consumers than any quarter in the past – a big diversification away from pure restaurant dependency.
Should You Buy DoorDash (DASH) After Q1 Earnings?
Even if it is not a definitive beat, the DoorDash Q1 report is strong enough to warrant the after-hours relief rally. Positives: 37% GOV growth, record membership, Deliveroo returning, Q2 GOV guidance above consensus. The gas subsidy headwind is $50m and EBITDA margins are falling. The offsetting are revenue and order miss.
Traders will be looking for a break above $186 in after-hours to pave the route for the $190-$195 resistance zone. Any retreat should find support in the old close area of $168-172. The stock had down 26% year-to-date leading into Wednesday’s earnings, so the bar for re-rating higher was rather low — and DoorDash crossed it, although not by as large a margin as the bulls would have liked.
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