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DoorDash (DASH +16%) is dashing higher following its Q3 report. The food delivery service giant reported big upside results. DASH reported a GAAP loss that was much narrower than expected. We like the top line growth of 27% to $2.16 bln, which was better than expected. DASH saw good order acceleration in Q3, with total orders rising 24% yr/yr to 543 mln while Q3 Marketplace GOV rose 24% yr/yr to $16.75 bln vs $15.8-16.2 bln prior guidance.

• Since DASH does not provide adjusted EPS, we think it is important for investors to focus more on adjusted EBITDA as the better metric for profitability because it's a clean adjusted number and DASH provides guidance for it. And on the score, DASH did well, growing 295% yr/yr to $344 mln, well above the high end of $220-270 mln prior guidance. The guidance was a bright spot as well with DASH expecting Q4 adjusted EBITDA of $320-380 mln.
• The warmer months tend to be seasonally weaker for DASH since fewer people order from home. There has also been a reduction in restaurant traffic generally as consumers watch spend, according to reports this week from MCD, SYY. Also, the delivery industry has been weak generally, just ask Domino's (DPZ) which has repeatedly reported weak delivery comps in recent quarters, while carryout has been strong. As such, we think these results really surprised investors.
• In terms of why Q3 was so strong, DASH said on the call that every line of business accelerated. DASH cited product improvements made to its platform, including adding many new restaurants and non-restaurants, the latter of which has gone from zero nearly three years ago to a multibillion-dollar business.
• DASH also cited an improvement to its quality of service, whether it's speed or accuracy or customer service. Finally, DASH has also improved the affordability of its programs, both for non-DashPass members as well as for its DashPass cohorts. Improvements like this have allowed DASH to continue to grow at higher rates even at increased scale. Looking ahead, DASH sees a lot of runway ahead of it as it is in less than 10% of US restaurants.
• In terms of the macro view, DASH explained that food is a category that everyone needs. Granted, it does not need to be delivery, but DASH argues that it is also seeing a macro trend toward greater convenience which helps to push back on that. Also, there are just more opportunities as people tend to consume food 20-25 times per week. DASH is just not seeing the same headwinds that other categories in commerce are seeing.
• DASH was asked about the GLP-1 weight loss drug trend. The company is not seeing any immediate or noticeable impact. It is more focused on product velocity, product quality and execution. Also, DASH did not address DPZ's recent deal with Uber Eats. We thought the company might say something about that, but it was not a topic on the call.

Overall, this was an excellent report from DASH. We think sentiment was running pretty low heading into this report. The stock has been drifting lower since its $92.61 high in late July. It closed yesterday just under $76. There have been concerns about restaurant traffic slowing as consumers watch their spend. Plus, DPZ has been vocal about consumers shying away from paying delivery fees. As such, the strong upside took investors by surprise and makes the case that perhaps DASH is handling macro pressures better than most.