Story Stocks^®

DoorDash (DASH +4%) is dashing higher following its Q4 report last night. The food delivery service giant reported solid top line growth at +24.8% yr/yr to $2.87 bln, which was slightly better than expected. Total orders rose 19% yr/yr to 685 mln while Q4 Marketplace GOV rose 21% yr/yr to $21.3 bln, which was above the $20.6-21.0 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 with adjusted EBITDA growing 56% yr/yr to $566 mln, toward the higher end of its $525-575 mln prior guidance. Also, Adjusted EBITDA as a % of Marketplace GOV rose to 2.7% from 2.1% a year ago and 2.7% in Q3.
• What stood out to us was order growth, which had been declining on a yr/yr basis in recent quarters, broke that trend. Orders grew +19% yr/yr vs +18% yr/yr in Q3, +19% in Q2, +21% in Q1 and +23% in Q4 last year. So that was good to see and we think that surprised investors a bit. Part of that is because DASH continues to sign new restaurant partners, that effort is growing double-digits. More importantly, what DASH saw in 2024 was stable and consistent growth throughout the quarters. New verticals (grocery, retail) and international are also growing much faster than the restaurant business.
• Another key factor driving performance is that monthly active users (MAUs) reached an all-time high of over 42 mln in Dec 2024, up from over 37 mln in Dec 2023. DashPass and Wolt+ members are also growing nicely. Also, there is cross-selling as over 25% of MAUs in December ordered from at least one of DASH's new verticals categories, up from over 20% in Dec 2023. All of this is driving order growth. Order frequency continues to be at an all-time high DashPass had a strong year.
• It was not all good news as analysts seemed a bit disappointed in the Q1 guide. DASH countered that Q1 last year had an extra day and there are some FX headwinds built into the guidance.
• Also, with 2024 wrapping up, DASH provided some good perspective. Compared to 2019, its business in 2024 was more than 9x bigger in GOV, 12x bigger in revenue, and is generating almost $2.4 bln more in Free Cash Flow. And it has sustained that growth even after the pandemic boom. Lots of companies that benefitted from the pandemic (DOCU, ZM to name a couple) saw sales drop off as the economy opened up, but DASH has maintained that trajectory.

Overall, investors are clearly pleased with how DoorDash wrapped up 2024, especially given the macro headwinds (a tight consumer, FX, LA wildfires etc.). The stock initially dropped last night, we think because EBITDA was just at the high end of guidance vs strong upside in Q2-Q3. However, as investors started to digest the metrics, that became the focus. Order growth acceleration after several quarters of declines really stood out. Also, MAUs and order frequency were both at record highs.