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DoorDash (DASH -7%) is dashing lower following its Q1 report last night. The food delivery service giant reported solid top line growth at +20.7% yr/yr to $3.03 bln, but that was a rare miss for DASH, its first in the past five years. Total orders rose 18% yr/yr to 732 mln while Q1 Marketplace GOV rose 20% yr/yr to $23.1 bln, which was above the $22.6-23.0 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 59% yr/yr to $590 mln, toward the higher end of its $550-600 mln prior guidance. Also, Adjusted EBITDA as a % of Marketplace GOV rose to 2.6% from 1.9% a year ago but ticked lower from 2.7% in Q4.
• DASH says Q1 was a good quarter from an overall restaurant growth perspective. Also, growth has been pretty stable over the past 5-6 quarters. Users continue to grow, order frequency continues to grow, retention has been very stable. When looking at the newer cohorts vs existing, all continue to perform extremely well. DASH says it looks pretty healthy, whether it's low income or high income or the new vs existing cohorts. DASH says a lot of that is being driven by improvements in its service.
• Earnings were not the only news on the menu. DASH also announced it will acquire Deliveroo, a London-based food delivery platform (restaurants, grocers, retail partners). Deliveroo has built one of the leading local commerce platforms across its geographies, primarily in Europe and the Middle East. These geographies are all complementary to DoorDash's current footprint. It's a large deal with an equity value of £2.9 bln and an EV of £2.4 bln.
• DASH also announced it will acquire SevenRooms, a hospitality-focused software company, for $1.2 bln in cash. DASH says the deal marks a significant expansion of DoorDash's Commerce Platform capabilities, equipping merchants with new tools to grow in-store sales. The deal is expected to close in 2H25. Of note, DASH was scheduled to report Q1 results tomorrow after the close, but apparently the M&A news caused them to move up earnings to this morning.

We think two main things are driving shares lower today: the rare top line miss is likely spooking investors a bit and the two acquisitions are likely making investors a bit nervous. On the former, it is causing concern that consumers are tightening the belt on QSR meals. We have heard that from several QSRs, including MCD, WING. DoorDash's yr/yr order growth ticked lower vs Q4 but DASH does not seem concerned.

On the latter, while the Deliveroo deal expands DoorDash's international reach, we think investors are a bit nervous about making such a large purchase when consumers are feeling the pinch and DASH missed on revs. Also, the SevenRooms was quite large as well. Investors may be questioning if this is the best timing for big cash outlays.