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DoorDash (DASH +4%) is dashing higher, although it has pulled back from its highs, following its Q2 report last night. The food delivery service giant reported solid top line growth at +24.9% yr/yr to $3.28 bln, which was nicely above analyst expectations. Total orders rose 20% yr/yr, an acceleration from +18% yr/yr in Q1, to 761 mln. Q2 Marketplace GOV rose 23% yr/yr, again above Q1's +20% yr/yr, to $24.2 bln, which was above the $23.3-23.7 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 this score, DASH did well with adjusted EBITDA growing 52% yr/yr to $655 mln, which was above the high end prior guidance of $600-650 mln. It also guided to Q3 adjusted EBITDA of $680-780 mln, a big sequential improvement.
• In its US marketplace, yr/yr growth in Total Orders accelerated in Q2, with notable strength in the US restaurant category. Strong growth in DashPass membership contributed to a yr/yr increase in average order frequency, which reached an all-time high in Q2. DASH says high levels of consumer engagement were evident across many metrics. DASH also generated strong results from its mature cohorts in Q2.
• Ultimately, what is driving growth for DashPass is the underlying product continuing to get better. The company noted that it has been investing in DashPass for years, including adding more selection and adding features and services. As a result, DashPass is attracting more new consumers than ever before. When they graduate to DashPass, their order frequency is higher.
• In its international marketplaces, DASH added more new Wolt+ members in Q2 than in any previous quarter. While the Wolt+ membership program is still early in its development, DASH says growth in Wolt+ members helped drive yr/yr growth in average order frequency in its international marketplaces. At the same time, DASH improved unit economics, driven partly by improvements in Dasher efficiency.
• Taking a step back, DoorDash talked about its longer term success. Five years ago, it was largely one product and operating in one country (restaurant delivery in US) and today it is five businesses. DASH have a business outside of the US. It has a business outside of US restaurant delivery with its category expansions. It has its Commerce Platform, an ads business, and it is working on new businesses.

There is a lot to like with this report. What stood out was the strong upside revs an especially the adjusted EBITDA results. On the latter, DASH reported above the high end of guidance after reporting within range last quarter. DASH also guided to significant sequential growth in Q3. Finally, we remember a few years ago that investors were concerned that DASH would not perform well post-COVID when everyone ordered delivery. However, we think that concern can be put to bed. DASH has continued to grow nicely since then and has expanded into new areas.