DoorDash Inc., the food delivery app whose pandemic boom saw it hit one of the biggest IPOs of 2020, said in its first earnings report since it went public that its fourth quarter earnings more than tripled, but that the net loss more than doubled.
By Dash DASH,
Shares fell more than 10% after hours on Thursday after falling 5.7% during the regular session, closing at $ 166.35 as the company’s forecasts lagged analysts’ expectations.
The San Francisco-based company reported a loss of $ 312 million, or $ 2.67 per share, in the fourth quarter, compared to $ 134 million or $ 3.05 per share in the same period a year ago. For its loss, the company cited $ 322 million in stock-based compensation costs related to its initial public offering. Sales were up 226% to $ 970 million from $ 298 million in the same quarter a year ago.
Analysts polled by FactSet had predicted a loss of 35 cents a share on revenue of $ 936.9 million.
For the full year, DoorDash posted a loss of $ 461 million, or $ 7.39 per share, on $ 2.89 billion in revenue. That is less than the loss of $ 667 million in 2019. Analysts had expected a loss of 33 cents a share on $ 2.85 billion in revenue.
DoorDash said it had gross orders of $ 8.2 billion in the fourth quarter, exceeding analyst expectations of $ 7.82 billion.
What will happen to delivery services when the pandemic comes under control is a big question for the company. DoorDash, which started out delivering takeaway food at restaurants but has since branched out into grocery and grocery delivery, could see a downturn in business when most restaurants reopen for in-person dining.
“The main unknown is what exactly does [the] competitive environment looks like post-pandemic, if no customers just come straight to you and volumes skyrocket? said Tom White, an analyst at DA Davidson.
The company said its outlook is factors in the widespread availability of the COVID-19 vaccine, which would lead to a return to personalized dining.
“Our experience is that consumer behavior is often tacky,” said Prabir Adarkar, DoorDash’s Chief Financial Officer during the earnings call. “New habits are formed. We think it will last in the long run. ”
But Adarkar also mentioned a possible seasonal slowdown in the second and third quarters. That’s something James Gellert, CEO of Rapid Ratings identified as a complicating factor: he said it was possible DoorDash could deal with “a drop in app traffic because … consumers venture outside in warmer weather.”
DoorDash said it would not generate revenue, but in a letter to shareholders, it stated it expects first-quarter marketplace gross order volume (GOV) of $ 8.6 billion to $ 9.1 billion, with adjusted EBITDA of $ 0 million to $ 45 million, which it said would be negatively impacted by the first full quarter of “operating under Proposition 22 and continued price controls”. Analysts expected first quarter EBITDA profit of $ 71 million.
DoorDash said it expects a GOV of $ 30 billion to $ 33 billion by 2021, less than the $ 33.2 billion analysts expect, with adjusted EBITDA of $ 0 million to $ 200 million.
Adarkar said the company admittedly some Prop. 22 costs, but consumes most of it.
Proposition 22, a vote supported by DoorDash and other gig companies, was approved by California voters in November. Under Prop. 22, the app-based platform companies continue to treat their drivers and delivery drivers as independent contractors, while promising them a new income guarantee and some benefits that do not meet full employee protection.
When asked about reports that DoorDash and others have spoken to unions about the issue of employee classification, Chief Executive Tony Xu said, “Whenever there are opportunities for discussion of how [delivery worker] offer flexibility and proportional benefits, we welcome those conversations. “
Another policy question that worried analysts was the effects of commission caps introduced in dozens of cities that DoorDash serves. As restaurants struggled over the pandemic, officials have cut commissions due to DoorDash and other apps may charge them for delivery. Adarkar said it is his understanding that these are emergency measures, and he expects those caps to disappear once personal dining resumes.
Shares of the company are down 6% since they made their public debut in December, but are up nearly 25% so far.