DoorDash shrugs off inflation worries with record delivery orders

Leading US food delivery app DoorDash shrugged off inflation concerns as it posted record-high order numbers in the second quarter and raised its growth targets for the rest of the year.

Shares in the company jumped as much as 20 per cent in after-hours trading after its earnings exceeded Wall Street expectations and it offered a buoyant lookahead.

The results capped a strong week for the US gig economy sector, with Uber and Lyft shares also gaining.

DoorDash told investors it expected to have a gross order value — the total cost of all orders — of between $51bn and $53bn this year, up from its previous guidance of $49bn to $51bn.

Total revenue in the April-June period was up 30 per cent year on year to $1.6bn, compared to $1.5bn expected by analysts, according to data from S&P Capital IQ.

DoorDash said strong adoption of its $9.99-per-month DashPass membership scheme, which reduces some of the fees when placing an order, has offset inflation worries with customers.

Revenue for the first time included earnings from Wolt, the Finnish delivery company it acquired late last year in a deal worth €7bn.

DoorDash did suffer steeper losses than Wall Street had hoped. It lost $263mn in the quarter, compared to analysts’ estimates of $150mn. It blamed stock-based compensation costs due to increased headcount.

Uber on Thursday was trading up more than 37 per cent since the start of the week owning to a similarly upbeat outlook offered to its investors during its earnings on Tuesday. The company said it had entered a “new phase” after posting its first-ever quarter of positive free cash flow.

Uber and DoorDash told investors that demand for food delivery had remained strong, allaying fears of a sharp drop-off post the easing of coronavirus pandemic restrictions when people began visiting restaurants more often or cut back on spending.

DoorDash’s gross order value for the quarter was at an all-time high, up 25 per cent year on year to $13.1bn. Gross bookings for Uber Eats was $13.9bn, up 7 per cent on 2021.

On Thursday, rideshare group Lyft’s shares were up 3 per cent after hours following its better than expected adjusted profits. It said its cost-cutting, including a hiring freeze, had helped it reach adjusted earnings before interest, tax, depreciation and amortisation of $79.1mn, compared to $17.3mn expected by analysts. The amount, which also discounts stock-based compensation and insurance costs, was its highest ever. Lyft’s net loss for the quarter was $377.2mn, compared to $251.9mn a year ago.

Lyft said its average earnings per rider — $49.89 — was its second highest, owing to an uptick in travel and longer trips. There were 19.9mn riders in the quarter, up 16 per cent on the same period last year. It said it expected an acceleration in trips in the current quarter, in part due to the start of the school year.

“It’s clear consumer transportation is a good long-term business with a massive addressable market,” said Logan Green, Lyft co-founder and chief executive. However, it forecast slower revenue growth for this year compared to 2021, and warned of increased insurance costs.

All three companies reported strong growth in their workforces. In contrast to earlier in the year, when tempting drivers back to gig economy platforms required heavy investment in added incentives, they benefited from the pressure on household earnings.

Lyft said it had 25 per cent more drivers on its platform than a year ago, and average pick-up times were within 1-2 minutes of pre-Covid levels.

Uber said it now had 5mn drivers on its rideshare and delivery platforms, up by more than 30 per cent on last year.

DoorDash did not disclose its active driver numbers, but said it had seen a “high organic acquisition of Dashers”.