DoorDash (DASH) - Q1 2025 Earnings Call
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Call Details
Call Title: DoorDash Q1 2025 Earnings Conference Call
Date held: 2025-05-07
Management team members present:
Tony Hsu, Co-Founder, Chair & CEO
Ravi Unaconda, CFO
Wes Twigg, Investor Relations
Call Summary
Financial Performance
DoorDash reported strong performance in Q1 2025. “The business is doing really well,” said CFO Ravi Unaconda.
The growth formula focuses on “growing the business while increasing overall profit dollars,” stated Ravi Unaconda.
Ravi highlighted continuous EBITDA profit dollar growth, both in Q1 and in the provided Q2 guidance.
Order volumes have shown steady increases, attributed to investments in consumer and merchant initiatives.
The focus remains on net profit dollar growth rather than optimizing margin percentages, which ensures revenue growth sustainability.
Guidance
Ravi Unaconda provided guidance expecting continued growth, stating “the philosophy will be the same. Invest behind strength.”
Q2 take rate is anticipated to be higher than Q1, with the second half of the year surpassing the first half.
Expected growth in unit economics, the ads business, and efficiency improvements will support this positive outlook.
A strategic focus on disciplined investments and scale is predicted to amplify profitability and growth in the coming quarters.
Capital Allocation
DoorDash’s capital allocation strategy prioritizes investments that meet internal rate of return (IRR) thresholds.
Ravi mentioned maintaining a minimum cash level of approximately $1 billion for working capital.
Cash exceeding working capital needs is directed towards investments aimed at long-term free cash flow growth.
“Our goal is to invest when we see success in business lines,” explained Tony Hsu, ensuring sustainable growth paths.
Macro & Demand Trends
Ravi commented that the business has adapted to fluctuating demand cycles and continues to perform well across different environments.
Tony suggested that “food delivery remains a resilient category,” demonstrating stability despite macroeconomic variations.
Consumer habits have shown no significant adverse effects from tariff discussions as tariffs remain paused.
“Customers are seeing increased value in delivery,” highlighting ongoing adoption and demand resilience.
International Trends
On the international front, Tony discussed the acquisition of Deliveroo, which extends DoorDash’s reach in Europe.
The integration aims to leverage Deliveroo’s market presence in 30 European countries, enhancing DoorDash’s European growth strategy.
Tony sees the acquisition as a way to “add scale and improve profit potential” in the region.
With past success in Volt integrations, DoorDash expects similar outcomes with Deliveroo, driving further market penetration.
Competition
DoorDash continues to focus on providing superior consumer experiences rather than dwelling on competitive intensity.
“We don’t focus on competition; we focus on improving customer experience,” explained Tony Hsu.
Investments are centered on quality improvements and efficient processes, aiming to outperform customer expectations rather than competitors.
AI & Innovation Trends
The company is investing in autonomous delivery solutions, a focus for nearly eight years, aiming to innovate supply chain efficiencies.
“We are optimistic about shaping the future of autonomous delivery,” Tony Hsu elaborated, integrating technology with operations.
Partnerships for developing autonomous solutions are in progress, anticipated to enhance the delivery model’s scalability and efficiency.
Product Updates
DashPass, DoorDash’s membership program, reached an “all-time high in subscribers,” reflecting its growing value proposition.
Innovations such as Double Dash, enabling customers to shop multiple stores in one go, are enhancing customer convenience.
Continuous focus on improving product offerings aims at maintaining DoorDash’s competitive edge in delivering consumer value.
Expense and Headcount Trends
Sales and marketing expenses reflect seasonal investments, particularly in Dasher supply, ensuring quality and growth.
Ravi mentioned leveraging efficiency gains for sustained scale and profitability while maintaining a strong focus on operational excellence.
The expense structure is aligned with strategic growth initiatives, balancing short-term investments with long-term objectives.
NOTABLE QUOTES
“The business is doing really well, not just in Q1 but over several quarters.” - Ravi Unaconda
“Invest behind strength; grow profit dollars.” - Ravi Unaconda
“We want to maximize long-term profit dollars rather than short-term gains.” - Tony Hsu
“DashPass had an all-time high, showing strong subscriber growth.” - Ravi Unaconda
“Food delivery remains the most resilient category in consumer spending.” - Tony Hsu
“Our capital strategy is business as usual; invest only where there’s observed success.” - Tony Hsu
“Customers want greater affordability, more selection, better service, and higher quality.” - Tony Hsu
“We’re seeing growth in cohorts using us for all use cases, not just top-ups.” - Ravi Unaconda
“The potential for online shopping to exceed offline experiences is there.” - Tony Hsu
“Autonomy initiatives bring the possibility of scalable advancements.” - Tony Hsu
Q&A SUMMARY
Q: Shveta Kajuria (Wolf Research), about DoorDash World and Deliveroo’s market share and tariff impact.
A: Tony explained the strategic placement of Deliveroo within Europe’s competitive landscape, envisioning synergies to strengthen market position. Tariff impacts remain negligible; focus is on offering value despite consumer sentiment variability.
Q: Deepak Mahavanan (Fitzgerald), on M&A strategy changes and grocery demand growth.
A: Tony confirmed the high bar for M&A remains consistent, detailing how Deliveroo’s acquisition fulfills strategic value addition. Ravi highlighted grocery’s expanding selection and improved customer engagement driving demand.
Q: Nikhil Dhani (Bernstein), regarding M&A impact on EBITDA.
A: Ravi emphasized that the company strives for increased profitability through disciplined investments, aligning with the strategic objective to enhance scale and drive profits across quarters using consistent methodologies.
Q: Yosef Squally (Truist Securities), on affordability impacts and Deliveroo margins.
A: Ravi addressed take rate variances due to seasonal and strategic investments. Tony noted potential enhanced profitability from Deliveroo through regional scale leveraging, aiming to elevate European markets’ margin performance.
Q: Michael Morton (Moffet Nathanson), on grocery affordability and Europe’s competitive landscape.
A: Ravi highlighted that affordability boosts user engagement in grocery and other categories. Tony noted that the European market’s competitive dynamics reinforce focus on continuous improvement rather than competition benchmarking.
Q: Andrew Boone (Citigroup), on DashPass evolution and New York delivery cap fees.
A: Ravi pointed out operational efficiencies driving sales and marketing leverage, while Tony discussed DashPass’s potential to elevate consumer utility and ongoing dialogue with New York on pragmatic policy adjustments.
Q: Ken Gavrowski (Wells Fargo), on Deliveroo’s market positioning and investment profile.
A: Tony shared insights into pursuing scale and introducing new products to elevate Deliveroo’s status, learning from Volt’s integration success, and emphasizing strategic expansion through deliberate investments.
Q: Doug Anmuth (J.P. Morgan), about grocery’s future and innovations.
A: Tony envisioned enhancing the online grocery experience to surpass in-store shopping by focusing on accuracy, affordability, and service, revealing plans for continued product innovation.
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