DoorDash reported higher-than-expected revenue in the first quarter, driven by strong growth in U.S. grocery orders. Despite this positive news, the company’s shares fell more than 15% in after-hours trading as investors expressed concerns about rising costs. DoorDash’s net loss narrowed to $23 million in the first quarter, compared to $161 million a year ago, but it was higher than Wall Street’s forecast. The company cited increased marketing and research costs during the quarter and mentioned plans to hire more staff to improve its products.
DoorDash’s Chief Financial Officer, Ravi Inukonda, stated the company’s goal is not just for strong growth in 2024, but for many years to come. The company also announced its expectations for pretax earnings in the second quarter, falling slightly below analyst forecasts. Despite this, DoorDash remains optimistic about its future prospects and anticipates improvements in pretax earnings in the second half of the year.
The San Francisco-based delivery company reported a 23% increase in revenue to $2.51 billion in the first quarter, surpassing Wall Street’s expectations. Total orders climbed 21% to 620 million, with the value of U.S. grocery orders doubling from the previous year. DoorDash has been expanding its grocery delivery services, partnering with new grocers such as Giant Eagle, Haggen, and Vallarta Supermarkets to offer same-day delivery. Additionally, the company saw growth in its U.S. restaurant business, albeit at a slightly slower pace than last year.
While DoorDash’s U.S. restaurant business remains healthy, investors were concerned about slowing growth in comparison to the company’s newer businesses like grocery delivery. The shift towards eating at home due to inflationary pressures has affected restaurant chains like McDonald’s and Starbucks, leading to lower store traffic. However, DoorDash CEO Tony Xu remains optimistic, highlighting strong digital demand despite challenges faced by merchants in certain markets.
DoorDash also addressed the impact of new regulations in New York and Seattle that establish minimum wage requirements for delivery drivers, resulting in increased prices for consumers and reduced sales for merchants. The company absorbed some of these costs in the first quarter but anticipates a decrease as the year progresses. Xu expressed confidence that similar regulations would not pass in other cities, emphasizing the economic benefits and flexibility that platforms like DoorDash provide for consumers and workers alike.
Overall, DoorDash remains optimistic about its future growth potential, focusing on improving its products and expanding its offerings. Despite short-term challenges such as rising costs and regulatory changes, the company is confident in its ability to navigate these hurdles and continue driving strong growth in the coming years. Investors will be closely watching DoorDash’s performance in the upcoming quarters to see if the company can maintain its momentum and capitalize on the evolving landscape of the delivery and grocery industries.
