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DoorDash/Uber: Home Meal Delivery Surprisingly Resilient

Thomas Paulson
Nov 4, 2022
DoorDash/Uber: Home Meal Delivery Surprisingly Resilient

  • In its quarterly update this week, Uber CEO Dara Khosrowshahi noted that, "cities are reopening, travel is booming and more broadly, a continued shift of consumer spending from retail back to services."  Khosrowshahi noted a sequential strengthening in October compared to 3Q22: "Frankly, we're not seeing any signs of consumer weakness [in the U.S. or in Europe]."
  • Amazingly in North America, gross bookings for delivery grew 19% and 13% on a global basis (below). The cost for delivery, Uber’s take rate continues to increase, reaching 20.2% in 3Q22, which has allowed both revenue and profitability to move higher. Adjusted EBITDA for delivery reached $181M. As a reminder, Uber is seeking to generate billions of dollars for its shareholders by providing more ways for its drivers ("earners") to be "earning" and one way is by disrupting convenience retail/BevAlc retail and extracting "listing revenue" from CPG brands.

  • With respect to Uber mobility, drivers now average $36 per hour and their hours are up 16% YoY on average. Khosrowshahi noted, "in the U.S., at least over 70% of our drivers who are coming on board now said that inflation did play a role in their decision to sign up, right? It helps them afford their groceries, be more comfortable in an environment where real wages are fairly weak as it relates to the inflationary environment. So we do think the macro environment is helping, although I do think that the investments that we made both in technology and behind driver incentives are also a pretty important factor as well."
  • Similar to Uber, DoorDash also surprised with stronger reported order and delivery trends this week. Orders increased 16% YoY to 402M and average order value increased 5% YoY to $31.44. DashPass active subscribers ($9.99 per month) increased by 1.2M to 13.4M. Annualized order value has now reached $54B (within a $700B industry). DoorDash’s take rate increased modestly to 9.8%. Company-wide EBITDA improved to $143M and free-cash-flow to $99M. Wall Street expects ongoing cash generation from the business and building upon the current cash balance of $4.6B. (DoorDash Inc. has no debt.)
  • DoorDash CEO Tony Xu suggested no signs of any pullback by the U.S. consumer and stated, "What we see in our own business is something largely the same...you're seeing order rates of those who joined after the pandemic have largely resembled those who joined during the pandemic. Certainly, you see some softness and impact on the non-DashPass cohorts on a relative basis. But by and large, we're talking about extraordinarily similar types of ordering behavior."

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Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more.

He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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