Business
DoorDash forecasts strong fourth quarter, bets on demand for online delivery
Global Banking & Finance Review®
Company
By Ananya Mariam Rajesh
(Reuters) -DoorDash forecast fourth-quarter core profit above estimates on Wednesday, as the online delivery firm bets on more consumers using the platform to order groceries to beauty products during the holiday period.
The company also posted a profit for the first time since going public in late 2020 and beat quarterly revenue estimates.
With the online delivery space seeing a surge in competition from UberEats and Instacart, DoorDash has widened the offerings on its platforms by partnering with companies such as Sephora and grocer Wakefern to maintain its market share.
Total orders of DoorDash jumped 18% to 643 million in the quarter.
The company also announced a partnership with Lyft to offer the ride-share app’s members three months of free trial of its DashPass membership that gives them an up to 50% off on one order. The food delivery firm’s customers in return get up to 50% discount on four scheduled rides to the airport and 5% discount on scheduled on-demand Lyft rides.
DoorDash expects fourth-quarter adjusted earnings before tax, interest, depreciation and amortization (EBITDA) between $525 million and $575 million, with midpoint of the range above estimates of $544.8 million.
It expects fourth-quarter gross order value – a key industry metric that shows total value of all app orders and subscription fees – to be between $20.6 billion and $21 billion, compared with estimates of $20.64 billion.
Third-quarter revenue rose 25% to $2.71 billion beating analysts’ expectations of $2.66 billion, according to data compiled by LSEG.
It reported profit per share of 38 cents, compared to a loss of 19 cents, a year earlier. Analysts had expected a profit of 22 cents.
DoorDash’s shares, which have risen nearly 57% this year, were down about 1% in extended trading.
“DoorDash has beaten estimates the last two quarters and there was a lot of hype coming into this earnings release,” said eMarketer analyst Blake Droesch.
“What we are probably seeing right now is a small and temporary market correction, but that shouldn’t overshadow how strong these earnings were for DoorDash.”
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric used to evaluate a company's operating performance.
Gross order value refers to the total value of all orders placed through a platform, including both product sales and subscription fees.
Profit margin is a financial metric that indicates the percentage of revenue that exceeds the costs of goods sold. It is a measure of a company's profitability.
A partnership in business is an arrangement where two or more individuals or entities collaborate to manage and operate a business, sharing profits and responsibilities.
Quarterly revenue is the total income generated by a company during a specific three-month period, often used to assess financial performance.
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