DoorDash’s spending forecast overshadowed strong quarterly results. — Bloomberg
NEW YORK: DoorDash Inc, the largest food delivery service in the United States, says it will invest “several hundred million” more next year toward new initiatives and beefing up internal tools after posting better-than-expected orders for the third quarter.
DoorDash, which is now in more than 40 countries through the acquisition of Finland’s Wolt Delivery and Britain’s Deliveroo businesses, said in a statement that it expects to invest “several hundred million US dollars more” into new products next year than it did this year, as well as an internal platform that will help improve its operational consistency and speed of product development.
That will include artificial intelligence tools to improve developer productivity, the company said.
Shares of DoorDash plunged 16% in extended trading after closing at US$238 in New York. The stock has been up 42% so far this year through Wednesday’s close.
Other technology companies have proposed aggressive spending increases so far this earnings season, and have also been met with a wary reaction from investors.
Shares of Meta Platforms Inc plunged the most in three years the day after it warned of capital expenditures that would be “notably larger” next year than this year.
DoorDash’s spending forecast overshadowed strong quarterly results. Gross order value grew 25% to US$25bil in the three months ending Sept 30, ahead of the Bloomberg-compiled average estimate for US$24.6bil.
That gain represents the strongest jump since mid-2023, which DoorDash attributed to “strong growth” in monthly active users.
The company expects the momentum to continue in the current period, after including results from its British delivery app, Deliveroo.
Gross order value for the fourth quarter is expected to be in the range of US$28.9bil to US$29.5bil.
The robust results underscore the resilient demand for delivery apps, even as concerns remain over the strength of consumer spending.
On Tuesday, rival Uber Technologies Inc reported a better-than-expected 25% jump in gross bookings at its delivery segment.
DoorDash’s strong cash generation has emboldened the company to spend more in growth areas, including the competitive grocery and retail delivery space.
Over the past year, it has went on a multi-billion US dollar buying spree to expand its business, both internationally and in its enterprise offerings for restaurants.
It completed its acquisition of Deliveroo in October, expanding its presence on the European continent.
DoorDash has also added a restaurant reservation feature in the United States and Australia and expanded software solutions for restaurant operators following its US$1.2bil acquisition of SevenRooms.
Separately, DoorDash has been investing in autonomous modes of delivery, including launching a delivery robot developed in-house and partnering with Alphabet Inc’s Waymo to eventually offer driverless deliveries.
For the current period, the delivery company expects adjusted earnings before interest, taxes, depreciation and amortisation to be US$710mil to US$810mil.
The company said the earnings guidance includes an approximately US$45mil contribution from Deliveroo.
Next year, it expects Deliveroo to add about US$200mil to adjusted earnings. — Bloomberg
