DoorDash pops 12% on strong earnings, upbeat order growth guidance

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Key Points

• DoorDash topped Wall Street's earnings expectations, but revenue fell short of estimates.
• DoorDash said it expects a $50 million cost from its driver relief program to ease the burden of skyrocketing gas prices on drivers.
• DoorDash spent billions last year to acquire new delivery markets and artificial intelligence capabilities.

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Follow your favorite stocksCREATE FREE ACCOUNTwatch nowVIDEO1:0601:06DoorDash jumps 14% as investors reward stronger earnings and upbeat order guidanceClosing Bell: OvertimeDoorDash reported strong first-quarter results and order growth guidance after the bell on Wednesday as the food delivery giant pours more money into new technology to lure customers.

Shares popped 12% following the report.

Here's how the company did versus LSEG estimates:

• Earnings per share:** 42 cents vs. 36 cents expected
• Revenue: $4.04 billion vs. $4.14 billion expected

For the current quarter, DoorDash expects marketplace gross order value, which tracks the total dollar value of orders on its platform, to range between $32.4 billion and $33.4 billion. That topped the $32.43 billion in GOV forecast by analysts.

The food delivery company also guided for $770 million to $870 million in EBITDA. The midpoint came up short of the $830 million expected by analysts.

Revenue rose 33% from $3.03 billion a year ago, while total orders jumped 27% to $933 million, but missed the $954 million estimate from analysts. Net income declined to $184 million, or 42 cents per share, from $193 million, or 44 cents per share, last year.

DoorDash is spending big on new features and services as it builds out a single-platform tech stack that integrates its recent global acquisitions. It's also shelling out billions to expand its global footprint, enhance artificial intelligence capabilities, and maintain a competitive edge against rivals such as Uber Eats.

"We expect these efforts will allow us to invest more efficiently, operate more effectively, and drive higher levels of growth in the communities we serve," DoorDash said in a press release on Wednesday.

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DoorDash's recent big-ticket purchases include restaurant reservation platform SevenRooms and British delivery company Deliveroo. Last year, DoorDash also launched an autonomous robot as it scales delivery optionality.

Investors previously challenged the company's aggressive spending initiatives, worrying that new tech investments would take time to pay off. CEO Tony Xu has fiercely defended those initiatives, and Wall Street gave a stamp of approval last quarter.

Finance chief Ravi Inukonda told analysts on an earnings call Wednesday that DoorDash has already completed the design components of its redesign initiative and is beginning to see early benefits.

"Not only are we already seeing some velocity and quality wins across all of the brands, but I think there'll be a lot more to come as we actually roll this thing out," said Xu.

Amid the recent war in Iran, DoorDash joined a handful of delivery companies that launched relief programs for drivers feeling the pressure from skyrocketing gas prices.

DoorDash said it expects over $50 million in costs from the program in the second quarter, which it plans to fund by reworking investments in other segments. Inukonda said the company has already pushed some investments into the second half of the year.

"If we do decide to extend the gas rewards program, we'll find offset in other parts of the business in order to make sure we're still pretty good from top line as well as the bottom line," he said.

DoorDash's GOV rose 37% from a year ago to $31.6 billion and beat a $31.5 billion estimate from analysts. The company's gross margin came in at 51.9%, ahead of a 51.6% estimate.

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