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QV Alert – DoorDash

February 14, 2025

DoorDash is a phenomenal business. It has echoes to me of Netflix and Spotify. It is growing at a phenomenal rate.

I think it’s helpful to put 2024 in perspective over a 5-year trajectory and use it as a way to reiterate our investment and operating philosophy. Compared to 2019, our business in 2024 is more than 9x bigger in GOV [gross order value], 12x bigger in revenue, and is generating almost $2.4bn more in Free Cash Flow. We’ve sustained growth throughout the years after COVID-19 while also significantly growing our profitability. It’s important to call out that our profitability grew even as we invested significantly more capital. For example, compared to 2019, our company in 2024 invested almost 11x more in research and development. Instead, the improvement to profitability was organic and came from our focus on improving our unit economics, staying disciplined on headcount growth, and only investing significant capital after we see signs of product market fit.

Annual shareholders letter, DoorDash, 11 February 2025

I love to see a company with big ambitions and these guys have that quality in spades.

Over time, we aspire to be the biggest creator, operator and investor in the world in building local commerce products. We’re always looking to build new projects (like we once did with PaloAltoDelivery.com) and assess whether they’d turn into good businesses at different milestones. From our experience, great businesses tend to start from great products (usually a substantial leap better than what customers are accustomed to today) that exhibit strong retention and engagement, demonstrate a path to strong unit economics, and ride on a trend or set of trends that both create a large market and suggest such behavior will endure. So far on our journey, we’ve been lucky to find five large areas where we believe we can build great businesses: US Restaurants, International Marketplace, US New Verticals, Commerce Platform, and Ads. (To be sure, we are also investing in search of future potential great areas for exploration.)

Annual shareholders letter, DoorDash, 11 February 2025

I imagined DoorDash was all about restaurants. This is important but there is much more.

US Restaurants has been our largest and oldest area of exploration. This might be our closest category on its way to reaching “centicorn” status in scale, but even if we achieve that measure, we’ll be only 10pc of the US restaurant industry in sales. Certainly, if we had every restaurant, offered at prices cheaper than cooking, with perfect quality and speed, we’d envision this business achieving even greater levels of success. While we are not yet close to offering this ideal, we have made significant progress and believe we have a long runway to continue improving. But such improvement is hard won. After all, with each successive cohort, expectations rise, the easy wins disappear and usually, engagement drops. One
sign of our progress comes from the continued strength in our consumer cohorts. When we review our most recent 2024 cohorts, we see new cohorts with significantly higher engagement than our pre-COVID cohorts, and their engagement level has stayed consistent for the past couple of years. In addition, each of our more mature cohorts grew their order rates through the year.

There is a reason why the name of the company is DoorDash, unrestricted to food. That’s because local economies do not grow from restaurants alone, and it was a matter of time before we’d serve other types of retailers. We launched US New Verticals in the middle of 2020 with a focus on Grocery and Convenience. Since then, we’ve expanded to launch Alcohol, Pets, Flowers, Health and Beauty, Sporting Goods, and in 2024, we launched the Home Improvement category.

Annual shareholders letter, DoorDash, 11 February 2025

In 2024, almost 1 in 2 consumers in the US who are new to ordering delivery in the Grocery, Convenience, and Alcohol categories through a third-party marketplace placed their first order on DoorDash. At current course and speed, we anticipate we will be doing more of these types of deliveries next year than any other third-party marketplace in the US. We’ve also improved our unit economics for the third straight year in US New Verticals and are on a path to generate strong profitability in the future.
Despite this progress, our journey with US New Verticals is just at its beginning. We’re a long way away from building the ideal product. We have lots of work to do to give consumers more comprehensive selection of the stores they shop from, greater accuracy to receive the exact items they ordered, and better prices delivered with the same or greater convenience. This is also an area where investing in scale matters, and when you consider an estimated combined $5 trillion of spend in the US in grocery and retail, these categories represent a significant potential source of profit dollars. Finally, we’re far from our goal of empowering every retailer to become a digital native. As we continue to build toward that
outcome and give the same tools we use for our marketplace to retailers creating their own first party digital businesses, it will lead to a world where consumers have maximum choice and local commerce will be democratized into the hands of all merchants, and not just a few.

Annual shareholders letter, DoorDash, 11 February 2025

This is a sensational business.

2024 was a great year at DoorDash. And even though our business today is far larger and more complex than when I performed DoorDash’s first delivery or even as recently as five years ago, our mission and approach to building this business remains the same: 1/ focus on the customer, 2/ make small investments to prove product market fit, and only then double down, 3/ operate at the lowest level of detail, which includes solving for the edge cases and finding the “and” solutions, and 4/ take a long-term view. I want to end by giving a special shoutout to the DoorDash team, a group that shows up and makes progress day after day, week after week, month after month. We hold ourselves to a high bar at DoorDash, and we are always trying to raise it.

Annual shareholders letter, DoorDash, 11 February 2025

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