DOORDASH, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled "Risk Factors" and other sections of this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. In addition, the section of this "Management's Discussion and Analysis of Financial Condition and Results of Operations" generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 are not included in this Annual Report on Form 10-K and can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , filed with theSEC onMarch 1, 2022 .
Overview
DoorDash, Inc. is incorporated inDelaware with headquarters inSan Francisco, California . We provide a local commerce platform that enables local businesses to address consumers' expectations of ease and immediacy and thrive in today's convenience economy. We operate a local commerce platform that connects merchants, consumers, and Dashers. Our primary offerings are theDoorDash Marketplace , which operates in four countries includingthe United States , and theWolt Marketplace , which operates in 23 countries, most of which are inEurope . Both of our Marketplaces provide a suite of services that enable merchants to establish an online presence, generate demand, seamlessly transact with consumers, and fulfill orders primarily through Dashers. As part of our Marketplaces, we also offer Pickup, which allows consumers to place advance orders, skip lines, and pick up their orders conveniently with no consumer fees, as well asDoorDash for Work, which 60
--------------------------------------------------------------------------------
Table of Contents
provides merchants on our platform with large group orders and catering orders for businesses and events.The DoorDash Marketplace also includes DashPass and theWolt Marketplace includes Wolt+. DashPass and Wolt+ are our membership products, which provide members with unlimited access to eligible merchants with zero delivery fees and reduced service fees on eligible orders. In addition to our Marketplaces, we offer Platform Services, which primarily includesDoorDash Drive andWolt Drive , which are white-label delivery fulfillment services that enable merchants that have generated consumer demand through their own channels to fulfill this demand using our platform. Platform Services also includes Storefront, which enables merchants to create their own branded online ordering experience, providing them with a turnkey solution to offer consumers on-demand access to e-commerce without investing in in-house engineering or fulfillment capabilities, and Bbot, which offers merchants solutions for their in-store and online channels, including in-store digital ordering and payments. Initial Public Offering OnDecember 9, 2020 , we completed our IPO in which we issued and sold 33,000,000 shares of Class A common stock at the public offering price of$102 per share. We received net proceeds of$3.3 billion from sales of our shares in the IPO, after deducting underwriting discounts and commissions and offering expenses. For additional information, see Note 1 - "Organization and Description of Business" included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Financial and Operational Metrics
We use the following financial and operational metrics to help us evaluate our
business, identify trends affecting our business, formulate business plans, and
make strategic decisions:
Year Ended December 31,
(in millions, except percentages) 2020 2021 2022
Total Orders 816 1,390 1,736
Total Orders Y/Y growth 210 % 70 % 25 %
Marketplace GOV $ 24,664 $ 41,944 $ 53,414
Marketplace GOV Y/Y growth 207 % 70 % 27 %
Revenue $ 2,886 $ 4,888 $ 6,583
Revenue Y/Y growth 226 % 69 % 35 %
Net Revenue Margin 11.7 % 11.7 % 12.3 %
GAAP Gross Profit $ 1,421 $ 2,452 $ 2,824
GAAP Gross Profit as a % of Marketplace GOV 5.8 % 5.8 % 5.3 %
Contribution Profit(1) $ 663 $ 1,071 $ 1,567
Contribution Profit as a % of Marketplace GOV 2.7 % 2.6 % 2.9 %
GAAP Net Loss including redeemable non-controlling interests
$ (461)
(1.9) % (1.1) % (2.6) %
Adjusted EBITDA(1) $ 189 $ 289 $ 361
Adjusted EBITDA as a % of Marketplace GOV 0.8 % 0.7 % 0.7 %
Basic shares, options and RSUs outstanding as of
period end 381 393 452
(1)Contribution Profit and Adjusted EBITDA are non-GAAP financial measures. For
more information regarding our use of these measures and reconciliations to the
most directly comparable financial measures calculated in accordance with GAAP,
see the section titled "Non-GAAP Financial Measures."
Total Orders. We define Total Orders as all orders completed through our Marketplaces and Platform Services businesses over the period of measurement.
In 2022, Total Orders increased to 1.7 billion, or 25% growth compared to 2021.
The increase in Total Orders was driven primarily by growth in consumers and
increased consumer engagement as well as our acquisition of Wolt.
61--------------------------------------------------------------------------------
Table of Contents
Marketplace GOV. We define Marketplace GOV as the total dollar value of orders completed on our Marketplaces, including taxes, tips5, and any applicable consumer fees, including membership fees related to DashPass and Wolt+. Marketplace orders include orders completed through Pickup andDoorDash for Work. Marketplace GOV does not include the dollar value of orders, taxes and tips, or fees charged to merchants, for orders fulfilled through Drive and Storefront.
In 2022, Marketplace GOV increased to
Contribution Profit (Loss). We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing expenses, (iii) allocated overhead included in cost of revenue and sales and marketing expenses, and (iv) inventory write-off related to restructuring. Gross profit (loss) is defined as revenue less (i) cost of revenue, exclusive of depreciation and amortization and (ii) depreciation and amortization related to cost of revenue. We use Contribution Profit (Loss) to evaluate our operating performance and trends. We believe that Contribution Profit (Loss) is a useful indicator of the economic impact of orders fulfilled throughDoorDash as it takes into account the direct expenses associated with generating and fulfilling orders.
In 2022, Contribution Profit improved to
Contribution Profit (Loss) is a non-GAAP financial measure with certain limitations regarding its usefulness. It does not reflect our financial results in accordance with GAAP as it does not include the impact of certain expenses that are reflected in our consolidated statements of operations. Accordingly, Contribution Profit (Loss) is not indicative of our overall results or an indicator of past or future financial performance. Further, it is not a financial measure of total company profitability and it is neither intended to be used as a proxy for total company profitability nor does it imply profitability for our business. Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) including redeemable non-controlling interests, adjusted to exclude (i) certain legal, tax, and regulatory settlements, reserves, and expenses, (ii) loss on disposal of property and equipment, (iii) transaction-related costs (primarily consists of acquisition, integration, and investment related costs), (iv) impairment expenses, (v) restructuring charges, (vi) inventory write-off related to restructuring, (vii) provision for (benefit from) income taxes, (viii) interest (income) and expense, (ix) other (income) expense, net, (x) stock-based compensation expense and certain payroll tax expense, and (xi) depreciation and amortization expense.
Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business.
In 2022, Adjusted EBITDA increased to$361 million , compared to Adjusted EBITDA of$289 million in 2021, as growth in Contribution Profit was partially offset by organic increases in adjusted research and development expenses and adjusted general and administrative expenses, as well as our acquisition of Wolt. Free Cash Flow. We define Free Cash Flow as cash flows from operating activities less purchases of property and equipment and capitalized software and website development costs.
In 2022, Free Cash Flow decreased to
Components of Results of Operations
Revenue
We generate a substantial majority of our revenue from orders completed through our Marketplaces and the related commissions charged to partner merchants and fees charged to consumers. Commissions from partner merchants are
5 Dashers receive 100% of tips.
62--------------------------------------------------------------------------------
Table of Contents
based on an agreed-upon rate applied to the total dollar value of goods ordered in exchange for using our Marketplaces to sell the partner merchants' products. Fees from consumers are for use of our Marketplaces to arrange for delivery services. We recognize revenue from Marketplace orders on a net basis as we are an agent for both partner merchants and consumers. Our revenue therefore reflects commissions charged to partner merchants and fees charged to consumers less (i) Dasher payout and (ii) refunds, credits, and promotions, which includes certain discounts and incentives provided to consumers, including those for referring a new customer. Revenue from our Marketplaces is recognized at the point in time when the consumer obtains control of the merchant's products. We also generate revenue from membership fees paid by consumers for DashPass and Wolt+, which is recognized as part of our Marketplaces revenue. Revenue generated from our DashPass and Wolt+ memberships is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of membership purchased by the consumer. In addition, we generate revenue from other sources, including from our Platform Services, which primarily consists of our Drive and Storefront offerings. We generate revenue from Drive by collecting per-order fees from merchants to arrange for delivery services that fulfill demand generated through their own channels. Revenue from Drive is recognized at the point in time when the consumer obtains control of the merchant's products.
Cost of Revenue, Exclusive of Depreciation and Amortization
Cost of revenue primarily consists of (i) order management costs, which include payment processing charges, net of rebates issued from payment processors, costs associated with cancelled orders, insurance expenses, costs related to placing orders with non-partner merchants, and costs related to first party product sales, for which we take control of inventory (ii) platform costs, which include costs for onboarding merchants and Dashers, costs for providing support for consumers, merchants, and Dashers, and technology platform infrastructure costs, and (iii) personnel costs, which include personnel-related compensation expenses related to our local operations, support, and other teams, and allocated overhead. Personnel-related compensation expenses primarily include salary, bonus, benefits, and stock-based compensation expense. Allocated overhead is determined based on an allocation of shared costs, such as facilities (including rent and utilities) and information technology costs, among all departments based on employee headcount.
Sales and Marketing
Sales and marketing expenses primarily consist of advertising and other ancillary expenses related to merchant, consumer, and Dasher acquisition, including certain consumer referral credits and Dasher referral fees paid to the referrers to the extent they represent fair value of acquiring a new consumer or a new Dasher, brand marketing expenses, personnel-related compensation expenses for sales and marketing employees, and commissions expense including amortization of deferred contract costs, as well as allocated overhead.
Research and Development
Research and development expenses primarily consist of personnel-related compensation expenses related to data analytics and the design of, product development of, and improvements to our platform, as well as expenses associated with the licensing of third-party software and allocated overhead.
General and Administrative
General and administrative expenses primarily consist of legal, tax, and regulatory expenses, which include litigation settlement expenses and sales and indirect taxes, personnel-related compensation expenses related to administrative employees, which include finance and accounting, human resources and legal, chargebacks associated with fraudulent credit card transactions, professional services fees, transaction-related expenses, bad debt expense, and allocated overhead.
Depreciation and Amortization
Depreciation and amortization expenses primarily consist of depreciation and
amortization expenses associated with our property and equipment and intangible
assets. Depreciation primarily includes expenses associated with equipment for
merchants, computer equipment and software, office equipment, and leasehold
improvements. Amortization includes expenses associated with our capitalized
software and website development costs, as well as acquired intangible assets.
63--------------------------------------------------------------------------------
Table of Contents
Restructuring Charges
Restructuring charges primarily consist of separation-related payments and other termination benefit costs associated with a reduction in workforce that is discussed in further detail in Note 17 - "Restructuring" included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, as well as costs associated with other restructuring activities in 2022. Interest Income
Interest income consists of interest earned on our cash, cash equivalents, and marketable securities.
Interest Expense Interest expense consists of interest costs primarily related to our revolving credit facility and payment-in-kind interest on our Convertible Notes issued inFebruary 2020 . Other Income (Expense), Net
Other income (expense), net primarily consists of adjustments to non-marketable equity securities, including impairment, as well as gains and losses from transactions denominated in a currency other than the functional currency.
Provision for (Benefit from) Income Taxes
Provision for (benefit from) income taxes primarily results from losses
generated outside the
Results of Operations
The following table summarizes our historical consolidated statements of
operations data:
Year Ended December 31,
(in millions) 2020 2021 2022
Revenue $ 2,886 $ 4,888 $ 6,583
Costs and expenses:(1)
Cost of revenue, exclusive of depreciation and
amortization shown separately below 1,368 2,338 3,588
Sales and marketing 957 1,619 1,682
Research and development 321 430 829
General and administrative 556 797 1,147
Depreciation and amortization(2) 120 156 369
Restructuring charges - - 92
Total costs and expenses 3,322 5,340 7,707
Loss from operations (436) (452) (1,124)
Interest income 7 3 32
Interest expense (32) (14) (2)
Other income (expense), net 3 - (305)
Loss before income taxes (458) (463) (1,399)
Provision for (benefit from) income taxes 3 5 (31)
Net loss including redeemable non-controlling
interests (461) (468) (1,368)
Less: net loss attributable to redeemable
non-controlling interests, net of tax - - (3)
Net loss attributable to DoorDash, Inc. common
stockholders $ (461) $ (468) $ (1,365)
64--------------------------------------------------------------------------------
Table of Contents
(1)Costs and expenses include stock-based compensation expense as follows:
Year Ended December 31,
(in millions) 2020 2021 2022
Cost of revenue, exclusive of depreciation and
amortization $ 31 $ 46 $ 102
Sales and marketing 37 52 98
Research and development 171 182 365
General and administrative 83 206 313
Restructuring Charges - - 11
Total stock-based compensation expense $ 322 (2)Depreciation and amortization related to the following:
Year Ended December 31,
(in millions) 2020 2021 2022
Cost of revenue $ 97 $ 98 $ 171
Sales and marketing 14 20 81
Research and development 6 30 104
General and administrative 3 8 13
Total depreciation and amortization $ 120 $ 156 The following table sets forth the components of our consolidated statements of operations data as a percentage of revenue:
Year Ended December 31,
2020 2021 2022
Revenue 100 % 100 % 100 %
Costs and expenses:
Cost of revenue, exclusive of depreciation and
amortization shown separately below 47 % 48 % 54 %
Sales and marketing 33 % 33 % 26 %
Research and development 11 % 9 % 13 %
General and administrative 20 % 16 % 17 %
Depreciation and amortization 4 % 3 % 6 %
Restructuring charges - % - % 1 %
Total costs and expenses 115 % 109 % 117 %
Loss from operations (15) % (9) % (17) %
Interest income - % - % 1 %
Interest expense (1) % - % - %
Other income (expense), net - % - % (5) %
Loss before income taxes (16) % (9) % (21) %
Provision for (benefit from) income taxes - % - % - %
Net loss including redeemable non-controlling
interests (16) % (9) % (21) %
Less: net loss attributable to redeemable
non-controlling interests, net of tax - % - % - %
Net loss attributable to DoorDash, Inc. common
stockholders (16) % (9) % (21) %
Comparison of the Years Ended 2022 and 2021
Revenue
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022
$ Change % Change
Revenue $ 2,886 $ 4,888 $ 6,583 $ 1,695 35 %
Revenue increased by
65--------------------------------------------------------------------------------
Table of Contents
Cost of Revenue, Exclusive of Depreciation and Amortization
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Cost of revenue, exclusive of depreciation
and amortization $ 1,368 $ 2,338 $ 3,588 $ 1,250 53 %
Cost of revenue, exclusive of depreciation and amortization, increased by $1.3
billion , or 53%, in 2022, compared to 2021. The increase was primarily
attributable to an increase of $813 million in order management costs and an
increase of $190 million in platform costs, driven primarily by growth in Total
Orders and Marketplace GOV. Order management costs also increased due to an
increase in insurance reserves, and costs associated with our first-party
distribution business. Additionally, personnel-related compensation expenses and
allocated overhead increased by $226 million driven by increased headcount.
Sales and Marketing
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Sales and marketing $ 957 $ 1,619 $ 1,682 $ 63 4 %
Sales and marketing expenses increased by $63 million , or 4%, in 2022, compared
to 2021. The increase was primarily driven by an increase of $138 million in
personnel-related compensation expenses and allocated overhead due to increased
headcount, partially offset by a decrease of $66 million in advertising
expenses.
Research and Development
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Research and development $ 321 $ 430 $ 829 $ 399 93 %
Research and development expenses increased by $399 million , or 93%, in 2022,
compared to 2021. The increase was primarily driven by an increase of $460
million in personnel-related compensation expenses and allocated overhead due to
increased headcount, partially offset by an increase in capitalized software and
website development costs of $92 million .
General and Administrative
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
General and administrative $ 556 $ 797 $ 1,147 $ 350 44 %
General and administrative expenses increased by $350 million , or 44%, in 2022,
compared to 2021. The increase was primarily driven by an increase of $213
million in personnel-related compensation expenses and allocated overhead due to
increased headcount and an increase of $58 million in transaction-related costs
primarily associated with the acquisition of Wolt.
Depreciation and Amortization
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Depreciation and amortization $ 120 $ 156 $ 369 $ 213 137 %
Depreciation and amortization expenses increased by $213 million , or 137%, in
2022, compared to 2021. The increase was primarily driven by an increase of
$94 million in amortization expenses related to capitalized software and website
development costs and an increase of $87 million in amortization expenses for
acquired intangible assets.
66--------------------------------------------------------------------------------
Table of Contents
Restructuring Charges
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Restructuring Charges $ - $ - $ 92 $ 92 *
*Percentage not meaningful.
Restructuring charges were $92 million , in 2022. The charge was primarily the
result of a reduction in workforce announced in November 2022 consisting of $82
million of separation-related payments and other termination benefit costs.
Interest Income
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Interest income $ 7 $ 3 $ 32 $ 29 967 %
Interest income increased by
Interest Expense
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Interest expense $ (32) $ (14) $ (2) $ 12 (86) %
Interest expense was not material for 2022 and 2021.
Other income (expense), net
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Other income (expense), net $ 3 $ - $ (305) $ (305) *
*Percentage not meaningful.
Other income (expense), net, decreased by
Provision for (benefit from) income taxes
Year Ended December 31, 2021 to 2022
(in millions, except percentages) 2020 2021 2022 $ Change % Change
Provision for (benefit from) income taxes
$ (31) $ (36) *
*Percentage not meaningful.
The provision for income taxes decreased by$36 million , in 2022, compared to 2021. The decrease in income tax expense was primarily driven by losses from non-U.S. operations which were acquired during 2022. A partial income tax benefit was recognized for these losses and the remaining income tax benefit was offset by a valuation allowance. As a result of the valuation allowance, such income tax benefit is not expected to recur in the future.
Non-GAAP Financial Measures
We use adjusted cost of revenue, adjusted sales and marketing expense, adjusted
research and development expense, adjusted general and administrative expense,
Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit (Loss),
Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow in conjunction with
GAAP measures as part of our overall
67--------------------------------------------------------------------------------
Table of Contents
assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our business and financial performance. We believe that these non-GAAP financial measures provide useful information to investors about our business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making. We are presenting these non-GAAP financial measures to assist investors in seeing our business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. Thus, our adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP. We compensate for these limitations by providing a reconciliation of adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow to their respective related GAAP financial measures. We encourage investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow in conjunction with their respective related GAAP financial measures. Adjusted Cost of Revenue We define adjusted cost of revenue as cost of revenue, exclusive of depreciation and amortization, excluding stock-based compensation expense and certain payroll tax expense, allocated overhead, and inventory write-off related to restructuring. We exclude stock-based compensation as it is non-cash in nature and we exclude allocated overhead as it is generally a fixed cost and is not directly impacted by Total Orders.
The following table provides a reconciliation of cost of revenue, exclusive of depreciation and amortization, to adjusted cost of revenue:
Year Ended December 31,
(in millions) 2020 2021 2022
Cost of revenue, exclusive of depreciation and
amortization $ 1,368 $ 2,338 $ 3,588
Adjusted to exclude the following
Stock-based compensation expense and certain payroll
tax expense (32) (48) (103)
Allocated overhead (18) (25) (32)
Inventory write-off related to restructuring - - (2)
Adjusted cost of revenue $ 1,318 $ 2,265 $ 3,451 Adjusted Sales and Marketing Expense
We define adjusted sales and marketing expense as sales and marketing expenses
excluding stock-based compensation expense and certain payroll tax expense and
allocated overhead. We exclude stock-based compensation as it is non-cash in
nature and we exclude allocated overhead as it is generally a fixed cost and is
not directly impacted by Total Orders.
68--------------------------------------------------------------------------------
Table of Contents
The following table provides a reconciliation of sales and marketing expense to adjusted sales and marketing expense:
Year Ended December 31,
(in millions) 2020 2021 2022
Sales and marketing $ 957 $ 1,619 $ 1,682
Adjusted to exclude the following
Stock-based compensation expense and certain payroll
tax expense (38) (53) (98)
Allocated overhead (14) (14) (19)
Adjusted sales and marketing $ 905 We define adjusted research and development expense as research and development expenses excluding stock-based compensation expense and certain payroll tax expense and allocated overhead. We exclude stock-based compensation as it is non-cash in nature and we exclude allocated overhead as it is generally a fixed cost and is not directly impacted by Total Orders.
The following table provides a reconciliation of research and development expense to adjusted research and development expense:
Year Ended December 31,
(in millions) 2020 2021 2022
Research and development $ 321 $ 430 $ 829
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll
tax expense (177) (186) (366)
Allocated overhead (14) (13) (16)
Adjusted research and development $ 130 Adjusted General and Administrative Expense
We define adjusted general and administrative expense as general and administrative expenses excluding stock-based compensation expense and certain payroll tax expense, certain legal, tax, and regulatory settlements, reserves, and expenses, transaction-related costs (primarily consists of acquisition, integration, and investment related costs), impairment expenses, and including allocated overhead from cost of revenue, sales and marketing, and research and development. We exclude stock-based compensation as it is non-cash in nature and we exclude certain legal, tax, and regulatory settlements, reserves, and expenses, transaction-related costs, impairment expenses, as well as restructuring charges, as these costs are not indicative of our operating performance.
The following table provides a reconciliation of general and administrative expense to adjusted general and administrative expense:
Year Ended December 31,
(in millions) 2020 2021 2022
General and administrative $ 556 $ 797 $ 1,147 Adjusted to exclude the following: Stock-based compensation expense and certain payroll tax expense
(86) (210) (313)
Certain legal, tax, and regulatory settlements, reserves,
and expenses(1) (160) (77) (72)
Transaction-related costs(2) (1) (10) (68)
Impairment expenses(3) (11) (1) (2)
Allocated overhead from cost of revenue, sales and marketing, and research and development
46 52 67
Adjusted general and administrative $ 344 $ 551 $ 759
(1)We exclude certain costs and expenses from our calculation of adjusted
general and administrative expense because management believes that these costs
and expenses are not indicative of our core operating performance, do not
reflect the underlying economics of our business, and are not necessary to
operate our business. These excluded costs and expenses consist of (i) certain
legal costs primarily related to worker classification matters, (ii) reserves
for the collection of sales and indirect taxes that we do not expect to incur on
a recurring basis, (iii) costs related to the settlement of an intellectual
property matter, (iv) expenses related to supporting various policy matters,
including those related to worker classification and price controls, and (v)
donations as part of our relief efforts in connection with the COVID-19 pandemic
and Russia's invasion of Ukraine . We believe it is appropriate to exclude the
foregoing matters from our calculation of adjusted general and administrative
expense because (1) the timing and magnitude of such expenses are unpredictable
and thus not part of management's budgeting or forecasting
69--------------------------------------------------------------------------------
Table of Contents
process, and (2) with respect to worker classification matters, management currently expects such expenses will not be material to our results of operations over the long term as a result of increasing legislative and regulatory certainty in this area, including as a result of Proposition 22 inCalifornia and similar legislation. (2)Consists of acquisition, integration, and investment related costs, primarily related to the Wolt acquisition for 2022. (3)Consists of impairment expense related to an operating lease right-of-use asset associated with our former headquarters.
Contribution Profit (Loss)
We use Contribution Profit (Loss) to evaluate our operating performance and trends. We believe that Contribution Profit (Loss) is a useful indicator of the economic impact of orders fulfilled throughDoorDash as it takes into account the direct expenses associated with generating and fulfilling orders. We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing expenses, (iii) allocated overhead included in cost of revenue and sales and marketing expenses, and (iv) inventory write-off related to restructuring. We define gross margin as gross profit (loss) as a percentage of revenue for the same period and we define Contribution Margin as Contribution Profit (Loss) as a percentage of revenue for the same period.
Gross profit (loss) is the most directly comparable financial measure to Contribution Profit (Loss). The following table provides a reconciliation of gross profit to Contribution Profit:
Year Ended December 31,
(in millions, except percentages) 2020 2021 2022
Revenue $ 2,886
(1,368) (2,338) (3,588)
Less: Depreciation and amortization related to cost of
revenue (97) (98) (171)
Gross profit $ 1,421 $ 2,452 $ 2,824
Gross Margin 49.2 % 50.2 % 42.9 %
Less: Sales and marketing $ (957)
97 98 171
Add: Stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing
70 101 201
Add: Allocated overhead included in cost of revenue and sales and marketing
32 39 51
Add: Inventory write-off related to restructuring - - 2
Contribution Profit $ 663 $ 1,071 $ 1,567
Contribution Margin 23.0 % 21.9 % 23.8 %
Adjusted Gross Profit (Loss)
We define Adjusted Gross Profit (Loss) as gross profit (loss) plus (i)
depreciation and amortization expense related to cost of revenue, (ii)
stock-based compensation expense and certain payroll tax expense included in
cost of revenue, (iii) allocated overhead included in cost of revenue, and (iv)
inventory write-off related to restructuring. Gross profit (loss) is defined as
revenue less (i) cost of revenue, exclusive of depreciation and amortization and
(ii) depreciation and amortization related to cost of revenue. Adjusted Gross
Margin is defined as Adjusted Gross Profit (Loss) as a percentage of revenue for
the same period.
The following table provides a reconciliation of gross profit to Adjusted Gross
Profit:
Year Ended December 31,
(in millions, except percentages) 2020 2021 2022
Gross profit $ 1,421
97 98 171
Add: Stock-based compensation expense and certain
payroll tax expense included in cost of revenue 32 48 103
Add: Allocated overhead included in cost of revenue 18 25 32
Add: Inventory write-off related to restructuring - - 2
Adjusted Gross Profit $ 1,568 $ 2,623 $ 3,132
Adjusted Gross Margin 54.3 % 53.7 % 47.6 %
70--------------------------------------------------------------------------------
Table of Contents
Adjusted EBITDA
Adjusted EBITDA is a measure that we use to assess our operating performance and the operating leverage in our business. We define Adjusted EBITDA as net income (loss) including redeemable non-controlling interests, adjusted to exclude (i) certain legal, tax, and regulatory settlements, reserves, and expenses, (ii) loss on disposal of property and equipment, (iii) transaction-related costs (primarily consists of acquisition, integration, and investment related costs), (iv) impairment expenses, (v) restructuring charges, (vi) inventory write-off related to restructuring, (vii) provision for (benefit from) income taxes, (viii) interest (income) expense, net, (ix) other (income) expense, net, (x) stock-based compensation expense and certain payroll tax expense, and (xi) depreciation and amortization expense.
The following table provides a reconciliation of net loss including redeemable non-controlling interests to Adjusted EBITDA:
Year Ended December 31,
(in millions) 2020 2021 2022
Net loss including redeemable non-controlling interests
$ (468) $ (1,368) Certain legal, tax, and regulatory settlements, reserves, and expenses(1) 160 77 72 Transaction-related costs(2) 1 10 68 Impairment expenses(3) 11 1 2 Restructuring charges - - 92 Inventory write-off related to restructuring - - 2 Provision for (benefit from) income taxes 3 5 (31) Interest (income) expense, net 25 11 (30) Other (income) expense, net(4) (3) - 305
Stock-based compensation expense and certain payroll tax expense(5)
333 497 880
Depreciation and amortization expense 120 156 369
Adjusted EBITDA $ 189 $ 289 $ 361
(1)We exclude certain costs and expenses from our calculation of Adjusted EBITDA
because management believes that these costs and expenses are not indicative of
our core operating performance, do not reflect the underlying economics of our
business, and are not necessary to operate our business. These excluded costs
and expenses consist of (i) certain legal costs primarily related to worker
classification matters, (ii) reserves for the collection of sales and indirect
taxes that we do not expect to incur on a recurring basis, (iii) costs related
to the settlement of an intellectual property matter, (iv) expenses related to
supporting various policy matters, including those related to worker
classification and price controls, and (v) donations as part of our relief
efforts in connection with the COVID-19 pandemic and Russia's invasion of
Ukraine . We believe it is appropriate to exclude the foregoing matters from our
calculation of Adjusted EBITDA because (1) the timing and magnitude of such
expenses are unpredictable and thus not part of management's budgeting or
forecasting process, and (2) with respect to worker classification matters,
management currently expects such expenses will not be material to our results
of operations over the long term as a result of increasing legislative and
regulatory certainty in this area, including as a result of Proposition 22 in
California and similar legislation.
(2)Consists of acquisition, integration, and investment related costs, primarily
related to the Wolt acquisition for 2022.
(3)Consists of impairment expense related to an operating lease right-of-use
asset associated with our former headquarters.
(4)Consists primarily of adjustments to non-marketable equity securities,
including impairment, for 2022.
(5)Excludes stock-based compensation related to restructuring, which is included
in restructuring charges in the table above.
Free Cash Flow
We define Free Cash Flow as cash flows from operating activities less purchases of property and equipment and capitalized software and website development costs.
The following table provides a reconciliation of net cash provided by operating activities to Free Cash Flow:
Year Ended December 31,
(in millions) 2020 2021 2022
Net cash provided by operating activities $ 252 $ 692 $ 367
Purchases of property and equipment (106) (129) (176)
Capitalized software and website development costs (53) (108) (170)
Free Cash Flow $ 93 $ 455 $ 21
Credit Facilities
On November 19, 2019 , we entered into a revolving credit and guaranty agreement
with JPMorgan Chase Bank, N.A ., an affiliate of J.P. Morgan Securities LLC , and
Goldman Sachs Lending Partners LLC , an affiliate of Goldman Sachs & Co. LLC ,
which, as amended and restated on August 7, 2020 , and further amended on October
31, 2022 , provides for a $300
71--------------------------------------------------------------------------------
Table of Contents
million unsecured revolving credit facility maturing onAugust 7, 2025 , which increased to$400 million in aggregate revolving commitments upon the consummation of our IPO, with a sublimit for the issuance of letters of credit in an aggregate face amount of up to$200 million . Loans under the credit facility bear interest, at our option, at (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus 0.50%, or (C) an adjusted SOFR rate for a one-month interest period plus 1.00%, or (ii) an adjusted SOFR rate (based on an interest period of one, three, or six months) plus a margin equal to 1.00%. We are also obligated to pay other customary fees for a credit facility of this size and type, including letter of credit fees, an upfront fee, and an unused commitment fee. As ofDecember 31, 2022 , we were in compliance with the covenants under the revolving credit and guaranty agreement. As ofDecember 31, 2022 and 2021, no revolving loans were outstanding under the credit facility. We maintain letters of credit established primarily for real estate leases and insurance policies. As ofDecember 31, 2021 and 2022, we had$60 million and$132 million of issued letters of credit outstanding, respectively, of which$39 million and$99 million were issued under the revolving credit and guaranty agreement.
Convertible Notes
OnFebruary 19, 2020 , we issued$340 million aggregate principal amount of Convertible Notes pursuant to the Convertible Note Purchase Agreement, datedFebruary 19, 2020 , among us, Caviar, and the investors party thereto. We received net proceeds of$333 million , net of$2 million in debt issuance costs and an original issue discount of$5 million . The interest rate under the Convertible Notes was 10.00% per annum, payable quarterly in arrears. InFebruary 2021 , we repaid the outstanding principal and accrued interest of the Convertible Notes in full for$375 million .
Liquidity and Capital Resources
In
As ofDecember 31, 2022 , our principal sources of liquidity were cash, cash equivalents, and marketable securities of$3.9 billion , which consisted of cash and cash equivalents of$2.0 billion , and short-term marketable securities of$1.5 billion and long-term marketable securities of$397 million . Additionally, funds held at payment processors of$441 million represent cash due from our payment processors for cleared transactions with merchants and consumers, as well as funds remitted to payment processors for Dasher payout. Cash and cash equivalents consisted of cash on deposit with banks as well as institutional money market funds and commercial paper. Marketable securities consisted of commercial paper, corporate bonds,U.S. government agency securities, andU.S. Treasury securities. We have generated significant operating losses from our operations as reflected in our accumulated deficit of$3.8 billion as ofDecember 31, 2022 . To execute on our strategic initiatives to continue to grow our business, we may incur operating losses and generate negative cash flows from operations in the future, and as a result, we may require additional capital resources. We believe our existing cash, cash equivalents, and marketable securities, along with the$400 million in available borrowings under our unsecured revolving credit facility, will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months and beyond. We have an obligation to our insurance provider which requires us to set aside collateral of up to$265 million in an escrow account. As ofDecember 31, 2022 , we had established and deposited into an escrow account an amount of$199 million , which is restricted from general use. We deposited the remaining collateral amount of$66 million onFebruary 1, 2023 . InFebruary 2023 , we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock, in an aggregate amount up to$750 million . This program is in addition to the prior repurchase program for the repurchase of$400 million shares of our Class A common stock, which was completed in the third quarter of 2022. Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our Class A common stock under this authorization. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. Our future capital requirements will depend on many factors, including, but not limited to our growth, our ability to attract and retain merchants, consumers, and Dashers that utilize our platform, the continuing market acceptance of our offerings, the timing and extent of spending to support our efforts to develop our platform, and the expansion of sales and marketing activities, the timing and extent of spending for policy and worker classification initiatives. Further, we may in the future enter into arrangements to acquire or invest in businesses, products, services, and technologies. We may be 72
--------------------------------------------------------------------------------
Table of Contents
required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.
The following table summarizes our cash flows for the periods indicated:
Year Ended December 31,
(In millions) 2020 2021 2022
Net cash provided by operating activities $ 252 $ 692 $ 367
Net cash used in investing activities (192) (2,047) (300)
Net cash provided by (used in) financing activities 3,996 (483) (375)
Foreign currency effect on cash, cash equivalents, 2 (1) (10)
and restricted cash
Net increase (decrease) in cash, cash equivalents, $ 4,058 $ (1,839) $ (318)
and restricted cash
Operating Activities
Cash provided by operating activities was $367 million for 2022. This primarily
consisted of a net loss of $1.4 billion , adjusted for certain non-cash items,
which primarily includes $889 million of non-cash stock-based compensation
expense, $369 million of depreciation and amortization expense and non-cash
reduction of operating lease right-of-use assets, $303 million of adjustments to
non-marketable equity securities, including impairment, net, and accretion of
operating lease liabilities of $81 million , as well as $73 million net inflows
from changes in operating assets and liabilities primarily driven by an increase
in our accrued expenses. The decrease in cash provided by operating activities
for 2022 compared to 2021 was mainly due to the increase in net loss for 2022.
Cash provided by operating activities was $692 million for 2021. This consisted
of a net loss of $468 million , offset by non-cash stock-based compensation
expense of $486 million , non-cash depreciation and amortization expense of $156
million , non-cash reduction of operating lease right-of-use assets and accretion
of operating lease liabilities of $52 million , and non-cash bad debt expense of
$36 million , as well as $391 million net inflows from changes in operating
assets and liabilities primarily driven by an increase in our accrued expenses.
Investing Activities
Cash used in investing activities was$300 million for 2022, which primarily consisted of purchases of marketable securities of$1.9 billion , purchases of property and equipment of$176 million , cash outflows for capitalized software and website development costs of$170 million , and purchases of non-marketable equity securities of$15 million , offset by proceeds from the sales and maturities of marketable securities of$1.9 billion and net cash acquired in acquisitions of$71 million . Cash used in investing activities was$2.0 billion for 2021, which primarily consisted of purchases of marketable securities of$2.3 billion , purchases of non-marketable equity securities of$409 million , purchases of property and equipment of$129 million , cash outflows for capitalized software and website development costs of$108 million , offset by proceeds from the sales and maturities of marketable securities of$944 million .
Financing Activities
Cash used by financing activities was$375 million for 2022, which consisted repurchases of our Class A common stock of$400 million , partially offset by cash received from other financing activities of$14 million and proceeds from the exercise of stock options of$11 million . Cash used by financing activities was$483 million for 2021, which consisted of$333 million of repayment of the convertible promissory notes,$172 million of cash outflows for taxes paid related to net share settlement of equity awards, and$10 million of payment of deferred offering costs, partially offset by$32 million of proceeds from the exercise of stock options.
Critical Accounting Policies and Estimates
Our consolidated financial statements and the related notes thereto included
elsewhere in this Annual Report on Form 10-K are prepared in accordance with
GAAP. The preparation of consolidated financial statements in accordance with
GAAP requires us to make certain estimates, judgments, and assumptions that
affect the reported amounts of assets and
73--------------------------------------------------------------------------------
Table of Contents
liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected. We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For further information, see Note 2 - "Summary of Significant Accounting Policies" included Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. Revenue Recognition We recognize revenue in accordance with ASC 606. We generate a substantial majority of our revenue from orders completed through our Marketplaces and the related commissions charged to partner merchants and fees charged to consumers. A partner merchant represents a merchant that has entered into a contractual agreement withDoorDash . Revenue from our Marketplaces is recognized at the point in time when the consumer obtains control of the merchant's products. We also generate revenue from membership fees paid by consumers for DashPass, which is recognized as part of our Marketplaces. Revenue generated from DashPass and Wolt+ memberships is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of membership purchased by the consumer. In addition, we also generate revenue from our Drive offering by collecting per-order fees from merchants that use our local commerce platform to arrange for delivery services that fulfill demand generated through their own channels. Revenue from Drive is recognized at the point in time when the consumer obtains control of the merchant's products. Our local commerce platform facilitates orders between consumers and partner merchants. Separately, the platform arranges for consumers to obtain delivery service from Dashers. We determined that the order facilitation service and delivery facilitation service are distinct performance obligations and therefore considered whether it is a principal or agent separately for each of these items. The order facilitation service and the delivery facilitation service are distinct given that the consumer can benefit from each item separately. Further, the order facilitation service and delivery facilitation service are separately identifiable as the nature of the promises are to transfer the order facilitation service and delivery facilitation service individually, rather than as a combined item.
Principal vs. Agent Considerations
Judgment is required in determining whether we are the principal or the agent in transactions with partner merchants, consumers, and Dashers. As it relates to the accounting for order facilitation services and delivery facilitation services, we evaluated whether to present revenue on a gross versus net basis based on whether we control each specified good or service before it is provided to the consumer in Marketplace transactions. With respect to order facilitation services, we have determined that we are an agent for partner merchants in facilitating the sale of products to the consumer through our Marketplaces. The consumer accesses our local commerce platform to identify merchants and places an order for merchants' products. These orders are picked up from partner merchants and delivered to consumers by Dashers. We do not control the products prior to them being transferred to the consumer as it neither has the ability to redirect the products to another consumer nor does it obtain any economic benefit from the products. With respect to the vast majority of our delivery facilitation services, we have determined that we are acting as an agent for the consumer in facilitating the delivery of products by connecting consumers with Dashers. As our role with the delivery facilitation service is only to arrange for a delivery opportunity to be offered to prospective Dashers, we do not control how the delivery service is ultimately provided to the consumer.
In the vast majority of our transactions with end-users, we are an agent in facilitating the sale of products and delivery services, thus we report revenue on a net basis, reflecting amounts collected from consumers, less amounts remitted to merchants and Dashers.
We recognize revenue from both partner merchants and consumers for each
successfully completed transaction. We satisfy our performance obligations to a
partner merchant when there is a successful sale of the merchant's products and
we meet our performance obligation to a consumer once the Dasher has picked up
the products from the merchant for delivery to the consumer.
74--------------------------------------------------------------------------------
Table of Contents
Gift Cards
We sell gift cards to consumers that can be redeemed through our Marketplaces. Those gift cards have no expiration date and administrative fees are not charged on unused gift cards. In prior periods, with limited history as to consumers' redemption patterns, proceeds from the sale of gift cards were fully deferred and recorded as contract liabilities until consumers use the card to place orders on its platform. When gift cards are redeemed, revenue is recognized on a net basis as the difference between the amounts collected from consumers less amounts remitted to merchants and Dashers. During the year endedDecember 31, 2021 , we concluded that we had developed sufficient historical evidence regarding the pattern of consumer redemptions of gift cards to have the ability to estimate the portion of outstanding gift cards that will never be redeemed ("breakage") and for which there is no legal obligation to remit the value of the unredeemed gift cards to the relevant jurisdiction as unclaimed or abandoned property. We recognize the breakage amounts as revenue, proportionate to the pattern of revenue recognition for the gift card redemptions. We recorded$48 million and$47 million of gift card breakage revenue during the years endedDecember 31, 2021 and 2022, respectively. Estimating future breakage rates requires judgment based on current and historical patterns of redemption, and the actual breakage rates may vary from the estimate.
Dasher Incentives and Referrals
We offer various incentives to Dashers, which are primarily recorded within Dasher payout and reduce revenue. These are offered in various forms and include:
Peak pay: We make additional payments to Dashers to incentivize them to accept delivery opportunities during peak demand time.
Dasher referrals: We offer referral bonuses to referring Dashers, as well as to referred Dashers, once the new Dasher has met certain qualifying conditions. We expense the fair value of payments made to the referring Dashers as incurred in sales and marketing expenses in our consolidated statements of operations, since the marketing of our platform to acquire new Dashers represents a distinct benefit to us. The portion of these referral bonuses in excess of the fair value of payments made to the referring Dashers is accounted for as a reduction of revenue. Payments made to the referred Dashers are recorded within Dasher payout and reduce revenue at the time the corresponding revenue transaction is recorded.
Business Combinations
We account for our business combinations using the acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed at their estimated fair values on the acquisition date. The excess of the fair value of purchase consideration over the values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, we make significant estimates and assumptions, especially with respect to intangible assets. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates. Acquisition costs, such as legal and consulting fees, are expensed as incurred.
Insurance Reserves
We utilize third-party insurance which include retained insurance deductibles to
insure costs including auto liability related to both bodily injury and physical
damage, and uninsured and underinsured motorists up to a certain dollar
retention limit. The recorded insurance reserves reflect the estimated cost for
claims incurred but not paid and claims that have been incurred but not yet
reported. The estimate of our ultimate deductible obligation utilizes actuarial
techniques applied to historical claim and loss experience. Given our limited
operational history, we use assumptions based on actuarial judgments with
consideration toward relevant industry claim and loss development factors, which
includes the development time frame and settlement patterns, and expected loss
rates. Reserves are periodically reviewed and adjusted as necessary as
experience develops or new information becomes known. However, ultimate results
may differ from our estimates, which could result in losses over our reserved
amounts.
Loss Contingencies
We are involved in various lawsuits, claims, investigations, and proceedings
that arise in the ordinary course of business. Certain of these matters include
speculative claims for substantial or indeterminate amounts of damages. We
record a liability when we believe that it is both probable that a loss has been
incurred and the amount or range can be reasonably estimated. We disclose
material contingencies when we believe that a loss is not probable but
reasonably possible.
75--------------------------------------------------------------------------------
Table of Contents
Significant judgment is required to determine both probability and the estimated amount. We review these provisions on a quarterly basis and adjust these provisions accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.
The outcome of legal matters and litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management's expectations, our results of operations, and financial condition, including in a particular reporting period, could be materially adversely affected.
Recent Accounting Pronouncements
For information on recently issued accounting pronouncements, see Note 2 - "Summary of Significant Accounting Policies" included Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
© Edgar Online, source
