DoorDash to Show Narrower Annual Loss as Growth Continues

By Preetika Rana 

DoorDash Inc.'s first results as a public company are expected to show the food-delivery app growing at a blistering pace while trimming its yearly loss.

Analysts polled by FactSet expect revenue in 2020 to jump more than threefold to $2.85 billion from $885 million a year earlier, as demand for food delivery skyrocketed during widespread shelter-in-place orders. Fourth-quarter revenue is also expected to more than triple to $938 million.

Food delivery has been an expensive logistical undertaking, however. DoorDash turned a surprise profit in last year's second quarter but has never posted a full-year profit. Analysts expect the company's 2020 loss to narrow to $318 million from $667 million a year earlier. But they predict fourth-quarter loss will widen to $153 million from $134 million in the year-earlier period.

DoorDash made its debut on the stock market in December alongside home-sharing giant Airbnb Inc., which also reports its first earnings as a public company on Thursday. Both companies are scheduled to report their results after market hours. DoorDash's shares have climbed 73% from their IPO price as of Wednesday's close. Its more than $56 billion market capitalization makes it is more valuable than Chipotle Mexican Grill Inc. and Domino's Pizza Inc. combined.

Consumers are more reliant on food-delivery services than ever before. DoorDash leapfrogged rivals Uber Technologies Inc.'s Eats and Grubhub Inc. to command nearly half the U.S. food-delivery market in mid-October, up from one-third a year earlier. Its monthly subscribers have more than tripled between January and September.

Some restaurants are pushing back against the high fees that food-delivery apps can charge -- up to 30% of an order -- by driving more orders toward their websites and putting idle staff on delivery duty. Regulators in cities including New York, San Francisco and Seattle have stepped in to cap app fees, in an attempt to rein in costs for restaurants.

Grubhub's fourth-quarter loss widened compared with a year earlier as these caps hurt its bottom line, among other things. Uber Eats trimmed its losses in the fourth-quarter.

DoorDash has said it spent millions of dollars to support small restaurants through grants and free marketing during the pandemic. It also waived commissions for restaurants with five or fewer outlets in the initial months of the health crisis.

The company's sales and marketing costs, which include deep discounts to consumers, rose 34% year over year to $900 million.

Write to Preetika Rana at [e-mail]

(END) Dow Jones Newswires

February 25, 2021 05:44 ET (10:44 GMT)

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