Delivery app DoorDash Inc. on Wednesday reported a slightly bigger second-quarter loss than expected but sales that beat estimates, and the company said it would keep investing in new businesses.
reported a net loss of $172 million, or 44 cents a share, compared with $263 million, or 72 cents a share, in the same quarter last year. Revenue nearly doubled to $2.13 billion, compared with $1.61 billion in the prior-year quarter. Total orders jumped 25% to 532 million.
Analysts polled by FactSet expected DoorDash to lose 41 cents a share, on $2.06 billion in sales.
A DoorDash representative attributed the sales gains to investments in the business, like efforts to refine searches for items. And she also told MarketWatch that efforts to expand outside of DoorDash’s main restaurant business — into areas like grocery and retail — helped drive the sales increase.
Shares jumped 4.6% after hours on Wednesday.
DoorDash reported earnings as competition in the food-delivery industry remains intense and rife with customer discounts. Despite a boom in demand during the pandemic, the industry has consolidated and struggled to turn a profit, and some executives over the years have said that building customer loyalty to one app over another has been difficult.
Domino’s Pizza Inc.
— a giant in the industry that has long resisted working with third-party delivery apps — recently worked out a deal to deliver pizza via two of DoorDash’s rivals, Uber Eats
and Postmates. Analysts have said that Domino’s may need to work with other delivery apps to reach a $1 billion sales target linked to that plan.
DoorDash, known for hauling restaurant orders from kitchens to customers’ doors, is also trying to expand internationally and into grocery delivery, striking up partnerships with Aldi, Sprouts Farmers Market Inc.
and Albertsons Cos. Inc.
In a letter to shareholders on Wednesday, Chief Executive Tony Xu said he expects the company to continue investing in its expansion, and said its willingness to take a long-term approach to developing new lines of business was one of the company’s strengths.
“We expect to continue looking for new problems to solve and new businesses to build, as this is the best way we know of to pursue our mission and increase the long-term value of our company,” he said.
A DoorDash representative, in an interview, declined to provide additional details on specific areas of new investment.
Xu, in the letter, noted that DoorDash spent more than six years investing in its U.S. restaurant marketplace before the company brought in any significant amount of cash. He said that even as losses accumulated, the company may have underinvested or stopped investing had they worked with shorter-term targets in mind.
“At this point you may be thinking, ‘great, they’re going to spend money forever,’” Xu said in the letter. “The truth is, we hope to be that lucky, but we probably won’t.”