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$DASH. DoorDash S-1 Quick Review Thread
https://www.sec.gov/Archives/edgar/data/1792789/000119312520292381/d752207ds1.htm#fin752207_13
Impressive results I would not have thought possible when I first started doing work on them in early 2015 when I was covering GRUB on the sell side as an associate.
https://www.sec.gov/Archives/edgar/data/1792789/000119312520292381/d752207ds1.htm#fin752207_13
Impressive results I would not have thought possible when I first started doing work on them in early 2015 when I was covering GRUB on the sell side as an associate.
The timing of the IPO makes sense given COVID benefit AND AB5 behind them. 200+% y/y growth, improving take rates, and +6000bps y/y margin expansion resulting in positive adj. EBITDA is a nice way to IPO.
Overall, this feels EERILY similar to Amazon (ex AWS) which is obviously a great comparison.
- PRIME subscription element with DashPass ($9.99/mo)
- Advertising Opportunity which only gets better as they solidify #1 position
- PRIME subscription element with DashPass ($9.99/mo)
- Advertising Opportunity which only gets better as they solidify #1 position
- 1P/3P mix. DD/Amazon started with 1P, doing all the hard low margin work. Then tacked on the high profit 3P non-FBA (pick-up, but ordered through DoorDash) orders.
- Private label opportunity. Cloud/ghost Kitchens. I understand this is in the works.
- Private label opportunity. Cloud/ghost Kitchens. I understand this is in the works.
- Amazon Business Prime. DoorDash should sign up every bank and law firm once everyone gets back to the office. I never understood why Uber (and now DD) didn’t push harder to take out the Seamless crown jewel that is Corporate ordering (except maybe its thinking too small).
TAM expansion potl with 1) different end markets. Amazon started with books, DoorDash started with restaurants but is starting to move to Groceries and others. 2) Geographic expansion. US/Canada today with recent Australia launch but DDash expects intl expansion in the future.
What I would have like to have seen:
- 2017 Data, given me another year of growth calc to see the COVID difference (note, I would like another year for EVERY S-1 I look at…)
- USER data over time, not just the one data point of 18mn. Would like to get a better handle on HH Pen%
- 2017 Data, given me another year of growth calc to see the COVID difference (note, I would like another year for EVERY S-1 I look at…)
- USER data over time, not just the one data point of 18mn. Would like to get a better handle on HH Pen%
Despite the impressive results/progress made, this isn’t one I look to invest in as I am far from confident on end-game unit economics and ultimate TAM pen%. Note: I'm v picky and prefer holding 5-10 names in size (and I don't write about professional positions <$100bn mktcap).
KEY to getting me more excited: Improve Unit economics for EVERYONE: Consumer, DoorDash, Dashers.
With a $600bn Rest TAM and ~$25bn GMV in 2020, there’s still runway to grow, BUT debatable if they ‘ll get meaningfully over 10% with the current setup of ~50% markup.
With a $600bn Rest TAM and ~$25bn GMV in 2020, there’s still runway to grow, BUT debatable if they ‘ll get meaningfully over 10% with the current setup of ~50% markup.
Things that can help: 1) proliferation of Cloud Kitchens (in size and meaningfully contributing to GP$s not as a way to push take rates with restaurants); 2) more density/order frequency and order batching; 3) more subscriptions (make money on the sub, not on the order).
Other Things I’m looking at for:
- Sales and Marketing efficiency. Potentially a factor of COVID, but DDash held S&M basically steady from 1Q19 – 2Q20 with a dramatic ~100% Q/Q increase in spend in 3Q. 3Q is typically THE time to spend going into the winter months, but I suspect
- Sales and Marketing efficiency. Potentially a factor of COVID, but DDash held S&M basically steady from 1Q19 – 2Q20 with a dramatic ~100% Q/Q increase in spend in 3Q. 3Q is typically THE time to spend going into the winter months, but I suspect
CPC/CPMs already ticked up a bunch as the economy improved AND maintaining the growth rate into the IPO was emphasized over the recent mgn expansion (this is muscle memory, not based on DDash specific info. I’ve seen it so many times for consumer internet companies into an IPO).
- Post COVID trends. Usage in 3Q suggests 13 Orders per User or 1X per week (236mn orders / 18mn users). This is pretty high. And more orders for the same user is HIGHLY Profitable (versus going out and spending to get new users). Orders/user post COVID is key for profits.
As I’ve said before, If a management team is good (and DoorDash has proven to be pretty darn good so far), they’ll find ways to grow that isn’t even on the radar of someone who has never operated a business (such as myself).
