DoorDash’s Q2 orders hit record high but revenue gains slow

DoorDash booked a record number of orders in the second quarter even as its revenue growth slowed from pandemic-induced highs.

The San Francisco-based delivery company said its total orders rose 69% to 345 million in the April-June period from the same span in 2020. Non-restaurant orders —— from new partners like 7-Eleven, PetSmart and the grocery chain Albertsons —— grew faster than restaurant orders, DoorDash said.

DoorDash’s revenue was up 83% to $1.24 billion, surpassing Wall Street’s expectations. Analysts polled by FactSet had forecast revenue of $1.1 billion for the quarter.

But the growth was lower than the double- and even triple-digit percentage revenue gains DoorDash saw over the prior four quarters as the pandemic juiced demand for delivery.

One issue: Many cities, including New York and Los Angeles, have temporarily capped the fees DoorDash can charge to merchants in an effort to help small businesses during the pandemic. DoorDash said those price caps cost the company $26 million in the second quarter.

Last month, DoorDash sued the city of San Francisco over its 15% fee cap per order, which was made permanent in June.

“They’re very harmful, in the sense that they are hurting the audience they’re trying to help,” DoorDash CEO Tony Xu said Thursday during a conference call with investors. DoorDash charges more for delivery in areas with fee caps, which cuts down on orders, he said.

DoorDash reported a net loss of $102 million for the quarter as it continued to invest heavily to grow in new markets, like Japan. DoorDash Chief Financial Officer Prabir Adarkar said the company also spent more to sign up new drivers after struggling to fulfill orders in the first quarter. DoorDash said a record 3 million people drove for DoorDash during the second quarter.

The loss, amounting to 30 cents per share, was far wider than Wall Street’s expectation of a 6 cent per share loss.

DoorDash said it anticipates seasonal declines in restaurant deliveries in the third quarter as more people go out to eat. But sales could rise if worries about increasing U.S. coronavirus cases keep people at home.

“There’s plenty of unknowns here,” Adarkar said.

Still, DoorDash raised its full-year outlook based on its order growth in the second quarter. The company said it now expects full-year gross order volumes in the range of $39 billion to $40.5 billion, up from $35 billion to $38 billion previously.

It also narrowed its earnings forecast. The company now expects full-year adjusted pretax earnings of $150 million to $350 million, compared to an earlier range of breakeven to $300 million.

DoorDash shares dropped 4% to $180.65 in after-market trading.