DoorDash (DASH) Q3 2026 earnings call transcript

All right. Thank you, Dustin. Good afternoon, everyone, and thanks for joining us for a Q326 earnings call. I'm pleased to be joined today by co-founder, chair, and CEO, Tony Hsu, and CFO, Robbie Anaconda. We'll be making forward-looking statements during today's call, including without limitations or expectations for a business, financial position, operating performance, profitability, or guidance, strategies, capital allocation approach, and the broader economic environment. When we will also be making forward-looking statements about our pending acquisition of Instacart, including without limitation, the expected timing and likelihood of completion of the acquisition, and our plans, objectives, intentions, and expectations with respect to the acquisition and the combined company. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described.

Many of these uncertainties are described in our SEC filing, including our most recent form 10K and 10Q. You should not rely on our forward-looking statement as predictions of future events or performance. We disclaim any obligation to update any forward-looking statements except as required by law. During this call, we will discuss our non-GAP financial measures, information regarding our non-GAP financial measures, including a reconciliation of such non-GAP measures and most directly comparable GAP financial measures may be found in our earnings release, which is available on our investor relations website at IR. door-dot-com. These non-GAP measures should be considered in addition to our GAP results and are not intended to get a substitute for our GAP results.

Finally, this call is being a replay of the call will be available on our website shortly after the call ends. Operator, I'll pass it back to you if we can take our first question.

Yeah. I mean, if you think about where grocery delivery is, it really is just a fraction of what its potential could be. And I think the reason I've said this quite a lot in the past, that the product really isn't there yet. Customers today are still being asked to pay a premium for imperfect delivery. So the question is, how can we actually ensure that we offer perfect deliveries at the most affordable prices? And the way I think about this is it really is a sequencing roadmap. And our journey really started five years ago when we began our own work in new verticals. And it's been a very successful endeavor.

As part of that journey, we recognize that in order to offer the best possible service at the most affordable prices, we really needed to manage the inventory because stock outs were a key issue. When you look at, for example, the deliveries that we fulfill from dash marks versus the delivery that we do third party, even though we have best in class, logistics operations quality in the third party stores, we are near perfect in our deliveries with dash marks. But we're only in the low 90s in terms of our accuracy through the third party stores. So there's a meaningful gap.

But we've been able to prove demonstrably that we can close it both first by holding our own inventory and now actually managing thousands of items for fantastic retail partners like Giant Eagle or Albertsons and many others. But when you think about this business, it's a fixed cost business when you're managing inventory. So scale is really helpful. And when I think about today's news and partnering with Instacard and the fact that they have unique demand or orders that are unique to our network, that not only helps, certainly on a day one scenario, post-close where the added density in the last mile network brings fulfillment efficiencies to offer faster delivery as well as lower cost throughout the system.

But it allows us to continue to invest on our end-stage journey of building what we believe will be the best in class product for all retailers to be able to compete against the world's biggest companies.

And that will enable faster delivery, it will enable more affordable prices, which in turn will generate more sales for every grocer and retailer and more earnings opportunity for every shopper.

Thank you.

Hey, Chuela, it's Ravi. Look, I mean, I'll take both of them and turn it over to Chairman. Look, I think there's an opportunity for us to build a really large, you know, an attractive business, right? If you think about synergies, which is, you know, the part of your question, there's a number of big blocks that you could think about. Let's start with the growth one first. Look, there's an opportunity for us to cross list merchants. For example, this categories that are not available on both platforms, there's a clear opportunity for us to be able to cross list them, which drives growth. One of the clearest examples is we are going to be able to list our restaurant's platform on Instacart, which is going to drive the pipeline growth.

Second, I would talk about is just purely ads. CPG advertisers will now have more consumers to reach, which will not only drive quality, but also higher ad spend, which will in turn drive more the third one that I would think about is there is an opportunity for us to cross sell products. Instacart has built a really strong first-party software infrastructure, which we can now cross sell to grow sellers on our platform, as well as Tony Touchdown and Dashboard fulfillment services.

It's going to be an opportunity for us to make that available to more customers across both platforms. Look, I mean, on the efficiency side, Dash or density, shopper density is going to be pretty critical as you increase the volume that's going to drive efficiency in the fulfillment network.

Finally, if you look up in on the P&L, there's a number of opportunities, whether it's opportunities on sales and marketing, opportunities and support. There's many opportunities that we could jointly work on together. We've thought about the opportunities that can jointly arise from combining both platforms. One thing that's pretty clear is putting both platforms together will actually rise to leading in growth, as well as increasing overall profit-dollar production.

The key for us, however, is how do you take some of the profit dollars and reinvest that back in the business to ultimately build a better product for consumers, as well as growers. Look, that's historically what we've done. It's to the second point in your question, which is what's driving the growth in the poor marketplace, largely because of the reinvestment back in the product.

Our playbook is going to be very similar here. You can see examples from that acquisition of as well, where we've reinvested back in the product to ultimately drive the growth that you're seeing in the business. In fact, when I look at the new vertical platform, our business is doing really well. That's growing quite nicely. We've become volume share leaders. We've continued to improve the customer outcomes, whether it's increase in order rate, increase in order frequency, the basket size of growing. The way we think about this is this is actually an accelerant to our core business, which continues to do well. The other side, which is the core business continues to well, which gives us the conviction and the capacity to be able to do.

If you're thinking about it from a modeling perspective, the way I would think about the model is, year one is going to be the investment that will make to build a better product. Year two will make progress.

Finally, year three, my expectation is we'll drive 500 million of incremental synergies to the bottom line. That is net of the investments that we plan to make.

Thank you for the second one. On the second one, look, I mean, you're right. The core business is doing really well, it's firing on all cylinders. If you look at the growth that we're seeing in the business, Q3, our restaurant business actually accelerated from Q2 to Q3. In fact, when you look at the sequential growth rate in Q3, it's the fastest we've seen in the last five plus years.

New vertical continues to grow both both as well as the root. They also accelerated from Q2 to Q3. But more broadly, when you look at our overall US restaurant growth, it's been stable actually for the last four years. A lot of that is got to do with the underlying improvements in the product. We've invested back in selection. We've made subscription better. Overall paid subscribers continue to set all the time records. The combination of the work that we've done in improving the product while continuing to drive subscription is what you're seeing in terms of the growth that you're seeing in the business. And again, the growth is coming from sustainable levers, which is user growth, subscription growth.

And the way, at least I think about it from a mental model perspective, is these are compounding growth that will come in the future, which gives us a lot more confidence as we look ahead into what we can drive in terms of both growth, as well as profit dollar production for the next several years.

Yeah. Hey, Deepak, I'll take both of those. On the first question about why now? I mean, it's a great question because M&A is very, very hard to do successfully. And we always take these decisions extremely seriously. I would say the first thing is our core business is doing really, really well. You know, Robbie touched upon a bit of this. And as you can see in the results that we just published this morning on the quarter, I mean, record highs in top line, bottom line, accelerating growth in the US restaurant's business, continued fast growth on new verticals, accelerating growth in our international properties. You continue to see product innovation from us. You know, for example, our most recent Dash forward event with the announcements of DoorDash Air Dash OS and merchant software, as well as speaking of AI agents, you are own AI agents.

So the core business is truly filing on all cylinders. I would say the second thing is, you know, our big projects for the year are on track. Obviously, the year is not over. But if you look at, you know, the projects around building a single tech stack, if you look at the projects around integrating Deliveroo and, you know, some of the results kind of speak for themselves. We're seeing customer benefits are ready from, you know, the single tech stack work, whether it's faster onboarding of merchants, better conversion from improved search, better SLAs for support across all audiences. These are just, you know, some of the ones that come top of mind. If you look at the roof side, you know, we grew in Q3 at twice the rate that we did a year ago before we acquired the business.

So all of the big projects we had for the year were projects that are going really, really well. And so, from a management bandwidth perspective and a sequencing perspective, we felt like we had the space to do something offensive. And, you know, this is a space we understand really well, the grocery marketplace space, you know, both because we built our own grocery marketplace very successfully to the premise of your question, as well as the fact that, you know, we've integrated, you know, other marketplaces very successfully into the DoorDash family, whether it's Lulls, whether it's Deliveroo, whether it's actually even, you know, thinking about how we've reinvested over the years back into product innovation in driving durable growth for our own U. S. restaurant marketplace.

I think those would be all three demonstrable examples of our understanding of how to run a marketplace at scale, both driving top line growth durably, but also generating long-term total profit dollars. And that's what we intend to do here and play offense. You know, when I think about Instacar, you know, I talked a little bit about how it feeds us on the journey towards building this in-state, which is being able to manage inventory on behalf of every retailer of every size. But, you know, when I think about this, you know, this really is about giving every retailer every size the ability to compete in a world where technology is only accelerating faster, disruption is happening more quickly, and the world's biggest companies are becoming larger.

And, you know, when I think about the capabilities that, you know, the combined companies will have, will have best-in-class software to help each one of these grocers. That's something that Instacar has done a fantastic job building over a decade in helping grocers build their first party online channels. You combine that with our first-party logistics capabilities, which we pioneered with Dorast Drive, also over a decade ago, and you know, can offer merchant stability to build the best-in-class first-party experience for fast delivery, their own loyalty programs, their own data, their own customers. Then you look at the third-party side of the house, the combined marketplace, and the combined reach gives every grocer, you know, higher-quality orders, faster delivery, which is going to generate more sales.

And so, I think it was just the time to play offense, and you're right. I mean, everything's going great with the core business. This only adds to it. Your second question was around AI agents. I would say that this is something that is, you know, still a very dynamic area. And, you know, my take on all things technology is, you never want to fight gravity. But at the same time, you don't want to be delusional.

What I mean by that is, if you look at where AI agents are today, we're seeing maybe several hundred orders in total, you know, from some of these third-party agents, some of which you've cited in terms of whether or not, you know, customers are placing orders. And I think it's because they still, you know, largely view these third-party assistance, not necessarily for what I call these easier tasks, whether it's, you know, ordering food, like you said. The predominant use case of that is actually through our app. And what we've been doing is actually in learning with some of these third-parties, what are the features that actually drive incremental orders, in which case, we can build a very healthy partnership with some of these third-party assistance?

But then what are the features that actually just make the DoorDash app in our own AI agents, whether it's DoorDash Ask, the Text DoorDash, which is something that we released recently, our MCP that we've been giving to third-parties and, you know, to use for things like, you know, corporate lunch orders, things like this, to just make our app easier to use. And I think that is the win-win of what we've been able to see, where the volumes are very low, as I kind of cited. But I do believe there's a path in which you can, you know, get incremental orders and allow customers to order the way that they want to order, especially for, you know, long consideration purchases or purchases they're not even thinking about that might be relatively made on their behalf.

But for, you know, the everyday ordering, what we see is people come to DoorDash and they come back to DoorDash.

It's easy to use, we're making it easier to use, and we expect to continue to do so.

City, but going back to your first question, right, I'll just reiterate, you know, one point, you look coming to your absolute right, our core business on new verticals is doing really well, right? Look, we've been operating this business for the last five years. A lot of performance, you know, that we've demonstrated over the last five years. If you look at the performance of that business, that business is growing really fast. When I look at the cohorts, MOUs are increasing, basket size is increasing, people are using us for different use cases.

We actually think the combination is fully going to be an accelerant for us. We've talked about efficiency. You know, a couple of calls that I mentioned that the overall new vertical portfolio is going to be gross profit positive by the end of the year. We're pretty close to doing that. We're pretty close to be break-even on a gross profit level. So the combination of both Instacartanats actually adds to that vision. So we're doing it from a position of strength the way we think about it.

Yeah. Hey, Nikhil. I'll take the first one. Look, I mean, I think we're quite the co-author. Actually, in my answer to Deepak's question, I talked about what we're seeing from an underlying cohort perspective, right? The way at least we run the business is ultimately it's a co-harted business. I look at the historic cohorts to see what the behavior of the future cohorts is going to be. When I look at mature cohorts, the behavior that we're seeing is people are using us more. More of those cohorts are coming back, which tells me that the product has gotten better. People are getting habituated to the product. Their basket sales are increasing. Their engagement on the platform is increasing.

And that is now starting to translate into New York owners as well, where we're seeing similar signs of strength in the New York owners. That, to me, truly is what we think is actually going to happen in the overall business as well, as you continue to add more and more New York owners. Our goal has been, how do you continue to improve the product? Well, it's adding more selection.

Look, we just added cost on the platform, which is off to a great start. We've increased the quality of the platform. Overall, more number of data subscribers are continuing to use categories outside of the core restaurants. That number continues to grow. All of this gives us confidence that people are using the product more than engaging with us even more, which is also driving it to some of the efficiencies that I talked about. As we continue to scale that platform, we're seeing efficiency gains also come back and benefit the overall platform, which we're reinvesting back in the business. The combination of both Instacartaners is actually going to accelerate this vision. And the simple metal model that we have is, look, when you put both companies together, there's an obvious opportunity in driving both higher top line growth, as well as higher profit dollar production.

On top of that, we're going to have synergies. Our goal is, how do you take a portion of that, reinvest that back in the business, historically, like we've done with Telugu, like we've done with our core restaurant business, which is what's driving the stable growth, use that to ultimately drive a better product, which, in fact, will drive more growth over the longer term, as well as get the customers to adopt a better product.

Nick Hill, I'll just add a little bit to that before I talk about your question on the integration of the tech stacks. To get, I guess, one level deeper. A lot of what I think about here is actually, how can we actually help improve the Instacart business as well as how can they help improve ours? And it's actually, I think that because of the success we've seen in running our marketplace, as well as the marketplaces, as I've mentioned, of the ones we've integrated, as well as how we've reinvested back into the US restaurant marketplace and some of the things we've learned on how to do that, I think we'll actually be able to re-accelerate the Instacart marketplace.

And I actually think that they'll help us grow a lot of the first-party software products for grocers and retailers, something that, you know, they started ahead of us, whereas we kind of focused on first-party on the restaurant front. And so I actually think that it's quite a nice, mutual combination here, where you're bringing the best of both, where on the door-dash side, you know, the best-in-class understanding of logistics operations, how to manage the marketplace to total profit dollars, how to, you know, generate product innovation in a continuous way, and then on an Instagram side, you know, the best-in-class, you know, tools for software tools, for grocers and their own online channels. Your second question was around tech stack.

I'm glad you asked it. So, I mean, this is a huge endeavor for us, and I actually don't even think most people appreciate how big of a deal it is, because we're not only trying to get, you know, all of our features into one tech stack, which means that, you know, we ship once, we ship, you know, everywhere, but we're actually building new infrastructure, like actually new infrastructure to run core door-dash, which will make any, you know, future integration much easier to run, because it'll just kind of work out of the box. So, it will actually speed things up quite a bit, and that's why, you know, we decided to undertake such a large investment both in terms of, you know, dollars as well as people.

I mean, literally rebuilding, you know, this airplane as we're flying it, you know, part by part, engine by engine, and so it'll actually speed things up in the future.

Any Michael, I'll take the first one. You know, we expect a very positive response for groceries, and a lot of what we talk about with with groceries is just how can we together help them compete against the largest companies in the world, online, and how do we actually help them build the capabilities of great technology, a modern tech stack, as well as fast delivery. You really need all of these component parts to have a fighting chance. I mean, if you've seen what has happened in the grocery industry in particular, I mean, the largest companies are only getting larger and eating more of the pie, and the question is, how do you give everybody else a fair fighting shot?

And I think, you know, the grocery's, you know, you think very similarly, these are conversations about, you know, what's happening in the industry in terms of the biggest, you know, companies eating more of the pie. I mean, that conversation's been happening for, you know, the past decade, and it's only kind of gone in that direction in that direction of travels. The question is, how do we give everybody else, you know, the capabilities to have a level playing field? And that's what we see, you know, in this potential partnership, which is, we're going to give you the tools, we're going to give you the business with added density, which will help with faster delivery times, more affordable prices for everyone, greater earning opportunities for shoppers.

And we think it really, you know, puts together the best possible chance where you have a modern tech stack that we're only going to continue investing and innovating more and new fulfillment models, which we are inventing as we speak, and certainly, you know, reinvestment, which, you know, has been the philosophy all along the way at DoorDash and how we built our own marketplace.

It might look, you know, on the second point, I mean, I think, you know, you're absolutely right. The value has stopped very highly focused on dilution. It was important for, you know, in Chicago to have some stock in the deal as, you know, overall, they wanted to participate in the upside in the business. Look, we believe there's upside in the business. We are happy with the consideration between cash and stock. You know, what I will tell you is, our philosophy on, you know, buyback has not changed, right, to the second part of your question.

We've been conservative. We were going to be opportunistic. We're happy with the buyback that we've done so far, which has generated a strong IRR. And in the future, if we see there's a good opportunity to buyback, we're happy to do that as long as it's a good, you know, return on the overall investment.

Sure. Yeah. Hey, Josh, I'll take that one. I mean, if you look at the next decade of work, I mean, it really is about making sure that we can build the local infrastructure for all things last mile delivery for everything inside your city. That's what DoorDash is working on, right? So, that's about merchant software. That's about building new fulfillment models. So, some of the warehousing that you're discussing. And, of course, it's always about making sure that we have the highest quality and most affordable logistics network. It's why we're investing deeply into autonomy, both land vehicles and drones. And, and you're right, there is going to be an investment. But the way I think about this is a lot of the, you know, real estate, though, that we're talking about in many ways has already been designed for us.

There are hundreds of thousands of grocery stores available that carry these millions of items that you're already talking about. The real question is whether or not all of that square footage and all that shelf space is being utilized in the most productive way. You know, none of these stores, as you probably know, are built for delivery. I mean, they were effectively built for browsing. And, in a world where delivery and convenience are a much bigger part of consumer expectations and a growing trend, you know, something has to change in order to offer a cost structure as well as a price point that consumers expect to see so that they will, you know, continue growing their relationships with each one of these grocers.

And that's really what we believe we can build with Instacart. But this is a sequencing process. This is not something, you know, when you're talking about all things physical and not just pure digital, you can't just hit a button and then magically, you know, everything changes. You have to understand that it's a marriage of technology, operation and people. I mean, a lot of these fantastic businesses, these grocers, have been built over many decades and their processes have been built over many decades.

And the question is, you know, how do we allow those stores to shine as the showrooms and how do we actually, you know, build the correct square footage as the warehouse or the back of house infrastructure such that we can offer fast delivery at attractive prices to compete against the world's biggest companies. That's the vision of Dashmore. But it's a sequencing process. You know, step one, you know, day one after close, it's how do we actually take the combined network where you have ad identity and British understand well how to reinvest that ad identity and give back value to everybody, every audience, consumers, grocers, shoppers, you know, how do we then, you know, take that added scale to then drive down further costs as we think about managing warehouses, which is a fixed cost business.

How do we then do that with more types of, you know, skews and items so that we can bring more of the store, then how do we bring every single store and ultimately everything inside your city to you in minutes?

Yeah, I mean, the first thing I'll say is that, you know, the first question I always ask is like, what is, you know, something fair and what is it that we actually want to see in the world? And, you know, what I believe is fair and something that we want to see in the world is a world in which, you know, every business locally of every size has a fair chance at it. If that is the mission of DoorDash, I mean, that's really why I created DoorDash. And if, you know, that were to happen, then GDP grows locally, which is the best possible way of GDP growth, not just for jobs, but also for the safety and health of communities.

And, you know, really the lifestyle of why we pick the different neighborhoods and cities in which we live. And, you know, when I think about it from that perspective, you know, and you just look at what's happening in the grocery industry, for example, over the past decade or even two decades, what you see is the largest companies are only eating more and more of the pie. Why is that? It's because they've invested aggressively into capabilities like a modern technology stack, like fast deliveries, like new fulfillment models. And that's been very difficult, you know, when you're a smaller player to invest in on your own. That's what this combination is really about, where DoorDash and Instacart can give, you know, every retailer fighting chance at competing in the modern day era.

And I believe that if we can do that, that's great for every community. So when I think about it from that perspective, that's how I get comfortable. You know, A, you know, knowing the right thing to do whenever you're doing the right thing that usually is the right narrative for anyone. You know, the second comment around, you know, go to market, you know, we won't say too much about this, you know, but you're right. I mean, I think Instacart has built a great brand and it's a very unique brand where their audience is, you know, very, very loyal, you know, to that brand. And so we certainly will support it. We certainly will bring value to consumers, you know, for instance, for the same price that you pay for a dash pass today, you'll get access to two subscription Instacart membership program as well as the DoorDash membership.

And we have some other ideas too, but a lot of, you know, the value in this partnership is really going to come in all things, what I see almost like not visible to the consumer. They'll see the benefits in the form of faster delivery, lower prices, greater selection, higher quality and accuracy of orders.

Grocers will see, you know, the value in terms of extra sales shoppers will see the value in terms of greater earning opportunities and communities. We'll see the value in greater GDP.

Yeah. Hey, you, so let me take that one. Look, I mean, I think on the overall tech platform, it is on track both from a cost, as well as a timeline perspective compared to what I talked about like a few quarters ago. In fact, we have been working on it in a very modular fashion. We have several modules that are already live on the new tech stack. We're already starting to see traffic flow through it. We've truly seen customer benefits, too, in places where we've already deployed our new tech stack. Merchants are getting on-boarded faster. Customer support is starting to get better. We already started to see early signs of benefit. In terms of the overall timeline, look, I expect that to be done by the first half of 2027, which is what we're originally expected.

So overall, we feel very good about both timeline as well as cost. And your second point around integration of Instapart onto the overall new tech stack, look, I mean, one of the core features as we thought about the new tech stack was the ability to add more future acquisitions and future platforms onto the tech stack. We've done some work around this. I think there's some investment needed, but overall, we don't think it's a massive investment to be able to operate both tech stacks on the replatform tech stack on a go forward basis.

Yeah, you said that all, the one thing I'll add is something I said, I think, on an earlier question, which is one of the biggest parts and why this current work on building a single tech stack is so expensive is we're actually literally building new infrastructure, which is why you have a lot of different copies of compute instances, and you are over provisioning things, and you're doing all of these things so that you literally have a much faster capability to build any new thing in the future. That includes obviously building organically, but also what Ravi said, integrating new products or new technologies or new services. And so it makes us ready for any modern work we want to do with AI agents.

It makes us ready for any new acquisitions.

Hey, Dominic, I don't know if you were able to catch the top of the call. We discussed some of this, which is right now, AI agents are generating several hundred orders across the time that they've been up and running. So it's been a fairly low use case.

And I believe that there will be opportunities in which we can generate when we win opportunities. With their party agents, my general philosophy when it comes to technology is you never want to fight gravity. And that includes how consumers want to use technology. Consumers want to use technology to shop in certain ways. We're going to find a way to make that win-win partnership.

And I do believe there are a lot of incrementally possible use cases, whether it be helping with long consideration purchases, whether it be doing work on your behalf proactively in the background. But when it comes to a task that's as simple as ordering food, we tend to see that come directly to not to mention or build their own AI agents to make the shopping process a lot easier. But you also have to remember one thing, which is it's not just about ordering food. That's actually not the hard part of the entire process ordering groceries. The hard part is making sure that they actually show up and show up in the order in the way that you expected and the condition that you want.

That end-to-end journey and making sure all of that is going to happen appropriately, especially when things go awry. We found that to be true living in our product.

You know, that said, I actually think that there will be advertising opportunities even within some of these AI agents. But I think first and foremost, we have to find ways to bring value to consumers. Right now, you know, with the low volumes that I'm telling you about, there isn't yet that value. But as hopefully that grows, we'll find a way to make that work.

Hey, Justin, let me take this one. Look, I mean, I think, you know, on your first question on share of grocery, look, we, you know, public information, we're not going to talk about disclose, you know, anything about Instacart. To your second point around, it looked, you know, the value to grocers. Look, I mean, ultimately, we talked about some of this, right? Like, the goal is how do you take the combination of both capabilities that both companies have, and how do you build a better platform, right? We have, you know, highly sophisticated logistics engine. We have a demand generation engine. We build dashmark fulfillment services for some merchants that we talked about. Instacart has done a really good job of being able to build, you know, very large, you know, enterprise, you know, storefront platform in addition to their own demand generation engine.

And I think the combination of both of this will actually help increase the number of products that we can co-sell to both sets of merchants in addition to that. I think there's an opportunity where we can actually invest back in the product to build a better product, not just for grocers, right, for consumers as well. We actually think the combination of both this equipment for consumers, grocers, as well as overall shoppers in the ecosystem.