Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021*. This discussion contains forward-looking statements that involve risks and uncertainties. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” and other sections of this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.*

Overview

We have built a local commerce platform that enables local businesses to address consumers’ expectations of ease and immediacy. We built our products to serve the needs of three key constituents: merchants, consumers, and Dashers. We do this primarily through our Marketplace, which offers a broad array of services that enable merchants to solve mission-critical challenges such as customer acquisition and demand generation, order fulfillment, merchandising, payment processing, and customer support. Our Marketplace enables merchants to establish an online presence and expand their reach by connecting them with millions of consumers. Merchants can fulfill this demand through delivery, generally facilitated by our platform, or in-person pickup by consumers. We also enable merchants to advertise and promote on our platform in order to acquire new consumers and drive incremental sales.

In addition to our Marketplace, which accounts for the vast majority of our revenue today, our Platform Services business, which primarily consists of Drive and Storefront, offers services to help merchants facilitate sales through their own channels. Drive, our white-label delivery fulfillment service, enables merchants to fulfill consumer demand generated through their own channels using our platform. Storefront enables merchants to create their own branded online ordering experience, providing them with a turnkey solution to offer consumers on-demand access to e-commerce without investing in in-house engineering or fulfillment capabilities.

We currently operate our business in the U.S., Canada, Australia, Japan, and Germany.

Key Business and Non-GAAP Metrics

In addition to the measures presented in our condensed consolidated financial statements, we use the following key business and non-GAAP metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions:

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022
Total Orders						329						404
Marketplace GOV						$	9,913					$	12,353
Contribution Profit(1)						$	209					$	319
Contribution Margin*(1)*						19		%				22		%
Contribution Profit as a % of Marketplace GOV						2		%				3		%
Adjusted EBITDA(1)						$	43					$	54
Adjusted EBITDA Margin*(1)*						4		%				4		%
Adjusted EBITDA as a % of Marketplace GOV						—		%				—		%

*(1)*Contribution Profit, Contribution Margin, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP financial measures. For more information regarding our use of these measures and reconciliations to the most directly comparable financial measures calculated in accordance with GAAP, see the section titled “Non-GAAP Financial Measures".

Total Orders. We define Total Orders as all orders completed on the DoorDash platform, including those completed through our Marketplace and Platform Services businesses, over the period of measurement.

In the first quarter of 2022, Total Orders increased to 404 million, or 23% growth compared to the same quarter of 2021. The increase in Total Orders was driven primarily by growth in consumers and increased consumer engagement.

Marketplace GOV. We define Marketplace GOV as the total dollar value of orders completed on our Marketplace, including taxes, tips, and any applicable consumer fees, including membership fees related to DashPass. Marketplace orders include orders completed through Pickup and DoorDash for Work. Marketplace GOV does not include the dollar value of orders, taxes and tips, or fees charged to merchants, for orders fulfilled through Drive and Storefront.

In the first quarter of 2022, Marketplace GOV increased to $12.4 billion, or 25% growth compared to the same quarter of 2021, driven primarily by the growth in Total Orders.

Contribution Profit (Loss). We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing expenses, and (iii) allocated overhead included in cost of revenue and sales and marketing expenses. Gross profit (loss) is defined as revenue less (i) cost of revenue, exclusive of depreciation and amortization and (ii) depreciation and amortization related to cost of revenue. We define Contribution Margin as Contribution Profit (Loss) as a percentage of revenue for the same period.

We use Contribution Profit (Loss) to evaluate our operating performance and trends. We believe that Contribution Profit (Loss) is a useful indicator of the economic impact of orders fulfilled through DoorDash as it takes into account the direct expenses associated with generating and fulfilling orders.

In the first quarter of 2022, Contribution Profit increased to $319 million, compared to $209 million in the same quarter of 2021, driven primarily by growth in Marketplace GOV. Contribution Margin increased to 22% in the first quarter of 2022 from 19% in the same quarter of 2021.

Contribution Profit (Loss) is a non-GAAP financial measure with certain limitations regarding its usefulness. It does not reflect our financial results in accordance with GAAP as it does not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations. Accordingly, Contribution Profit (Loss) is not indicative of our overall results or an indicator of past or future financial performance. Further, it is not a financial measure of total company profitability and it is neither intended to be used as a proxy for total company profitability nor does it imply profitability for our business.

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) certain legal, tax, and regulatory settlements, reserves, and expenses, (ii) loss on disposal of property and equipment, (iii) transaction-related costs, (iv) impairment expenses, (v) provision for income taxes, (vi) interest income and expense, (vii) other income (expense), net, (viii) stock-based compensation expense and certain payroll tax expense, and (ix) depreciation and amortization expense. Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue for the same period.

In the first quarter of 2022, Adjusted EBITDA increased to $54 million from $43 million in the same quarter of 2021, driven primarily by growth in Marketplace GOV. In the first quarter of 2022, Adjusted EBITDA Margin remained flat at 4% compared to the same quarter of 2021.

Components of Results of Operations

Revenue

We generate a substantial majority of our revenue from orders completed through our Marketplace and the related commissions charged to partner merchants and fees charged to consumers. Commissions from partner merchants are based on an agreed-upon rate applied to the total dollar value of goods ordered in exchange for using our Marketplace to sell the partner merchants’ products. Fees from consumers are for use of our Marketplace to arrange for delivery services. We recognize revenue from Marketplace orders on a net basis as we are an agent for both partner merchants and consumers. Our revenue therefore reflects commissions charged to partner merchants and fees charged to consumers less (i) Dasher payout and (ii) refunds, credits, and promotions, which includes certain discounts and incentives provided to consumers, including those for referring a new customer. Revenue from our Marketplace is recognized at the point in time when the consumer obtains control of the merchant’s products.

We also generate revenue from membership fees paid by consumers for DashPass, which is recognized as part of our Marketplace revenue. Revenue generated from our DashPass memberships is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of membership purchased by the consumer.

In addition, we generate revenue from other sources, including from our Platform Services business, which primarily consists of our Drive and Storefront offerings. We generate revenue from Drive by collecting per-order fees from merchants to arrange for delivery services that fulfill demand generated through their own channels. Revenue from Drive is recognized at the point in time when the consumer obtains control of the merchant’s products.

Cost of Revenue, Exclusive of Depreciation and Amortization

Cost of revenue primarily consists of (i) order management costs, which include payment processing charges, net of rebates issued from payment processors, costs associated with cancelled orders, insurance expenses, and costs related to placing orders with non-partner merchants, and costs related to first party product sales, for which we take control of inventory, (ii) platform costs, which include costs for onboarding merchants and Dashers, costs for providing support for consumers, merchants, and Dashers, and technology platform infrastructure costs, and (iii) personnel costs, which include personnel-related compensation expenses related to our local operations, support, and other teams, and allocated overhead. Personnel-related compensation expenses primarily include salary, bonus, benefits, and stock-based compensation expense. Allocated overhead is determined based on an allocation of shared costs, such as facilities (including rent and utilities) and information technology costs, among all departments based on employee headcount.

Sales and Marketing

Sales and marketing expenses primarily consist of advertising and other ancillary expenses related to merchant, consumer, and Dasher acquisition, including certain consumer referral credits and Dasher referral fees paid to the referrers to the extent they represent fair value of acquiring a new consumer or a new Dasher, brand marketing expenses, personnel-related compensation expenses for sales and marketing employees, and commissions expense including amortization of deferred contract costs, as well as allocated overhead.

Research and Development

Research and development expenses primarily consist of personnel-related compensation expenses related to data analytics and the design of, product development of, and improvements to our platform, as well as expenses associated with the licensing of third-party software and allocated overhead.

General and Administrative

General and administrative expenses primarily consist of legal, tax, and regulatory expenses, which include litigation settlement expenses and sales and indirect taxes, personnel-related compensation expenses related to administrative employees, which include finance and accounting, human resources and legal, chargebacks associated with fraudulent credit card transactions, professional services fees, transaction-related costs, bad debt expense, and allocated overhead.

Depreciation and Amortization

Depreciation and amortization expenses primarily consist of depreciation and amortization expenses associated with our property and equipment and intangible assets. Depreciation primarily includes expenses associated with equipment for merchants, computer equipment and software, office equipment, and leasehold improvements. Amortization includes expenses associated with our capitalized software and website development costs, as well as acquired intangible assets.

Interest Income

Interest income consists of interest earned on our cash, cash equivalents, and marketable securities.

Interest Expense

Interest expense consists of interest costs related to our revolving credit facility and payment-in-kind interest on our Convertible Notes issued in February 2020.

Other Income, Net

Other income, net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency.

Provision for Income Taxes

Provision for income taxes primarily consists of U.S. federal and state income tax and franchise tax, as well as international taxes from foreign operations.

Results of Operations

The following table summarizes our historical condensed consolidated statements of operations data:

						Three Months Ended March 31,
(In millions)						2021						2022
Revenue						$	1,077					$	1,456
Costs and expenses:(1)
Cost of revenue, exclusive of depreciation and amortization						563						763
Sales and marketing						333						414
Research and development						82						148
General and administrative						169						245
Depreciation and amortization(2)						29						59
Total costs and expenses						1,176						1,629
Loss from operations						(99)						(173)
Interest income						2						1
Interest expense						(12)						—
Other income, net						—						5
Loss before income taxes						(109)						(167)
Provision for income taxes						1						—
Net loss						$	(110)					$	(167)

(1)Costs and expenses include stock-based compensation expense as follows:

						Three Months Ended March 31,
(In millions)						2021						2022
Cost of revenue, exclusive of depreciation and amortization						$	9					$	12
Sales and marketing						10						14
Research and development						35						55
General and administrative						43						48
Total stock-based compensation expense						$	97					$	129

(2)Depreciation and amortization related to the following:

						Three Months Ended March 31,
(In millions)						2021						2022
Cost of revenue						$	21					$	31
Sales and marketing						2						6
Research and development						5						18
General and administrative						1						4
Total depreciation and amortization						$	29					$	59

The following table sets forth the components of our condensed consolidated statements of operations data as a percentage of revenue:

						Three Months Ended March 31,
						2021						2022
Revenue						100		%				100		%
Costs and expenses:
Cost of revenue, exclusive of depreciation and amortization						52		%				53		%
Sales and marketing						31		%				28		%
Research and development						8		%				10		%
General and administrative						15		%				17		%
Depreciation and amortization						3		%				4		%
Total costs and expenses						109		%				112		%
Loss from operations						(9)		%				(12)		%
Interest income						—		%				—		%
Interest expense						(1)		%				—		%
Other income, net						—		%				—		%
Loss before income taxes						(10)		%				(12)		%
Provision for income taxes						—		%				—		%
Net loss						(10)		%				(12)		%

Comparison of the Three Months Ended March 31, 2021 and 2022

Revenue

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Revenue						$	1,077					$	1,456					35		%

Revenue increased by $379 million, or 35%, during the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by a 25% growth in Marketplace GOV. On a year-over-year basis, revenue for the first quarter of 2022 grew at a faster rate than Marketplace GOV primarily due to improvements in Dasher supply.

Cost of Revenue, Exclusive of Depreciation and Amortization

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Cost of revenue, exclusive of depreciation and amortization						$	563					$	763					36		%

Cost of revenue, exclusive of depreciation and amortization, increased by $200 million, or 36%, for the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by an increase of $124 million in order management costs and an increase of $51 million in platform costs, driven by growth in Total Orders and Marketplace GOV, as well as by increases in insurance reserves and costs associated with our first-party distribution business.

Sales and Marketing

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Sales and marketing						$	333					$	414					24		%

Sales and marketing expenses increased by $81 million, or 24%, for the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by an increase of $49 million in advertising expenses and an increase of $25 million in personnel-related compensation expenses and allocated overhead driven by increased headcount.

Research and Development

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Research and development						$	82					$	148					80		%

Research and development expenses increased by $66 million, or 80%, for the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by an increase of $82 million in personnel-related compensation expenses and allocated overhead due to increased headcount, partially offset by an increase in capitalized software and website development costs of $24 million.

General and Administrative

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
General and administrative						$	169					$	245					45		%

General and administrative expenses increased by $76 million, or 45%, for the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by an increase of $33 million in sales and indirect tax liability as we favorably resolved a sales and indirect tax exposure which resulted in a benefit in the first quarter of 2021, and an increase of $27 million in personnel-related compensation expenses and allocated overhead due to increased headcount.

Depreciation and Amortization

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Depreciation and amortization						$	29					$	59					103		%

Depreciation and amortization expenses increased by $30 million, or 103%, for the first quarter of 2022, compared to the same quarter of 2021. The increase was primarily driven by an increase of $21 million in amortization expense related to increased capitalized software and website development costs.

Interest Income

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Interest income						$	2					$	1					(50)		%

Interest income was not material in the periods presented.

Interest Expense

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Interest expense						$	(12)					$	—					(100)		%

Interest expense decreased by $12 million, or 100%, for the first quarter of 2022, compared to the same quarter of 2021. The decrease in interest expense was primarily attributable to the repayment of our Convertible Notes in February 2021.

Other Income (Expense), Net

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022						% Change
Other income, net						$	—					$	5					100		%

Other income, net was not material in the periods presented.

Non-GAAP Financial Measures

We use adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit (Loss), Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our business and financial performance. We believe that these non-GAAP financial measures provide useful information to investors about our business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making. We are presenting these non-GAAP financial measures to assist investors in seeing our business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry.

Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations. Thus, our adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

We compensate for these limitations by providing a reconciliation of adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to their respective related GAAP financial measures. We encourage investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view adjusted cost of revenue, adjusted sales and marketing expense, adjusted research and development expense, adjusted general and administrative expense, Contribution Profit (Loss), Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin in conjunction with their respective related GAAP financial measures.

Adjusted Cost of Revenue

We define adjusted cost of revenue as cost of revenue, exclusive of depreciation and amortization, excluding stock-based compensation expense and certain payroll tax expense, and allocated overhead. We exclude stock-based compensation as it is non-cash in nature and we exclude allocated overhead as it is generally a fixed cost and is not directly impacted by Total Orders.

The following table provides a reconciliation of cost of revenue, exclusive of depreciation and amortization, to adjusted cost of revenue:

						Three Months Ended March 31,
(In millions)						2021						2022
Cost of revenue, exclusive of depreciation and amortization						$	563					$	763
Adjusted to exclude the following
Stock-based compensation expense and certain payroll tax expense						(9)						(12)
Allocated overhead						(5)						(9)
Adjusted cost of revenue						$	549					$	742

Adjusted Sales and Marketing Expense

We define adjusted sales and marketing expense as sales and marketing expenses excluding stock-based compensation expense and certain payroll tax expense, and allocated overhead. We exclude stock-based compensation as it is non-cash in nature and we exclude allocated overhead as it is generally a fixed cost and is not directly impacted by Total Orders.

The following table provides a reconciliation of sales and marketing expense to adjusted sales and marketing expense:

						Three Months Ended March 31,
(In millions)						2021						2022
Sales and marketing						$	333					$	414
Adjusted to exclude the following
Stock-based compensation expense and certain payroll tax expense						(10)						(14)
Allocated overhead						(4)						(5)
Adjusted sales and marketing						$	319					$	395

Adjusted Research and Development Expense

We define adjusted research and development expense as research and development expenses excluding stock-based compensation expense and certain payroll tax expense, and allocated overhead. We exclude stock-based compensation as it is non-cash in nature and we exclude allocated overhead as it is generally a fixed cost and is not directly impacted by Total Orders.

The following table provides a reconciliation of research and development expense to adjusted research and development expense:

						Three Months Ended March 31,
(In millions)						2021						2022
Research and development						$	82					$	148
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense						(36)						(56)
Allocated overhead						(3)						(4)
Adjusted research and development						$	43					$	88

Adjusted General and Administrative Expense

We define adjusted general and administrative expense as general and administrative expenses excluding stock-based compensation expense and certain payroll tax expense, certain legal, tax, and regulatory settlements, reserves, and expenses, transaction-related costs, impairment expenses, and including allocated overhead from cost of revenue, sales and marketing, and research and development. We exclude stock-based compensation as it is non-cash in nature and we exclude certain legal, tax, and regulatory settlements, reserves, and expenses, transaction-related costs, as well as impairment expenses, as these costs are not indicative of our operating performance.

The following table provides a reconciliation of general and administrative expense to adjusted general and administrative expense:

						Three Months Ended March 31,
(In millions)						2021						2022
General and administrative						$	169					$	245
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense						(45)						(48)
Certain legal, tax, and regulatory settlements, reserves, and expenses(1)						(13)						(24)
Transaction-related costs						—						(14)
Allocated overhead from cost of revenue, sales and marketing, and research and development						12						18
Adjusted general and administrative						$	123					$	177

(1)We exclude certain costs and expenses from our calculation of adjusted general and administrative expense because management believes that these costs and expenses are not indicative of our core operating performance, do not reflect the underlying economics of our business, and are not necessary to operate our business. These excluded costs and expenses consist of (i) certain legal costs primarily related to worker classification matters, (ii) reserves for the collection of sales and indirect taxes that we do not expect to incur on a recurring basis, (iii) costs related to the settlement of an intellectual property matter, (iv) expenses related to supporting various policy matters, including those related to worker classification and price controls, and (v) donations as part of our relief efforts in connection with the COVID-19 pandemic and Russia's invasion of Ukraine. We believe it is appropriate to exclude the foregoing matters from our calculation of adjusted general and administrative expense because (1) the timing and magnitude of such expenses are unpredictable and thus not part of management’s budgeting or forecasting process, and (2) with respect to worker classification matters, management currently expects such expenses will not be material to our results of operations over the long term as a result of increasing legislative and regulatory certainty in this area, including as a result of Proposition 22 and similar legislation.

Contribution Profit (Loss)

We use Contribution Profit (Loss) to evaluate our operating performance and trends. We believe that Contribution Profit (Loss) is a useful indicator of the economic impact of orders fulfilled through DoorDash as it takes into account the direct expenses associated with generating and fulfilling orders. We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing expenses, and (iii) allocated overhead included in cost of revenue and sales and marketing expenses. We define gross margin as gross profit (loss) as a percentage of revenue for the same period and we define Contribution Margin as Contribution Profit (Loss) as a percentage of revenue for the same period.

Gross profit (loss) is the most directly comparable financial measure to Contribution Profit (Loss). The following table provides a reconciliation of gross profit to Contribution Profit:

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022
Revenue						$	1,077					$	1,456
Less: Cost of revenue, exclusive of depreciation and amortization						(563)						(763)
Less: Depreciation and amortization related to cost of revenue						(21)						(31)
Gross profit						$	493					$	662
Gross Margin						46		%				45		%
Less: Sales and marketing						$	(333)					$	(414)
Add: Depreciation and amortization related to cost of revenue						21						31
Add: Stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing						19						26
Add: Allocated overhead included in cost of revenue and sales and marketing						9						14
Contribution Profit						$	209					$	319
Contribution Margin						19		%				22		%

Adjusted Gross Profit (Loss)

We define Adjusted Gross Profit (Loss) as gross profit (loss) plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense and certain payroll tax expense included in cost of revenue, and (iii) allocated overhead included in cost of revenue. Gross profit (loss) is defined as revenue less (i) cost of revenue, exclusive of depreciation and amortization and (ii) depreciation and amortization related to cost of revenue. Adjusted Gross Margin is defined as Adjusted Gross Profit (Loss) as a percentage of revenue for the same period.

The following table provides a reconciliation of gross profit to Adjusted Gross Profit:

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022
Gross profit						$	493					$	662
Add: Depreciation and amortization related to cost of revenue						21						31
Add: Stock-based compensation expense and certain payroll tax expense included in cost of revenue						9						12
Add: Allocated overhead included in cost of revenue						5						9
Adjusted Gross Profit						$	528					$	714
Adjusted Gross Margin						49		%				49		%

Adjusted EBITDA

Adjusted EBITDA is a measure that we use to assess our operating performance and the operating leverage in our business. We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) certain legal, tax, and regulatory settlements, reserves, and expenses, (ii) loss on disposal of property and equipment, (iii) transaction-related costs, (iv) impairment expenses, (v) provision for income taxes, (vi) interest income and expense, (vii) other income (expense), net, (viii) stock-based compensation expense and certain payroll tax expense, and (ix) depreciation and amortization expense. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by revenue for the same period.

The following tables provide a reconciliation of net loss to Adjusted EBITDA and a calculation of net margin and Adjusted EBITDA Margin:

						Three Months Ended March 31,
(In millions)						2021						2022
Net loss						$	(110)					$	(167)
Certain legal, tax, and regulatory settlements, reserves, and expenses(1)						13						24
Transaction-related costs						—						14
Provision for income taxes						1						—
Interest income and expense						10						(1)
Other (income) expense, net						—						(5)
Stock-based compensation expense and certain payroll tax expense						100						130
Depreciation and amortization expense						29						59
Adjusted EBITDA						$	43					$	54

(1)We exclude certain costs and expenses from our calculation of Adjusted EBITDA because management believes that these costs and expenses are not indicative of our core operating performance, do not reflect the underlying economics of our business, and are not necessary to operate our business. These excluded costs and expenses consist of (i) certain legal costs primarily related to worker classification matters, (ii) reserves for the collection of sales and indirect taxes that we do not expect to incur on a recurring basis, (iii) costs related to the settlement of an intellectual property matter, (iv) expenses related to supporting various policy matters, including those related to worker classification and price controls, and (v) donations as part of our relief efforts in connection with the COVID-19 pandemic and Russia's invasion of Ukraine. We believe it is appropriate to exclude the foregoing matters from our calculation of Adjusted EBITDA because (1) the timing and magnitude of such expenses are unpredictable and thus not part of management’s budgeting or forecasting process, and (2) with respect to worker classification matters, management currently expects such expenses will not be material to our results of operations over the long term as a result of increasing legislative and regulatory certainty in this area, including as a result of Proposition 22 and similar legislation.

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022
Revenue						$	1,077					$	1,456
Net loss						$	(110)					$	(167)
Net margin						(10)		%				(12)		%

						Three Months Ended March 31,
(In millions, except percentages)						2021						2022
Revenue						$	1,077					$	1,456
Adjusted EBITDA						$	43					$	54
Adjusted EBITDA Margin						4		%				4		%

Credit Facilities

On November 19, 2019, we entered into a revolving credit and guaranty agreement with JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities LLC, and Goldman Sachs Lending Partners LLC, an affiliate of Goldman Sachs & Co. LLC, which, as amended and restated on August 7, 2020, provides for a $300 million unsecured revolving credit facility maturing on August 7, 2025, increasing to $400 million in aggregate revolving commitments upon the consummation of an initial public offering of our common stock on or prior to August 7, 2021. Loans under the credit facility bear interest, at our option, at (i) a base rate equal to the highest of (A) the prime rate, (B) the higher of the federal funds rate or a composite overnight bank borrowing rate plus 0.50%, or (C) an adjusted LIBOR rate for a one-month interest period plus 1.00%, or (ii) an adjusted LIBOR rate plus a margin equal to 1.00%. We are also obligated to pay other customary fees for a credit facility of this size and type, including letter of credit fees, an upfront fee, and an unused commitment fee. As of March 31, 2022, we were in compliance with the covenants under the revolving credit and guaranty agreement. As of December 31, 2021 and March 31, 2022, no amounts were drawn from the credit facility.

We maintain letters of credit established primarily for real estate leases and insurance policies. As of December 31, 2021 and March 31, 2022, we had $60 million and $80 million of issued letters of credit outstanding, respectively, of which $39 million and $59 million were issued from the revolving credit and guaranty agreement.

Liquidity and Capital Resources

In December 2020, we completed our IPO in which we received net proceeds of $3.3 billion from sales of shares of our Class A common stock in the IPO, after deducting underwriting discounts and commissions.

As of March 31, 2022, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $4.2 billion, which consisted of cash and cash equivalents of $2.2 billion, short-term marketable securities of $1.4 billion and long-term marketable securities of $643 million. Additionally, funds held at payment processors of $293 million represent cash due from our payment processors for cleared transactions with merchants and consumers, as well as funds remitted to payment processors for Dasher payout. Cash and cash equivalents consisted of cash on deposit with banks as well as institutional money market funds and U.S. Treasury securities. Marketable securities consisted of commercial paper, corporate bonds, U.S. government agency securities, and U.S. Treasury securities.

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $2.2 billion as of March 31, 2022. To execute on our strategic initiatives to continue to grow our business, we may incur operating losses and generate negative cash flows from operations in the future, and as a result, we may require additional capital resources. We believe our existing cash, cash equivalents, and marketable securities, along with the $400 million in available borrowings under our unsecured revolving credit facility, will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months and beyond.

Our material cash requirements relate to operating lease obligations for corporate office facility leases and purchase commitments for purchase of onboarding, technology platform infrastructure services and advertising services.

Our future capital requirements will depend on many factors, including, but not limited to our growth, our ability to attract and retain merchants, consumers, and Dashers that utilize our platform, the continuing market acceptance of our offerings, the timing and extent of spending to support our efforts to develop our platform, and the expansion of sales and marketing activities, the timing and extent of spending for policy and worker classification initiatives. Further, we may in

the future enter into arrangements to acquire or invest in businesses, products, services, and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

The following table summarizes our cash flows for the periods indicated:

						Three Months Ended March 31,
(In millions)						2021						2022
Net cash provided by (used in) operating activities						$	166					$	(20)
Net cash used in investing activities						(7)						(246)
Net cash (used in) provided by financing activities						(496)						5
Foreign currency effect on cash, cash equivalents, and restricted cash						—						1
Net decrease in cash, cash equivalents, and restricted cash						$	(337)					$	(260)

Operating Activities

Cash used in operating activities was $20 million for the three months ended March 31, 2022. This consisted of a net loss of $167 million, offset by non-cash stock-based compensation expense of $129 million, non-cash depreciation and amortization expense of $59 million, non-cash reduction of operating lease right-of-use assets and accretion of operating lease liabilities of $16 million, non-cash bad debt expense of $2 million, and other net non-cash expenses of $1 million. The net changes in operating assets and liabilities was the result of an increase of $68 million in prepaid expenses and other current assets, a decrease of $44 million in accrued expenses and other current liabilities, primarily related to Dasher and merchant payables, insurance reserves, accrued operations related expenses, contract liabilities, and accrued advertising, an increase of $23 million in other assets, and $14 million paid for operating lease liabilities, offset by an increase of $34 million in accounts payable, a decrease of $30 million in funds held at payment processors, and a decrease of $25 million in accounts receivable, net. The change in cash used in operating activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was mainly due to the net changes in operating assets and liabilities for the three months ended March 31, 2022.

Cash provided by operating activities was $166 million for the three months ended March 31, 2021. This consisted of a net loss of $110 million, offset by non-cash stock-based compensation expense of $97 million, non-cash depreciation and amortization expense of $29 million, non-cash bad debt expense of $16 million, non-cash reduction of operating lease right-of-use assets and accretion of operating lease liabilities of $11 million, non-cash interest expense of $11 million related to the convertible notes, and other non-cash expenses of $6 million. The net changes in operating assets and liabilities was the result of a decrease of $79 million in prepaid expenses and other current assets, an increase of $27 million in accrued expenses and other current liabilities, primarily related to litigation reserves, sales tax payable and accrued sales and indirect taxes, accrued operations related expenses, Dasher and merchant payable, and contract liabilities, and a decrease of $19 million in funds held at payment processors, offset by a decrease of $8 million for payments for operating lease liabilities, an increase of $7 million in accounts receivable, net, and an increase of $4 million in other assets.

Investing Activities

Cash used in investing activities was $246 million for the three months ended March 31, 2022, which primarily consisted of cash paid for acquisition, net of cash acquired, of $71 million, purchases of marketable securities of $656 million, cash outflows for capitalized software and website development costs of $39 million and purchases of property and equipment of $32 million, partially offset by proceeds from maturities and sales of marketable securities of $552 million,

Cash used in investing activities was $7 million for the three months ended March 31, 2021, which primarily consisted of purchases of marketable securities of $99 million, purchases of property and equipment of $32 million, and cash outflows for capitalized software and website development costs of $22 million, offset by proceeds from the sales and maturities of marketable securities of $146 million.

Financing Activities

Cash provided by financing activities was $5 million for the three months ended March 31, 2022, which was the proceeds from exercise of stock options.

Cash used in financing activities was $496 million for the three months ended March 31, 2021, which consisted of $333 million of repayment of the convertible notes, $166 million of cash outflows for taxes paid related to net share settlement of equity awards, and $10 million of payment of deferred offering costs, offset by $13 million of proceeds from the exercise of stock options.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of condensed consolidated financial statements in accordance with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected.

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.