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

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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, 2023. This discussion contains forward-looking statements that are based on current plans, expectations, and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, 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

DoorDash, Inc. is incorporated in Delaware with headquarters in San Francisco, California. We provide a local commerce platform that enables local businesses to address consumers’ expectations of ease and immediacy and thrive in today’s convenience economy.

We operate a local commerce platform that connects merchants, consumers, and Dashers. Our primary offerings are the DoorDash Marketplace and the Wolt Marketplace (our "Marketplaces"), which together operate in over 30 countries across the globe. Our Marketplaces provide a suite of services that enable merchants to establish an online presence, generate demand, seamlessly transact with consumers, and fulfill orders primarily through independent contractors who use our platform to deliver orders ("Dashers"). Dashers that use our DoorDash Marketplace and Wolt Marketplace are referred to as "DoorDash Dashers" and "Wolt courier partners," respectively, in this Quarterly Report on Form 10-Q. The DoorDash Marketplace also includes DashPass and the Wolt Marketplace includes Wolt+. DashPass and Wolt+ are our membership products, which provide members with unlimited access to eligible merchants with zero delivery fees and reduced service fees on eligible orders.

In addition to our Marketplaces, we offer Platform Services, which primarily includes DoorDash Drive and Wolt Drive, which are white-label delivery fulfillment services that enable merchants that have generated consumer demand through their own channels to fulfill this demand using our platform. Platform Services also includes DoorDash Storefront, which 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.

Financial and Operational Highlights

We use the following financial and operational metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions:

Three Months Ended June 30,
(in millions, except percentages)20232024
Total Orders532635
Total Orders Y/Y growth25%19%
Marketplace GOV$16,468$19,711
Marketplace GOV Y/Y growth26%20%
Revenue$2,133$2,630
Revenue Y/Y growth33%23%
Net Revenue Margin13.0%13.3%
GAAP gross profit$951$1,195
GAAP gross profit as a % of Marketplace GOV5.8%6.1%
Contribution Profit(1)$620$825
Contribution Profit as a % of Marketplace GOV3.8%4.2%
GAAP net loss including redeemable non-controlling interests$(172)$(158)
GAAP net loss including redeemable non-controlling interests as a % of Marketplace GOV(1.0)%(0.8)%
Adjusted EBITDA(1)$279$430
Adjusted EBITDA as a % of Marketplace GOV1.7%2.2%
Basic shares, options and RSUs outstanding as of period end449455

(1)Contribution Profit and Adjusted EBITDA 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 through our Marketplaces and Platform Services businesses over the period of measurement.

In the second quarter of 2024, Total Orders increased to 635 million, or 19% growth compared to the same quarter of 2023. 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 Marketplaces, including taxes, tips1, and any applicable consumer fees, including membership fees related to DashPass and Wolt+. 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 second quarter of 2024, Marketplace GOV increased to $19.7 billion, or 20% growth compared to the same quarter of 2023, driven primarily by growth in Total Orders.

Net Revenue Margin. We define Net Revenue Margin as revenue expressed as a percentage of Marketplace GOV.

In the second quarter of 2024, Net Revenue Margin increased to 13.3% from 13.0% in the same quarter of 2023, primarily due to increasing contribution from advertising revenue.

Contribution Profit. We define Contribution Profit as our gross profit 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, (iii) allocated overhead included in cost of revenue and sales and marketing expenses, and (iv) inventory write-off related to restructuring. Gross profit 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 use Contribution Profit to evaluate our operating performance and trends. We believe that Contribution Profit 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 second quarter of 2024, Contribution Profit increased to $825 million, compared to $620 million in the same quarter of 2023, driven primarily by growth in revenue, partially offset by increases in cost of revenue and sales and marketing.

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) including redeemable non-controlling interests, 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 (primarily consists of acquisition, integration, and investment related costs), (iv) impairment expenses, (v) restructuring charges, (vi) inventory write-off related to restructuring, (vii) provision for (benefit from) income taxes, (viii) interest income, net, (ix) other expense, net, (x) stock-based compensation expense and certain payroll tax expense, and (xi) 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.

In the second quarter of 2024, Adjusted EBITDA increased to $430 million from $279 million in the same quarter of 2023, driven primarily by growth in Contribution Profit.

Free Cash Flow. We define Free Cash Flow as cash flows from operating activities less purchases of property and equipment and capitalized software and website development costs.

In the second quarter of 2024, Free Cash Flow increased to $451 million, compared to Free Cash Flow of $311 million in the same quarter of 2023, driven primarily by an increase in net cash provided by operating activities.

1 Dashers receive 100% of tips

Results of Operations

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Revenue$2,133$2,630$4,168$5,143
Costs and expenses:(1)
Cost of revenue, exclusive of depreciation and amortization shown separately below1,1351,3852,2042,715
Sales and marketing4715099671,013
Research and development269303500582
General and administrative341494626813
Depreciation and amortization(2)128140251282
Restructuring charges——2—
Total costs and expenses2,3442,8314,5505,405
Loss from operations(211)(201)(382)(262)
Interest income, net34496194
Other expense, net(4)(5)(5)(7)
Loss before income taxes(181)(157)(326)(175)
Provision for (benefit from) income taxes(9)188
Net loss including redeemable non-controlling interests(172)(158)(334)(183)
Less: net loss attributable to redeemable non-controlling interests(2)(1)(3)(3)
Net loss attributable to DoorDash, Inc. common stockholders$(170)$(157)$(331)$(180)

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Cost of revenue, exclusive of depreciation and amortization$43$41$67$73
Sales and marketing36326057
Research and development133140231253
General and administrative9989183171
Total stock-based compensation expense$311$302$541$554

(2)Depreciation and amortization related to the following:

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Cost of revenue$47$50$92$104
Sales and marketing33306660
Research and development445586108
General and administrative45710
Total depreciation and amortization$128$140$251$282

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

Three Months Ended June 30,Six Months Ended June 30,
2023202420232024
Revenue100%100%100%100%
Costs and expenses:
Cost of revenue, exclusive of depreciation and amortization shown separately below53%53%53%53%
Sales and marketing22%19%23%20%
Research and development13%12%12%11%
General and administrative16%19%15%16%
Depreciation and amortization6%5%6%5%
Restructuring charges—%—%—%—%
Total costs and expenses110%108%109%105%
Loss from operations(10)%(8)%(9)%(5)%
Interest income, net2%2%1%2%
Other expense, net—%—%—%—%
Loss before income taxes(8)%(6)%(8)%(3)%
Provision for (benefit from) income taxes—%—%—%—%
Net loss including redeemable non-controlling interests(8)%(6)%(8)%(3)%
Less: net loss attributable to redeemable non-controlling interests—%—%—%—%
Net loss attributable to DoorDash, Inc. common stockholders(8)%(6)%(8)%(3)%

Comparison of the Three and Six Months Ended June 30, 2023 and 2024

Revenue

We generate a substantial majority of our revenue from orders completed through our Marketplaces 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 Marketplaces to sell the partner merchants’ products. Fees from consumers are for the use of our Marketplaces and to arrange for delivery services. Our revenue 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 consumer.

We also generate revenue from membership fees paid by consumers for DashPass and Wolt+, and our advertising products, which are recognized as part of our Marketplaces revenue.

In addition, we generate revenue from other sources, including our Platform Services, 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.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Revenue$2,133$2,63023%$4,168$5,14323%

Revenue increased by $497 million, or 23%, during the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by a 20% increase in Marketplace GOV. During the second quarter of 2024, revenue grew at a faster rate than Marketplace GOV during the same period primarily due to an increasing contribution from advertising revenue.

Revenue increased by $975 million, or 23%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by a 20% increase in Marketplace GOV. For the first six months of 2024, revenue grew at a faster rate than Marketplace GOV during the same period primarily due to an increasing contribution from advertising revenue.

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, 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.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Cost of revenue, exclusive of depreciation and amortization$1,135$1,38522%$2,204$2,71523%

Cost of revenue, exclusive of depreciation and amortization, increased by $250 million, or 22%, for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily attributable to an increase of $215 million in order management costs, driven primarily by growth in Total Orders. Order management costs also increased due to an increase in insurance reserves and costs associated with our first-party distribution business.

Cost of revenue, exclusive of depreciation and amortization, increased by $511 million, or 23%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily attributable to an increase of $452 million in order management costs, driven primarily by growth in Total Orders. Order management costs also increased due to an increase in insurance reserves and costs associated with our first-party distribution business.

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.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Sales and marketing$471$5098%$967$1,0135%

Sales and marketing expenses increased by $38 million, or 8%, for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by an increase of $17 million in advertising expenses and an increase of $13 million in personnel-related compensation expenses.

Sales and marketing expenses increased by $46 million, or 5%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by an increase of $30 million in personnel-related compensation expenses, and an increase of $7 million in advertising expenses.

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.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Research and development$269$30313%$500$58216%

Research and development expenses increased by $34 million, or 13%, for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by an increase of $30 million in personnel-related compensation expenses and allocated overhead.

Research and development expenses increased by $82 million, or 16%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by an increase of $78 million in personnel-related compensation expenses 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, impairment expenses, bad debt expense, and allocated overhead.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
General and administrative$341$49445%$626$81330%

General and administrative expenses increased by $153 million, or 45%, for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by an increase of $83 million in office lease impairment expenses and an increase of $44 million in legal, tax, and regulatory expenses.

General and administrative expenses increased by $187 million, or 30%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by an increase of $83 million in office lease impairment expenses, an increase of $60 million in legal, tax, and regulatory expenses, and an increase of $8 million in personnel-related compensation expenses 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.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Depreciation and amortization$128$1409%$251$28212%

Depreciation and amortization expenses increased by $12 million, or 9%, for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by an increase of $17 million in amortization expense related to increased capitalized software and website development costs.

Depreciation and amortization expenses increased by $31 million, or 12%, during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by an increase of $39 million in amortization expense related to increased capitalized software and website development costs.

Restructuring Charges

Restructuring charges primarily consist of separation-related payments and other termination benefit costs associated with restructuring activities.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Restructuring charges$—$—*$2$—*

*Percentage not meaningful

Restructuring charges were not material in the periods presented.

Interest Income, Net

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Interest income, net$34$4944%$61$9454%

Interest income, net increased by $15 million for the second quarter of 2024, compared to the same quarter of 2023. The increase was primarily driven by an increase in average interest rates during 2023, resulting in higher interest income earned on marketable securities in the second quarter of 2024.

Interest income, net increased by $33 million during the first six months of 2024, compared to the same period of 2023. The increase was primarily driven by an increase in average interest rates during 2023, resulting in higher interest income earned on marketable securities in the first six months of 2024.

Other Expense, Net

Other expense, net primarily consists of adjustments to non-marketable equity securities, including impairment, as well as gains and losses from transactions denominated in a currency other than the functional currency.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Other expense, net$(4)$(5)25%$(5)$(7)40%

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

Provision for Income Taxes

We are subject to income taxes in the United States and foreign jurisdictions in which we do business. Foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States.

Accordingly, our effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in our stock price, intercompany transactions, changes in how we do business, acquisitions, investments, tax audit developments, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains and losses, changes in statutes, regulations, case law, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, the impact of discrete items and non-deductible expenses varies depending on the amount of pre-tax income or loss. For example, the impact of any particular item is greater when the amount of our pre-tax income or loss is smaller.

We have a valuation allowance for our net deferred tax assets in the United States and Finland. We expect to maintain these valuation allowances until it becomes more-likely-than-not that the benefit of our deferred tax assets will be realized by way of expected future taxable income in the United States and Finland.

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)20232024% Change20232024% Change
Provision for (benefit from) income taxes$(9)$1*$8$8*

*Percentage not meaningful

The provision for income taxes for the second quarter of 2024 was $1 million, compared to a benefit from income taxes of $9 million for the same quarter of 2023. The change was primarily attributable to variability in our quarterly and full-year forecasted pre-tax book income as of the end of the second quarter.

The provision for income taxes for the first six months of 2024 is comparable to that in the same period of 2023. The provision for income taxes is primarily attributable to positive pre-tax book income in the United States resulting in federal and state income taxes.

For additional information, see Note 9 - "Income Taxes" included in Part I, Item 1, "Notes to Condensed Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

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, Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow 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 and 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, Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow 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, Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow 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, Contribution Margin, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, and Free Cash Flow 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, allocated overhead, and inventory write-off related to restructuring. 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. We believe excluding such expenses provides a better period-to-period comparison of the core operating performance of our business.

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Cost of revenue, exclusive of depreciation and amortization$1,135$1,385$2,204$2,715
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense(43)(41)(67)(74)
Allocated overhead(8)(9)(17)(17)
Adjusted cost of revenue$1,084$1,335$2,120$2,624

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. We believe excluding such expenses provides a better period-to-period comparison of the core operating performance of our business.

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Sales and marketing$471$509$967$1,013
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense(36)(33)(60)(58)
Allocated overhead(6)(6)(12)(12)
Adjusted sales and marketing$429$470$895$943

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. We believe excluding such expenses provides a better period-to-period comparison of the core operating performance of our business.

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Research and development$269$303$500$582
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense(134)(141)(232)(255)
Allocated overhead(5)(6)(9)(11)
Adjusted research and development$130$156$259$316

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 (primarily consists of acquisition, integration, and investment 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. We believe excluding such expenses provides a better period-to-period comparison of the core operating performance of our business.

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
General and administrative$341$494$626$813
Adjusted to exclude the following:
Stock-based compensation expense and certain payroll tax expense(99)(89)(183)(172)
Certain legal, tax, and regulatory settlements, reserves, and expenses(1)(49)(102)(68)(137)
Transaction-related costs(1)(2)(2)(2)
Office lease impairment expenses(2)—(83)—(83)
Allocated overhead from cost of revenue, sales and marketing, and research and development19213840
Adjusted general and administrative$211$239$411$459

(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, our historical Dasher pay model, and a settlement entered into in connection with an initiative to serve underrepresented communities, (ii) reserves and settlements or other resolutions for or related to the collection of sales, indirect, and other taxes that we do not expect to incur on a recurring basis, (iii) expenses related to supporting various policy matters, including those related to worker classification, other labor law matters, and price controls, and (iv) donations as part of our relief efforts in connection with the COVID-19 pandemic. 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 in California and similar legislation.

(2)Consists of impairment expenses associated with certain corporate office spaces which we have ceased use of and made available for sublease during the three months ended June 30, 2024.

Contribution Profit

We use Contribution Profit to evaluate our operating performance and trends. We believe that Contribution Profit 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. 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. We define Contribution Profit as our gross profit 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, (iii) allocated overhead included in cost of revenue and sales and marketing expenses, and (iv) inventory write-off related to restructuring. We define gross margin as gross profit as a percentage of revenue for the same period and we define Contribution Margin as Contribution Profit as a percentage of revenue for the same period.

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

Three Months Ended June 30,Six Months Ended June 30,
(in millions, except percentages)2023202420232024
Revenue$2,133$2,630$4,168$5,143
Less: Cost of revenue, exclusive of depreciation and amortization(1,135)(1,385)(2,204)(2,715)
Less: Depreciation and amortization related to cost of revenue(47)(50)(92)(104)
Gross profit$951$1,195$1,872$2,324
Gross Margin44.6%45.4%44.9%45.2%
Less: Sales and marketing$(471)$(509)$(967)$(1,013)
Add: Depreciation and amortization related to cost of revenue475092104
Add: Stock-based compensation expense and certain payroll tax expense included in cost of revenue and sales and marketing7974127132
Add: Allocated overhead included in cost of revenue and sales and marketing14152929
Contribution Profit$620$825$1,153$1,576
Contribution Margin29.1%31.4%27.7%30.6%

Adjusted Gross Profit

We define Adjusted Gross Profit as gross profit 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, (iii) allocated overhead included in cost of revenue, and (iv) inventory write-off related to restructuring. Gross profit 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 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 June 30,Six Months Ended June 30,
(in millions, except percentages)2023202420232024
Gross profit$951$1,195$1,872$2,324
Add: Depreciation and amortization related to cost of revenue475092104
Add: Stock-based compensation expense and certain payroll tax expense included in cost of revenue43416774
Add: Allocated overhead included in cost of revenue891717
Adjusted Gross Profit$1,049$1,295$2,048$2,519
Adjusted Gross Margin49.2%49.2%49.1%49.0%

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) including redeemable non-controlling interests, 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 (primarily consists of acquisition, integration, and investment related costs), (iv) impairment expenses, (v) restructuring charges, (vi) inventory write-off related to restructuring, (vii) provision for (benefit from) income taxes, (viii) interest income, net, (ix) other expense, net, (x) stock-based compensation expense and certain payroll tax expense, and (xi) depreciation and amortization expense.

The following table provides a reconciliation of net loss including redeemable non-controlling interests to Adjusted EBITDA:

Three Months Ended June 30,Six Months Ended June 30,
(in millions)2023202420232024
Net loss including redeemable non-controlling interests$(172)$(158)$(334)$(183)
Certain legal, tax, and regulatory settlements, reserves, and expenses(1)4910268137
Transaction-related costs1222
Office lease impairment expenses(2)—83—83
Restructuring charges——2—
Provision for (benefit from) income taxes(9)188
Interest income, net(34)(49)(61)(94)
Other expense, net4557
Stock-based compensation expense and certain payroll tax expense312304542559
Depreciation and amortization expense128140251282
Adjusted EBITDA$279$430$483$801

(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, our historical Dasher pay model, and a settlement entered into in connection with an initiative to serve underrepresented communities, (ii) reserves and settlements or other resolutions for or related to the collection of sales, indirect, and other taxes that we do not expect to incur on a recurring basis, (iii) expenses related to supporting various policy matters, including those related to worker classification, other labor law matters, and price controls, and (iv) donations as part of our relief efforts in connection with the COVID-19 pandemic. 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 in California and similar legislation.

(2)Consists of impairment expenses associated with certain corporate office spaces which we have ceased use of and made available for sublease during the three months ended June 30, 2024.

Free Cash Flow

We define Free Cash Flow as cash flows from operating activities less purchases of property and equipment and capitalized software and website development costs.

The following table provides a reconciliation of net cash provided by operating activities to Free Cash Flow:

Six Months Ended June 30,
(in millions)20232024
Net cash provided by operating activities$790$1,083
Purchases of property and equipment(66)(40)
Capitalized software and website development costs(97)(105)
Free Cash Flow$627$938

Credit Facility

On November 19, 2019, we entered into a revolving credit and guaranty agreement with certain lenders, which, as most recently amended and restated on April 26, 2024, provides for an $800 million unsecured revolving credit facility maturing on April 26, 2029, with a sublimit for the issuance of letters of credit in an aggregate face amount of up to $600 million. As of June 30, 2024, we were in compliance with the covenants under the revolving credit and guaranty agreement. As amended and restated, the credit agreement contains customary affirmative covenants, as well as customary negative covenants that restrict our ability and our subsidiaries’ ability to, among other things, incur subsidiary indebtedness, grant liens, declare cash dividends or make certain other distributions, repurchase stock, merge or consolidate with other companies or sell substantially all of our and our subsidiaries' assets, taken as a whole, make investments and loans, and engage in certain transactions with affiliates. The Company must also maintain compliance with a maximum senior net leverage ratio, measured quarterly, determined in accordance with the terms of the credit agreement. As of December 31, 2023 and June 30, 2024, no revolving loans were outstanding and $115 million and $112 million of letters of credit were issued under our revolving credit facility, respectively.

Liquidity and Capital Resources

As of June 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $5.5 billion, which consisted of cash and cash equivalents of $3.4 billion, short-term marketable securities of $1.4 billion, and long-term marketable securities of $669 million. Additionally, funds held at payment processors of $396 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, commercial paper, corporate bonds and U.S. Treasury securities. Marketable securities consisted of certificates of deposit, commercial paper, corporate bonds, U.S. government agency securities, U.S. Treasury securities, and mutual funds.

We have generated significant operating losses from our operations as reflected in our accumulated deficit of $5.3 billion as of June 30, 2024. We have historically funded our operations from cash from operations as well as the issuance of equity securities, including in our initial public offering in December 2020. 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 available borrowings under our revolving credit facility, will be sufficient to meet our working capital and capital expenditures needs for at least the next 12 months and beyond.

In February 2024, we announced the authorization of a share repurchase program for the repurchase of shares of our Class A common stock, in an aggregate amount up to $1.1 billion. Repurchases may be made from time to time through open market purchases or through privately negotiated transactions subject to market conditions, applicable legal requirements, and other relevant factors. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 of the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our Class A common stock under this authorization. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

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:

Six Months Ended June 30,
(in millions)20232024
Net cash provided by operating activities$790$1,083
Net cash used in investing activities(145)(219)
Net cash provided by (used in) financing activities(698)2
Foreign currency effect on cash, cash equivalents, and restricted cash(2)(18)
Net increase (decrease) in cash, cash equivalents, and restricted cash$(55)$848

Operating Activities

Cash provided by operating activities was $1,083 million for the first six months of 2024. This consisted of a net loss including redeemable non-controlling interests of $183 million, offset by non-cash stock-based compensation expense of $554 million, non-cash depreciation and amortization expense of $282 million, non-cash reduction of operating lease right-of-use assets and accretion of operating lease liabilities of $52 million, non-cash office lease impairment expenses of $83 million, and other net non-cash expenses of $41 million, as well as $254 million net inflows from changes in operating assets and liabilities primarily driven by an increase in accrued liabilities and other current liabilities.

Cash provided by operating activities was $790 million for the first six months of 2023. This consisted of a net loss, including redeemable non-controlling interests, of $334 million, offset by non-cash stock-based compensation expense of

$541 million, non-cash depreciation and amortization expense of $251 million, non-cash reduction of operating lease right-of-use assets and accretion of operating lease liabilities of $60 million, and other net non-cash expenses of $19 million, as well as $253 million net inflows from changes in operating assets and liabilities primarily driven by an increase in accrued liabilities and other current liabilities and a decrease in our funds held at payment processors.

Investing Activities

Cash used in investing activities was $219 million for the first six months of 2024, which primarily consisted of purchases of marketable securities of $969 million, purchases of property and equipment of $40 million, and cash outflows for capitalized software and website development costs of $105 million, partially offset by proceeds from maturities and sales of marketable securities of $903 million.

Cash used in investing activities was $145 million for the first six months of 2023, which primarily consisted of purchases of marketable securities of $930 million, purchases of property and equipment of $66 million, and cash outflows for capitalized software and website development costs of $97 million, partially offset by proceeds from maturities and sales of marketable securities of $965 million.

Financing Activities

Cash provided by financing activities was $2 million for the first six months of 2024, which consisted of proceeds from exercise of stock options of $3 million and other financing activities of $6 million, offset by repurchases of our Class A common stock of $7 million.

Cash used in financing activities was $698 million for the first six months of 2023, which primarily consisted of repurchases of our Class A common stock of $693 million.

Critical Accounting 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 estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023.

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