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spk09: Good day and thank you for standing by. Welcome to the DoorDash Q1 2021 earnings call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Andy Hargreaves.
spk08: Hello, everyone, and thanks for joining us for our first quarter 2021 earnings call. I'm pleased to be joined today by co-founder, chair, and CEO, Tony Hsu, and CFO, Prabira Darko. I'd like to remind everyone that we'll be making forward-looking statements during this call, including statements regarding our expectations of our business, future financial results, and guidance and strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in our forward-looking statements, and some such risks are described in our risk factors, including in our SEC filings, including Form 10-K. You should not rely on our forward-looking statements as predictions of future events. We disclaim any obligation to update any forward-looking statements except as required by law. During this call, we will discuss certain non-GAAP financial measures, Information regarding our non-GAAP financial results, including a reconciliation of such non-GAAP results to the most directly comparable GAAP financial measures, may be found in our investor letter, which is available on our investor relations website. These non-GAAP measures should be considered in addition to our GAAP results and are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being audio webcast on our investor relations website. An audio replay of the call will be available on our website shortly after the call ends. We're going to go straight into questions today. So, May, please take the first question.
spk09: Our first question is from the line of Lloyd Ramsey from Deutsche Bank. Your line is now open.
spk04: Thanks for taking the question, too, if I can. Just first, in the shareholder letter, you called out increased frequency from existing customers who order convenience products.
spk06: And I'm curious if you can just put a finer point on that. Is that increases in frequency even on the food delivery side, just more habituation to the app, or is it more just a comment that convenience is additive and not cannibalistic?
spk05: and I guess maybe in areas where the product is more full in terms of other things that you offer on the platform on top of food, convenience, other stuff.
spk06: Are there similar dynamics where just the more categories people use it across, the more they use within individual categories? And then the second question would just be on the new commission packages. How are you seeing kind of merchants – react to the new packages? Are we opting into the higher value bundles? And what should we kind of expect in terms of a take rate impact from that? Anything you can share there would be great. Thanks.
spk08: Hey, Lloyd. It's Prabir. Why don't I take the first question on the frequency comment and then Tony will take the second. It's the latter thing you mentioned, which is what we actually find is that these categories are symbiotic with one another. So customers who order from new categories subsequently increase their frequency with restaurants by a greater amount than those who do not order from new categories. So said differently, once you begin to use multiple categories, it actually increases your engagement with the core restaurant category. And then the other thing we've found is that customers who actually engage with us across restaurants different categories beyond food also appear to just have stronger retention and engagement versus consumers who place their orders with restaurants only. So, you know, we're actually seeing strength because the addition of categories basically makes a user stickier with our platform.
spk06: Yeah. Hey, Lloyd. And this is Tony. On the second question, The business impact is reflected in our guidance, and it's something that we feel pretty comfortable in as we tested this program, as we do with all of our new initiatives with merchants for about six months. So it's meeting our expectations in terms of our rollout so far. But I thought I'd take a second to give you a bit of the guiding principles or the design principles behind why we shipped what we announced a couple weeks ago. If you take a step back, we took quite a lot of actions during the pandemic to make sure that these businesses would be successful. That's the entirety of why DoorDash was founded, to make sure that these local businesses would succeed. And so during the pandemic, I'm very proud that the actions we took as well as hundreds of millions of dollars of investments we made allow these businesses to have eight times the odds of surviving the pandemic versus the average restaurant in the industry now as we get out of the pandemic and as we start heading into reopening which i'm very excited about given you know where the country is in terms of vaccination rates increasing and such is that we wanted to give these business owners, in speaking with them for about six, seven months about this, the best chance at getting out of the gate as fast as possible. And what we heard over and again was they really wanted choice, choice on the spectrum of investing in growth, in which case they can pick some of the higher-priced plans that allows them participation in programs like DashPass, where DoorDash is covering the cost of delivery, or choice in the form of greater profitability, depending on how they're seeing staffing and things like that as they get into recovery. Choice in the form of whether the orders are coming from the DoorDash app or their own channel, where we're offering commission-free, no-cost product called DoorDash Storefront, which will allow them to build their own digital channels, as well as choice in the form of non-delivery use cases like pickup, where we flash rates from 15% to 6%. And so that really was the reason why we shift what we announced. And we had been working with these merchants for about six months on it. And in terms of the financial impact or the impact on the business, all of that is reflected in our guidance.
spk08: Just to add one point to that, if you actually look at these programs, there is an offset between the lower commission rate that comes with a higher consumer fee. It's not a perfect offset, but just keep that in mind as you think about the ramifications.
spk05: Okay, thanks, guys. Nice quarter.
spk09: Next in line is Douglas Anmos from J.P. Morgan. Your line is open.
spk05: Thanks for taking the questions. I have two. First, just I hope you could talk more about your thoughts on impact of reopening and perhaps just how your thoughts have changed relative to three to six months ago, if they have. And then second question, just on Dasher supply, it's just how do you get comfortable, you know, with how that can play out here in the coming months, given some of the supply issues, of course, that are seen with ridesharing and in some other areas? Thanks.
spk08: Thanks for the question. So the first thing I'd say is we were encouraged by the trends that we saw in the first quarter, particularly as markets reopened and in-store dining grew. The negative impact to consumer behavior was smaller than we initially anticipated, and that enabled us to actually beat our Q1 guidance by 9%. What's driving that is the commentary we made even at our earlier earnings call. We talked about consumer behavior being sticky. So as consumers begin to use the product, new habits develop and those habits tend to persist. And part of that's being bolstered by the fact that the product has gotten materially better over the course of time. Just over the course of this past year, the selection on the platforms improved in terms of the number of restaurants, as well as new categories such as convenience stores and grocery stores. Our quality has improved, our affordability has gotten better, and all these things continue to act in support of continued stickiness as far as consumers go. And so as we look to the future, we're optimistic about the balance of the year, which led to an increase of guidance by about 15 percent to $35 to $38 billion of GOV. On your second question, I know Rideshare is focused on this, but it's important to remember that Rideshare drivers are a different pool of people than our dashers. Over 75% of our dashers are students or other part-time or full-time jobs. On average, they dash less than four hours per week. You know, dashers don't require a car. They can dash on bikes. Our population of dashers tend to skew more female, and that's likely because you don't have to share your personal space with another individual. And so, you know, even in our survey data, you know, shows that 21% of our dashers have ever driven for rideshare, and only 6% say they prefer rideshare. So it's a completely different pool of people. We had a little bit of a supply blip in March, but we solved the issue. We acted quickly. We took a bunch of actions, including improving the efficiency of the logistics network, expanding our marketing funnels, improving our conversion rates for dashers, and as a result, we're now acquiring more dashers per week than we were compared to Q1. So we're well-supplied today, and we expect that to be the case for the foreseeable future.
spk05: Thank you, Peter.
spk09: Next is Yusuf Squali from Tourist Securities. Your line is now open.
spk02: Great. Thank you very much. Congrats on an impressive quarter. Just two, if I may. First, can you just speak to the recent trends that you've seen so far in May? I think your guide speaks to it. But anything to highlight in terms of just the competitive intensity and how you guys feel about the, you know, particularly the growth in the non-food delivery business in the quarter and contribution to it? And second, as you look at the diversification that you're embarking on into non-food, convenience, grocery, et cetera, I was wondering if you can just speak to the broader – well, first, how big do you think that business could become over time? Is this a situation where you could see a scenario where half of your business is coming from these new initiatives, say, over the next, I don't know, three to five years, but probably – Also, just how do you see that impacting the take rates over time? Thank you.
spk06: Sure. Hey, it's Tony. I'll start. So far, the quarter is off to a great start. And what I'll say is that the impact of reopening really has been more muted than we expected, certainly when we were looking at this last fall and even as we're starting to prepare for this towards even last summer. With respect to some of the new categories, We're very excited about our progress. I mean, growing 40% quarter on quarter. Our non-restaurant orders now are totaling over 7% of our total orders. And again, you know, this happened in a pretty short period of time. We really in earnest launched our second category outside of restaurants in convenience, where we're now the market leader, in just under a year. So things are certainly ahead of plan and exceeding our expectations there. With respect to, I think, the broader question of how this plays out and unfolds, to remind all of us on the call, as I mentioned during actually our very first earnings call, we're really investing in four areas. We're investing certainly to grow our core business And we're seeing a greater strength there, especially as we saw record engagement in the quarter, as well as our investment into other use cases, such as pickup, where we're also the market leader now, or the office business like DoorDash for Work. We are investing certainly into new categories. We're also investing into the build-out of our platform. So DoorDash is as much a marketplace or app that grows your orders as well as a platform that gives you products like DoorDash Drive, DoorDash Storefront to help merchants build their own channels. And then finally, international market growth. And so those are the four buckets of where we're investing. And we're very, very excited by both how things are progressing in all of these areas, as well as what that might mean for diversification in the future.
spk08: And, Yusuf, if I could just add to that, I mean, you know, some of the markets you mentioned, whether it's convenience or grocery, these are extremely large markets. Convenience is $200 and $250 billion. Grocery is an $800 billion to $1 trillion market. But the thing that's unique is both of these are very low penetration rates. And you think about our platform and the success that we've enjoyed internationally. inconvenience up to this point, despite, you know, launching that business 12 months ago, it's because of the extensibility of our platform. It's because we take a hybrid approach that pairs together, not just third party partners in our marketplace, like CVS, like Walgreens, like 7-Eleven, in fact, Rite Aid that we recently announced, but also we're bringing our own first party selection to consumers. And that's in order to provide consumers a choice and serve them in underserved neighborhoods. And so penetration is extremely low today and there's a lot of runway for growth.
spk09: Next question is from the line of Ross Sandler from Barclays. Your line is now open.
spk01: Hey, guys. Just a quick follow-up on that last one and then one other one. So the 7% of orders from non-restaurant. Can you talk about the unit economics of that business and your go-to-market? Like Instacart, I think, is mostly getting its, you know, profit pool from ads. GoPuff is a 1P business. So how do we think about that? the blended offering that you guys have and EBITDA per order. I think you mentioned the AOV is a little bit lower for convenience. So any color there would be helpful on EBITDA per order. And then it sounds like, you know, based on the letter that you guys are expecting a little bit of a drop off into the summer, which I think everybody can totally understand as things reopen. The question is more like, as you look at the data, are you seeing new customers that came in in 2020? Are those the ones that are going to drop off? Or is it that the higher frequency dash pass folks who order like five times a month are just going to order less when we get to the summer? Any color on that would be helpful. Thanks, guys.
spk08: So on the first question, in terms of unit economics, we're not actually breaking out unit economics for these orders. What I will say is we're fortunate in that our core U.S. business is cash generative, and we're taking that cash and we're investing it to grow some of these new verticals, whether it's convenience or grocery, or expand into new merchant services like storefronts. as well as expand internationally. So we're fortunate to have a profitable core business that allows us to invest in these areas. On the question regarding the summer seasonality, it was exactly right. What's big thing to the guidance is the fact that starting about April and going all the way through to Labor Day, usually as the weather improves, we see consumers go dine in. And that behavior is generally consistent across both new customers that were recently acquired as well as as well as existing customers that have been on the platform for a while. It's just behavior that we tend to see as weather improves and people want to go out a little bit more. So, you know, you don't see it in our historical numbers, partly because of the rapid pace of customer acquisition. But if you look at it on a cohort level, it's there both for new and existing cohorts.
spk09: Next is Ralph Shackhart from William Blair. Your line is now open.
spk05: Good afternoon. Thanks for taking the question. I'm just curious if you could provide maybe a little bit more color on Dasher Pay and incentive trends that you've seen both in the quarter, maybe kind of quarter to date. I know in the letter you talked about 40% pay increase, 13%, I think, decrease for cost to consumers over a two-year period. It sounds like you're in a better supply situation now, which is great. I'm just curious to get some more color on kind of recent trends on the incentives. Are some of those getting passed on to the consumer? And then eventually, as government incentive programs subside, do you think the driver incentives will normalize over time? Thank you.
spk08: Maybe I'll take that question. I mean, the summary is we're expecting take rates to improve sequentially from Q1 to Q2, and in part that's driven by the fact that Dasher Pay will normalize because the supply state is actually better today, that problem's been resolved, and we've brought markets back to health. you know, taking a step back just in terms of overall Dasher pay. We've said before, you know, in the context of our overall strategy, you know, our North Star is to reduce customer prices, consumer prices, reduce the fees and commissions we charge for merchants, and increase earnings for Dashers. And so, you know, the 40%, year-over-year increase in national earnings per active hour. It's consistent with our general philosophy. So as we continue to squeeze out more efficiency out of the logistics network, as we continue to improve our defect rates and that results in economic improvements, we invest a lot of that back into the ecosystem by taking down fees and by increasing national earnings.
spk05: Great. And if I could squeeze one more. And just on the pickup opportunity you talked about on the call and the letter, it seems like a pretty good opportunity for you in a post-COVID environment. Maybe just talk about sort of how that's been received by consumers, you know, kind of what you've learned. And as you add sort of technology to that, you know, long-term innovation, you know, what are your views on this opportunity? Thank you.
spk06: Sure. I'll take that. It's Tony's. You know, I think the greatest privilege we probably have in this business is that people eat 20 to 25 times a week, maybe more, maybe less during this pandemic. But what I will say is that, you know, When someone is doing that kind of frequency of consumption, it's never going to happen in one method. It's never going to be all in cooking. It's never going to be all in eating out or eating in or getting deliveries. I think especially as we get out of the pandemic, we're going to go back into doing some of the things that I think are now prized commodities, like grabbing a coffee. on the way to work or doing a walk along the block with your colleagues and grabbing a snack or what have you. And so we're seeing quite a lot of excitement to the pickup product. I think not just because people are tired of being stuck at home, but I think people are, I think there's just the mere fact that because we consume so often that this is one of the natural use cases that governs our behavior. And so we're very excited to continue investing there.
spk05: Great. Thanks, Tony. Thanks, Prabir.
spk09: Next is Deepak Mathivanan from Wolf Research. Your line is now open.
spk07: Great. Thanks for taking the question, guys. One for Tony and one follow-up for Prabir. Can you talk about your partnership strategy for the new categories? I mean, you entered into partnerships with a lot of retailers directly, but as you kind of think about expanding it further over the next few years, how should we think about your, you know, desire to work with platforms that have offline business integrations like the online presence systems, point-of-sale software companies, Shopify, and even, you know, companies like Facebook to scale the merchant sites? rapidly on both marketplace and drive.
spk06: Yeah, I'll start. Hey Deepak, it's Tony. So the way that we look at all things is how do we build the best product? And for our marketplace, what that really means is how do we offer the best selection, quality, price, and customer service? and for our platform business where we're building tools for merchants to allow them to grow their own digital businesses it's really about how do we allow them to be you know very successful across all the activities that they have to perform in order to build a digital business and so With that, I suppose, as the guiding principle, we would consider any partnerships that achieve those means, and they can look different depending on whether or not they fit into our marketplace or whether or not they fit into our platform. At DoorDash, we really are thinking about building this system that has both components. One system is our app, which is trying to grow all of local commerce and bring everything inside your neighborhood to you in minutes, not hours or days. And then on the other side, we are trying to empower you, the merchant, to replicate and grow on top of your four-wall business and compete in today's digital economy. So any partnerships that fit each respective part of our business and the two jobs that we do, which is to grow and to empower local commerce, for all years.
spk07: Got it. Now, that's very helpful, Tony. And then, Prabir, can you talk about the second half guidance on GOE? Should we expect the GOE to sell, you know, bottom out in 3Q and then start improving sequentially in 4Q into 2022? How are you thinking about, like, the slope in the second half? Thank you so much.
spk08: Yeah, the second half, GOV is impacted by two factors. The first, we're baking in some uncertainty with respect to consumer behavior as markets continue to reopen and there's increased vaccination rates. But second, to your point, there's summer season energy. And that usually continues through Labor Day. And so you've got Q2 and Q3 in there that are usually a lull. And then as the winter season starts setting in, you start to see growth from there on out. So it's basically what you pointed out. The one thing I will say, Deepak, is just stepping back, you know, the GOV guidance for the year is materially higher than what we thought at the beginning of the year. So I would, you know, I point to the shape of the curve just so you get the model right. But at the end of the day, let's not lose sight of the big picture, which is we're materially more optimistic today than we were earlier on.
spk07: Got it. That's very helpful. Thanks, guys.
spk09: Next is Michael McGovern from Bank of America. Your line is now open.
spk00: Great. Thanks for taking my question and congrats on the great quarter. I just wanted to ask maybe about maybe just like a regulatory overview. Seems like there's been a lot of news items on the regulatory side recently. So maybe first, if you could comment about the federal side and the comments from the Department of Labor Secretary recently and just any views on what could happen long term on the federal side. And then I think some of your peers in the gig economy or ride share space have talked about potentially working out deals with states that might look similar to Prop 22. So can you share with us if you're participating in those kind of discussions or just what you think about the potential for regulatory developments on the state side as well? Thank you.
spk06: Yeah. Hey, Mike, it's Tony. I'll take that. So, you know, we're very excited about what we heard Secretary Walsh and the Biden administration say, which, you know, to our ears was that they're very excited in figuring out with us, with the private sector companies, how to actually construct a model that takes us into the 21st century instead of, I guess, moving backwards toward the 20th century. I mean, if you think about it, what DoorDash stands for is optimizing for the worker. So in this case, the Dasher, the millions of drivers on our platform. And the number one thing we hear over and again from Dashers is that they want this flexibility that has never existed in any labor environment before. And the question is, how do we marry that in the face of traditional labor definitions with benefits and protections that we believe they deserve? And what we heard from really anyone we speak to is a willingness to engage in that conversation and construct forward a third way in which we can pair this independence and flexibility with benefits. And that's true at the federal level, that's true at the state level, and any elected official that we speak with.
spk08: And Mike, just to be clear, the DOA has made clear that they aren't taking immediate action and instead want to engage with us when we're in dialogue with the federal government as well as at the state level.
spk00: Got it. Maybe just as one quick follow up to that, I thought the prior comments about the difference between between dashers and rideshare drivers were really important, especially on the regulatory front. So could you talk about just like the possibility that rideshare drivers and food delivery couriers are regulated separately with different rules? Or do you think that gig economy workers could just all be kind of lumped together long term in terms of like that regulatory response and development?
spk08: Yeah, I'm not sure that we've got a firm conclusion on this matter. I mean, as Tony indicated, Secretary Walsh's comments actually suggest an openness to engage with the private sector to figure this stuff out. So it's a little early to signal whether right-share drivers will be grouped together with the broader gig economy or kept separate. We'll come back if there's any update on this topic as our conversations progress.
spk00: Got it. Thanks so much.
spk09: Next is Jason Heftine from Oppenheimer and Call. Your line is open.
spk08: Thanks. This is Sean on the call for Jason. So just one on how are you guys thinking about the risk around local pricing caps and how does this take into account with the new merchant pricing model? And then second, can you talk about the competitive environment around non-food sales relative to the environment and food delivery? Is it more competitive, about the same, less competitive? What are you guys seeing there? Thank you.
spk06: Yeah. Hey, Sean. It's Tony. I'll start. So on the first question around commission caps, what we expect is that these commission caps will be rolling off pretty soon. In fact, we've already seen some of this in some very large cities, whether it's Chicago, Kansas City, Cincinnati. I saw some even roll off earlier this week. And I'm And so we're very encouraged, I think, by what we're seeing, which is elected officials allowing capitalism to do its job and allow everyone to really make things work for all audiences. And, you know, we're the first to be excited at DoorDash to have, you know, lots of folks go back inside restaurants. And I think people will. And I think that, you know, as that continues to happen, as the reopenings occur, more and more folks will see delivery as an augmented way to help grow these fiscal businesses and and to be one part of the portfolio of how they do business moving forward um i think uh with respect um to the second question which is around i think you asked about the competitive environment um And some of these newer categories, I mean, look, I would say that certainly things have exceeded our expectations. If you look at the fact that we started just a year ago in our first non-restaurant category, convenience, and in about a year's time we've become the market leader in that category, I think really just showed the strength of convenience. both, actually across all audiences, the receptivity to our platform, how Dashers were willing to do deliveries across different hours of the day, different categories, how consumers were willing to see us help solve different jobs at different times of the week, and how different types of merchants would like to have access to the largest on-demand food audience that comes to us at the highest frequencies every month. And so, so far, we're seeing quite a lot of progress in these areas. But to Prevere's earlier points, to an earlier question, We're at the beginning of a massive transformation that's just unfolding. I mean, just to remind all of us, even in the core restaurant business, even if you added all of the sales up for the largest platforms in the U.S., we're about 10% or less of the entire restaurant industry. If you did the same math for some of these other categories that we're entering, be it convenience, grocery, and others, that number is very, very, very small single digits. And so there's a massive runway ahead.
spk09: Next question is from the line of Ron Josie from JMP Security. Your line is open.
spk04: Great. Thanks for taking the question and really great quarter. I wanted to ask two, please. One on DashPass. You talked about subscribers more than doubled year-over-year, average order frequency is an all-time high, and And I think you even mentioned that new users joining in OneQ was somewhat of a record. But can you talk about the strategic nature of DashPass here, just specifically as you think about increasing the penetration of new categories or increasing the MAUs for new categories, just how you see both DashPass and new categories are working together? And then, Tony, maybe as a follow-up to your prior answer, and this is a weird question maybe, but Could it be that with the reopening, the amount of change in consumer behavior, the reopening might actually help longer term about how we as consumers just order things, restaurants, food, et cetera, online, and how you're thinking about how the reopening might actually be a tailwind? Thank you.
spk08: I think the first one and the second. DashPass at the end of the day is a core pillar of our strategy. To think about what we're trying to do for consumers to deliver the widest selection, the best quality, and superior affordability. And DashPass strikes right to the heart of both selection as well as as well as price, because with dashboards, as you know, consumers pay zero delivery fees and reduce service fees on their orders. And so what we're finding is consumers, particularly as they start increasing their engagement, they derive value out of the fact that the $10 subscription fee defrays the cost of multiple delivery fees and multiple orders. And so we're seeing the value proposition of of DashPass translated into sign-ups that have then allowed us to grow the DashPass membership base to be 2x what it was a year ago. And another aspect of the strategy is to continue adding verticals into DashPass. So in much the same way Amazon Prime allows you to consume products across multiple categories, that's our vision for DashPass. We started with food, and over time, We've added convenience stores in there, and all the time as you continue to add categories, you'll see those get slotted into the dashboard to improve the consumer value proposition.
spk06: Yeah, and with respect to the second question around, you know, the reopening as a possible tailwind, you know, I guess no one has the crystal ball in terms of how this, you know, shape of recovery occurs and, you know, to I think from the earlier discussion, how the slope of change, you know, happens. But, you know, what I would say is that the long-term trend is that when it comes to convenience, things always move towards the direction of greater convenience, which means that over the long term, and I suppose if you look at it from that perspective, the tailwind thesis would be that all that's happening is that we've kind of shifted some of the growth that was otherwise going to happen by, who knows, some period of time. And I think what it has allowed is just that it's allowed more and more people to be more and more comfortable with this type of business, which allows possibly faster entry into other categories as we power all of local commerce, for example. And so, I think that's kind of where we're seeing it. But I do just want to remind people that convenience only moves in the direction of greater convenience. I mean, if someone wanted to go and eat inside of a restaurant, for example, they're probably not thinking about delivery. Conversely, if they're thinking about takeout or delivery, they probably were never going to go inside the restaurant in the first instance. And so I think it's, you know, again, I always like to step back in moments where we're trying to figure out what seems like a very difficult question to take a slightly longer time horizon and think, well, if the greatest privilege we have here is that people eat 20 to 25 times a week and do we see some share of that growing into more convenience? We believe the answer is yes. That's helpful. Thank you, guys.
spk09: We have our next question from Spencer Tan from Ever Cry Is I. Your line is open.
spk03: Hi, thanks for taking my question. I have one question around guidance. So it looks like if you were to take the midpoint of your GOV and EBITDA guidance that you're guiding to EBITDA accretion versus prior quarters. Just wondering if that's a direct read-through from the commission structure change that you announced this quarter and how we should think about that, maybe just providing a little bit more color around that specifically. And then secondarily, I guess, you know, looking into the recovery, are you seeing any restaurants consolidate the platforms that they utilize? And do you think that DoorDash has a competitive advantage from that standpoint by offering, you know, other types of, you know, software as a service and storefront versus maybe some of the smaller competitors out there, i.e., having the ability to maybe gain a little bit more share from some of your comps? Thank you.
spk08: Sure. So if I answered the question correctly, it had to do with the EBITDA margins or percentage of GOV picking up slightly.
spk04: Is that right?
spk08: Yeah. Gotcha. Yeah. Look, what I'd say is we provided a range of EBITDA, but if you, you know, just to reiterate the way we manage our business, it's to try to maximize scale. And so to the extent that there are opportunities available to invest in, in order to beat top line, we will do that all day long. The reason for expanding the guidance compared to the prior quarter is simply we don't want to feel compelled to have to spend the money in the quarter if we don't find the right return thresholds. And so what this allows us to do is to drop that profitability to the bottom line. in the event that there aren't the right investment opportunities. And the slight margin equation that you see is because of the sequential increase in take rates that we're expecting in Q2 because supply state is normalized.
spk07: Got it. Okay. Yeah. Perfect.
spk06: And with respect to the second question, yes, we do believe that by having a wider portfolio of products, we can certainly serve more use cases, both from a consumer perspective, as I was mentioning earlier. People eat 20 to 25 times a week. And so by having more use cases, whether it be in delivery, pickup, the office business, we're serving a bigger addressable market. And I suppose share of stomach in that regard. And then with respect to the merchant, you know, on the platform piece where we're not only, you know, their largest source of incremental demand through our app, but the fact that we also power their own channels, power their deliveries directly. that gives us greater order density, which drives lower fulfillment costs. But it also allows us to take up greater kitchen capacity, as we're powering the majority of the space that is being used up to produce the food in the first instance. And so I think those are some ways in which our suite of products are generating a competitive advantage, both for the consumer in terms of just giving a lot more value beyond delivery, as well as some of the things that Fabir said earlier, where we're adding more categories at no extra charge into a program like DashPass. And then on the merchant side, the wide portfolio of products are choosing either to grow through the largest source of incremental demand, our app, or the fact that we're powering know all of their channels you know allows us to certainly work with merchants more but also take up more of their production capacity got it thank you so much and congrats on the quarter next question is from the line of clark lampen from btig your line is now open hi good evening um tony or kabir invited some speculation on m a that's come up somewhat recently
spk07: I wanted to see if we could revisit how you guys are thinking about both new market entry and also specifically weighing up sort of build versus buy options for doing that. Thanks.
spk08: Yeah, look, I mean, we've said previously that, you know, one of our aspirations is to build a global company. And today we operate in the US, Canada and Australia. And over time, over a long horizon, we will try to expand outside of these regions. Now, you know, as far as M&A goes, what I'd say is we look at all of the opportunities around us and we're fortunate in that we've got a core business in the U.S. that generates cash and we can invest organically to build out our presence internationally. To the extent M&A makes sense, it might be something we consider, but the bar is extremely high just given that M&A, frankly, is a complicated matter and getting it right is difficult. So unless we've got absolute conviction that M&A is the right tool, we usually rely on organic mechanisms.
spk09: No further questions at this time. I turn the call back over to Mr. Andy Hargreaves.
spk08: Perfect.
spk02: Thank you for the questions and thank you everybody for joining us today. Have a great afternoon or evening and we'll talk to you again in a few months. Bye.
spk09: This concludes today's conference call. You may now disconnect.
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