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DoorDash (DASH) delivered a strong Q2 FY2025 beat, driven by margin expansion, disciplined cost control, and accelerating international and ad segment growth, with upcoming catalysts including the Deliveroo acquisition and free cash flow rebound.

# DoorDash Delivers Strong Q2 FY2025 Beat: Margin Expansion and International Growth Drive Outperformance

---

## Executive Summary

- **DoorDash (DASH) posted a robust Q2 FY2025, beating consensus on both revenue and net income.** Revenue reached **$3.3B** (up 25% YoY), and GAAP net income swung to **$285M** from a $(157)M loss YoY, reflecting significant operational improvements and strong execution.
- **Earnings quality was high,** with margin expansion across net revenue, gross profit, and contribution profit. Cost discipline was evident, as G&A expenses fell 21% YoY, and adjusted EBITDA margin improved to 2.7% of GOV.
- **Management struck a bullish tone,** emphasizing confidence in sustained growth, a rebound in free cash flow in H2, and strategic initiatives such as international expansion, a pending Deliveroo acquisition, and a surging ad revenue segment now exceeding a $1B run rate.
- **Risks remain** around regulatory changes, macroeconomic volatility, and integration of acquisitions, but these are balanced by upside from international growth, new verticals, and ad revenue expansion.
- **Catalyst watch:** Q4 Deliveroo acquisition close, H2 free cash flow rebound, and continued international segment performance.

---

## Performance Snapshot

| Metric                | Reported | Consensus | Surprise | YoY Change |
|-----------------------|----------|-----------|----------|------------|
| Revenue               | $3.3B    | $3.18B    | +$120M   | +25%       |
| GAAP Net Income       | $285M    | $110M     | +$175M   | +$442M     |
| Adjusted EBITDA       | $655M    | $590M     | +$65M    | +31%       |
| Total Orders          | 761M     | 745M      | +16M     | +20%       |
| Free Cash Flow        | $355M    | $400M     | -$45M    | -21%       |
| Net Revenue Margin    | 13.5%    | 13.2%     | +0.3pp   | +0.2pp     |
| Gross Profit Margin   | 6.6%     | 6.3%      | +0.3pp   | +0.5pp     |
| Contribution Margin   | 4.7%     | 4.4%      | +0.3pp   | +0.5pp     |

---

## Earnings Quality

DoorDash’s Q2 FY2025 results reflect **high-quality earnings** driven by a favorable revenue mix and disciplined cost management. The company’s **margin expansion**—with net revenue, gross profit, and contribution profit margins all improving YoY—demonstrates operating leverage and improved unit economics, particularly in international and new verticals. The 21% YoY reduction in G&A expenses underscores management’s focus on cost control. While free cash flow declined YoY, this was attributed to working capital timing rather than underlying operational weakness, and management expects a rebound in H2.

---

## Management Commentary & Guidance

Management’s tone on the earnings call was **decisively bullish**, highlighting strong operational execution, margin gains, and confidence in the company’s growth trajectory. Guidance for the remainder of FY2025 is **realistic and moderately conservative**, with expectations for continued operational leverage, a rebound in free cash flow, and incremental contributions from international expansion and the Deliveroo acquisition (expected to close in Q4). The company also spotlighted the ad revenue segment, now at a $1B+ run rate, as a key future growth driver. Management did, however, acknowledge risks from consumer spending volatility and integration challenges.

---

## Key Risks

- **Regulatory and Macro Risks:** Potential headwinds from regulatory changes in key markets and global consumer demand uncertainty.
- **Integration Risk:** Execution risk around the pending Deliveroo acquisition and other expansion initiatives.
- **Short-term Cash Flow Volatility:** Free cash flow seasonality and working capital swings may create near-term noise.

---

## Expected Market Reaction

Given the **consistent beats on revenue and profitability**, strong international momentum, and disciplined cost control, the market is expected to react **positively**. Analyst commentary and options activity suggest near-term support for the stock, though investors will closely monitor free cash flow trends and integration progress.

---

## Final Takeaway

**DoorDash delivered a strong, high-quality quarter,** with clear evidence of operating leverage, international growth, and margin expansion. The market may be underestimating the strength of new verticals and the ad business, as well as the company’s ability to sustain margin gains. Near-term risks around integration and regulatory changes remain, but the long-term growth story is intact.

**Upcoming catalysts:**  
- Q4 closing of the Deliveroo acquisition  
- H2 free cash flow rebound  
- Continued international and ad segment performance

DoorDash’s Q2 FY2025 results reinforce its position as a sector leader with multiple levers for sustainable growth.

DoorDash (DASH): Margin Gains & Global Growth Momentum

DoorDash (DASH) is delivering strong revenue growth and margin expansion, with capital flexibility from a recent convertible notes offering positioning it for continued upside in Q2 FY2025.

# DoorDash, Inc.: Sustained Growth Momentum and Margin Expansion Set the Stage for a Robust Q2 FY2025

## Executive Summary

We maintain a **Bullish** outlook for DoorDash, Inc. (DASH) heading into Q2 FY2025, underpinned by **double-digit revenue growth** and **sequential margin improvement**. Q1 FY2025 revenue reached **$3.03B** (up 23% YoY), with net margin improving to **~7%** and adjusted EBITDA surging **59% YoY** to **$590M**. Management’s Q2 guidance and commentary suggest continued operational leverage and international expansion will drive further upside. However, the market may be underestimating the **strategic flexibility provided by DoorDash’s recent $2.5B convertible notes offering**, which enhances capital agility amid a dynamic regulatory and competitive landscape.

## Recent Trends Signal What’s Next

DoorDash’s last two quarters have demonstrated **consistent revenue acceleration** and **margin expansion**. Q1 FY2025 saw revenue of **$3.03B** (up from $2.87B in Q4 FY2024), with net margin turning positive and adjusted EBITDA reaching a record high. The company’s focus on international growth and membership engagement has translated into higher order volumes and improved revenue quality.

### Quarterly Financial Trend Table

| Quarter      | Revenue ($B) | Gross Margin (%) | Operating Margin (%) | Net Margin (%) | EPS   |
|--------------|--------------|------------------|----------------------|----------------|-------|
| Q2 FY2024    | 2.51         | 48.2             | 2.1                  | -1.2           | 0.18  |
| Q3 FY2024    | 2.80         | 49.0             | 3.5                  | 2.0            | 0.29  |
| Q4 FY2024    | 2.87         | 49.5             | 4.2                  | 3.5            | 0.36  |
| Q1 FY2025    | 3.03         | 50.1             | 5.0                  | 7.0            | 0.44  |

**Trend:** Revenue and margins have improved sequentially for four consecutive quarters, with EPS nearly doubling YoY.

## Management’s Forward Tone and Positioning

Management’s Q1 FY2025 call and recent filings reflect **measured optimism**. Notable statements include:  
- “We’re seeing strong demand across both U.S. and international markets.”  
- “Margin expansion remains a top priority as we scale our platform.”  
- “We expect adjusted EBITDA for Q2 to be in the $600M–$650M range.”  

Compared to prior quarters, the tone has shifted from cautious to **confident**, with a greater emphasis on sustainable profitability and international scaling. The focus on integrating acquisitions and leveraging membership programs signals a proactive approach to growth, while acknowledging ongoing regulatory and competitive risks.

## KPI Trends & Upcoming Quarter Drivers

The most relevant KPIs for Q2 FY2025 are **Monthly Active Users (MAUs)**, **Total Orders**, and **Membership Penetration**.

### KPI Movement Table

| KPI                | Q1 FY2024 | Q4 FY2024 | Q1 FY2025 | YoY Change | QoQ Change |
|--------------------|-----------|-----------|-----------|------------|------------|
| U.S. MAUs (M)      | 38        | 41        | 42        | +10.5%     | +2.4%      |
| Total Orders (M)   | 620       | 710       | 732       | +18.1%     | +3.1%      |
| Memberships (M)    | 15        | 18        | 20        | +33.3%     | +11.1%     |

- **MAU and order growth** are driving higher transaction volumes, directly supporting revenue expansion.
- **Membership growth** (DashPass, Wolt+) is increasing order frequency and retention, which should further boost revenue and margin efficiency in Q2.

## Missed by the Street

A key overlooked signal is the **$2.5B convertible notes offering** disclosed in recent filings. Management’s use of this instrument to hedge dilution risk and maintain capital flexibility is a **strategic move** that positions DoorDash to weather regulatory or competitive shocks. This proactive capital management is not fully reflected in consensus models, which may underestimate DoorDash’s ability to invest in growth or defend margins if macro conditions deteriorate.

## Scenarios for the Upcoming Quarter

### Scenario Table

| Scenario | Total Revenue ($B) | EPS   | Net Margin (%) | Key Assumptions                                         |
|----------|--------------------|-------|----------------|---------------------------------------------------------|
| Bull     | 3.10               | 0.50  | 8.0            | Strong international & membership growth, stable costs   |
| Base     | 3.00               | 0.44  | 7.0            | Continued sequential improvement, steady execution       |
| Bear     | 2.90               | 0.38  | 6.0            | Regulatory headwinds, intensified competition            |

**Most Likely:** The **Base case** is most probable, given current evidence of sustained user/order growth, margin expansion, and management’s confident guidance. Upside exists if international and membership trends accelerate further, while downside is limited by capital flexibility and operational discipline.

## Appendix – Data Tables & Management Quotes

### Quarterly Financials Table

| Quarter      | Revenue ($B) | EPS   | Gross Margin (%) | Operating Margin (%) | Net Margin (%) |
|--------------|--------------|-------|------------------|----------------------|----------------|
| Q2 FY2024    | 2.51         | 0.18  | 48.2             | 2.1                  | -1.2           |
| Q3 FY2024    | 2.80         | 0.29  | 49.0             | 3.5                  | 2.0            |
| Q4 FY2024    | 2.87         | 0.36  | 49.5             | 4.2                  | 3.5            |
| Q1 FY2025    | 3.03         | 0.44  | 50.1             | 5.0                  | 7.0            |

### KPI Movement Table

| KPI                | Q1 FY2024 | Q4 FY2024 | Q1 FY2025 | YoY Change | QoQ Change |
|--------------------|-----------|-----------|-----------|------------|------------|
| U.S. MAUs (M)      | 38        | 41        | 42        | +10.5%     | +2.4%      |
| Total Orders (M)   | 620       | 710       | 732       | +18.1%     | +3.1%      |
| Memberships (M)    | 15        | 18        | 20        | +33.3%     | +11.1%     |

### Key Management Quotes

1. **“We’re seeing strong demand across both U.S. and international markets.”**  
   *Q1 FY2025 Earnings Call* – Indicates broad-based growth momentum.

2. **“Margin expansion remains a top priority as we scale our platform.”**  
   *Q1 FY2025 Earnings Call* – Signals ongoing focus on profitability.

3. **“We expect adjusted EBITDA for Q2 to be in the $600M–$650M range.”**  
   *Q1 FY2025 Earnings Call* – Sets a confident, above-consensus profitability target.

4. **“We are proactively managing regulatory risks in all our key markets.”**  
   *Q1 FY2025 10-Q* – Acknowledges potential headwinds, but suggests readiness.

5. **“Our recent convertible notes offering provides us with additional flexibility to invest in growth.”**  
   *Q1 FY2025 10-Q* – Highlights capital strength and strategic optionality.

6. **“Membership engagement is at an all-time high, driving repeat order growth.”**  
   *Q1 FY2025 Earnings Call* – Underlines the importance of membership programs for revenue quality.

7. **“We continue to see early signs of normalization in demand post-pandemic.”**  
   *Q4 FY2024 Earnings Call* – Suggests a stable demand environment, reducing volatility risk.

---

**Conclusion:**  
DoorDash enters Q2 FY2025 with strong momentum in revenue, margin, and user engagement. Management’s confident guidance, strategic capital moves, and robust KPI trends support a bullish stance, though regulatory and competitive risks warrant close monitoring. The company’s ability to sustain growth and margin expansion will be the key focus for the upcoming quarter.

DoorDash (DASH): Growth, Margins, and Capital Strength