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That graph is only as good as the "contribution profit" metric, which is basically a thing made up by DoorDash to make the financials look better. It is not "p
by aliston 6y ago
That graph is only as good as the "contribution profit" metric, which is basically a thing made up by DoorDash to make the financials look better. It is not "profitable" in any standard metric.
Look at how many things are excluded in contribution profits:
"We define Contribution Profit (Loss) as our gross profit (loss) less sales and marketing expense plus (i) depreciation and amortization expense related to cost of revenue, (ii) stock-based compensation expense included in cost of revenue and sales and marketing expenses, and (iii) allocated overhead included in cost of revenue and sales and marketing expenses. "
So basically if you don't count any indirect COGS, you don't count the RSUs you're paying the engineers and you don't count the capitalized costs of your infrastructure, you can eek out an operating profit. In my view, that's not a "profit."
- arcticbull 6y agoExcluding stock-based compensation is pretty nuts IMO, RSUs are recognized and taxed as ordinary income because they're ordinary income. Apparently "Contribution Profit" is roughly defined as "ramen profitability." "Well you see, if you only count about 1/3 of the compensation we pay engineers, ignore bonuses, etc, we've got us a great business!"
- ArnoVW 6y agoHaven't read the S-1, and won't be investing, but I can give you another way of looking at it. You do an IPO to scale. Once you scale, the relative costs of systems and engineering 'disappears'. In terms of profitability. Everyone is used to success stories of 50% margin. That's not the norm though. In retail 8% is not bad. Especially since you're hoping to get 8% of a huge market.
- NationalPark 6y agoIf they had an 8% margin, or expected to have one soon, it would be a great business. But you only get to those numbers using their non-GAAP metrics. None of that really matters/is surprising though, obviously investors know this but speculate that future growth and the changing market will one day result in real margins. Food delivery has been profitable on a small scale since forever, it definitely seems plausible that you could do it on a large scale and makes loads of money.