DoorDash the Largest Food Delivery Company in the U.S. to IPO on the NYSE

eResearch | This week, DoorDash, a U.S. food delivery company, filed its Form S-1 Prospectus with the U.S. Securities and Exchange Commission (“SEC”). DoorDash plans to list publicly on the New York Stock Exchange (“NYSE”) under the ticker “DASH”.

The IPO is expected to be led by Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM). Other book-running managers include Barclays (NYSE: BCS), Deutsche Bank (ETR: DBK), Royal Bank of Canada (TSX: RY), and UBS Group (SWX: UBSG).

Last year, DoorDash became the largest U.S. food delivery company by revenue after announcing the acquisition of Caviar, a leading luxury food delivery service in the U.S.

FIGURE 1: DoorDash Funding History

Source: CrunchBase.com

DoorDash has raised approximately $2.5 billion in capital to support funding acquisitions and marketing expenses. DoorDash’s most recent raise of $400 million with Durable Capital Partners provided DoorDash with an approximate valuation of $16 billion.

DoorDash

DoorDash offers local restaurants and retailers logistics services for on-demand delivery capabilities, while hiring independent contractors called “Dashers” to carry out physical deliveries.

The online marketplace DoorDash operates enables both businesses and customers to thrive in an increasingly convenience-driven economy.

FIGURE 2: DoorDash Economics

The majority of DoorDash’s revenue is generated from fees paid by customers and commissions charged to merchant partners for various services that support online deliveries. DoorDash also offers a white-label logistics service called Drive, which allows retailers to build their own delivery platforms.

DoorDash offers three main services:

• Logistics Platform – facilitates the timely delivery of any food item.
• Merchant Services – supports merchants solve online delivery challenges such as customer acquisition, payment processing, and marketing.
• Membership Program – provides consumers with a flat monthly fee ($9.99) membership for unlimited delivery services from eligible merchants.

Since 2013, DoorDash has grown its delivery platform to over 390,000 merchants with over one million Dashers that serve more than 18 million consumers. The delivery service is offered in more than 4,000 cities across the U.S., Canada, and Australia.

In the S-1 Prospectus, DoorDash states that it is the category leader in the U.S. food delivery market based on total sales, with a 50% market share as of October 2020.

FIGURE 3: U.S. Food Delivery Market Based on Total Sales

DoorDash Financials

This year, DoorDash experienced a surge in revenue as the COVID-19 pandemic increased the adoption of online deliveries.

DoorDash generated $1.9 billion in revenue for the nine months ended September 30, 2020, a 226% increase from the prior year’s comparable period. In 2019, DoorDash reported revenue of $885 million, a 204% increase year-over-year.

Total Orders for DoorDash reached 543 million with $16.5 billion in Gross Order Volume (“GOV”) for the nine months ended September 30, 2020. In the same period last year, DoorDash had 181 million Total Orders with $5.5 billion in GOV.

The GOV includes the total dollar value of DoorDash’s completed orders, in addition to taxes, tips, and any other applicable consumer fees.                                                        

FIGURE 4: DoorDash – Total Orders and Marketplace GOV (2019-2020)

However, DoorDash is incurring large expenses from sales and marketing, which resulted in a net loss of $149 million for the nine months ended September 30, 2020. Last year, DoorDash reported a net loss of $667 million, a 227% increase year-over-year.

Food Delivery Services Market

The pandemic fueled a sharp growth in food delivery services as consumers refrained from going to retail stores due to social and physical distancing guidelines. The food delivery services market is currently experiencing high M&A activity as demand surges and competition increases.

Earlier this year, Amazon (NASDAQ: AMZN) announced the acquisition of UK-based food delivery startup Deliveroo, while Uber Technologies (NYSE: UBER) announced the acquisition of US-based food delivery company Postmates.

According to ResearchAndMarkets, the global online food delivery services market was $107 billion last year, and is forecasted to reach $154 billion by 2023, growing at a CAGR of 11.5%.

Other recent eResearch articles related to the food delivery industry:

• July 2020: Goodfood Reports Exceptional Quarterly Results & Then Raises $35 Million
• July 2020: Uber Acquires Postmates for $2.7B and Launches new On-Demand Grocery Services in Canada & Latin America
• April 2020: Foodora Exits Canada and Files for Bankruptcy with $4.7 Million in Obligations
• March 2020: Delivery-Service Companies Experience Demand Explosion

Notes: All numbers in USD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article.