DoorDash IPO Filing Shows Profitable Quarter on Pandemic Boost

DoorDash Moves Ahead With IPO, Files to List Shares on NYSE

DoorDash Inc., the biggest U.S. food delivery company, is seizing on the pandemic-fueled boom in demand for meals brought to your door, as well as investor exuberance over new stock listings, with its filing Friday for an initial public offering.

The prospectus reveals a sharp jump in revenue this year and more surprisingly, a profitable quarter. The company, in its filing with the U.S. Securities and Exchange Commission, listed the size of the offering as $100 million, a placeholder that will likely change when terms for the share sale are set later. Private investors valued DoorDash at around $16 billion in June.

The Covid-19 pandemic led to a significant increase in revenue as people stayed home and ordered food for delivery, DoorDash said, boosting its sales to $1.9 billion in the nine months through September, from $587 million in the same period last year. It was briefly profitable in the second quarter of 2020 -- at the height of the stay-at-home orders in major U.S. cities -- posting $23 million in profit.

Overall, in the nine months through September its net loss narrowed to $149 million, the prospectus shows, compared to a net loss of $533 million in the same period of 2019.

“We believe there is a long runway of growth ahead for DoorDash and expect consumers to continue to favor food delivery even beyond the pandemic,” Asad Hussain, PitchBook’s lead mobility analyst, wrote in an email.

“DoorDash is a much cleaner growth story today for investors than it was before the pandemic,” Hussain said. “Overhang over labor regulation has reduced, the company has seen a massive expansion in growth, and is making strides toward profitability.”

Stating its mission to “grow and empower local communities,” DoorDash said it has more than 18 million consumers and 1 million Dashers -- its name for the independent contractors that transport orders from restaurants to customers. Its share of the U.S. market has grown from 17% in January 2018 to 50% in October this year -- including the acquisition of rival Caviar in 2019.

DoorDash, which said in February that it had filed confidentially with the SEC, is set to join Airbnb Inc. in a finale to what is already a record year for IPOs. Driven mostly by the proliferation of special purpose acquisition companies, or SPACs, and to a lesser extent by software companies, an all-time record of more than $141 billion has been raised on U.S. exchanges in 2020, according to data compiled by Bloomberg.

Along with DoorDash and Airbnb, online discount retailer Wish Inc. and installment loans provider Affirm Inc. are expected to complete IPOs by the end of the year, people familiar with their plans have said.

Intense Competition

DoorDash’s IPO also comes amid consolidation in the food-delivery industry as players seek to gain market share. In July, Uber Technologies Inc. agreed to pay $2.65 billion in an all-stock takeover of Postmates Inc. Europe’s Just Eat NV struck a deal in June to acquire Grubhub Inc., which in October then announced a partnership with Lyft Inc.

DoorDash listed intense competition from its rivals as one of the key risk factors in its IPO filing. It also cited its dependence on its independent contractors and its ability to bring on and retain popular restaurants as potential threats to its business. The possibility of negative publicity for its contractor pay model, which has previously attracted criticism around how the company allocates its tips to its drivers, was also mentioned.

Prior to the public offering, SoftBank Group Corp.’s Vision Fund, venture capital firm Sequoia and Singapore’s GIC Pte collectively own more than 55% of DoorDash’s Class A stock, the filing shows. Tony Xu, the cofounder and CEO, holds tight control over the company’s future. He holds more than 41% of DoorDash’s Class B supervoting shares, which have 20 votes per share. He also has voting control over the rest of the 20-vote shares, which are split between his cofounders, Stanley Tang and Andy Fang. According to the filing, Xu sold an unspecified number of shares in a September 2018 tender offer.

DoorDash’s listing plans -- along with the entire app-based service industry -- got a boost this month, when California voters approved a ballot measure setting aside a state law requiring gig-economy companies to treat their drivers more like employees than contractors. Despite that victory, the company indicated in its filing that it could face further regulation or litigation that would affect its ability to keep its workers as less costly independent contractors.

The offering is being led by Goldman Sachs Group Inc. and JPMorgan Chase & Co., with Barclays Plc, Deutsche Bank AG, RBC Capital Markets and UBS Group AG. San Francisco-based DoorDash is seeking to list its shares on the New York Stock Exchange under the symbol “DASH”.

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